John Lewis model should ‘suit you sir’

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John Lewis model should ‘suit you sir’

There is a growing clamour to see the John Lewis shared ownership business model replicated more widely across the UK, as last month Deputy Prime Minister Nick Clegg called for the creation of a ‘John Lewis economy’ in which employees are offered a greater stake in the firms they work for.  It is hard to deny the virtues of the model, which invests time, money, trust and power in its employees – in turn companies receive a highly motivated and productive workforce. And on a personal note I have certainly looked on with envy when my brother, a partner at John Lewis, has received a bonus worth between 15% and 20% of his annual wage at the end of every March for the last six years.
The model is best suited in the service industries, where particular value is based on the individual employees performances. However it does not represent a ‘fits all’ solution for all sectors. For example it won’t be suitable for high-risk, venture-based start-ups that rely on the capital-raising activities, or for technology and pharmaceutical companies that require immediate equity for research and development. Furthermore, established listed companies and small medium companies will find it very difficult to come up with the capital to allow their employees any form of shared ownership and are discouraged to do so by present tax regulations.  And this does not even take in account that key shareholders will be unmotivated to relinquish their shares and power in a profitable company.
One area of society that we may see the principles of the John Lewis model more quickly transcended, is into local politics. Lambeth, a Labour led council,  has labelled it self the ‘John Lewis’ Council,  after adopting the mission to get community members involved in running schools, housing and tackling crime.  The pilot scheme has led to the council having more tenant-managed housing estates than any other borough. It has also transferred assets to community control including Raleigh Hall in Brixton, and an abandoned school sports hall in Vauxhall that has become a community sports hub praised by Usain Bolt and Michael Jordan. If the pilot is deemed to be successful by key the powers above at the Labour party, it will be adopted in over 100 councils across the UK. Furthermore, when analysing the Collation’s planning reforms, implemented through the NPPF and the Localism Act, it is hard to miss the strong elements of the co-ownership model in ‘Neighbourhood Plans’ and the new powers given to communities through ‘Neighbourhood Development Orders’ and Community Right to Build Orders’.  In fact David Cameron’s ‘Big Society’ agenda’ is so underpinned by the principles of the John Lewis model it should perhaps be accompanied by the strapline – ‘never knowingly undersold’
It is really hard to argue against the benefits of the co-ownership model whether that be in businesses or local politics, and I believe we will slowly see it’s principles used more and more in society – currently co-ownership businesses (mutuals) only account for 3% of Britain’s GDP.  But whatever happens, John Lewis will always be seen as the pioneers and embodiment of the model and this will only continue to enhance their reputation as Britain’s favourite department store.

Andrew Todd, Account Executive

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