Outlook: The power of partnership

Outlook: The power of partnership

SO THE John Lewis Partnership has ruled out a Goldman-Sachs-style stock market flotation. This is hardly a surprise as it was never under serious consideration in the first place. That hasn't stopped the City running the sums. On a conservative valuation of around pounds 4bn, the partnership would be worth more than pounds 100,000 per employee on conversion. Tempting, eh?

John Lewis has a partnership history going back nearly 70 years and its "never knowingly undersold" department stores and Waitrose supermarkets have been one of Britain's great retail success stories. The difficulty is that this success is not in spite of its ownership structure, but because of it.

Take service. John Lewis staff are efficient and courteous because they know that a significant part of the group's profits is paid to employees in the annual partnership bonus. Costs are kept lower too. Light switches behind the scenes at the stores feature signs above them saying: "Switch off: you're burning my bonus." Staff are also not allowed to make personal telephone calls or use the photocopier for personal use without paying a standard tariff. Adherence to the rules is universal.

As law firms and accountancy practices have found, the private partnership can be an extremely efficient and powerful business model. Flogging John Lewis might bag a windfall for each member of staff. But would it be fair for them to profit from all the hard work of their predecessors. And is it really theirs to sell?