Retail success at John Lewis means staff bonus for all

Far from the astronomical incentives accorded to a select few at Britain's banks, clothes-to-food retailer John Lewis Partnership is paying all its staff an annual bonus worth 15 percent of their salaries, earning praise for its co-operative structure. From the chief executive right down to shop assistants at the group's high-end supermarket Waitrose and department store chain John Lewis, workers will share a bonus pot totalling £202.5 million ($336 million, 242 million euros) for 2013. About 91,000 staff are receiving the equivalent of about two months' extra pay after John Lewis Partnership (JLP), whose stores are popular with Britain's middle class, enjoyed a rise in pre-tax profits last year, putting more pressure on its struggling rival Marks & Spencer. Bryan Roberts, analyst at consultants Kantar Retail, said the co-operative or mutual structure at JLP, which sees the company owned by its workers, hands the group "a very real competitive advantage... helping with staff retention, customer service and employee morale". He told AFP: "On the downside, the structure has been accused of leading to a lack of dynamism and entrepreneurialism... but I think that point of view has been dispelled by the company’s out-performance, innovation and willingness to take tough commercial decisions" in recent years. It was a mixed showing for JLP in 2013, causing the group to reduce annual bonuses from 17 percent of salary a year earlier. Profit after tax fell 4.1 percent to £329.1 million. The group is meanwhile faced with a large shortfall in the fund that pays out pensions to its retired workers. Despite certain challenges, group chairman Charlie Mayfield recently said that 2013 had been another "good year for the Partnership". He added that "both Waitrose and John Lewis increased market share for the fifth consecutive year". The first John Lewis store opened in 1864 on Oxford Street -- London's main shopping thoroughfare -- while Waitrose joined the JLP structure in 1937. - Shareholder pressure absent -Analysts say John Lewis's structure frees it from the pressure that shareholders exert at its rivals. "The company's structure has allowed it to invest in long-term performance and apply a long-term vision by investing in store improvements and more efficient internet retailing solutions, without the added pressure from shareholders more focused on short-term profits," said Raphael Moreau of research group Euromonitor International This has been one reason for the company’s performance, with steady sales growth in a stagnant economy since 2009," he told AFP. Deputy Prime Minister Nick Clegg, whose Liberal Democrats are the junior partner in Britain's Conservative-led coalition government, has spoken on the need for more companies to mirror the JLP model. "Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors," he said two years ago. "In fact they often perform better. The 1980s was the decade of share ownership. I want this to be the decade of employee share ownership. We need more individuals to have a real stake in their firms, more of a John Lewis economy." - A tale of co-operatives - Since Clegg's appeal, the mutual model has also been in the headlines for the wrong reasons -- the supermarket-to-banking Co-operative Group has been riven by internal scandal. Its chief executive Euan Sutherland resigned this week after less than a year at the helm, blaming the failure to reform governance of the mutual that is owned by its 4.7 million customers. The resignation was sparked by leaked details of Sutherland's £3.5-million pay package for 2014. The Co-op's banking unit meanwhile came close to collapse last year after the lender was ordered by regulators to increase its capital cushion by £1.5 billion. The bank -- which prides itself on ethical investments -- was subsequently forced into a drastic restructuring that handed control to US hedge funds in order to plug the vast black hole. Co-op Bank slumped into further crisis last November after its former chairman Paul Flowers, a Methodist minister, was filmed allegedly arranging to buy illegal drugs.