The John Lewis Partnership: are staff being given a bonus incentive… to leave?
The annual John Lewis partners’ bonus - a share of the business’ profits – was the biggest incentive for joining and staying at the retail giant. Since the inception of the partnership, nearly one hundreds years ago in 1929, when Spedan Lewis transferred his own shares to his workers in an experiment in industrial democracy, workers have shared in the spoils when times were good.
The biggest bonus ever given out was 24% in 1979, 1987 and 1988.
This year the bonus pot was zero, following a previous year of no bonus. The last bonus in 2022 was just 3 per cent. This was despite making a profit. 2024 financials showed the partnership's two brands, Waitrose supermarkets and John Lewis department stores, recorded a profit of £56m, after a loss of £234m in the previous financial year.
The parent brand said: “Following careful consideration it has been decided that there will be no Partnership Bonus paid this year, with investment in Partner pay and improvements to the business taking priority over paying a bonus.”
Pay for its 76,000 workers could be increased by a record £116m this year, the company said, with two-thirds of staff getting a 10% uplift. Despite sounding generous, this is against a backdrop of the UK’s National Living Wage increasing to £11.44 an hour, a 9.8% uplift in April.
Rumours have been swirling around vast redundancies at the group. The Guardian put a figure of 11,000 partners being let go in a bid to save £900m over the next five years. The group told partners in January it was halving its current two-week redundancy pay per year of service policy. Under the new plan, the package will be reduced by half to provide one week of pay per year, in addition to statutory redundancy pay.
This might suggest an intention to get rid of more expensive staff, possibly managerial levels. But when companies make large numbers of cuts, the question must be asked ‘what on earth all those staff were there for in the first place?’.
To sustain the brands’ reputations, John Lewis needs to make cuts from areas consumers can’t see. It doesn’t want to cut staff on the floor. They are needed. There is plenty of chatter on social media about John Lewis’ service deteriorating with shop staff actively telling people to order online when they are in-store, leading customers to question why they should actually bother going to a store. Hopefully within the plan, there will be more investment in training for the remaining staff members.
Nish Kankiwala
John Lewis CEO Nish Kankiwala, confirmed to media that a ‘few hundred' roles were axed in 2023 under moves to save £88 million in costs, although many of the job cuts were through natural staff turnover and not replacing workers when they left.
And that’s probably why there wasn’t a bonus for staff this year. Without a bonus, what is the incentive to stay? John Lewis need to reduce its headcount and in the most financially efficient way through a large amount of staff attrition; a way of motivating staff to leave without the costs and bad press of redundancies.
Kankiwala told media the group was looking to cut costs by a ‘similar magnitude’ in the current financial year. He said, “We’re looking at all the opportunities as we improve our ways of working and if there is eventually a reduction in roles, then we’ll use (staff) attrition in the same way as we have done in the past.”
On a postive note, if the John Lewis Partnership can get profits heading in the right direction and strip out more costs, the bonus pot for the lower numbers of remaining partners should look much healthier. Will it ever get back to the magical figure of 24% again? The partners left can only dream.
