14.11.14
Shared responsibility and shared reward
Source: National Health Executive Nov/Dec 2014
Sir Charlie Mayfield, chair of the John Lewis Partnership, explains the relevance of his company’s employee-ownership model to the NHS.
I am often asked whether the ‘John Lewis model’ – owned by its employees – has applicability within the public sector and specifically the health service. The parallels between retail and health aren’t at once obvious but the focus on delivering excellent personal service is certainly one. After all, the value of services is directly based on the individual employees and the discretionary effort they devote to their work.
At Christmas, our shops and supply chain in Waitrose and John Lewis have to cope with a huge increase in trade. Transactions run at double the normal rate over the last two weeks and all our people and processes are tested to the maximum. The only way to make that work is together, from the top of the organisation all the way down, with visible and effective accountability all the way through. Nothing ever goes perfectly to plan. What always pulls us through is an extraordinary team effort and willingness on everyone’s part to take responsibility for our whole operation.
So, perhaps this is the reason that government and health service workers are expressing an interest in mutualism. The Partnership was founded as an experiment in industrial democracy. The idea is a simple one: the purpose of the Partnership is the ‘happiness of its members thorough their worthwhile and satisfying employment in a successful business’.
That doesn’t mean we make decisions democratically. It does mean that the leaders of the business are accountable to the people they lead for creating worthwhile jobs that drive the success of the Partnership.
I am a strong advocate for the model and believe it can work well in many places. But let’s be clear: mutualism is not a silver bullet to every problem, whatever the organisation. Indeed, there are areas of public services where it would not be appropriate – for instance, high risk organisations that require large sums of money for research and development, where employees might not be prepared or able to take that sort of risk.
Admittedly, the word ‘mutualism’ can be confusing, but at its core it’s about shared responsibility and shared reward. While not a guarantee of success, it does bring some very clear advantages.
For example, employee-owned businesses like the John Lewis Partnership can never be sold. While that might offend free marketeers, it also means we have no alternative but to focus on future earnings. It means that every one of our 91,000 partners at Waitrose and John Lewis has an incentive to make this Christmas better than the last one. And the same will be true next year; because we don’t have the option of selling our shares and investing in another business, we have no option but to throw all our energy, passion and talent into making this one better. Year after year. That relentless focus on continuous improvement is a powerful competitive advantage, especially in a retail market that’s one of the most contested in the world.
Of course this attitude is not the preserve of employee-owned businesses, but we have discovered that co-ownership leads to increased levels of productivity, lower absenteeism, lower staff turnover, higher levels of commitment and higher levels of wellbeing than the national average. So it is tempting to conclude that where frontline staff do not feel connected, able to influence, or ultimately responsible for the whole of a public service, mutualism and other forms of employee ownership may well be a worthy consideration. Indeed, some forms of employee ownership have already shown promise for the NHS and social services that have experimented with the model.
There are now 100 organisations across the public sector that are owned in whole or in part by their employees and many are seeing considerable success. For example, at CSH Surrey, patient satisfaction levels are far in excess of the national average, and there is a strong correlation with staff engagement and wellbeing. Among its employee owners, 91% would recommend its health services to friends and family – compared with 67% in equivalent NHS trusts. And at City Health Care in Hull, efficiencies of almost £4m have been found since 2012-13, whilst simultaneously increasing patient and staff satisfaction.
As a result there is a growing interest in mutual models to deliver public services and across the economy as a whole. More organisations are asking the question: is this for me? Membership of the Employee Ownership Association has doubled in the past year, and the number of employee-owned businesses in the UK is growing at nearly 10%.
This is a welcome trend that should be encouraged. For this reason, we, along with KPMG, Nationwide and CH2M Hill, are arranging a one-day event on 5 February 2015, to promote employee ownership.
Those with an interest in it can hear directly from others in business, government and the public sector, and speak to legal and financial advisers with experience in helping organisations to make the transition.
Tell us what you think – have your say below or email [email protected]