John Lewis partnership- Is this the key to success?

Would you work for a company that made you a partner in their business? Where you had the right to voice your opinion on how the company was run and received a share of the profits at the end of the year? I know I would!

In a business, the managers have the job of creating shareholder value by focusing on profit maximisation to reward the shareholders for their investment in the company however, this does not always happen as sometimes the managers do not always put the interests of the shareholders first. Conversely, John Lewis have quite possibly come up with a genius idea, making their employees partners of the business so that they are the shareholders and they have a more hands on approach to how things are done. This partnership model gives employees part-ownership of the company, shares of annual profits and a say on how things are run. If someone was to give you a cash incentive to do something better and put your time and effort into doing it would you do it? I know for a fact that I would and I know a lot of other people would too.

Being given the power to voice your opinion on matters must make employees feel very empowered. In my opinion, I think this is possibly the key to a business’s success as it will increase staff morale, reduce staff turnover and increase the efficiency of the business. I believe that employees of John Lewis have to feel valued by this partnership as they are being rewarded and recognised for the time and effort they have put into the company. Moreover, staff are being rewarded in monetary form at the end of the year from the profits the business makes.

This partnership works the same for the Chairman of the company right down to the Saturday shelf stackers, they all receive the same pay-out and it has been reported that they receive about 17%, which is equivalent to nine weeks pay. In my opinion, this amount of incentive as a bonus at the end of the year is enough to encourage employees to work hard to achieve an efficient business, creating shareholder value.

So, the big question in the back of my mind is, does this partnership work? The answer to that would be yes, nearly a century they have been  working towards creating a different sort of company with 84,000 partners who own the two businesses – John Lewis and Waitrose. Achieving an annual profit of £11 billion which has been created by their success and is shared between all 84,000 partners. I feel that this business model has added a great deal of value to both the business and its shareholders and it clearly proves to be working successfully.

With this in mind, where can I apply?