Outlook: Disastrous to demutualise John Lewis
Saturday 07 August 1999
The issue has been around before, of course, but this time it looks a little more serious. Many of the partnership's 39,000 staff who collectively own the department store and Waitrose supermarket group, are getting restless, prompted by the management's decision to re-write the partnership's constitution which was first drafted in 1929.
The letters pages in the staff newsletter have been full of the subject. "Give us our loot," is the thrust of many of the comments, though others do argue for the status quo.
It is not hard to see the motivation. City analysts put the value of John Lewis at around pounds 3.9bn. That equates to a pounds 100,000 windfall for each employee, a tidy sum for a shop girl in ladies hosiery.
But would it change anything? There is little doubt that John Lewis must adapt. The stores' unwillingness to take credit cards and their short opening hours (the department stores all close on Sundays and Mondays) conveys the impression that the outlets are there for the benefit of staff rather than customers. Several branches have started to look tired and run-down. The last set of results showed a 17 per cent profit fall and the next figures in September will be grim too. There are alarming parallels with Marks & Spencer, another once great name that failed to notice that the world had changed.
John Lewis is aware it must sharpen up its act but demutualising this retail institution is not the answer.
There is the obvious question as to whether it is right that the current crop of workers should plunder the heritage of their forebears and rob their successors of the privilege of ownership.
More seriously, a break-up would require an act of parliament to change the trust set up by the founder Spendan Lewis, who bequeathed the business to future workers. It would be the equivalent of changing a man's will.
Thirdly, demutualisation would surely strip away some of the many quirks that make John Lewis special. This is a company which owns farms and holiday centres where its staff can go on holiday. It operates a "Committee for Claims" which helps staff who hit financial trouble. And after five years employment, partners receive a letter stating that all, things being equal, they will have a job at John Lewis for the rest of their working life. Sell or float this company and all this would be asset stripped away without a second thought.
The final point is that John Lewis' key strength is the quality of its service which comes directly from the self-interest of collective ownership. Sell the company and the buyer might find the business immediately devalued.
Of course, the board may find that if a sizeable number of workers remain firmly fixed on paying off the mortgage in one go, it could become counter- productive for the directors to stand in the way. But it would be a terrible mistake.
educationTo mark International Women's Day, Sarah Brown on how charities have brought proper joined-up thinking to the delivery of education
South African rhino finally put down after roaming Kruger park for days with horn hacked off and bullet in brain
Lammily: Barbie-like doll hits Kickstarter fundraising target in a day
Belle Knox: How a porn star student from Duke University became bigger than Justin Bieber
Oscar Pistorius trial: Neighbour feared South African athlete would use gun that killed his girlfriend Reeva Steenkamp to shoot himself
Top 10 most expensive cities in the world: Singapore named costliest place to live – but what about London?
Apple's Tim Cook: Business isn’t just about making profit
Thousands of young people forced to go without food after benefits wrongly stopped under 'draconian' new sanctions regime
Ukraine crisis: New navy chief 'defects' and surrenders Crimean HQ as Putin claims ultranationalists forced intervention
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
- 1 The future of sex: The first female condoms were derided, mistrusted and shunned - but will their modern counterparts catch on?
- 2 South African rhino finally put down after roaming Kruger park for days with horn hacked off and bullet in brain
- 3 Study suggests that 'gaydars' are real - at least for women
- 4 Man stabbed with Legend of Zelda Master Sword in serious condition
- 5 First clip of Outkast's Andre 3000 in Jimi Hendrix biopic All Is By My Side emerges
iJobs Money & Business
£1200 per month: Inspiring Interns: Our client is one of Europes leading mobi...
£18000 - £19000 per annum: Inspiring Interns: Our client is the UKs leading i...
£30000 - £45000 per annum: Inspiring Interns: A (non-bank) fast-growing intern...
£40000 - £80000 per annum + Very Compeititve Salary: Austen Lloyd: Corporate F...