March 6, 2008
Managing “otherwise” still works for John Lewis
Along with the National Health Service, the John Lewis Partnership probably represents the UK’s most durable flirtation with socialism. The department store and supermarket group is owned by its 69,000 staff, who are called partners. Today, it was announced that they would each receive a profit-sharing bonus worth 20 per cent of their salary after strong trading in 2007.
As in the rest of the retail sector, average wages are still low compared with other industries. However, personnel managers in other sectors would do well to consider the additional ways in which the group’s knowledgeable staff are rewarded and kept loyal.
When retirement benefits have been stripped back across corporate Britain, John Lewis partners are still members of the most generous type of pension scheme - a final salary, non-contributory arrangement. They can holiday in four leisure centres owned by the group, including one on the beautiful Brownsea Island near Poole. Another leisure centre is on the way. Staff discounts at John Lewis stores and Waitrose supermarkets range from 12-25 per cent. There are plenty of other perks.
It is also worth checking out this 1957 speech made by John Spedan Lewis, the son of the group’s founder and the man who gave the company to its staff. I think this passage sums up his pragmatic idealism pretty neatly:
The present state of affairs is really a perversion of the proper working of capitalism. It is all wrong to have millionaires before you have ceased to have slums. Capitalism has done enormous good and suits human nature far too well to be given up as long as human nature remains the same. But the perversion has given us too unstable a society. Differences of reward must be large enough to induce people to do their best but the present differences are far too great.
If we do not find some way of correcting that perversion of capitalism, our society will break down. We shall find ourselves back in some form of government without the consent of the governed, some form of police state.
The dividends of some shareholders exceed their own highest hopes, hopes that may have been much too greedy, and the incomes of the more fortunate of the captains of industry are many times as great as would have caused the same persons to work just as hard and for just as many years if, instead of going into business, they had happened to become, say, lawyers or doctors. This is quite wrong.
The John Lewis Partnership was started to find out what would in fact happen if business were managed otherwise. So far, the thing seems feasible.
More than half a century later, the strategy of managing “otherwise” is more than feasible. But the backdrop of glaring inequalities elsewhere doesn’t seem to have changed all that much.
The background of inequalities may have changed little, but labour managed firms (i.e., cooperatives) have had some notable successes in the post war period, notably the Mondragon cooperatives in the Basque country, as well as the large proportion of Lega cooperatives in Italy relative to the rest of the economy.
I’d advise reading Jaroslav Vanek for a positive scholarly view of the cooperative movement. Gregory K. Dow investigates the various structural limitations and opportunities for labour managed firms in his book “Governing the Firm: Workers’ Control in Theory and Practice” - it’s worth reading and is based on rigorous economic theory.
Posted by: Robert Graham | March 7th, 2008 at 1:48 pm | Report this commentDon’t forget the resilience and - often - success of the co-operative movement. There are 4400 co-ops in the UK with a combined turnover of £26 billion and employing almost 200,000 people. They manage otherwise too.
Posted by: Bob Deed | March 17th, 2008 at 4:53 pm | Report this comment