John Lewis Partnership

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Marjorie Kelly:

"Consider, for example, the John Lewis Partnership (JLP) in England. It’s the largest department store chain in the country, with 35 department stores and 272 Waitrose grocery stores. Revenues of this company are more than $11.5 billion. If placed into the Fortune 500 list of the largest U.S. corporations, JLP would settle in around 212—a little higher than Starbucks. It’s 100 percent owned by its employees.

The John Lewis Partnership is built around the value of fairness. The founder, John Spedan Lewis, who created its democratic structure about a century ago, believed that traditional ownership was unfair because dividends paid to shareholders for doing nothing were obscene when workers barely earned subsistence wages. The stated purpose of the company he created is to serve the happiness of its employees, or, as the company calls them, partners.

Each year, the John Lewis Partnership distributes a portion of its profits to employees. Last year, employees got a bonus of 18 percent of their regular salaries, about nine weeks pay.

To see if this firm was real, I flew to London and visited a few of its stores—including a Waitrose grocery store. I met a butcher at the meat counter wearing a white linen fedora, a crisp white shirt beneath a green-striped apron, and a bow tie. The hats were required, he explained. But wearing a tie every day was his choice. “I just feel more dressed,” he told me. People notice touches like that at Waitrose, where pay raises are given for performance, including such things as “being a tidy person,” John said. He told me about his sister, Carol, who also worked at Waitrose and had just been diagnosed with cancer. “They’ve been really good,” he said, referring to the company. “There’s a budget set aside for people like this. She’s been off for three months, and they’re holding her job.”

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 the special budget John referred to and makes 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 company’s Peter Jones department store, entering through an arched doorway with the legend inscribed 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, an elected body of employees that works alongside the board of directors.

“How did you get on the council?” I asked him. “Did you campaign?”

“Very much so,” he said. “I stood at the door and grabbed people, told them, ‘Hi, this is who I am.’” He carried himself as a city councilmember might, calmly, with an air of dignity that was almost arresting. He was impeccably dressed in a dark suit and had dark olive skin—he is from Sri Lanka, I was later told. He lacked that harried, pinched sense one often sees among floor managers at other retailers. A meeting of the Partnership Council would be held soon, he told me, during which an adjustment to the pension scheme would be discussed.

Each year, the company contributes to pension accounts a sum not far below employees’ annual pay; employees aren’t required to contribute anything. However, they are not eligible until they have completed three years of work, and people were concerned about that. “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.

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 Emma told me her recent bonus was 2,000 pounds [U.S. $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 percentage 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 reading “18%,” and employees clapped and cheered. That bonus amounted to about nine weeks pay.

Here we begin to see what is revolutionary about the John Lewis Partnership. Employees in this firm are not a countervailing power. They’re not legally outside the firm, negotiating with it. They are the firm.

From shareholders to stakeholders

This concept represents a kind of revolution akin to the shift from monarchy to democracy. In the American Revolution, the founding generation didn’t attempt to regulate or restrain monarchy. They created a new source of political power and sovereignty that they controlled themselves. The revolution they began is one that we are in a position to finish today. That previous generation democratized the political aspect of sovereignty. But our politics and economy are so intertwined that imbalances in wealth and ownership have eroded our political democracy. To fix this, we need to democratize the economic aspect of sovereignty." (