The Partnership - John Lewis and Waitrose

The John Lewis Partnership PLC is the 2nd largest co-operative in the United Kingdom with a UK Pounds turnover of 8.2 billion - about A$13 billion in Australia.  The Partnership has 76,500 partners - all permanent staff are partners owning 35 John Lewis shops across the UK (29 department stores and six John Lewis at home), 269 Waitrose supermarkets, an online and catalogue business, a production unit and a farm.

The Seven Principles

The John Lewis Partnership continues to adhere to seven principles identified by the founder John Spedan Lewis:

Purpose: The partnership's ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business. Because the partnership is owned in trust for its members, they share the responsibilities of ownership as well as its rewards profit, knowledge and power.

Power: Power in the Partnership is shared between three governing authorities - the Partnership Council, the partnership Board and the Chairman.

Profit: The partnership aims to make sufficient profit from its trading operations to sustain its commercial vitality, to finance itscontinued development and to distribute a share of those profits each year to its members, and to enable it to undertake other activities consistent with its ultimate purpose.

Members: The partnership aims to employ people of ability and integrity who are committed to working together and to supporting its Principoles. Relationships are based on mutual respect and courtesy, with as much equality between its members as differences of responsibility permit. The partnership aims to recognise their individual contributions and reward them fairly.

Customers: The Partnership aims to deal honestly with its customers and secure their loyalty and trust by providing outstanding choice, value and service.

Business relationships: The partnership aims to conduct all its business relationships with integrity and courtesy and to honour scrupulously every business agreement.

The community: the Partnership aims to obey the spirit as well as the letter of the law and to contribute to the wellbeing of the communities where it operates.

The Beginning

The beginning of this remarkable employee-owned co-operative was in 1864 when John Lewis established a shop in Oxford Street, London. Subsequently, in 1906 John Lwis bought Peter Jones which had been established in 1871 with two small shops. ( pp 39-40) While the John Lewis Partnership has the name of his father (1836-1928), it was the son Spedan Lewis (1885-1963) who initiated and developed the partnership.

In 2010 Spedan's Partnership - The Story of John Lewis and Waitrose was published - written by Peter Cox who worked for the John Lewis Partnership for thirty five years until he retired in 2003. The book was written with the agreement of the Partnership bus was independent of it. Over 120 working and retired Partners were interviewed for the book.

Peter Cox was born in 1945. He joined John Lewsis in 1968 as a computer programmer. When he retired in 2003 he was head of computing at Waitrose. Since his retirement, he has written two other books - English Cricket Since World War 11 (2006) and Set Into Song - Ewan MacColl, Charles Parker, Peggy Seeger and the Radio Ballads (2008). He is now working on a series of plays about the fight for the vote in Britain, 1819-1918.

The first 18 chapters narrate chronologically the story of the John Lewis partnership. The last two chapters examines the business as it operates today - as a retailer and as a co=owned business.

It is an insightful history of the continuous and evolving interplay between the Partnership Chairman, the Partnership Board and the Partnership Council. ( p 285)

In 1920 at Peter Jones John Spedan Lewis began the Partnership with a profit-sharing scheme and a representative staff council. When his father died in 1928, John Spedan Lewis now had sole ownership of the Peter Jones and John Lewis companies. He created the first Coinstitution and in 1929 the John Lewis Partnership and the First Trust Settlement were created. In 1940 the irrevocable Second Trust Settlement was created and the Partnership became the property of the people employed within it.

The values which Spedan Lewis established in the Principles and the Constitution have endured. While the Partnership is clearly run by the Chairman and the managers appointed by the Chairman, all Partners have a continuing capacity to participate.

While an informative history of the development of democracy within the Partnership, the book could have included an additional chapter on Partnership Democracy. How democracy is exercised exercised, however, is adequately discussed on the John Lewis Partnership web site - necessary additional reading to complement the book.

The Partnership Council has the power to discuss, ask questions and make recommendations on any subject and elects five directors to the Partnership board. The Council has the power to dismiss the Chairman if the Chairman fails to fulfil his or her responsibilities. The council also elect three Trustees of the Constitution. The Trustees act as Directors of the John Lewio Partnership Trust  Ltd - the legal entity that holds the company shares in trust for the partners and officially appoints the Chairman and distributes the partnership bonus. The Chairman and members of the Chairman's management Committee can not be Trustees of the Constitution. Any partner may attend any meeting of the Partnership Council unless the Council rules otherwise for a particular occasion.

John Lewis and Waitrose have divisional councils with at least one elected councillor to represent each branch. Elections to the councils take place every two years with Partners voting in constituencies that are decided by the three Trustees of the Constitution. Councillors are elected to represent partner opinion, but are not delegates of their constituents. Their responsibility is to exercise their judgement for the best interests of the partnership as a whole and not to promote sectional interests.

Each John Lewis selling branch has a Branch Forum, the members of which are selected by their fellow Partners to represent them. Each Waitrose selling branch has a PartnerVoice forum. This is the local avenue for Partner opinion and is a means by which Partners can provide feedback, question management opn branch matters and raise their own issues and be consulted. There are similar arrangements for the head offices and distribution in each Division, for the production unit, for Leckford and Corporate and the Clubs.

The Gazette

The Gazette is a remarkable example of democracy in the John Lewis Partnership.The Gazette was first published in 1918 to establish "a genuine two-way debate between" Spedan Lewis and the staff. ( p 54)  Staff were encouraged to contribute anonymous letters - anonymously because it was thought that this would encourage freedom to criticise without aq fear of retribution.  The policy was and still is that "any letter that isn't offensive as personally defamatory must be published. " ( p 284)  It was and is a deliberate effort as "a corrective against internal good-news spin." ( p 284)  By 1938 the Gazette was over 30 pages - including anonymous letters, minutes of every major meeting and detailed results for each branch and each buyership. ( p 108) An equally important consideration was that tan "appropriate authority" was required to answer letters in the Gazette within three weeks. ( p 284) "It's the threat of the Gazette letter which makes Partnership managers - usually - consider changes with extreme care if they think they'll affect people adversely." ( p 285) 

Replicable

Cox asks whether the John Lewis Partnership is replicable. It is an important question that is asked of every successful co-operative and employee owned model. He suggests that private ownership was critical - that a private owner had the power to transfer ownership of the company to all employees but that politically the two major political parties in the UK were committed to either the "unfettered market" (the Conservative Party) or "state ownership"  (the Labour Party." He does not relate employee-ownership to the co-operative movement and the acknowledgement by Co-operatives UK that the John Lewis Partnership is the 2nd largest co-operative in The UK - The UK Co-operative Economy 2011.   He does refer to "a seed that has been waiting to germinate for a hundred years" and to a "once in a lifetime chance" - a echoing of the claims for the International Year of Co-operatives in 2012. (pp 296-298)

In  February 2010 the John Lewis Partnership released research on employee-owned businesses - Model Growth: Do employee-owned businesses deliver sustainable performance? The research eas commissioned by the John Lewis partnership and is based on research bu Cass Business School and includes an in-depth survey of senior executives and analysis of the financial data of over 250 companies.The report was written by Prof. Joseph Lampel. Dr. Ajay Bhalia and Dr. Pushkar Jha.

The employee-owned sector  (companies that are wholly or substantially owned by their employees) in the UK  accounts for 2% of GDP.and operate in a wide range of sectors - from retail, manufacturing, engineering and financial services.

The research found that the employee ownership model offers particular advantages to small and medium-sized businesses and in knowledge and skill-intensive sectors, where employee-owned companies significantly outperform competitors. It concluded that employee-owned firms created jobs more quickly and added more value to output and human capiital than conventionally structured businesses whilst demonstrating the same level of profitability.

Cox makes this judfgement: " It has survived and grown because of a combination of strong trading principles and an ownership structure that gives all its employees a share in its success. Because of that, it has been able to maintain a distinct internal culture, with a degree of communal feeling rare in the business world. Moreover, it cannot be takenm over by corporate raiders. its stakejolders are its employees, iys customers, and to a certain extent its suppliers, not a set of anonymous shareholders.. Its customers are largely uninterested in the unusual structure, and judge it by iits ability to give them what they want. It has its flaws, it has at times been complacent, defiantly insular. and occasionally arrogant, but it keeps on thriving." ( p 296)

The book includes a Glossary of Partnership and Retailing Terms, an explanation of Money Values, a Timeline, an Illustrations List and Explanation and two Indexes - of People and Places, Shops and Businesses.

For information on employee ownership in Australia - the Employee Ownership Australia. and New Zealand.