Outlook: Disastrous to demutualise John Lewis

THE BUILDING society movement has been transformed by it. Even the AA and RAC are motoring down this path. So what price the John Lewis Partnership as the next candidate in the Great Demutualisation debate?

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.

u

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor