Steffan Aquarone

Steff is a film producer and technology entrepreneur who speaks internationally on innovation, entrepreneurship and digital marketing

Give your company to your workers and enjoy long-term profits?

“It is wrong to have millionaires before you have ceased to have slums” were the immortal words of John Lewis’ founder, John Spedan Lewis. Regardless of moral persuasion, the fact that this month the John Lewis Partnership announced an increase in group sales of 8.4% (on 52 week basis) with operating profit across the group up 22% is impressive. They paid partners a bonus worth almost 8 weeks’ pay and made a one-off contribution to the pension fund of £150 million. All that in a recession that’s wiped out scores of businesses, not least in the retail sector.

In the spirit of John Spendan Lewis’ philosophy, the John Lewis Partnership is made up of all the 70,000 people it employs. Its annual report modestly states that “Our purpose is the happiness of all our members, through their worthwhile and satisfying employment in a successful business, with success measured by our ability to sustain and to enhance our position both as an outstanding retailer and a thriving example of employee ownership”. This takes Nick Clegg’s statement last night that work “is the way you reward people, but also where you find self-esteem” to a new level.

By rewarding employees with a tangible share in the benefits of their work, John Lewis has benefited from extraordinarily high commitment from its workers, a likely contributing factor to their success. “They’re interested in what they do and they’re knowledgeable about what they sell” says their own website. This is patently clear when you visit a Waitrose or John Lewis store. One of the things I’ve always found most impressive is the way staff are happy to refer to colleagues’ whose expertise about a particular product might be greater. This is a marked contract to commission-based incentives that reward sales people only when they close the deal.

The damage done by taking a short term view of rewards goes deeper than this without even mentioning bankers. Our private sector supports executives who are paid phenomenally high amounts. Today the average CEO earns 81 times more than their average employee. In 2000 this ratio was “just” 47. The worrying thing is that it appears no amount of corporate cock up can even threaten these salaries – just take a look at Ruth Sunderland’s list of the hightest-paid executives and work out for yourself whether they added value to the extent of their remuneration. A classic example she cites is BP’s shareholder meeting last week, where there were protests at chief executive Tony Hayward’s 41% pay rise over a period in which profits fell. Will one of the biggest man-made disasters in 20 years have an impact on next year’s salary do you think?

This isn’t a side-effect of capitalism. It’s a side-effect of a new type of capitalism that places a layer of impenetrable unaccountability between executives and shareholders. Richard Lambert, secretary general of the CBI, said that executives risked becoming “aliens… in a different galaxy from the rest of the community” and said this “Jack Welch capitalism” had tarnished the reputation of business such that it can never be “a positive force for good” while short-term shareholder value is the main boardroom aim.

Left-wingers often talk prophetically about the end of capitalism. But perhaps examples like John Lewis are indicative of an alternative type of capitalism – no less profitable – with longer-term interests and a broader recognition of its stakeholders. “We believe our model, where commercial success is a driving force but where the needs of Customers, Partners, and long-term financial ambitions are balanced, represents a sustainable, compassionate and fairer form of capitalism” says John Lewis’ Annual Report.

Welch was famed and derided for stating that CEO compensation should continue to be dictated by the free market, without interference from government or other outside agencies. Maybe it’s consumers’ turn to influence things. And with more businesses seeing for themselves how employee ownership can pay in the long run, they might not even need to be conscientious objectors to do so.

Further reading:

Bill Waddell on The End of Jack Welch Capitalism

Filed under: successful businesses, , , , , ,

Social Enterprise 2010

This month I’m exploring social enterprise and where this relatively new movement is heading in 2010. Social enterprises are businesses trading for social and environmental as well as financial purposes. There’s a good introduction here.

My first visit to a functioning social enterprise was this morning. Textiles by St Anne’s (new website coming soon here), an offshoot of mental health charity Bita Pathways, is a soft furnishings manufacturer and registered Social Firm with the specific aim of creating jobs for people who find it hardest to get them. Their workshop was just like I imagined a furnishing outfitters to look, save for the fact that it’s located in the stunning St Peter’s Urban Village in Saltley – possibly the least likely destination imaginable for such a picturesque and progressive place.

At St Anne’s, people benefit from training, personal development and work experience especially around reestablishing their own confidence. Some directly develop and prototype new products (including some new releases at this summer’s festival scene), as well as fulfilling commercial orders and the proceeds of what they do are entirely ploughed back into the operation.

St Anne’s purpose is what I expected from a traditional social enterprise – a charitable cause with a trading arm basically. But so much more than I expected in terms of its strategy and business focus. “We’re aiming for self-sustainability in two to three years” said Pat Bend confidently. Pat’s a lady I’ve worked with before and she knows how to develop a business. She’s done it successfully three times for herself, not to mention the countless businesses she worked for in telesales including Fullrange shortly after we set up. Why is Pat, a business woman with a strong track record, working in a social enterprise for – as she puts it – for the love of it?

I think it’s for the feeling of satisfaction at watching something good grow – something where her business skills are being applied to a cause that truly makes a difference to the people it trains, employs and supports. It’s clearly immensely hard work by any business-owner’s standards and Pat has the additional roles of mentor, social worker and advocate to add to the usual tasks of strategy, business development and general management. I’ve no doubt that Textiles by St Anne’s will become a great success story when Pat fulfills the next step of developing greater awareness amongst potential customers with more events like Sustainability Live at the NEC where they’re exhibiting this week.

Vital Statistic: the Social Firms sector saves an estimated £30 million in welfare benefits annually

Starkest realisation: the number of stories of people who come to the parent organisation BITA Pathways having burned-out professionally in high-demanding roles like business ownership or senior management.

Biggest frustration: the current lack of custom for what is, at the most fundamental level, a range of high quality, innovative products.

Filed under: social enterprise 2010, , , ,

Time for a nice cup of tea

Welcome to Venio’s new home. We’ve only just moved in, so please bear with us while we unpack.

There’s a bit more information on the pages to the right of here but please get in touch direct if you’re interested in what we do and we can paint the full picture.

Filed under: welcome message, , , ,

@steffanaquarone’s twitter feed


Join 15 other followers