Employee ownership: will Blackwell’s do a John Lewis?

John Lewis has emerged from the recession in sparkling form. It’s not just the terrific financial results, or the good PR heaped on the business by being one of the nation’s favourite retailers over several years (see the Which? league tables for 2010 here).

What has really caught attention is John Lewis’ radically different ownership structure. Its employee partnership model seems to offer a particular blend of strengths that are currently much admired. So it’s interesting to see that Blackwell’s book chain may go down a similar route.

According to The Guardian the owner of the Blackwell specialist books chain is handing ownership of the business to its staff because he is determined to prevent it ever being taken over and is “passionate” about keeping the family name on the company founded by his great-grandfather. He told the newspaper, “I have seen all sorts of awful takeovers”.

Blackwell said he is drawing up a new constitution for the chain – which has 37 permanent shops and 40 that open temporarily on campuses – and it would be based on the John Lewis partnership, which controls the celebrated department store chain and Waitrose supermarkets.

“No one will own shares,” said Blackwell. “There will be an annual bonus, paid out of profits, and the chairman will get the same percentage [payout] as the part-time lady on the till in a store.” In an interesting take on the importance of various business stakeholders, Blackwell said the bookseller’s staff were “very, very important” to its future success and was convinced that employees of John Lewis-style businesses performed better. “My wife loves Waitrose. The staff there smile, because they own it, and because they want to sell you more.”

There is some evidence that staff-owned firms perform better than shareholder-owned firms and the chairman of John Lewis said the structure meant “a happier workforce, more accountable management, a closer alignment of risk and reward and a fairer distribution of profit”.

Blackwell’s decision comes after several years of losses and at a time when booksellers are facing mounting competition from supermarkets, the internet and e-books. Borders has closed down in the UK and HMV is facing shareholder pressure to sell its underperforming Waterstone’s chain.

Another great quote from the article about Blackwell’s view of the future as a smaller retailer in competition with the giants: “We must concentrate on being a specialist. We have some of the best specialists in the world. As long as there are people who want to speak to a specialist, we will stay in business.”