John Lewis Partnership Executive
This report previously gives a short introduction to John Lewis Partnership. It addresses a brief description of issues identified in the case study. And then, it discusses the structure and culture at John Lewis Partnership. It is focused on the similarities and differences between the Co-operatives and John Lewis Partnership. Subsequently, the report evaluates unique management style of John Lewis Company whereby it overcomes economic downturn. Thereafter, it discusses core values for John Lewis Partnership and methods they use to motivate and retain staff.
As a conclusion, John Lewis Partnership has a unique business pattern that all of the members are partners and get rewarded from shares of profits. It conducts and maintains a fair, open, and democracy culture to retain its staff. There are similarities and differences between the Co-operative and John Lewis Partnership, in accordance with organizational structure and culture. John Lewis Partnership conducts competitive strategies to meet the needs of stakeholders and staff. Finally, partnership model is a type of business entity. It does not perfectly fit Public Sector organizations. However, if public sector workers could earn partnership bonus, they might change their attitude to work better. Such business model could be introduced to public sector institutions.
Table of Contents
John Lewis Partnership has more than 70,000 permanent employees as its partners. They own 29 John Lewis shops, 228 Waitrose supermarkets, an online and catalogue business of johnlewis.com, a direct services company of Greenbee, a production unit and a farm, call a turnover of nearly £7.4 billion in 2009 (John Lewis Partnership, 2010). John Lewis Partnership is a unique and successful approach to doing business. It has created a different pattern of business. It is owned by many partners who are devoted to serving customers fairly. The purpose of John Lewis Partnership is to satisfy customers via the happiness of employees, maintaining and developing a successful business (John Lewis Partnership, 2010). This report is going to address that whether the business model of John Lewis is fitted with institutions in Public Sectors, associated with main reasons. It will be evaluated by whether the workers in public sectors should be motivated by shares of profits. Meanwhile, it discusses whether or not John Lewis Partnership model could be introduced to public sector institutions.
2.0 Unique business model of John Lewis Partnership
This part discusses the unique business model of the John Lewis Partnership. It breaks down into two parts: structure and culture at the John Lewis Partnership and similarities and differences between the Co-operative and the John Lewis Partnership.
2.1 Structure and culture at John Lewis Partnership
Employees are partners in the John Lewis Partnership. And they have powers and opportunities to influence the business about many issues. For the Partnership Council, 80% of the 82 representatives were elected by the partners. Others are appointed by the chairman. It takes responsibility for non-commercial aspects of the business, such as social activities and charitable actions. The partnership board is formed of five directors which are elected by the Partnership Council and, another five are elected by the chairman. This organizational structure ensures that partners have a channel to give suggestions to the management (John Lewis Partnership, 2010). Moreover, under the organization of partnership, partners benefit from other programs, such as pension scheme and annual bonus. Other High Street retailers do not have such organizational arrangements.
John Lewis Partnership considers itself as a special place to work in. The distinctive culture, which is different from other High Street retailers, lies at the heart of this kind of idea (John Lewis Partnership, 2010). The culture of John Lewis Partnership can be stated as democracy, openness, fairness and transparency. Profits and values are shared with members in the organization. Each employee has a great sense of pride in belonging to John Lewis Partnership. The organization maintains and develops continuous relationship with customers, suppliers, and other employees. Business activities are based on honesty, respect, and encouragement. All of these make John Lewis Partnership different from other High Street retailers. And then, there is no shareholder partnership. Therefore, objectives differ in accordance with particular cases.
2.2 Similarities and differences between the Co-operative and John Lewis Partnership
Co-operative and John Lewis Partnership are both owned by their members. The employees are rewarded with the share of profits. It is based on how much they contribute to the organizations and how much profits they create during the past year. Meanwhile, the two companies’ core values involve quality, openness, honesty, and responsibility. Each of these means successful business activities by Co-operative and John Lewis Partnership. And then, members within the two organizations have efficient channels to give their suggestions and opinions to the management. It helps both the organizations and themselves (Co-Operative, 2010).
Organizational structures are different between Co-operative and John Lewis Partnership. The Co-Operative is a unique business democratically run by members (Co-Operative, 2010). Employees devote their strength and commitment to meeting organizational needs and, in turn they are rewarded with shares of profits. However, Co-Operative does not have councils elected by partners such as John Lewis Partnership has done. Non-commercial activities, such as social activities and charitable actions, are conducted directly by its members. Moreover, John Lewis Partnership has a partnership board, dealing with daily affairs and adopting members’ suggestions. Most importantly, members are not only employees as other companies.
3.0 Latest performance on John Lewis Partnership
John Lewis Partnership had made significant gross sales of £7,421.5 million from Jan 2009 to Jan 2010, which was £454 million higher than previous fiscal year. Revenue was £6,734.6 million with a gross profit of £2,274.2 million. Deducing partnership bonus, the company called a profit before tax of £155.3 million. Finally, profit for the year to Jan 2010 was £106.5 million (John Lewis Partnership/ Financials, 2010).
For John Lewis Partnership, the economic downturn only brought about temporary adverse effects. From its long-time successful management, the company created significant profits and currently has a strong ability to deal with financial risks. From 2008 to 2009, John Lewis Partnership cut partner bonuses to £125.5 million, which fell sharply from £181.1 million in previous year. In doing this, John Lewis Partnership could retain more profit for future businesses. Meanwhile, John Lewis Partnership maintained and developed management skills to establish relationships with customers and suppliers. Moreover, they developed and provided new products and services in extensive potential markets. Therefore, John Lewis Partnership has managed to defy the economic downturn
Fig 1, financial performance on John Lewis Partnership
Source: John Lewis Partnership Annual Report
The group’s financial performance segments have been identified as John Lewis, Waitrose and Corporate and other. Waitrose helped significantly support John Lewis Partnership in the last year. Waitrose had made significant gross sales of £4,532.3 million from Jan 2009 to Jan 2010, which was much higher than last year. Revenue was £4,317.2 million with a operating profit of £268.4 million. The company called a profit after tax of £155.3 million, for there was no partnership bonus and taxation. To the year 2010, Waitrose has contributed greatly to John Lewis Partnership’s success(John Lewis Partnership, 2010).
Fig 2, financial performance of Waitrose in 2010
Source: John Lewis Partnership Annual Report
4.0 Competitive strategies to meet the needs of stakeholders and staff
This part addresses John Lewis Partnership’s competitive strategies to meet the needs of stakeholders and staff. They include core values, how to satisfy the needs of main stakeholders and methods to motivate and retain staff.
4.1 John Lewis Partnership’s core values
The constitution of John Lewis Partnership states that the trustee of the Settlements is John Lewis Partnership Trust Limited. The Chairman is the Partnership’s Chairman. Other directors are the Deputy Chairman. Three Partners are elected every year by the Partnership Council as Trustees of the Constitution. Such arrangement aims to outline what expectations the company has for its partners (John Lewis Partnership, 2010). The principles of the John Lewis Partnership are described as Purpose, Power, Profit and Members. They are necessary for the cooperative ownership and company development. John Lewis Partnership’s core values are defined as co-operative values and ethical values. For co-operative values, they help people to help themselves as self-help. They take responsibility for their actions as self-responsibility. Meanwhile, they establish channels for members’ suggestions, which is democracy. Moreover, they do business fairly and unbiased as equality. For ethical values, members are encouraged to be honest about what they do as honesty and openness (Street and Harrison, 2006). Afterward, members take responsibility for their own communities and work together as social responsibility. Subsequently, they do social activities and charitable actions from profits of their businesses as caring for others (Guidi, Hillier and Tarbert, 2010).
4.2 How they satisfy the needs of main stakeholders
Annually, John Lewis Partnership provides information about financial statements and business activities to members. It ensures that member within the organization have fully grasp the company’s current situation. In order to protect interests of the Partnership’s members, the company conducts the independence of external auditor, which plays a role as an outsider. External auditor has no interests or any other benefit relationships form the company. It is a good way to ensure the objective and realistic auditing results. Meanwhile, Audit and Risk Committee examines the cost and nature of all non-audit activities performed by the external auditor (Husband, 2007). It makes supplemented functions for external auditor. In doing this, the company’s auditing work would be conducted efficiently and effectively. And then, John Lewis Partnership offers favorable partnership bonus. Every year, members in the company are invited to renew their authority at the annual general meeting and they have preferences to subscribe new stocks. The members with significant contributions are rewarded with great shares of profits and get considerable partnership bonus (John Lewis Partnership, 2010).
4.3 Methods to motivate and retain staff
In accordance with the motivation theory by Boddy, both intrinsic and extrinsic rewards are valued by people. For the extrinsic rewards, every employee is considered as a partner and they have opportunities to influence business activities via certain approaches. Meanwhile, special channels are established for employees to give their suggestion. In doing this, they are motivated to join in current issues about management. Subsequently, members are partners and they get benefit pension scheme and annual bonus. Afterwards, John Lewis Partnership constructs an open, fair and friendly environment to retain staff (Reynolds, 2005). For the intrinsic rewards, the company provides considerable partnership bonus for exceptionally meritorious members.
5.0 Discussion on partnership model for Public Sector organizations
Partnership is a type of business entity within which partners share profits or losses of doing business. Generally, this structure does not trigger taxation on profits before they are distributed to the partners (Reynolds, 2005). Partners are often exposed to great personal liability. Public sector organizations deal with production, delivery, and allocation of goods and services for government and people. Generally, they are not mainly motivated by profits. Activities range from social security, urban planning, and national defenses. Therefore, Public Sector organizations do not need partnership model to generate and share profits. However, if public sector workers could earn partnership bonus, they might change their attitude to work better. Such business model could be introduced to public sector institutions.
In conclusion, John Lewis Partnership has a unique business model. All of the members are partners and get rewarded from shares of profits. It conducts and maintains a fair, open, and democratic culture to retain its staff. There are similarities and differences between the Co-operative and John Lewis Partnership, in the area of organizational structure and culture. John Lewis Partnership has good financial performance to the year 2010. It was successful to defy economic crisis in 2008. Meanwhile, John Lewis Partnership conducts competitive strategies to meet the needs of stakeholders and staff. It meets the needs of members and is capable to motivate its staff. Finally, partnership model is a type of business entity. It does not fit Public Sector organizations.