LONDON BRIEFING:THERE AREN'T many company bosses these days who can raise a cheer from their employees. But there were cheers and high fives all round last week as staff at the John Lewis Partnership greeted the announcement of their annual bonus.
On Wednesday morning, just before the doors were opened to shoppers, more than 1,000 staff – or “partners” as they prefer to be known – gathered at John Lewis’s flagship store on London’s Oxford Street to hear the bonus announcement. It was a scene repeated at its stores around the country, as managers opened envelopes revealing the payout.
Despite the impact of the recession on the group – its profits slumped by more than 25 per cent last year – some 69,000 of its staff have been rewarded with a windfall equivalent to almost seven weeks’ pay.
Although the size of the bonus fell well short of the previous year’s figure, which was equivalent to 10 weeks’ salary, there was genuine delight among the John Lewis workforce.
Everyone at the group – from the chairman to the canteen staff, from postroom workers to store managers – receives exactly the same percentage payout. The higher paid will obviously receive a larger amount, but the figure equates to the same proportion of salary for everyone.
As an employee-owned partnership, John Lewis is a very different beast from a publicly-quoted company. With no outside shareholders to make demands, and no share price to worry about, it can afford to take a much longer-term view of its business. It has the freedom to make decisions that would not be popular with investors, but which are in the best interests of the company and its employees.
The impact of the recession has forced the group to put some of its expansion plans on hold. It has had to abandon its previous target to open 10 stores in 10 years, although it is still optimistic that its store in the Dublin Central development on O’Connell Street, its first move outside the UK and due to open in 2013, will go ahead.
As the row over rewards for failure rumbles on, other companies, quoted or not, would do well to take a closer look at how John Lewis does these things.
The idea of a fair share for all would no doubt seem quite quaint in a banking boardroom, but the John Lewis model has much to recommend it – not only are all staff included in the bonus scheme, and on the same terms, but the payouts are made on profits that have actually been earned, rather than on future projections, invariably based on arcane and overly-complicated performance targets.
Thus, even in a difficult year, employees are still rewarded for their hard work. In terms of staff morale, the knock-on benefit on the business is invaluable – just ask the partners who cheered their bonus announcement last week. How many banking bosses could stand up in front of their staff these days and expect to raise anything other than a chorus of catcalls?
Goodwin pension scandal deepens
TALKING OF catcalls, there were yet more revelations yesterday on the lavish pension arrangements of Fred “the Shred” Goodwin, disgraced former chief executive of Royal Bank of Scotland (RBS).
Appearing before MPs at a treasury select committee hearing, City minister Lord Myners revealed that Goodwin has already cashed in some £3 million (€3.3 million) of his infamous £16 million pension pot – and that the 40 per cent tax due on the lump sum was generously funded by RBS, now owned by the UK taxpayer.
Myners, under fire for his role in the scandal, repeatedly denied that he himself has approved the lucrative retirement deal that has seen Goodwin start to draw his pension at the age of 50, rather than 60. Describing the £703,000-a-year pension as “outrageous”, he said he still hoped that Goodwin would return some of the pension or make a substantial donation to charity.
There was another revelation made by Myners, who disclosed that, when Goodwin joined the bank at the age of 40, he was treated for pension purposes as though he had been with the company since the age of 20. Fred “the Shred” did enough damage to the bank in the 10 years he was there – imagine the carnage if he really had joined at the age of 20.
Fiona Walsh writes for the Guardiannewspaper in London
