UK: Business Legends - Never knowingly under-generous.

UK: Business Legends - Never knowingly under-generous. - Not many people know that there were actually two John Lewises. One founded the eponymous company, the other moulded it into the partner-inhabited world it is today.

by Rhymer Rigby.
Last Updated: 31 Aug 2010

Not many people know that there were actually two John Lewises. One founded the eponymous company, the other moulded it into the partner-inhabited world it is today.

What do you think of when people say John Lewis? Wedding lists? The store's 'never knowingly undersold' motto? Or, perhaps, if you have a little more business nous, the fact that it is not a plc but a partnership?

By all accounts, this makes it a pretty cool place to work. The 'partners' (that's staff to you and me) profit share, and in a big way - last year, it worked out as 22% of salary. The business has holiday homes for partner use and in the company newspaper staff are free to be shockingly (and, anywhere else, sackably) candid about their seniors. In recent years, John Lewis has also been highly profitable. In fact, all its detractors can really find to grouse about is that it sometimes doesn't always quite 'walk the talk' and that, with its committed, smiley staff, the whole set-up feels a bit like Stepford Wives.

Big John, little John

It is important to note here that there were two John Lewises. The first founded the business. The second, John Spedan Lewis, was the one who made it unique.

The first John Lewis was born in 1836 in Somerset and was brought up by his aunt, Anne Speed, after being orphaned. At 14, he became a draper's apprentice and at 20, he was working in a London draper's shop. By the relatively tender age of 28, he had opened his first shop, John Lewis & Co, selling fabric on London's Oxford Street, where the company's flagship store remains. He married in 1884 and, a year later, his wife gave birth to John Spedan Lewis (the name honours Anne Speed), followed by Oswald in 1887.

As the years passed, the business did well enough and John Spedan joined the family company in 1904 at the age of 19. The following year was significant.

Peter Jones, the founder of the eponymous Sloane Square department store, died and John Lewis Sr bought a controlling stake in the business.

On his 21st birthday, Spedan was given a quarter share in the company (at the time worth £50,000). His brother received the same sum in 1908, making both young men very rich indeed - particularly compared to their employees. Soon Spedan had rather more time than he might have imagined to muse on such social injustices. A riding accident necessitated a two-year convalescence during which the enlightened Spedan devised a scheme whereby the business would share its profits with employees in the form of equity.

Naturally, his father laughed in his face at the suggestion, although he did give his son executive control of the ailing Peter Jones store in 1914. Here, Lewis Sr felt Spedan could give his wacky managerial ideas free reign. As things turned out, Spedan fell out with Dad in 1916 and withdrew from John Lewis to concentrate on Peter Jones.

A trusting fellow

Having taken over full control of Peter Jones, Spedan set about implementing his ideas with an evangelic zeal. Staff committees were set up, employees got another week's holiday (taking it up to three) and a newspaper and were christened 'partners'. Crucially, he also laid the groundwork for the profit-sharing scheme, sternly telling his external shareholders that the days of non-participatory equity taking the lion's share of profits were numbered. Spedan's worker's paradise was a short-lived one, however.

Peter Jones' fortunes waned with the recession of the early '20s and Spedan was forced to go cap in hand to his father. The store's fortunes later improved and, curiously enough, in 1925, Oswald transferred his share in the Oxford Street store to his older brother. Thus, on John Lewis' death in 1928, Spedan became owner and chief executive of both shops.

He lost no time in putting his ideas into practice.

In 1929, he signed the First Trust Settlement, an experiment whereby his shares in the stores were transferred into a trust, forming the John Lewis Partnership. He did however retain, if not ownership, ultimate executive control. The '30s were a busy decade for the new partnership - a medical service was started and the company began buying shops in provincial cities.

Waitrose was snapped up and, in 1940, the company doubled its size when it bought Selfridge Provincial Stores Limited. But for the bombing of the flagship Oxford Street shop (which wouldn't be fully rebuilt until 1960), the war years were relatively uneventful for JLP. By 1950, Spedan felt sufficiently confident in his little experiment to make it permanent.

He signed the Second Trust Agreement, ceding executive control and signing everything over to a trustee, the John Lewis Partnership, for posterity.

In 1955, he retired, dying eight years later, aged 77.

Since his death, the formula has remained much the same and the Partnership, with its 23 department stores and 117 Waitrose supermarkets, is currently enjoying its most profitable period since 1987 and 1988, its previously record years. Despite a vicious and potentially libellous slanging match in the company newspaper in 1996, the partners seem happy with it all. But then, receiving a £4,400 annual bonus on a £20,000 salary - and in retail - is a pretty good reason to like your employer, even if it is a little idiosyncratic.

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