The John Lewis Partnership (JLP) is different; any number of news items or acade
ID: 327433 • Letter: T
Question
The John Lewis Partnership (JLP) is different; any number of news items or academic journal articles will confirm this. JLP operates 48 John Lewis stores across the United Kingdom, 34 of which are department stores selling everything from lingerie to elec trical goods. The partnership also includes 351 Waitrose supermarkets (a company purchased by JLP in 1937). However, it isn’t the number of stores, nor the retail offer ing that make this organization different, it is the 88,900 permanent staff who are the partners of JLP. With profits flowing to the partners and not the external sharehold ers, JLP is very different to most capitalist enterprises.
In 1864, John Spedan Lewis started trading on Oxford Street in London; however, it was not until 1929 that the John Lewis Partnership was established. John believed that business success should be balanced with the happiness of employees and that by
making them partners he was allowing employees to share the responsibility of owner ship as well as the rewards in the form of a share of the profits. These rewards have not been insubstantial, averaging 17 percent of average pay, since 1970, when cash bonuses started being paid.
The role of the partners is not limited to simply receiving a share of the part nership profits. The Partnership Council, a democratically elected body, looks after the partners’ interests. The Council has a say in how profits are spent, can influence matters such as pay and pensions, and directly elects five members of the Partner ship Board. There are mechanisms in place to ensure that this structure allows all partners across the business to have a voice. At a local level, elected partners work alongside managers to influence the running of the individual store. JLP also dis tributes a weekly in-house newspaper called the Gazette, which actively encourages partners to ask questions, with each question receiving a personal response from management.
So what is it like to work at JLP? In 2010, an article for The Guardian newspaper interviewed a number of JLP employees, both present and past. There was a real sense of connection and belonging, even amongst those who had retired. When asked why people stayed with the company twice as long as the industry average, one partner simply replied that if people weren’t happy, they had the responsibility and support to do something about it. Other partners referred to a willingness to make extra effort, specifically noting that motivation felt different. Perhaps the greatest praise for this system came from a partner who confirmed she would only begrudgingly move to another company if it offered her twice the salary!
While employee ownership is rare, JLP is not alone. They are members of the Employee Ownership Association (EOA), which represents U.K. organizations that are currently employee-wned or currently moving to this new form of ownership.According to EOA figures, the number of employee owned businesses in the United Kingdom is increasing by 10 percent per annum. In 2009, an independent report by the Demos think tank estimated that the employee-owned sector was worth £25 billion tothe U.K. economy and further development should be supported.In 2012, this grow ing belief in employee-ownership was further supported when the U.K. Deputy Prime Minister called for more companies to follow the JLP model, arguing that firms where staff had more of a stake were more innovative and had higher levels of productivity.
It is unlikely that the JLP model will totally replace the typical capitalist enterprise any time soon. However, the continued success of JLP and the general feeling that a business should be measured against more than share price could see employee-owned organizations becoming far more common in the future.
DISCUSSION QUESTIONS
17-17. Is there a link between the approach at the John Lewis partnership and the
earlier theories of motivation?
17-18. Considering the Goal-setting theory, how do you think this partnership
structure will affect the setting and achievement of challenging individual goals?
17-19. “Money is not a motivator.” Discuss this statement in light of the JLP case.
17-20. Do you think that this partnership approach will solve any of the problems
associated with the Equity theory? Why or why not?
17-21. What could be the potential drawbacks of this type of organizational
ownership?
Explanation / Answer
17-17 Yes. There is a link between the approach at John Lewis Partnership and the earlier theories of motivation. Every theory of motivation talks about connection, relatedness, clear vision, achievements and expectations. If we consider any of the theories of motivation (such as ERG theory, McClelland theory, Maslow’s theory or others) we can see that by making the employees as partners to the organization, John Lewis has motivated their employees intrinsically. They feel more related to the company through their part ownership, they share their visions, goals and align them with company, the success or failure of the company resonates with the employees and overall the employees receive prestige and motivation simply by working at the company.
17-18 Goal-setting theory states that when an employee have specific and practical goals, it motivates them. Goals should have clarity, challenge, commitment, feedback, and task complexity. However at the same time the goal should be specific, measurable, attainable, relevant, and time bound. If these factors are considered setting goals then it motivates employees and helps them perform better.
In this particular case, the part ownership of the company may create a few initial confusion as people may have different ideas about their personal goals and how it maps with the organization. However, in the longer run, with proper management, the goals of each employee can be aligned with the organization goal and create a greater motivating factor.
17-19 “Money is not a motivator”. The statement is not exactly correct. At the end of the day, everybody works for money. However, money provides an external motivation. In order for an employee or a team member to truly perform to his/her fullest potential, the organization cannot depend solely on an external motivator. It must also find a way to motivate employees intrinsically. This is achieved through providing a sense of belongingness, respect, responsibility, and achievement. The JLP case shows that. The partnership approach of JLP provided the employees with the above points apart from money. This in turn caused a strong connection between the organization and the people.
17-20 Adam’s equity theory calls for a balance between input by an employee and output they receive. The partnership makes the entire organization a collective force. While it may not change the results drastically, it will provide transparency to the employees. With a sense of ownership, they will put in more effort in to JLP. However, if the result is not favorable, then there will be less blame game than other organizations. This will improve the overall operation. In purely terms of result, it will not solve any other problem.
17-21 The potential drawback of this type of organizational ownership is that everyone has a voice. This means that decision making often becomes a time consuming process as the organization needs to listen to a lot of people and their concern. When an organization is run by top management, the decision making processes can be much quicker. As a result an organization such as JLP is more sluggish and may suffer in a dynamic industry/market.
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