DCSIMG

Interview: Charlie Mayfield, charirman, John Lewis Partnership

YOU don't often meet the chairman of a £7 billion company who says he isn't interested in profit.

But Charlie Mayfield is a rare kind of chairman. And of course it is not true that he wants to see the John Lewis Partnership lose money, far from it. But he reckons the way the company he runs goes about making money is just a little different from the rest: "The difference in our business is our objective is not to make the maximum profit. That is not what we are interested in doing. We want to make sufficient profit."

Some of the sufficient profit is then shared among the group's 69,000 employees. But they are not actually employees. As co-owners of the group they are referred to as "partners". And last year they shared 125 million between them.

Admittedly this was down on the bumper 155m they shared out the year before. But in the run-up to Christmas, sales in both the food side, Waitrose, and everything else, John Lewis, are "bouncing back fantastically well" from a poor first half where profits again were down.

"We have seen a big recovery in the second half," confirms Mayfield, although he admits figures in the same period in 2008 were grim in comparison.

"Some of that is to do with the fact things were tough last year, but a lot of it is to do with the fact we have worked really hard during the recession."

For Mayfield, the partnership model that the company has operated under for 80 years is a "huge advantage, particularly at times like these".

As the louring storm of recession approached last year, retailers that weren't blown over with Woolworths and Zavvi battened down the hatches. But John Lewis, which also runs 221 Waitrose supermarkets, went ahead with its investment plans despite the impact it would have on profits.

"We are talking several million pounds extra cost this year. That will give us a good return in the future but this time will cost us," says Mayfield, a clean-cut former Scots Guards man who maintains eye contact with a steady gaze.

"We took a particular decision last year that rather than cutting back during a recession, we were determined to use the fact that other businesses are going to be cutting back to push ahead.

"Even though sales were going to be tough we weren't going to slow down. Quite a lot of businesses would," he adds.

Investment this year included a new distribution hub at Magna Park in Milton Keyes. As well, the company announced earlier this month they were opening a new call centre in Hamilton.

Which isn't to say the changes have come without pain. Although the workforce have a stake in the business, co-operative firms do not offer utopias when times get tough.

Employees have a say in how the business is run but the hard choices are made by the people who run the group. Mayfield has executive control of the partnership, while John Lewis and Waitrose each have a managing director, Mark Price and Andy Street respectively.

"We don't run the business by committee," admits Mayfield.

But if jobs have to go, Mayfield insists the model is consultative, and he seems sincere when he says: "I am employed by the people who work for this shop. I don't employ them, they employ me."

If employees don't like him, their representative council has a chance twice a year to vote to have him removed. "It hasn't happened yet," he points out with a smile.

But changes to the structure of the group mean jobs have to go. While the new call centre will create 250 jobs in Glasgow – another will be based in the North of England – it centralises the smaller call centre units spread out over 25 stores. Inevitably more than 200 jobs will be cut across the group.

"Let's not pretend it is easy, it is not easy," says Mayfield.

The call centre programme is stretched out over two years, which will give affected staff the chance to get new jobs in the stores. Mayfield points out when it comes to job losses over the past five years, about 60 per cent of staff who were made redundant have found new jobs in the firm. Initially the new distribution depot in Milton Keynes was due to run alongside the old one in Stevenage until sales took a turn for the worse.

"As the recession hit we realised in fact we would not need to operate Stevenage any more," says Mayfield. But even this "last-minute" decision was a six-month process, with all employees at the affected site offered a job 30 miles away at Magna park. Some 116 out of 280 took them up on it, but that is still lower than the average.

Although sales in recent weeks at John Lewis have picked up – and Waitrose is powering ahead – Mayfield has no illusions that the new year will bring much respite. He says the elections and the return of the higher VAT rate are a worry.

"There is more uncertainty ahead," says Mayfield. "In particular I don't think you can go through what the world economy has gone through and make the assumption it will return to normal.

"What we are facing is a period where the economy will grow more slowly than it did in the past 15 years. That will bring with it a number of new challenges we haven't seen."

But while Mayfield notes that he will have been ten years with the John Lewis Partnership, the partnership has been here much longer. Interestingly, he says, the co-ownership model was introduced in 1929, another significant date in the history of economic adversity. Likewise, John Lewis expanded into Scotland in 1943, which wasn't such a hot year either. Yet the model in particular has proved resilient.

"We were created as a better form of capitalism," says Mayfield. "We have a set of values which I think are definitely all about trying to achieve sustainable success across a balanced set of objectives. I do think some of those values are very appropriate now."

He is not critical of the publicly listed or privately-owned companies that make the fabric of the UK's high street. But he does think there is more scope for the growth of more employee-owned businesses, particularly in small, technologically advanced start-ups. We have become too "monoline" in our thinking about company structures and ways of making money, he says. This will have to change.

"Times like this are exciting in a way," says Mayfield. "The founder of John Lewis Partnership said in 1929 said, 'I believe there is a different way to run a business.' Times of crisis can be times which act as a catalyst for new thinking."

BACKGROUND

&#149 Born: 25 December, 1966

&149 Education: Radley College; Sandhurst; Cranfield School of Management

&#149 Career: Began career as an officer in the Scots Guards. Later worked for SmithKline Beecham, managing the sports drink brand Lucozade. A stint of consultancy at McKinsey came before joining the John Lewis Partnership in 2000 as head of business development. He was appointed managing director of John Lewis in 2005. In 2007, he became the fifth chairman of the John Lewis Partnership, replacing Sir Stuart Hampson

&#149 Family: Married, two daughters, one son

&#149 Other interests: running, walking, skiing, sailing

 
 
 

Back to the top of the page