The boss of John Lewis will face a confidence vote by staff members on Wednesday as the business considers the option of bringing in outside investment in a change that could threaten the decades-old employee-owned model.
Chairman Sharon White is considering radical ways to bring in up to £2bn to help secure the future of the John Lewis Partnership, including diversifying into building flats for rent above shops, after reporting hefty losses from its chain of department stores and Waitrose supermarkets.
On Wednesday, the former top civil servant, who left the public sector to join the retailer three years ago, will give an update to the 61 members of the John Lewis Partnership council. A governing body made up of shop floor staff elected by the company’s workers, the council is gathering for a two-day meeting at the retailer’s own Odney Club holiday retreat in Berkshire.
View image in fullscreenChairman Sharon White believes stores are no longer profitable enough to pay a regular bonus to employees. Photograph: Terry Murden/Alamy
The meeting, called a holding to account session, takes place shortly after each of the two half-yearly financial reports and is part of the group’s constitution.
The debate is followed by two votes – one on whether the council has confidence in the progress of the partnership under the chairman’s leadership over the past year, and the other on whether it can support the chairman to take the business forward. Members can answer from strongly agree to strongly disagree.
The votes are symbolic rather than binding; however, they can be influential as the business is owned by its staff and the council has the power to oust the chairman at any time if members see fit.
The council members represent the interests of the group’s 74,000 workers, passed to them via dozens of smaller forums representing the two retail brands in different areas of the country.
Chris Earnshaw, president of the partnership council, said: “Since 1919, the chairman has held sessions with our council to reflect on the performance of the partnership. This is a routine part of our democratic process.”
The partnership has been owned by its employees since the 1920s, meaning they have a democratic say in how things are run and receive an annual bonus based on profits. It is a setup credited with motivating staff and helping it become a stalwart of the British high street.
John Lewis’s first council was set up in 1919. Today it remains influential with three staff members elected by the council sitting on the partnership’s board alongside executive directors including the boss of John Lewis’s department stores and its Waitrose supermarket chain helping to form its strategy. These three people also sit on the council, but do not take part in the vote on strategy.
Retail expert Mary Portas recently wrote to White urging caution, saying the company needed to protect its soul, and telling White “you’re fighting to save part of our collective cultural identity”.
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Andy Street, the West Midlands mayor who was the managing director of John Lewis’s department stores from 2007 to 2016, has said “it would be a tragedy” if the staff-owned model were to be ditched.
On Tuesday, Bill Grimsey, the former Wickes boss behind several reports on how to revive the UK’s high streets, wrote on Twitter: “If John Lewis don’t wake up and realise that it has lost its way under Dame Sharon White it will go from very bad to appalling. She needs to focus on the core objective of a class retailer that is Customer satisfaction at a profit!”
However, White believes the group’s retail arm can no longer sustain the profit levels needed to pay a regular bonus to employees . She wants capital to expand into financial services and build to rent above Waitrose stores.
Last year, the group slid £234m into the red despite £12bn of sales forcing it to scrap its staff bonus this year for only the second time since 1953.
Retail experts have said White would be better spending cash on revitalising the existing core retail business. They have also questioned the recent appointment as chief executive of the former Hovis boss Nish Kankiwala – a private equity expert who has never run a British high street shop who was previously on the non-executive board.
