This year the John Lewis Partnership celebrates a milestone anniversary that very few businesses can claim.
2014 marks 150 years since John Lewis opened his drapery shop in Oxford Street in London. It marks 150 years since he began a multi-billion pound business empire that, unbeknownst to him, would become a flag bearer for employee engagement and employee ownership across the world.
The early history of the business is well recorded. John Lewis himself was a sharp business man whose focus on offering quality products at tight profit margins established a successful model he was quickly able to build on. The proceeds allowed him to expand the business and rent and buy further properties. He famously purchased the controlling interest in the Peter Jones department store with a massive £20,000 in cash.
However, it was his son, John Spedan Lewis who saw the benefit of increasing employee engagement by giving the employees a share in the profits of the company. In 1914 John Lewis appointed Spedan Lewis as Chairman of Peter Jones. Spedan Lewis soon realised that his staff’s interests were not in line with his businesses interests and he chose to make some innovative changes. He developed a commission system and started regular meetings with staff. When he gained full control of the Peter Jones business he improved staff conditions, increased holidays, increased internal communication and instituted the first staff council. Profits increased and by 1920 Spedan had started distributing shares to his staff who were now known as Partners and thus, modern employee ownership was born.
In stark contrast, in 1920, John Lewis’ original store experienced staff unrest, a five week strike and eventually he sacked the whole staff of the shop. Not a great model for employee engagement!
Spedan Lewis gained control of the whole business when his father died in 1928 aged 92. The following year he set up a trust which enabled profit sharing to the businesses employees and by 1950 he had passed ownership of the John Lewis Partnership to trustees to hold the business for the benefit of those who worked within it.
John Lewis employees continue to benefit from Spedan Lewis’ progressive approach to employee engagement and employee benefits. The Partnership operates a comprehensive network of business forums and a Partnership Council to ensure that every employee has an outlet to feed into the development of the business. The Partnership publishes a weekly in house magazine, the Gazette, and each branch has its own magazine, The Chronicle – each of which offers feedback opportunities to management. The Partnership offers an extensive range of social activities for its partners including holiday venue Brownsea Castle, country estates and hotels and a sailing club. Its pension, insurance and holiday benefits are generous and after 25 years of service, partners are entitled to a six month, fully paid, break.
Of course, the most famous benefit of being a partner in John Lewis is the annual bonus. This year each partner received a bonus equivalent to nearly eight weeks of their salary based on a 15% profit. John Lewis has consistently shown a profit of over 10% since 2002-3 and as much as 17 – 20% on several occasions. The partners at John Lewis are richly rewarded for their achievements.
Today, the John Lewis Partnership is a £10.2billion turnover retail empire which encompasses John Lewis and other Department Stores, Waitrose grocery outlets and has a very successful online presence. There is no doubt that the John Lewis Model works.
So, why is this multi-million pound business relevant to a Welsh Co-operative Development agency?
The answer is simple. Employee owned business approaches can offer stability and growth to businesses where the owner or owners are looking to withdraw over a period of time, reducing the need to search for, potentially aggressive, buyers. This sort of business transition lends itself to giving employees the opportunity to learn the business, become empowered within it and eventually become the future business owners. John Lewis provides the template that people know and can relate to.
Employee ownership is a flexible approach. Many employee owned business are co-operatives where employees directly own a share in the business, some are multi-stakeholder models and some are owned by a trust on behalf of the employees. All of these approaches are marked by high employee involvement, exemplary engagement, innovation, above average attendance, productivity and in most cases, profit.
This employee engagement and empowerment fits in perfectly with the Wales Co-operative Centre’s aims and ethics. It also provides an alternative approach to addressing one of the biggest problems facing an ageing population of business owners in Wales – how to ensure a business continues when the owner decides it time to leave.
So, as John Lewis’ newest, eagerly anticipated, advertising campaign celebrating their 150 year anniversary hits our TV screens this bank holiday weekend, let’s raise a glass to John Lewis, an employee owned, employee engaged company that is 150 years young this year.
Happy Birthday John Lewis.
If you would like to know more about the John Lewis Partnership, visit the partnership website here.
If you would like to know more about employee ownership and business succession services available from the Wales Co-operative Centre, please visit our website or call our business consultants on 0300 111 5050.
David Madge is Marketing and PR Officer for the Wales Co-operative Centre. He has an interest in employee ownership and worker co-operatives.