John Lewis Partnership’s customer brand is doing better than ever, and its success is all down to how it treats its staff. Jo Faragher spoke exclusively to new personnel director Tracey Killen about how working as a partnership doesn’t mean losing your business edge.
March was a bumper month for retail giant John Lewis Partnership. Staff were celebrating their share of a £155m bonus payout, pre-tax profits rose by 27% and, for the second year running, Waitrose and John Lewis – the partnership’s two core brands – ranked in first and second place as the UK’s favourite retailers in a poll of 60,000 shoppers by retail analyst Verdict.
This spring will also mark two major successes in the profile of HR (or personnel, as it is resolutely still called) at the company. Andy Street, the partnership’s former director of personnel, will assume the role of managing director of John Lewis, the department store side of the business, while Tracey Killen will take over the reins of personnel director of the whole group. The pair have worked for the partnership for more than 20 years and have a solid grounding in the operational side of the business, having both managed stores along the way.
Promoting HR executives to managing director and chief executive roles tends to be the exception rather than the rule, but according to Killen, it was an utterly natural move for Street, and one that reflects the partnership’s willingness to stretch its staff – or partners, as they are known.
“One of the things that gives the partnership real personality is its ability to offer people opportunities to move into roles outside their business. Street has broad experience, he’s worked at board level, and his work in HR has reinforced that,” she says.
Killen can also boast broad experience of the partnership, having joined John Lewis in Bristol as an A-level trainee in 1982. After several roles in merchandising and general management, she moved into HR as personnel director at the John Lewis arm of the business in 2002.
“When I arrived [in HR], the business was taking a longer-term view of where it wanted to be, but also looking back to its fundamentals, what it means to be a ‘partner’ in John Lewis,” she remembers. “Our cultural heritage is very strong. I started in HR just as the company was beginning the journey to make that contemporary relevant to how we work today.”
That cultural heritage weighs heavily on the company, and in the past has led critics to brand John Lewis as slow-moving and too focused on the fact that all staff ‘co-own’ it to be a real commercial success.
Those critics are now eating their words. Last Christmas, the Partnership outperformed all the other major high street retailers, and in February announced plans to create 35,000 new jobs and double turnover to £12bn over the next 10 years.
“There’s a danger when we talk about partners that people think it’s all about brotherhood and apple pie, but we’re a commercial business,” insists Killen. “We don’t have any fewer challenges to manage.”
What differentiates John Lewis from other retailers, according to Killen, is precisely the thing that its competitors think slows it down – the co-ownership, the constant consultation with staff on where the business is going. “We don’t have external shareholders, so we’re not driven into short-term decision-making. It’s not slow, but you can plan and take account of what your partners want. We can take time and consider people’s views.”
Staff inclusion is high on the agenda at John Lewis Partnership. It boasts a unique structure of democratic bodies, where partners can air their views and influence how the company is run. The Partnership Council is the main staff body, responsible for holding management to account, and is so influential that it even has the power to remove the chairman. The Partnership Board, meanwhile, is responsible for the day-to-day running of the organisation and electing its board members. John Lewis and Waitrose each have their own elected divisional council, and each shop has its own elected branch council.
Such a consultative and open way of operating creates its own challenges for Killen and her team, however.
“If you work in HR you’re in a goldfish bowl,” she explains. “We’re judged so transparently and you’ll get called up short and sharp if you get it wrong. You’ve got to feel comfortable with that, but it’s incredibly stimulating and good fun. You can’t have too much of an ego.”
This means that HR works very closely with line managers, something for which Killen’s operational experience has prepared her well. She believes that 90% of HR at the Partnership is done ‘at the line’, so it’s important that managers feel HR trusts them to handle the people issues, while also meeting their commercial goals.
“We work with line managers really closely and understand that management teams are integral to the business’s performance,” she says. “They feel able to own the relationship with their staff, and they don’t have to consult HR on everything. They create communities in branches that we could never replicate at the head office.” Killen visits branches regularly, describing it as “soul food”. “It reminds you that we put things on shelves and sell them,” she says.
The fact that everyone gets a share in the company’s success means it is less focused on gaining external recognition as an ’employer of choice’ than competitors. And while Killen and her team look externally to benchmark the partnership with other retailers, and to keep an eye on best practice, there is no pressure to enter any ‘best company’-style awards.
“It’s always going to be 100% important to be regarded as a good employer by those who work here, so we should be most focused on how we’re perceived internally. Our most important audience is our internal one,” she says.
In terms of putting her own stamp on the personnel director role, Killen is humble about her plans, deferring to projects her predecessor put in place.
“My role is not to interfere at the moment. There’s a full agenda until the end of this year. Then I will take a step back and consider my next move,” she says. When pressed, Killen says that she wants to promote a new corporate initiative where staff can plan and access their training needs around their own ambitions. Her new role will also see her take charge of diversity across the whole of the partnership.
After 25 years at the company, she has certainly seen some changes, but the most dramatic are yet to come, and that’s all down to the unique co-ownership culture.
“People’s commitment still impresses me. I’m amazed by their ability to put their personal concerns aside to secure the best outcome for the business. This business is stuffed full of seriously good and committed people,” she says.
Staff engagement and reward
The unique co-ownership structure at John Lewis Partnership means that all staff – known as partners – share in its success. Every March, partners share any profit the Partnership has made in the previous year (excluding funds re-invested in the business) in the form of a Partnership bonus. This year there was a record bonus pot of £155m, up 29% on the bonus the previous year. Each bonus equates to 18% of partners’ annual salary.
The Partnership also offers a number of other benefits:
- BonusSave – A staff share incentive plan that allows partners to invest all or part of their Partnership Bonus tax-free, up to £4,500.
- Flexible working – All partners, regardless of whether they have family or carer commitments, are entitled to request flexible working arrangements.
- Golden Jubilee Trust – The Partnership’s own charity funds around 50 awards each year that allow staff to spend up to six months working for a UK charity while still receiving full pay.
- Once in a Lifetime – Groups of partners or one of the company’s many clubs or societies can apply for funds to undertake a ‘once in a lifetime’ trip.
- Final salary pension – The Partnership offers a non-contributory final salary scheme to staff after a five-year qualifying period.
- Retirement – Retired partners are still eligible for the same benefits as working staff and receive their own benefits, including access to financial help, a reunion lunch and a monthly magazine.
Tracey Killen’s CV
- 1982 Joins John Lewis Partnership at John Lewis store in Bristol
- 1995 Merchandise manager, John Lewis High Wycombe
- 1998 General manager, John Lewis Cribbs Causeway
- 2000 Managing director, John Lewis Cribbs Causeway
- 2002 Personnel director, John Lewis
- 2007 Director of personnel, John Lewis Partnership