November 18, 2017

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The Pursuit of Employee Happiness: That’s the Purpose of U.K.'s Largest Department Store Chain

Employee ownership isn’t just for small companies – neither is prioritizing employee welfare.

Marjorie_kelly

By Marjorie Kelly

When most of us think about cool, alternative companies, we think small.

But one of the coolest companies I’ve ever found is a huge company – the largest department store chain in the U.K., with 35 department stores and 272 grocery stores. Its revenues are more than $13 billion, bigger than Monsanto’s. It’s 100 percent owned by its employees.

And get this: Its stated purpose is to serve employee happiness.

The John Lewis Partnership Values Fairness

The company is the John Lewis Partnership, which I write about in Owning Our Future: The Emerging Ownership Revolution. The book is the story of my quest to find places where a new kind of economy is bubbling up – what I call a “generative economy,” one that isn’t about maximum financial returns for a few, but about building a world where we all can thrive.

Ownership designs form the foundation of this economy. And what I found is that generative ownership isn’t just about small, local, founder-run companies. It’s possible to keep the soul of these companies alive even at large scale, long after the founder is gone.

Values are at the core of every business. The John Lewis Partnership is built around the value of fairness. The founder who created its democratic structure a century ago, John Spedan Lewis, Owning Our Future: The Generative Economybelieved that traditional ownership was unfair because dividends paid to shareholders for doing nothing were obscene when workers barely earned subsistence wages.

He decided to make service to employees the purpose of his company. 

To see if this firm could possibly be for real, I visited a few of its stores—like the Waitrose grocery store on King’s Cross in London. I met a meat counter worker wearing a white linen Fedora and a bow tie – the most dignified butcher I’d ever met. He told me about his sister, Carol, who also worked there and had just been diagnosed with cancer. The company had been really good to her, he said. “There’s a budget set aside for people like this. She’s been off for three months, and they’re holding her job.” 

Committees for Financial Assistance, Partnership Councils & Pensions

When employees at Waitrose and other JLP stores face a family emergency, they can seek a grant or loan from the Committee for Financial Assistance. That committee, composed of and elected by employees, controls a special budget, making decisions outside the chain of management. Help from that fund — plus the commitment to hold Carol’s job — took “the money side of worries away,” John said.

I also visited the department store Peter Jones, entering through an arched doorway with the legend John Lewis Partnership: The Peter Jones storeinscribed in stone, “Here is Partnership on the scale of modern industry.” There I encountered a mid-level manager named Harry Goonewardene, who served on the Partnership Council, a governing board that is elected by employees and works alongside the Board of Directors.

He carried himself with an air of self-possession that was arresting. He was impeccably dressed in a dark suit and had the dark olive skin of someone from the Middle East — from Sri Lanka, I was later told. He lacked that harried, pinched sense one often sees among floor managers at other low-price retailers. I asked him what the Partnership Council discussed, and he said that at the next meeting, they’d be looking at an adjustment to the employee pension plan. 

Each year, the company contributes to pension accounts a sum not far below employees’ annual pay; employees aren’t required to contribute anything. But they aren’t eligible until after five years of work, and people wanted that shortened to three. “A committee has been looking at this, and we’ll take it back to constituents and present a plan,” he said.

By “constituents,” he meant the workers themselves.

Employee Ownership, Profit-sharing & Bonus Pay

John and Harry are among the 76,500 employee-owners of the John Lewis Partnership. If the ultimate perquisite of being an owner is the right to pocket some of the profit left after the bills are paid, then these employees are genuine owners.

Each year, after the firm sets aside a portion of profits for reinvestment in the business, the remainder — generally between 40 and 60 percent of profit — is distributed to employees. One clerk named John Lewis Partnership: The Waitrose StoreEmma told me her recent bonus was 2,000 pounds [$3,264]. “I spent some on a holiday in the Canary Islands,” she told me. “It was my first holiday in four years.”

Every employee at JLP, from shop clerk to the chairman, gets a bonus representing the same percent of individual pay.

As one manager told me, “In the worst year, it’s 8 percent, in the best year, 24 percent” of salary. Last year, the annual figure was announced with fanfare on the floor of the company’s store on Oxford Street, where a partner held up a poster bearing the numbers “18%” and employees clapped and cheered. That bonus amounted to about nine weeks pay.

What’s revolutionary about the John Lewis Partnership is that employees are not legally outside the firm, negotiating with it. They are the firm. They’re members of the firm: they’re owners.

Harbinger of the Future

Imagine a day when more and more firms are employee-owned.

This is more than a fantasy. With the pending retirement of many Baby Boomer-owners, we’re approaching a wave of sales of closely held companies that’s projected to go on for 20 years – with 750,000 or more of these businesses sold each year.

According to a study by White Horse Advisors, only one in seven of these company founders expects to pass the business to family. An age wave of ownership transfer is coming. With the right tax incentives and support structures, we could see a massive increase in employee ownership in coming decades.

Now that would be a different kind of economy: a generative economy, one that might offer dignified jobs for all.

Previously:

Learning to See the Invisible: The Unsung Ownership Revolution

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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