A family legacy

By Matthew Gwyther

The John Lewis Partnership began life as a family business with the opening of a draper’s store on London’s Oxford Street in 1864. The first day’s take was sixteen shillings and fourpence.

Today it is one of the UK’s top ten retail businesses with 28 department stores and 219 Waitrose supermarkets. It turned over £8.2 billion in 2010 on which it made a pre-tax profit of £367 million. No longer a family operation in the true sense of the word, its 72,500 Partners (what others call employees) hold a unique place in British society because they own the business.

The JLP is wildly popular and is jealous of a peerless reputation. When Verdict Research performs consumer polls of the UK’s most popular retailers, John Lewis consistently comes top. When the BBC ran a poll a few years back to find Britain's greatest business leader, Spedan Lewis, the son of the company’s founder, was the winner beating Andrew Carnegie, Joseph Rowntree, William Lever and Arnold Weinstock.

This most remarkable experiment in “industrial democracy” came about because of a family schism. Spedan was a headstrong handful and fell out badly with his father who was deeply sceptical about his son’s placing the “happiness” of his employees firmly at the centre of his mind. He offered shortened working days, the setting up of a staff committee and a third week's paid holiday – unheard of in the retail trade at this time.

To get the prodigal son out of his hair John Senior palmed him off with the Peter Jones department store and when the old boy died and Spedan inherited the whole show, he promptly gave it all away to its employees on the eve of the Great Depression in 1929.

Spedan died in 1963 and the official memoir hardback published in 1985 to mark the centenary of his birth includes the following, “we ought to be able to admit that he was vain and cantankerous, and it would not be hard to demonstrate that he was intolerant and sometimes cruel in the intellectual arrogance with which he treated individuals who were his mental inferiors. In some ways he was a humbug and he certainly sacrificed his family to his dream of partnership.” That’s gratitude for you.

We’re accustomed to philanthropy among wealthy business people these days: Bill Gates has donated hundreds of millions to medical research in the developing World; Warren Buffett has said he is not going to take it with him and neither are his kids. But Spedan Lewis’s act of generosity, however, had a hard-headed business motive behind it – to make his organisation more effective by ensuring engagement and commitment from his staff or “partners,” as they are known.

It worked. The JLP regards itself as a cut above. It is a very proud, bourgeois organisation, like Radio 4 or the National Trust: solid, respectable, dependable. Not glitzy. It is “Never Knowingly Undersold,” a Spedan concept created in 1925. It all contributes to the cultish feel of the organisation. They are like one enormous family complete with the squabbling, bickering that such a close-knit unit involves

Sceptics look on them like some sort of soft, hippy co-op. The current Chairman Charlie Mayfield, ex-British Army and McKinsey consultant begged to differ when I met him recently.

He said: “Our constitution is most definitely not a philanthropic idea. It’s a commercial idea. A competitive idea. It’s our competitive advantage. It’s not political, it’s about engaging people. We create a culture of ownership and people feel valued. So they perform better. That is a very powerful performance lever.”