1998 - Employee trusts
Supposing the chairman of your
company gathered his top team around him and questioned
whether management success could be rated beyond
the usual financial measures. Supposing he asked
them to focus on employee happiness. How would
your management react?
According to Sir Stuart Hampson,
chairman of the John Lewis Partnership, the department
store and supermarket group, his fellow directors
warmed to the idea and their weekly meeting to
discuss their progress became known as the "happy
The company remains closely aligned
to the aspirations of Spedan Lewis, the son of
its founder, who outlined its corporate aims in
what today would be called a mission statement.
"The partnership's supreme purpose,"
he wrote, "is to secure the fairest possible
sharing by all its members of the advantages of
ownership - gain, knowledge and power; that is
to say, their happiness in the broadest sense
of the word so far as happiness depends upon gainful
"How many mission statements
use the word 'happiness'?" asked Sir Stewart
last week at a London conference on leadership
run jointly by the Centre for Leadership Studies
at Exeter University, John Potter International
and Core Events.
"We are in this role for
the long term and I'm absolutely convinced that
the only way to sustain success is to have a company
with a happy workforce. Do they come in just for
their pay or do they come to work because they
identify with the business?" he said.
Spedan Lewis began his experiment
in employee power-sharing during the early part
of this century. After setting up a staff council,
a committee for communication and a staff journal,
he began sharing profits with employees. Thirty
years later he made the ultimate gesture of anyone
privileged enough to have run and owned a business,
transferring his rights of ownership to trustees.
Thus employees, who call themselves
partners, enjoy a relationship with their management
that is difficult to match in other companies.
How many companies run a staff
magazine allowing employees to comment anonymously
on management decisions within the bounds of the
libel laws? Just occasionally there is a need
to edit out confidential commercial information.
This is because the company opens its books to
scrutiny by any of its 36,000 employees.
Then there are the staff benefits.
The company has three golf courses and five ocean-going
yachts. Membership of the company sailing club
costs £1 a year and a day's sailing at the
weekend costs £13.
It has holiday accommodation
in the Lake District, on Brownsea Island, and
a camp site on its 3,000-acre Hampshire estate,
which also includes a stretch of the River Test,
one of England's finest chalk streams for those
employees who enjoy fishing. Employees can buy
half-price tickets for the theatre through the
company and this year the partnership has leased
two out-of-season weeks on Lundy Island from the
Landmark Trust for staff holidays. The subsidised
prices range from £12 to £66 per person
for the week.
There are 20 company-based special
interest clubs, covering such pastimes as skiing,
riding, pottery, gliding, drama, photography and
gardening. Not only that, if you make it through
five years with the company, your job is as about
secure as any job can be.
So what's the catch? There is
no catch. This is not a trendy company. It does
not believe in management by committee. There
is a hierarchy and some are paid much better than
others. Profit bonuses are shared out on the same
percentage of basic salary.
John Lewis is not the only employee-owned
business in the UK. A similar trust was set up
at Baxi-Boilers in Preston when Philip Baxendale
passed over his shareholding. Tullis Russell,
the Scottish paper milling company, also has many
similar features of employee involvement. Shares
in Tullis Russell were bought from family owners
in a complex purchase scheme designed to transfer
ownership to employees.
It is not just the ownership
structure of these companies that is different.
Their whole culture is different, reflecting a
tacit understanding by management that the employees
are integral to the business.
Spedan Lewis died somewhat embittered
that his ideas did not catch on across industry.
Perhaps they were ahead of their time. Tax breaks
are available in the US for those wishing to transfer
their shareholdings to employees.
But the movement needs some greater
incentive or encouragement if genuine employee
ownership is to become more widespread. Surely
a system that shares profits among everyone who
worked to create them is a more acceptable face
of capitalism than that which is engineered by
remote owners whose only concern is with a management's
ability to squeeze out maximum profits year after
year before they sell their shares to the highest
© 1998 Financial Times.
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