Business strategy and sustainable development
Businessstrategy and sustainable development
JohnLewis Partnership as “an example of conscious capitalism”
Backgroundto John Lewis Partnership
JohnLewis Partnership is considered one of UK’s major retail businessesthat have over twenty seven departmental stores and a hundred and sixWaitrose stores. The enterprise is owned and operated as apartnership entity and the first store was set up in 1864 withWaitrose chains coming up in 1904. The first trust settlement wasestablished in 1929 when the business gained a legal entity andprofits became available for distribution to all partners employees.The owner, Spedan Lewis sacrificed his personal business to fulfillhis vision of establishing a business owned and run by employees aspart of promoting ‘industrial democracy’ in the business (JohnLewis Case Study).
In1950, the partnership trust was transferred from a settlement trustto a legal Trust company under the name John Lewis Partnership TrustLimited. In this arrangement, the Trust company would be under theTrust Chairmanship and his deputy elected by the three governingcouncils. John Lewis partnership is also regarded as Britain largestworker co-ownership business with more than 63, 000 permanent staffsas partners in the business. In this arrangement, the staffs sharebusiness profits and participate in important decisions for theenterprise development. The staffs’ commitment has seen the retailgiant garner a unique competitive edge for over seventy five yearswith unparalleled growth (John Lewis Case Study).
Oneof the major aspects that have propelled the business to greaterheights is due to a partnership approach based on understanding thatprofit is the main aim of business. Another important aspect that haspropped the enterprise to its position is a business partnershipmodel anchored on the principle of social economy and the integrationof workers as company partners. All these have shaped the structureand principle of the company into a cooperative ownership that shapesthe company policy and development.
JohnLewis partnership has a legal form based on governing partnership andat no time are business operations directed by shareholders quest forprofits but principles of the members’ happiness as enshrined inthe partnership constitution. In particular, workers happiness comesfrom good job performance in enhancing successful business. Thepartnership constitution has ‘responsibilities and rights’ whichenjoins the workers obligation of good job performance with overallbetterment of the business for their benefits (John Lewis CaseStudy).
EvaluatingJohn Lewis Partnership principles of conscious capitalism
JohnLewis partnership is governed through principles of power, purpose,members read and profits. The principle of purpose dictate that theaim of the partnership is to promote, enhance and facilitate thehappiness of its members through their work as employees in thebusiness and as managing members of the business success. Thepartnership is based on trust and each member shares genuineresponsibility of ownership and rewards that are accrued from thebusiness entity such as knowledge, power and profits.
AtJLP, all employees are co-owners in the business a democraticmanagement structure run the business. Power is held in esteem byJohn Lewis partnership and there are three governing authorities thatshare power the partnership Board, the Partnership Council and thepartnership council. The principle of profits in the partnershipdictates that, the enterprise make more profits through its tradingoperations in order to sustain its commercial prominence, financedevelopment activities and distribute part of the profits to members.Furthermore, the principle of profits making aims to enlarge theenterprise returns that enables the business engage in otheractivities in accordance to its goals (John Lewis Case Study).
Underthe principle of members, the partnership constitution is to increasemore employees who are competent and committed to working andsupporting the enterpri9se principles. In the principle ofmembership, courtesy, mutual respect and equality among the differentmembers is highly encouraged. The aim is to enhance and encourageindividual contributions fairly and reward each accordingly.
Evaluatethe principles of conscious capitalism
Theconcept of conscious capitalism refers to establishing enterprisesthat implement practices which benefit people and the environment(Mackey, 2013:123). The concept of conscious capitalism is tied toconscious business that is gaining popularity in the modern ageespecially with regard to increased demand for corporate socialresponsibility by many business enterprises. Conscious capitalism is‘values-based’ economic values that push for social andenvironmental concerns for business as they pursue their economicinterests (Baron and Cayer, 2011: 344). The principle of consciousbusiness is driven by the belief that when conducting business, it isnot just for profit but facilitating social environmentalresponsibility for the general good.
Principleof Conscious Culture
Besidesa democratic management structure, JLP has upholds the principle ofradical transparency when conducting all business operations. Allemployees (co-owners) share, inquire, criticize and tell themanagement all that is important (Laszlo and Zhexembayeva, 2011:156).Each partner has a priority to voice any aspect deemed necessaryregardless of age, education or experience.
Anotheraspect of conscious culture at JLP is its conscious consumerismthrough socially responsible investments (Zender, 2015). Ideally, theprinciples of conscious capitalism are based on certain criteria thatdemand businesses do no harm while undertaking their enterpriseoperations. One principle of conscious capitalism is that theproducts and services of business enterprises should never be harmfulto the environment or people. This requires business to havemechanisms that forestall social and environmental effects whiledoing business as well as adopting beneficial social andenvironmental practices (Korschun,Bhattacharya and Swain, 2014).
Anotherprinciple of conscious capitalism is the triple down line model ofdoing business. Under the triple down model of doing business, theaim is to promote positive value in domains such as the planet,profits and people (Mackey, 2013:123). Profits are what distinguishan entity as a business and not social enterprises. As such, thedegree to which an organization has adopted ‘conscious capitalism’may be reflected in how it utilizes part of the profits for socialand environmental welfare. In modern firms, there is a tendency toutilize part of the profits accrued in business for social welfarethrough donations or establishing an organization foundation whosepurpose is social welfare a good example is the Aga-khan Foundation,Bill Gates Foundation among others.
Inline with the principles of ‘conscious business’ firms that havean understanding of conscious capitalism should desist fromaccumulating profits through illegal means or deceitful operationpractices such as failing to pay employees, poor working conditionsor supporting harmful causes. For instance, the recent revelationthat HSBC Swiss Bank has been evading tax cuts is an example of abusiness operating without conscious culture principles. The bank isalleged to have allowed bank transactions involving stolen overseesfunds and this disqualifies the bank as being a ‘consciousbusiness.’
Aconscious business seeks to enhance the external and internal livesof its stakeholders (shareholders, clients, neighboring community andimportantly its employees) (John Lewis Case Study). In addition, aconscious business should benefit its other stakeholders such as thesuppliers, creditors and humanity at large globally. Businessenterprises embrace consciousness by forming welfare workplaceprograms, fair trade in manufacturing and assisting the generalcommunity with outreach programs. A business that is conscious aimsto reduce the effects of its business operations on the environmentin various ways such as engaging in recycling, using renewable energyand working with environmentally conscious partners.
Furthermore,businesses that are conscious use their resources in benefiting theenvironment and the society through direct or indirect programsrelated to the distribution of services and products (John Lewis CaseStudy). It has become increasingly important for businesses toreflect their ‘conscious capitalism’ spirit in the way they treattheir employees and other stakeholders. Businesses are increasinglyreflecting their ‘consciousnesses through their company missionsand values. In particular, paying employees well, donating servicesand products to non-profit organization is considered a goodconscious business spirit. Operating under the spirit of consciouscapitalism model pushes the fortunes of a business up by projecting apositive role of improving humanity in the society (John Lewis CaseStudy).
Consciouscapitalism helps business to create value and ethics of economicexchanges, elevate humanity existence and creates prosperity bylifting people from poverty. In addition, when business operates onhigher purposes other than the pursuit of profits, businesses createsvalue for all stakeholders, eliminate tradeoffs and elevateperformance. The key pillars to conscious capitalism is havinghigher purpose, stakeholder integration in the business, consciousleadership, management and culture (Rooke and Torbert, 1998).Neglecting one pillar would lead to jeopardized principle ofconscious business. Examples of companies that have successfullyembraced conscious capitalism are Google, POSCO in South Korea,Patagonia among others. These companies have created win-winsituations for their customers, suppliers, employees, the generalcommunity and the environment (John Lewis Case Study).
Althoughconscious capitalism is related to corporate social responsibility,the two are different, Conscious capitalism purposes on creatingvalue for the community stakeholders through actively engagement inbusiness decisions as opposed to engaging them in periphery businessprograms(Fialka, 2006: 4).
Theprinciple of conscious stakeholder integration
JohnLewis Partnership is an example of conscious capitalism on manyfronts. First, the partnership is based on conscious purposefulprinciples whose objective is promoting social economy (Mackey,2015:1). By developing a co-ownership with workers is one importanttenets of conscious capitalism employed by the partnership. Employeesare important stakeholders in any organization and play criticalroles in the success of an entity (Burden and Warwick, 2013: 3). Itis common knowledge even among the company shareholders thatemployees are the cogs that support the organization in achieving itsobjectives and goals (John Lewis Case Study).
JohnLewis Partnership is keen in building transformative relationshipsand co-develops solutions with all key stakeholders. JLPprogressively builds transformative relationships with clients,employees, the local authority and charity organizations in itspursuit of sustainable business. In this way, by integrating theinterests of all its stakeholders in the core of business activities,John Lewis is an example of a conscious capitalism.
Althoughorganizations may boast of effective leadership, without competentand committed employees becomes an exercise in futile for mangers.Employees’ posses’ important skills and experience on areas thatneed improvement in the firm based on their day to day interactionwith the various aspects of an organization. As such, havingcompetent, committed and selfless employees is not easy and manymodern firms are spending heavily in incentives and welfare programsmeant to boost employees’ morale for performance (Mackey, 2015:1).Although these employee betterment programs are related to theprinciple of conscious capitalism, they are less effective in tapingemployees’ contribution to the firm. John Lewis might have done acritical assessment on these issues prior the development of aco-ownership with thousands of staffs at the retail enterprise.Enjoining employees in business ownerships serves many advantages.One is that employees contribute selflessly and actively in shapingthe firms development policy based on their day to day work.Employees are not only motivated to work hard for the business butconsistently strive to innovative new ideas that will benefit ‘their’business (John Lewis Case Study).
Inaddition, the aspect of ‘owning’ the business and being part ofdecision making helps to improve employees motivation,cooperativeness and overall a corporate culture of harmony (Hind,Wilson and Lenssen, 2009: 23). John Lewis notes that, by enjoiningthousands of his staffs in the business, he promoted ‘industrialdemocracy in which each employee has a fair equal responsibilitiesand rights in the affairs of the organization. The key pillar in JohnLewis Partnership is promoting the happiness of its members who areemployees. Human resources studies have found that, motivated andhappy employees means happy customers and subsequently increase insales returns(Somerville, 2013: 2).As such, by promoting the a conscious capitalism approach thatfocuses on improving employees happiness, the Partnership is awin-win model employees will strive to make clients happy in returnfor good business to their partnership business (Abergene, 2005: 23).
Furthermore,by enjoining the employees in the business, this helped improve theirwelfare by raising their income thereby improving their socialeconomy. In this way, by focusing on the general welfare ofemployees, John Lewis serves as an example of working ‘consciouscapitalism’ enterprise. John Lewis is a good example of a‘conscious business’ through its conscious management andleadership (Hind, Wilson and Lenssen, 2009: 23).
ThePartnership enterprise is government by a well structuredconstitution that establishes three centers of authority. Thesecenters of authority promote democracy in the management and runningaffairs of the business especially in decision making all employeesare members while assessing the business problems. In this way, JohnLewis partnership serves as an example to other businesses on whattrue conscious capitalism means (John Lewis Case Study).
Althoughmodern firms allege to have conscious business, employees do not takepart in decisions making and are often used as tools to achieve endgoals. An example in case is Barclays bank that boast of a ‘consciousbusiness’ but has been implicated with cases of employeesmistreatment, underpay and contributing resources to programs thathave hazardous effects on the welfare of humanity at large (Smith,2013: 2).At John Lewis Partnership, employees have absolute freedom ofopenness in the management of the business employees can inquirereport and raise criticism based on actions deemed unsuitable for thebusiness (Brown, 2012: 73).
Employees’share business rewards, power and knowledge at the partnership andthis has enhanced the firm have a competitive edge againstconventional business those that treat employees as mere operationalcogs in a business. All employees have equal opportunity to promotetheir potential and hold principle management positions in thePartnership Council. The management structure and organizationalculture allows for two ways decentralized communications among themembers. In this way, no individual feel neglected or out of themanagement structure(Lin, Hu S-y and Chen M-s, 2005: 534).
Anotheraspect of ‘conscious capitalism’ exhibited by the partnership isthat, it does not condone or take part in social positions, sex,gender and political favoritism.’ This is a rare feat of ‘consciouscapitalism’ especially in the modern world where most businessestake positions in social, political and religious matters (Burden andWarwick, 2013:2). According to Mackey (2013: 123), businessenterprises project conscious business by contributing to the largercommunity in which they operate. At John Lewis Partnership the entitycontributes to the general community in distinct ways. In particular,the enterprise has established links with Schools, local authorities,charitable institutions and other stakeholders in the community aspart of giving back to the community(Shumate and O`Conner, 2010: 580).
JohnLewis Partnership has important community outreach activities includethe Partner volunteer work, charitable giving and development,customer panels and others. The principles established by JLP arestrong indictors of a business operating under the principles ofconscious capitalism. In particular, the entity main objective is tomake more profits not for the purpose of enriching privateshareholders but for the general good of partner members and thesociety at large(Korschun, Bhattacharya and Swain, 2014).
Insummary, it is evident that the JLP entity was not formed with thesole aim of profit making but to facilitate social economy formembers and the society at large. John Lewis Partnership serves as agood example of a conscious capitalism through its interest in thewelfare of its employees and other stakeholders such as suppliers,having a conscious management structure, leadership, and democraticwork culture and spreading the fortunes of the business tosurrounding communities (John Lewis Case Study).
Consciouscapitalism is an important aspect for modern business. The principleof conscious capitalism enables business organizations to surmountmyriads of problems associated with employee management,stakeholders’ relation and projects a good role model in thesociety. Conscious capitalism facilitates free enterprise capitalismsthat uphold social and environmental interests beyond economicinterests. Conscious capitalisms is inspired by the need to improvehumanity welfare, create business value to all stakeholders adimprove organization performance competitiveness against conventionalenterprises. Conscious capitalism is pillared by stakeholderintegration, having conscious leadership in organizations, consciousmanagement, conscious working cultures and creating value for thegeneral community at large.
JohnLewis Partnership is a good example of a successful ‘consciouscapitalism’ that enjoined its employees as co-owners. Theprinciples adopted by JLP have enhanced the firm uplift the welfareof its employees, suppliers, shareholders and the general communityat large. Conscious capitalism is inspired by the need to improvesocial and environment needs in line with achieving economic gains.In short, conscious capitalism is means through which the ends goalsof company profits are increased due to improved social reputation.John Lewis Partnership is a creation of conscious capitalism and thishas enhanced the enterprise to remain competitively profitable as thelargest retail store in UK.
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Briefbackground to John Lewis Partnership
LinY-h, Hu S-y, Chen M-s (2005). “Managerial optimism and corporateinvestment: Some empirical evidence from Taiwan.” Pacific-BasinFinance Journal.13(5):523-546.