On 7 March 2012, the John Lewis Partnership announced its annual bonus for staff of 14% of salary, a decrease from the 18% 2010 bonus. This was greeted with doom-laden headlines from supposedly informed business journalists about slashing bonuses.
This in spite of the fact that in the face of the worst economic conditions for decades the business is able to award a bonus of seven weeks’ wages to all staff, rather than paying massively excessive amounts to directors while other employees look on in amazement.
The fact is that most UK employees would be delighted to receive such a substantial bonus, especially if they were properly informed about the company that they own. In the grocery sector, we have excellent examples of employee-owned companies in Waitrose and Palmer & Harvey, as well as our company, Parfetts, and suppliers such as Wilkin & Sons. We at Parfetts are a long way from emulating John Lewis, but are nevertheless delighted at its success and the example it sets.
Away from grocery, there are many other great examples of employee ownership such as Tullis Russell, School Trends, Circle Health and others, in both the private sector and increasingly in public sector spin-outs. I am therefore delighted to report that the chairman of our company ownership trust, Graeme Nuttall, has been appointed by the government as their adviser on employee ownership.
Employee ownership is not some sort of socialist enterprise run by committee. It is a company run with all the challenges and constraints of a commercial business, but a fairer recognition of the contribution made by all concerned. Employee ownership is a real and effective alternative structure, which has the ability to take a long-term view of the right strategy for success.
It will always be subject to the constraints of commercial success faced by any other model but does achieve consistently higher levels of communication, engagement and reward than traditional models. This requires the enthusiastic commitment and alignment of management, but studies here and abroad demonstrate impressive results in comparison with traditional models, as shown by John Lewis.
At Parfetts, we are at the beginning of the journey down this route, but I firmly believe this model has the potential to contribute to a new era of responsible capitalism and sustainable economic growth. I am delighted that both coalition parties have recognised this potential and shown a real willingness to listen to the case for this innovative and increasingly successful and recognised model.