John Lewis Case Study

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The John Lewis Partnership

Logo:

A successful business powered by its people

Introduction

The John Lewis Partnership was developed under the guidance of a man who is now hailed as a visionary retail radical, John Spedan Lewis. Indeed, his influence is so widespread today that he was voted number one British business leader ever in 2002.Today, the Partnership that he established is still guided by those early and revolutionary principles, and enjoys a position as a pre-eminent retailer nationwide.

This sheet seeks to examine what those principles were, where they came from, and why they are so enduring.

History and Vision

The principle on which the John Lewis Partnership is based was radical for its time. Simply put it was a commitment to his employees’ happiness and the assertion that this route was both a good outcome for the employees, but also an excellent way to ensure sustained profitability. Bearing him out, the Partnership made revenues of £5.8 billion in the year 2005-2006 and now has 68,000 permanent employees.

The John Lewis brand was established in 1864 with a draper’s shop in Oxford Street and had a conventional ownership structure, wholly owned by the original John Lewis. Lewis bought a failing store, Peter Jones on Sloan Square, soon afterwards. The eldest son of John Lewis, John Spedan Lewis, took over total control of the failing Peter Jones store in exchange for the 25% stake in the John Lewis department store that he was given at the age of 21. It was from this position as sole Director of the Peter Jones store that he was able to implement policies based on his egalitarian vision.

John Spedan Lewis was troubled by the realisation that that he, his brother and his father between them were earning the same as the entire workforce in both the department stores they owned. Additionally, he became concerned for the happiness of his employees more generally. With the happiness of his employees firmly at the centre of his mind, he began to introduce new systems and practices based on that simple vision. Intent on bettering the working conditions what is called the ‘spirit’ of the company, he offered shortened working days, the setting up of a staff committee, a third week's holiday – paid holiday was an innovation for the retail trade at this time – and eventually an in-house magazine, The Gazette, which is still published today.

Importantly, in 1920 the first employee profit-sharing scheme was introduced along with a representative staff council. Lewis Sr’s eventual death in 1928 gave Spedan sole ownership. He created the first Constitution and the following year the John Lewis Partnership Limited and signed the First Trust Settlement. This gave him practical control of the business, but allowed the profits to be distributed among the employees. Twenty-one years later, he signed the irrevocable Second Trust Settlement, and the Partnership became the property of the people employed within it. The aim was to establish a governance system that was both democratic and commercial, giving every Partner a voice in the business they co-owned. Additionally, all Partners would share in the benefits and profits of the business.
The John Lewis ‘spirit’ creates an organisation in which Partners feel excited to be a part and which is an unusual place to work. Spedan’s initial hunch that a sense of belonging through common-ownership seems to have paid off. The PR of John Lewis states: “Our distinctive culture - our spirit - lies behind this feeling and sense of belonging and enables Partners to serve customers to the best of their ability.” The belonging-sales link seems strong.
Crucially, the Partnership’s strategy is based on three interdependent concerns – Partners, customers and profit. The latter is obviously important to sustain commercial vitality and allow a share of the profits each year in line with Partners’ reasonable expectations.

The structure is unique and has proved to
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