Work. – December 2014. Original article.
Interview with Sir Charlie Mayfield, Chairman of the John Lewis Partnership
For an institution so British to its very core, the Partnership inspires feelings in direct opposition to the stiff upper lip. Because who doesn’t love John Lewis? And for anyone on the fence there are those devastatingly charming Christmas campaigns. Of course, the John Lewis Partnership exists to serve much grander ideals than clever marketing. Company man that he is, Sir Charlie Mayfield is distinctly British too, in the sense that he may be clearly proud of the Partnership but he remains tastefully modest about it. Mayfield’s smile when the Partnership’s enviable reputation comes up suggests this matters to him a great deal, but of course, there’s no resting on laurels here:
“Our reputation is both a privilege and a challenge. It’s something we think very carefully about. The last thing I want is to appear as the smuggest retailer on the High Street. We have to work very hard, every single day, at getting things right.”
The first law of the John Lewis Partnership, and also to Mayfield, is to serve “the happiness of its members”. Not once does Mayfield refer to just himself in terms of the work he does – it’s all about the group. Actually that’s not entirely true: Mayfield points out more than once that the partners have the power to sack him if they think he’s not cutting it. We’re sitting in the Chairman’s office at Partnership House in London’s Victoria, on sofas surrounded by green plants and abstract paintings. Mayfield is in a salmon-coloured knit tie and crisp white shirt, his jacket left on the hanger on the unseasonably warm Tuesday afternoon. Glasses dangling from the hand, he’s relaxed yet professional throughout.
The John Lewis Partnership is a story of how an employee-owned business can not only match the performance of its retail sector peers, but also beat it. People-issues are hard-wired into the organisation, but Mayfield is careful to stress how this, above all, is a business. Our conversation swings back and forth between these two elements – people and business – as if ethical practices were the enemy of growth. But as only 2% of British businesses are employee-owned, chances are Mayfield has had to explain more than once how a long-term holistic focus translates to a healthy bottom line.
*** Now in its 150th year, the Partnership delivered a £129.8m profit at September’s results announcement, a healthy rise of 12.1% on the year before in what remains a squeezed market. But it’s something of a chicken-or-the-egg situation regarding what comes first: the desire to run a people-centric company, or to run a profitable business.
“Somewhat unhelpfully I probably won’t be able to separate the two out for you!” Mayfield laughs. “In essence, the focus of the business is the happiness of its members. We are really focused on partners through their worthwhile and satisfying employment – in a successful business. That’s our our ultimate purpose, and from that stems everything else.”
Certainly, this priority will affect how decisions are made: “We won’t say that the most important thing is to make a certain profit, each year. But what we do prioritise is having a sustainable business that’s well-balanced, reflecting the needs of partners, customers, and profit.” This may mean the company won’t slash costs to improve numbers in a single year, unless there is a strong case for long-term benefit: “But what we absolutely will do is take tough business decisions to completely remodel and reshape our business where we think that’s necessary.”
So what happens when these “tough” decisions prove unpopular? “Oh, there will absolutely be controversy!“ Mayfield got plenty of “vocal” feedback after the decision to take out an entire level of management from the John Lewis department stores, making over 360 roles redundant. “We don’t shy away from those issues. But the manner with which we carry out those decisions may differ from other organisations.” In the case of the redundancies, the changes were implemented over the course of a year, encouraging people to find alternative positions within the company, and offering payment cushions.
“What we always do is, we say: ‘Look, we’re not running this business for any one individual partner. We are running it for the totality.’ We’ve always recognised that the greater good will trump the needs of individuals,” says Mayfield. “Though what we will do is try to implement change in a way which respects the needs of individuals.”
*** The financial advantage of being a partner is attractive: people get an average of seven weeks’ pay in shared profits every year. “But the fact that way we share profits is almost as important. It sends a strong message about collective reward for collective effort. It’s not about equality, but fairness.”
The other vital element is how the management is accountable to partners. Throughout our chat, Mayfield brings up numerous examples of what this looks like in practice, as this openness isn’t just culture, it’s structure. Human resources is an important channel for implementing this, but the Partnership is also putting in place a central shared-services team whose job is to make the sure the principles are enacted consistently across the group. Already, there’s an elected body of people in every single shop, distribution centre or office, holding the local management to account. Registrars throughout the organisation ensure the business is run in accordance with its constitution, a document which includes a commitment to sharing knowledge. That means keeping discussions out in the open instead of secret meetings behind closed doors, and keeping facts available for all to see, warts and all.
“We don’t have a referendum on whether we are going to reorganise a particular area of the business, open a shop, or stock green jumpers. But the responsible managers make those decisions in the knowledge they are accountable,” says Mayfield. That includes himself: twice a year he faces a council questioning him on the performance of the business, before they vote on whether they want him to stay: “That is quite a key moment. Now, I have never lost the vote, but it still focuses the mind.” He nods. “It really does focus the mind.”
*** Accountability doesn’t mean the management will never be in the firing line, though. The Partnership caught flack this autumn when CEO Andy Street described France as “sclerotic, hopeless and downbeat”. Street was quick to issue an apology, adding that his comments were meant to be “tongue-in-cheek”. Earlier this year, at July’s council session, Mayfield found himself at the receiving of complaints from partners unhappy about the stress and pressure caused by recent years’ restructuring:
“Fundamentally, the council was not very happy with where we were, and they made that very, very clear. I sat and listened; I didn’t particularly like it, and I didn’t agree with all of it either. But that is the view of the owners of the business, so whatever my views, I listen to those opinions.” The follow-up came in October, after Mayfield commissioned a report on how the changes were progressing: “That was a very good session, and as a consequence, we have decided to make a few adjustments. The direction is still correct – we are very confident of that – but we made some adjustments in-flight.”
A unusually hands-on Chairman, Mayfield took an oath to run the Partnership in accordance with its constitution. He acknowledges he’s probably more focused on people-issues than perhaps the average Chairman: “But I would really encourage you not to separate that from the business. We focus on the business, which happens to be run by 90,000 people. Therefore, the best way to achieve the best results is actually to focus on the people running it.”
Having said that, Mayfield will readily assert that the effects of the Partnership is vital to the success of the business: “There is now a good body of evidence which shows employee-owned firms outperform their PLC company peers in overall performance over the economic cycle. In areas like job creation, productivity improvements, and well-being, many do even better.” Looking at Waitrose, product innovation can often be attributed to long-standing relationships with suppliers: “Don’t get me wrong: we have very commercial relationships with our supplier base. But we try to put them on mutually beneficial footing.”
*** Mayfield became Chairman in 2007, but he first joined the Partnership in 2000 as Head of Business Development. “Before this, I was working in management consulting [at McKinsey & co] which I … enjoyed?” Mayfield laughs. “I say that with a degree of hesitation, because I’m not cut out to be a career consultant. I just don’t think I’m designed to be solely in an advisory role.” Still, the experience of working across retail brands was useful: Mayfield now chairs the UK Commission for Employment and Skills, and was appointed Chairman of the British Retail Consortium this March.
In the rare moments when he’s not working, Mayfield (48) lives in Newbury with his wife, a teacher, and their three teenage children. And yes, the kids have had a taste of the family business, with a bit of work experience at Waitrose before going off to university. “I spend lots of time at work, so when I’m not working I basically want to be at home with family. We have two large dogs that need a lot of walks, so it’s that kind of thing. […] It’s really important to defend the time away from work. My wife would probably tell you I don’t do it very successfully!” He laughs. “But I think I do, reasonably.”
Being in a leadership role within a partnership means potentially exposing yourself to a higher level of internal criticism: “Sometimes people find that hard to take. But I would say it’s a great strength to the business that we do that.” It may also take a little longer to implement change: “But this is not for soft reasons. We think doing so gives us a better long-term outcome. And it’s always the long-term that matters.”
This commitment to playing the long game cost the John Lewis Partnership £47 million last year, as the company discovered a discrepancy in holiday pay going back six years. The company could probably have got away with back-paying just part of the money: “But we decided that was just completely wrong. […] Rather than using the law as a device to avoid payment, we should actually say: ‘Frankly, we should have paid people more.’ These are the people who own our business. We just need to take this on the chin.”
This also goes to the heart of what the company means to Mayfield personally: “It sounds terribly cheesy, but I never cease to be impressed at the level of motivation and commitment [the partners] demonstrate – to each other, and therefore to the Partnership. We’re very fortunate to have an organisation which reinforces and encourages that.” The Chairman is usually recognised when he goes into a shop, where he’ll chat to partners who have been with the company anywhere between a week and 30 years. “They are working hard, are proud of what they do, and they are trying to do their best. That never ceases to be a tonic for me. […] There are thousands of people like that, who are impressive and deserve the best possible leadership we can provide.”
*** Mayfield is careful never to say the employee-ownership model is better than the alternatives, but absolutely, he’d love for Britain to have more partnerships. “I would be delighted if there were more [employee-owned] companies,” he says. “But it’s not everybody’s cup of tea!” In any case, the John Lewis Partnership has been campaigning for five years to ensure employee-ownership is a financially viable alternative for entrepreneurs selling their businesses, as is now the case following October’s Finance Act. Next, the Partnership is running the ‘Inspire EO’ conference in February, aiming to educate company owners about the benefits of this model.
“I think there’s an increasing interest in not just how businesses perform, but in how they behave,“ says Mayfield; he would like to see the number of British employee-owned companies to reach 10%, up from 2% today. “Reputation matters, also in terms of very hard-nosed measures of financial return, and so it’s a key consideration. It’s probably a good thing that more businesses are thinking more seriously about how to preserve that.”
Despite his insistence that the John Lewis way is not for everyone, Mayfield is at his most enthusiastic when talking about his work to spread the word of its benefits: fairness for employees, the stability of a long-term outlook, and the benefit of plurality in a country’s business ownership. Maybe he’d be better suited to consultancy than he thinks? Clearly he has a desire to affect change beyond his own company. Mayfield laughs: “Well, that’s just being an advocate for a form of ownership I think deserves a greater awareness and following.” Again the company man, proud yet tastefully modest always.