John Lewis Model of People Management in Retail.

• John Lewis is an employee owned Retail company

• It is one of the largest retailers in the UK – sales of 11 bn pounds.

• The People management Model is based on the principle that “A happy, engaged workforce and a long term focus delivers shareholder value“.

• The proposition to employees is about outstanding leadership and training.   John Lewis believes that employees, will then deliver a customer satisfaction proposition, sufficiently differentiated as to create value.

How the partnership model works

• No external shareholders – the company is entirely financed through internal accruals and borrowing.

• Profits are either ploughed back into the business, or redistributed back to the employees.

• Everybody, gets the same percentage of profits irrespective of grade / level.

Laura Whyte, Personnel Director, John Lewis

Employees are “Partners” in the business.

The principles of the “Partnership Model”

Behaviours which epitomize the Partnership model.

• These have been articulated, crafted and adopted by Partners.

Developing a Leadership “Compass”

• Partners have created a Leadership “Compass” – Critical behaviors that are required by current and future leaders which recognize the conflicting tensions that they are expected to reconcile.

Leaders are expected to balance and maintain a ‘creative’ tension, while driving the business towards the goal.

Mechanisms that John Lewis uses for getting things done.

• Partners decide the final % of profits to be redistributed.

• Each week – two magazines are published in-house – a local,  store specific edition and a national one

• Any partner can write in anonymously – their manager must respond.

• No editing of the letters is permitted – unless the Chairman approves.

• Employee attitude surveys are used to gauge feedback – which must be implemented, if the it is the opinion of the majority of Partners.

–Response rates to these surveys are 88%.

On employee attitude surveys:  “If you are not prepared to change, don’t ask the question”.

Partners concerns can range from advertising to the environment

All concerns are carefully debated, considered and voted upon.

What happens when things get tough?

• Most retailers reacted to the 2009 recession classically – they cut inventory and head count.

• John Lewis decided to continue its approach of focussing on the long term.  “Let the profit takes its course” was the majority view of the Partners.

• In 2009 the company did not make money for 5 months.

• Saw the online space as an opportunity, increased SKU’s from 45,000 to 200,000.

Taking decisive action – the online story.

• Expect that by 2020 –Bricks and Clicks will be equal contributes to sales.

• Website / mobile enablement is key.  2013  – spend of 40 mio pounds on the website.

• Online success is about controlling supply chain – end to end:  building the second fully automated DC @ 750,000 sq feet to match its twin.

• A large segment of the online customer is young – 39% are less than 35 yrs old.   This is good news for a brand that has often been considered, “solid, stable, middle class” in the UK market.