Laura Whyte surely has one of the nicest jobs in HR. As personnel director of John Lewis department stores, she is working for a company that holds operating for the benefit of staff as one of its founding principles.

The John Lewis Partnership, a group that combines the department stores, Waitrose supermarkets and a number of smaller businesses, is 100 per cent owned by its employees (who are known as partners) and is therefore spared the short-term share price chasing, or job-slashing, of some of its rivals. It’s a company where every partner – from a part-time sales assistant to the chairman Charlie Mayfield – gets the same annual bonus (13 per cent of salary for 2008) from profits. A company voted Britain’s best retailer for six of the past 10 years, with the status of a national institution – a national treasure, even. And, as if all that weren’t enough, Whyte can pretend that shopping is really work.

“Oh, you can’t work in retail if you don’t love shopping,” she says. She then launches into a loving exposition of the pleasure of seeing, feeling and smelling “product” and confirms that, having worked for the partnership for 27 years, her house is furnished largely from John Lewis. “The thing is, with the partners’ discount [25 per cent at John Lewis and 12 per cent at Waitrose], you’d have to really want something from somewhere else, to buy it.”

Yet shopping aside, Whyte’s job is not without its challenges. There are the usual HR headaches faced by any retail business – ensuring you have the right people in place to stay competitive, for example – plus issues that are more particular. While the partnership model has undoubtedly contributed to John Lewis’s reputation for exceptional service, it has downsides. It can be hard, for example, to keep partners motivated, since many stay a long time and promotion prospects are limited by the lack of movement. Another challenge is ensuring partners don’t become jaded by a sense of entitlement as a result of an employment package that includes subsidised theatre tickets, education grants and extended leave for long service. But above all, the people challenge is making sure the partnership retains its unique culture, despite ambitious growth plans.

Right now, of course, growth is severely hampered. The collapse in the property market means developers have put new shopping centre projects on hold, so department store openings planned in Portsmouth and Oxford have little prospect of coming to fruition soon. Trading conditions are tough for the partnership as a whole, which employs 69,000 people. In 2008, profits were £324 million – 18 per cent down on the previous year.

The retail division (meaning the department stores; Waitrose is known as the supermarket division) is in the middle of a three-year restructuring programme that involves closing an old distribution facility in Stevenage, opening a new one in Milton Keynes, and shifting hundreds of staff away from back-office and into customer-facing roles. Although several hundred posts will disappear in the process, John Lewis hopes to redeploy all the partners who want to stay.

September sees the opening of a 280,000 sq ft department store in Cardiff and another full-scale department store will open in the Olympic Village in Stratford, London, in 2011. On top of that, John Lewis and Waitrose are looking at smaller format stores as a way to keep growing. In May the supermarket chain announced that it was opening an outlet in a Welcome Break service station, while John Lewis is piloting a 45,000 sq ft home store in Poole this autumn, in premises previously occupied by the (now insolvent) furniture shop, Courts.

The idea of a Waitrose in a motorway service station took some thinking through, says Tracey Killen, personnel director of the John Lewis Partnership. Employees there will be partners like any other, despite the fact that they will be operating out of someone else’s premises. “We have a unique legacy and the contractual arrangements with partners and the partner experience matters to us,” says Killen, who has been with the organisation since 1982, after her A-levels.

Whyte too talks a lot about the company’s heritage. She peppers her conversation with references to “Spedan” – founder John Spedan Lewis – speaking his name with a familiarity that makes you think he might have left the organisation just a few years back. “You can’t understand the culture of John Lewis without understanding its roots and what Spedan did,” she says.

She’s in a good position to know, having started her career at John Lewis in a division called “the registry”, a Spedan invention. As the group grew in the 1930s, the registry was created as an independent function within each store to keep a record of key facts and decisions about sales, complaints, staffing and pay. Every store still has a registry today, independent of local management. It runs the employee assistance programme, which is where Whyte started as a graduate in 1982. More importantly, it is the body overseeing the staff representation arrangements that form a key part of the partnership model and which encourage partners to use their voice effectively.

One of the luxuries of employee ownership is stability, and the ability of the group to think long term. In its 80-year history, the John Lewis Partnership has had only five chairmen. Of the 11 executive members of the Partnership Board (equivalent to a PLC board), nine joined in the 1980s or 1990s “There’s value in continuity,” says Whyte. “When we look at the leadership team, most have traded through two recessions.”

The downside of such longevity, however, is a potential for insularity. But both Charlie Mayfield and the finance director are relative newcomers. “We have to make a conscious effort to refresh ourselves,” Whyte says. “Otherwise you can become too inward looking.”

A related challenge is ensuring that partners don’t take their package for granted. “When people first join they think, ‘Wow, I can go sailing on a partnership yacht!’, and they think it’s fantastic. But when you’ve had the benefits for a while, you can get complacent,” Whyte says. To counter this, her department puts a lot of effort into communicating the full array of what’s on offer. It is now looking at introducing a “partnership statement”, the equivalent of a total reward statement that would spell out the full value of the package each partner had enjoyed. There has also been more effort to articulate and communicate the values of the partnership internally and to measure employee engagement and satisfaction.

Yet partnership still isn’t ideal for everyone. Although turnover is below industry norms, it is still around 17-20 per cent, says Whyte, and 28 per cent of partners have joined within the past four years. “For some it doesn’t suit because they want commission, for example, or more rapid promotion than we are able to offer. If you are young and ambitious, you might be tempted away,” she says. “That’s why expansion is so important to us – all the senior managers and about half the departmental managers for the new store in Cardiff will be internal appointments.”

Whyte knows the frustration of needing a change. After five years in the registry when she first joined John Lewis, she was advised to progress her career with a stint on the shopfloor. She spent six years in departments including stationery and fashion accessories (“I have a very good scarf collection”) and clearly loved it. The experience was also useful for her return to personnel, where she rose up the ranks in registry positions before becoming personnel director of John Lewis in November 2008.

“That understanding of leadership at grassroots level is something you can only have if you’ve done it,” she says.

She still enjoys the odd day on the shopfloor. Last Christmas, urged on by the need to save costs in the downturn, head office staff spent a total 3,000 days in shop sales roles. Whyte did four days at Oxford Street and Brent Cross in London and High Wycombe, including selling towels in the post-Christmas sales – the nearest thing to a bunfight you’ll find in the genteel environment of a John Lewis store.

The exercise had several benefits. One concrete example was that head office staff experienced the inefficiencies in a certain type of refund that they were then able to re-model. “It’s probably something that people in head office did know about, but they didn’t understand the impact,” Whyte explains.

For Whyte, with her love of the shopfloor, the exercise was a reminder of what’s important. “You come away with a renewed respect for shopfloor partners. You can get quite intellectual in a head-office function, when really retail is quite simple: focus on the customer and think on your feet.”

Partnership principles
John Spedan Lewis, born in 1885, was an entrepreneur with a social conscience. His father owned two London stores, Peter Jones on Sloane Square and John Lewis on Oxford Street. But Spedan was troubled by the fact that he and his father earned more money than all their employees put together.

Spedan created a profit-share scheme and a staff representative council at Peter Jones in 1920, and eventually formed an irrevocable trust, handing full ownership of the business to serving employees.

In a speech that reflects many of today’s concerns about inequality, executive pay and money management, he talked about setting limits to the rewards for financial risk-taking and achieving a fairer distribution of profits between employers and staff. “Differences in reward must be large enough to induce people to do their best, but the present differences are much too great,” he told the BBC in 1957.

The partnership has extensive arrangements to ensure partners have a meaningful say in how the business is run. These range from departmental and store-level forums to the Partnership council, an 87-member body made up mostly of partners, whose role is to hold the top management to account. Partners get time off to fulfil representative roles and an independent department, called the registry, oversees these democratic arrangements.

“We can sound very ‘motherhood and apple pie’,” acknowledges the partnership’s personnel director, Tracey Killen. “But ours is a different way of doing business that really makes a commercial difference.”