Could a partnership model be tailored to suit UK Royal Mail
Department store John Lewis may well be the off-the- shelf ‘privatisation, but not as we know it’ solution that Allan Leighton has in mind.
The partnership, set up by John Spedan Lewis in 1929, is a private company whose shares are held in a trust for the benefit of its employees, or ‘partners’ as they are known. Like workers in the Royal Mail, they receive a share of profits – in the case of JLP, every year. This year they got 14 per cent of their salaries, a total cost to the company of pounds 106 million out of profits of pounds 216m.
The trust is controlled by the trustees – the chairman, deputy chairman and partners elected by the partnership council, a group of directly elected employees who hold the chairman to account twice a year.
The shares cannot be sold by the trust. To do so would require a change in the trust deeds, which chairman Sir Stuart Hampson says would require an act of parliament.
Hampson believes the JLP model could work for Royal Mail. Importantly, it protects the shares from being sold by employees. But there are big differences between the two organisations. For one thing, Royal Mail’s 200,000-strong workforce dwarfs JLP’s 60,000. For another, the Royal Mail requires a great deal of investment.
‘Provided it was set up the right way, I think it could be extremely effective,’ Hampson says. ‘It is a way of creating something that stands between a conventional PLC and a state-owned business.’
Hampson says the most important feature of the partnership structure is that it motivates the employees, and allows them, through the council, the company’s gazette and other partners’ organisations, to hold the management to account.
‘I am not saying there is never disagreement, but we are working together towards a common purpose.’ To ensure this, he says, directors must not reap undue rewards through high bonuses. Hampson admits he is well paid. He receives pounds 600,000 a year. But his bonus is, in percentage terms, the same as that of every employee.
‘No individual should be enriched by this,’ he says. So is the partnership model compatible with a management culture where chief executive Adam Crozier earned close to pounds 3m last year for his role in ‘turning around’ the business?
‘Maybe you don’t need people like Adam Crozier in the new environment,’ says Hampson. ‘If you are really going to create a business where everybody working for it feels part of it, you can’t pay somebody pounds 3m.’
Beyond issues of pay, he points out that the workforce has to be on side. Here there is a difference. There are unions in retail, but they have not, traditionally, been as strong as the postal one. So, would opposition from the union prove a problem? ‘If you had a strong trade union opposed to it, yes,’ he says.
The question will therefore be whether Leighton can sell a John Lewis-style partnership strongly enough to overcome union opposition.
Tantalisingly, Hampson says he knows Leighton well. Leighton has spoken at conferences organised by John Lewis. But he adds: ‘He and I have not had a direct conversation about it.’ Maybe they will soon.
