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The headlines say it all, John Lewis Partnership profits up by20% , but behind the headlines there is something fundementally more important than these figures. JohnLewis Partnership is the oldest and largest co-owned business in the UK and has transformed the way business models are created today. The forthcoming Public Sector Reforms, to be outlined by the Prime Minister, will go some way to highlighting the role of Co-Operatives and Social enterprises in shaping the way public services are delivered. So there has never been a more important time to address such innovative models demonstrated by the John Lewis Partnership

Here, Charlie Mayfield, Chairman of the John Lewis Partnership, explains the huge benefits employee owned and led models  can bring to an organisation and the work John Lewis are currently doing with the Governments Pathfinder Mutuals initiative.

Q.  Charlie, can you tell us more about the Pathfinder Mutuals initiative and the role of the John Lewis Partnership?

The Pathfinder Mutuals initiative, brokered by the Employee Ownership Association (EOA), is a government initiative designed to support entrepreneurial public sector staff who want to take control of their services. The scheme sees us join other selected companies in providing mentors to 12 fledgling public service spin-offs interested in transferring to an employee-owned structure.


As one of the oldest and largest co-owned businesses in the UK, we’re naturally a strong supporter of the employee-ownership model and are happy to share our insights and advice with the public sector. We know that giving employees a real stake in the business they work in helps transform productivity, innovation and customer service.


Moving forwards, Patrick Lewis, one of our Board Directors, will sit on the Cabinet Office's Mutuals Task Force in order to represent the views of the John Lewis Partnership.  This group includes leading experts on employee-ownership, enterprise development and social enterprise, and it will drive the necessary changes to policy across Whitehall to help these public sector workers, who are attempting to form Mutuals.


However, it’s important to note that while the Partnership is hugely engaged in supporting public sector staff transfer to an employee-owned structure, we do not see our role as advising on public sector reform. We’re simply keen to share our experience of employee ownership and in doing so help to identify enablers and barriers to success.


Q. How do you feel an employee-owned and led approach can help today's economic and social challenges?

Research that we commissioned has found that companies owned by their employees are more resilient than conventionally structured companies, outperforming the market during the downturn and demonstrating a lower risk of business failure.


The report, ‘Model Growth: Do employee-owned businesses deliver sustainable performance?’ which was published in February 2010, indicated 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. Employee-owned firms also create new jobs more quickly and add more value to output and human capital than conventionally structured businesses, whilst demonstrating the same levels of profitability.


That said, it’s important to mention that whilst co-ownership works for JLP as a retail business, the business model is not a silver bullet – it will not solve all the social and economic problems of the public sector on its own and when working with the Employee Ownership Association we have been clear on some of the challenges and barriers they may face.


Q. What do you believe has been the most significant ingredient in making the John Lewis Partnership so successful and ensuring the delivery of better services?

Our success rests largely with how we engage our Partners. By giving Partners a stake in the business and the opportunity to have a say how it is run they will naturally want the business to do well and will be further engaged.  This can create powerful results in terms of productivity, motivation, staff retention, and staff satisfaction.

The John Lewis Partnership was founded in 1929, so we’ve had a lot of time to perfect our business model and smooth over any initial issues!  But we’re still learning!

Q. What is necessary to ensure a co-operative organisation is successful?

Essentially, co-ownership relies on staff having apowerful sense of ownership of their business.  Which can result in greater loyalty towards the company and contribute to ensuring the smooth running of the business or organisation. It is very much a case of ‘you reap what you sow’ in a co-ownership business

However, whilst a business will reap the rewards of co-ownership in the long term, it’s important to note that the business model is not the easiest option for a business to take in the short term. It is for this reason that the Pathfinder Mutuals initiative has been set up in order to support businesses whilst they transfer to the co-ownership model.

Employee-owned companies do sometimes have difficulties obtaining favourable financing from institutions that are more accustomed to dealing with listed companies. They also face more regulatory and policy challenges than businesses with other ownership structures. However, while these initial barriers may be frustrating, the benefits of a co-ownership model far outweigh the negatives.

When John Spedan Lewis, the founder of the Partnership, first took control of the Peter Jones department store in London, he instituted shorter hours, longer holidays, and a good dose of democracy. The store initially struggled financially. However, Spedan's bravery paid off as within five years he had converted an annual deficit of £8,000 to a profit of £20,000. The employee ownership model is not a quick win for companies and long term investment is needed, but its significant long term benefits, both for the company involved and the company’s employees, can revolutionise the way that we do business, ensuring greater business efficiency throughout the UK.

Q. What would you say to such Union Leaders as Tony Woodley who says there is "No appetite" from the public sector to participate or organise a co-operative?

From what we can see there does seem to be some  appetite for co-operatives within the public sector and beyond. And there are multiple businesses throughout the UK who have adopted a co-owned model, and who are now reaping the benefits. Companies such as ARUP, the UK based engineering firm, Loch Fyne Oysters, Parfetts, Aquascot and the Tullis Russell Paper Mill offer examples of international co-ownerships and co-owned SMEs.

Likewise, notable employee-owned and run organisations currently delivering public services include Central Surrey Health, Sunderland Home Care Associates, and Circle Health.


Q. What can staff gain from co-operatives and how can they encourage innovation?

Employee Ownership encourages staff to be engaged in the business and how it is run. This can lead to other performance, work fufilment and greater rewards. Innovation comes from knowing what success looks like and engaging the people who know what needs to be done to achieve it.



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Written by Charlie Mayfield   
Thursday, 24 March 2011 12:30
Last Updated on Thursday, 24 March 2011 13:03
 

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