Wednesday, March 14, 2012

John Lewis Partnership – Where is the Controversy?

The John Lewis Partnership is a business that does not seem to attract a bad word from anywhere.

Everyone from the shop staff to the chairman of the company plus the millions of satisfied customers, all are unanimous in their support of John Lewis.

It is unusual to find such blanket approval of anything but John Lewis is not a short-lived phenomenon, or an ordinary company.

The John Lewis chain includes all Waitrose supermarkets, the John Lewis department stores and various other services.

They provide good quality merchandise and produce, and the chain appeals to a largely middle class and upper class clientèle.

However, John Lewis is more than just a good quality store, like Harrods or Selfridges. The secret to the Company’s success lies in its organisation.

This was laid down back in 1929 by John Speden Lewis who established the unique profit sharing ethos, after taking over the company established by his father John Lewis in 1864 from a draper’s shop in Oxford Street.

John Speden Lewis believed that the profits from a business should be shared with the workers who had produced them.

John Speden Lewis had already turned round Peter Jones – an ailing business bought out by his father, with profit sharing and when he took over John Lewis after the death of his father, applied the same principles.

The idea is that everyone has a stake in the business and this means that today all 76,500 permanent staff are partners of the company and share in the profits and benefits. With annual gross sales of over £8.2bn, this provides an annual bonus that typically works out at between 9% - 22% based on salary.

Managing director Andy Street has said that the "crucial thing" about the bonus is that is set at same percentage for every single partner." Also, "It is totally driven by the results of the organisation", adding, "everyone has put the bonus pot together and collectively they are sharing in it."

On the shop floor, the annual announcement of the bonus figure creates an electric atmosphere.
All the partners have plans riding on the bonus which in 2011 was 18% or the equivalent of 8 weeks wages.

The 2012 has yet to be announced but is predicted to be slightly lower following a difficult economic year.

The company’s slogan "Never knowingly undersold "ensures that if you find exactly the same item on sale for cheaper elsewhere then the company will refund the difference.

Recently the company have had to change this to exclude internet-shopping outlets and have included 2 - year warranties as standard on all appliances to beat equivalents offered in rival shops that generally only extend a free warranty for a year.

A couple of customers have questioned this policy but in 80 years of history, this is as close to a criticism of John Lewis as it gets!

In today’s mood of shared responsibility as the government urge people to take more control and the outcry following the bankers’ bonuses, the John Lewis model seems to represent a shining example of how things could be.