Essay - An Analysis of the impact partnership, within the context of the John Lewis Partnership, in the development of commitment, with a focus on employees PDF

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An Analysis of the impact partnership, within the context of the John Lewis Partnership, in the development of commitment, with a focus on employees.
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The John Lewis Partnership (JLP) is renowned for employee’s (“partners”) owning the organisation, sharing the profits, perfor...

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An Analysis of the impact partnership, within the context of the John Lewis Partnership, in the development of commitment, with a focus on employees. Authored by Catherine Wiley Abstract The John Lewis Partnership (JLP) is renowned for employee’s (“partners”) owning the organisation, sharing the profits, performing successfully and having a democratic structure (Cathcart 2013). Nick Clegg commented in 2012 that Britain should adopt a “John Lewis economy” and JLP is often referred to as a business to not only compete against, but also learn from with a 15% increase in operating profits 2012/13 (Wintour 2012; Butler 2013; Mintel 2013). The concepts of affective, normative and continuance commitment created by Allen and Mayer (1990) are developed alongside the theory of behavioral and attitudinal commitment (Mowday 1979) as well as applying the KMV model by Morgan and Hunt (1994) to understand commitment of partners in JLP. Introduction Commitment is as increasing focus of organizations, for example Starbucks’ list their commitments: to the UK and to ethical practices (Starbucks 2013). JLP lists it’s commitments in terms of aims however Moorman et al (1992, p.316) define commitment as “an enduring desire to maintain a valued relationship” indicating that it is more of a set of activities with deeper intentions (JLP 2013a). Commitment and how to build and maintain has been researched for many years, with more recent focus on relationship commitment as a marketing tool. This paper focuses on combining these two bodies of literature, creating a model for JLP partnerships. Stakeholders A stakeholder is a beneficiary of an organization creating a mutually dependent relationship, and in the management of internal stakeholders two-way communication is essential (Johnson et al. 2011; Marens 2008). The focus of this exploration is employees as stakeholders. Partnership The Oxford Dictionaries’ (2013) definition of a partner is “a person who takes part in an undertaking with another or others, especially in a business or firm with shared risks and profits” which perfectly describes the term ‘Partnership’ within JLP. JLP (2013b) state their focus is on the happiness of its partners as well as sharing profits and knowledge through democratic leadership. Partnerships can be used to describe a variety of organizational structures including ‘Employee Stock Ownership Plans’ and ‘Common Ownership Models’ where the percentage owned, and value placed on employee participation in decision-making can vary significantly (Logue and Yates 1999; Sauser 2009; Guidi et al. 2008). JLP Constitution (2013c) states ‘The Partnership Council’ is used to represent the partners of JLP in terms of democratic decisions and development of policy.

Highlighting JLP complies with the third partnership type; Co- operations, defined by Rothschild-Whitt and Lindenfeld (1982) as an organisation which the workers own and manage, and Forcadell (2005) states it performs the most democratic partnership structure. According to Joo and Lim (2009), partnership can improve organizational commitment through the decision-making process, which JLP employ through their democratic structure. However, Cathcart (2013) summaries a range of scholars research and states JLP has been accused of running a “pseudo democracy” (Cathcart 2013, p.4) through the hierarchial structure of power which is discussed in the JLP constitution which “provides the principles and rules” for partners to work within (JLP 2013c, p.3). Commitment O’Reilly and Chatman (1986) state commitment is an element of psychological attachment which links to Iverson and Buttigieg’s (1999) advice for organizations to consider commitment in planning HR management to ensure low staff turnover. Commitment related behaviours and attitude are discussed by Mowday et al. (1979); behavioral commitment is the process of acting in a way, which goes beyond the norm. Attitude commitment is when “an individual identifies with a particular organization and its goals and wishes to maintain membership in order to facilitate these goals” (Mowday et al. 1976, p.225), therefore individuals apply effort, for the future success of the organization (Mowday et al. 1979). Attitude commitment is employed by JLP through encouraging partners to not only put effort into their work, which equates to the success of the company, but also creating a low propensity to leave due to the shared values, indicating the creation of behavioral commitment also. Morgan and Hunt (1994) conceptualise trust "as existing when one party has confidence in the exchange partner's reliability and integrity". Relationships cannot exist without the presence of trust (Rotter, 1967) and is in fact central to all successful relational exchanges (Morgan and Hunt, 1994). Figure 1. The Five Components of Commitment Iverson and Buttigieg (1999), built upon Meyer et al. (1989) theory stating commitment can have both positive and negative consequences to an organization, relating to Mowday et al (1979) theory of behavioral and attitude commitment. Affective and normative commitment tend to lead to positive outcomes such as low turnover and absenteeism, and employees accepting change, where-as to continuance commitment can lead to increased levels of inflexibility. This corresponds with Arthur’s (1994) study of commitment with the focus on turnover and HR management however, this does not confirm a strategy for creating continued commitment to an organization, with no attention to relationship commitment. Morgan and Hunt (1994) created the Key Mediating Variables Model (see Fig. 2) which places commitment at the centre of relationships, with trust feeding into it, and five antecedents and outcomes leading from the two constructs. Morgan and Hunt (1994, p.22) state relationship marketing success is fed directly by commitment and trust producing “efficiency, productivity and effectiveness” indicating the convincing need for organizational focus upon commitment.

Figure 2. The KMV Model Morgan and Hunt (1994) Application of the Components of Commitment Allen and Meyer (1990) argue the components of commitment are experienced simultaneously by employees, and each have different associated antecedents. Affective Commitment Demographic characteristics are said by Motazz (1988) to have little effect upon commitment, and instead Meyer and Allen (1991) discuss the role of the need for achievement and a personal work ethic and the positive correlation this has with affective commitment. JLP understand partners may have personal differences, in terms of levels of aspiration, however screening is used to ensure values are shared and offer opportunities for job improvement and role progression to further increase levels of commitment (JLP 2013d). Meyer and Allen (1991) theorize that a decentralized organizational structure and decision- making, together with formal policies and procedures, also help to increase commitment. Messages regarding partners’ input on decision-making, and rules and responsibilities giving authority and autonomy to every partner are observed throughout internal as well as external communications (JLP 2013c). It is said by Meyer and Allen (1991) that ‘work experiences’ influence affective commitment, such as reward distribution, support and job role clarity as well as, involvement in decision- making, job advancement, and importance placed in the organisation. It has been separated from ‘organizational structure’ and ‘personal characteristics’, however the many resemblances highlight how ‘work experience’ encompasses a vaster range of influences of affective commitment. Work experience factors can be identified within JLP such as the bonus reward structure, which links with commitment growth from rewards (JLP 2013d; Allen and Meyer 1990). ‘Job scope’ and ‘opportunity for advancement in role’, are addressed by the ongoing training and opportunities offered through management schemes as well as the association that a large profitable company continuously offer opportunities for personal and professional development (JLP 2013d; Meyer and Allen 1991). Continuance Commitment It is said by Becker (1960) that commitment is due to the costs or perceived losses with discontinuing an activity which include ‘side-bets’ such as the time taken to acquire skills, availability of alternatives and other job related benefits (Meyer and Allen 1991). In relation to JLP, perceived costs to partners are high due to the lack of alternative large companies adopting partnership structures for their employees as well as offering extras such as generous pension schemes and social activities including a surf club (JLP 2013e,f). These extras combined with the bonus structure, job position and ethos of the company equate to high levels of continuance commitment for all partners. Normative Commitment

The feeling of obligation and responsibility is the premise of normative commitment, and can be created in advance of committing to an organisation, and then built upon through ‘organizational socialization’ (Allen and Mayer 1900; Meyer and Allen 1991). An example of building normative commitment prior to employment is through JLP promoting their partner benefits externally through recruitment channels, and marketing and PR activities which have created a strong pull towards the company, and mean partners feel they should stay committed to their job because they are ‘lucky’ to have it. Together with the sense of duty to JLP because of continued training, being made a partner from day one, and loyalty to a team creates a strong sense of obligation, which in tern leads to commitment (JLP 2013f,g). Commitment is only beneficial if it has positive consequences to the organization. It has been stated by Allen and Meyer (1900) that it leads to reduced turnover, as well as relationships between certain components of commitment leading to different job behaviours. JLP reports its staff turnover levels of 17.7%, lower than industry average, are due to the partnership model having a focus of happiness for all its members (Sillitoe 2010). By looking at the three forms of commitment it could be deduced that JLPs focus is not on ‘happiness’, but instead creating characteristics of the partnership model, positively influencing commitment. Application of the KMV Model with Commitment focus Figure 3. Commitment focus on KMV Model Although trust is a feature of commitment in the KMV model, it has not been reviewed throughout the research, and therefore does not feature in the subsequent analysis. Figure 4. Applying KMV model to JLP Communication to KMV Commitment building feature Partners Antecedents Employee Ownership Employee Ownership SV/RB/RTC Video Knowledge SV Power SV Profit RB/RTC Partnership Council Democracy SV Partnership Survey Culture of the organization SV Partnership Values Change with the times SV Video Teamwork SV Social Groups (Choir, surf club) RB/RTC Working with friends SV/RB/RTC Core Development Working up RTC Programme Community Work SV Make a difference to the SV/RTC company Governance/Rules/Procedures SV/RB

KMV Outcomes Acq/Prop/Coop Coop/Acq Coop/Acq Prop Coop/Acq Coop/Acq/Prop Coop/Acq Prop/Coop/Acq Prop Prop Prop/Coop/Acq Coop/Acq/Prop Coop/Acq/Prop Coop

External Communication

Business Success

RTC/RB

Prop

Relationships Influence over lives

SV/RB/RTC RTC

Coop/Acq/Prop Prop

RTC = Relationship SV = Shared Values

Termination

Costs

RB

=

Relationship

Benefits

See appendix. 1 for examples Acq = Prop = Propensity to Leave Coop = Cooperation

Acquiescence

Figure 5. Applying KMV model to JLP, highlighting decision-making features From applying the KMV model to JLP it has been highlighted that in the main activities creating Relationship Benefits also create Relationship Termination Costs, as well as showing when Acquiescence is an outcome, so is Cooperation. From this, combined with research on partnerships and commitment highlighting decision-making as an antecedent, an amended KMV model is created. Figure 6. Partnership KMV Model The amended model focuses on commitment but the antecedents and outcomes have been changed in accordance with the research. Benefits and Termination Costs have been grouped together as they are created simultaneously, as are Acquiescence and Cooperation. Decision-making has been included as antecedent as this is a key factor within a partnership, and the influence of this upon commitment is discussed throughout the literature review. Figure 7. Applying Partnership KMV Model to ‘the Cooperative’ Partnership (The Cooperative 2013) Communication to Partners Ongoing training

Corporate meetings Corporate Regional Board

committee

BTC = Benefits SV T = Turnover

and =

Commitment building KMV feature Antecedents Share of the profits BTC Supporting the SV community Changing the world SV Having your say D Extra Benefits BTC

KMV Outcomes T/CA

Democracy

T

Termination

CA = Cooperation and Acquiescence

D Cost D Shared

=

CA CA T/CA T

Decision

Making Values

See Appendix. 2 for examples Limitations The Partnership KMV Model has been created after analyzing JLP, and has also been applied to The Cooperative successfully. This reduces the limitation as it indicates the amended model applies to two different businesses, however it has not been applied to organizations in non-retail sectors. Also, the model has a focus on employees within the stakeholder group and may not be an effective method of understanding commitment for other stakeholders. It can be applied to other stakeholder groups such as consumers, but this was not the intention of the model creation so may have flaws. Conclusion This study has highlighted the past research into partnerships and commitment, and shown gaps as well as indicated past theories have over-segmented antecedents and outcomes of relationship commitment. JLP partners create the three components of commitment simultaneously, and this feeds into the new Partnership KMV model creating commitment, typically leading to positive outcomes. The framework created applies to JLP; further research would need to be implemented to determine its application to other industries and stakeholders. References •

•

•

• Allen, N.J. and Meyer, J.P., 1990. The Measurement and Antecedents of Affective, Continuance and Normative Commitment. Journal of Occupational Psychology. 63. 1-18. • Arthur, J.B., 1994. Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal. 37. (3). 670 – 687. • Becker, H.S., 1960. Notes on the Concept of Commitment. American Journal of Sociology. 66. 32-42.

Critique:

Vivek, Beatty and Morgan (2012, p.1) critic the model by suggesting that it focuses too much on “enhancing, retaining, and maintaining relationships with existing customers”, and does not address the relationship with attracting new customers. They argue that the model needs to include customer engagement, which means the experiences that the consumer and non consumer has with the company. Palmatier et al (2009, p.2) stated that, “gratitude is an important missing mediator in the extant RM model (Morgan and Hunt 1994), one that influences performance outcomes beyond the contributions of trust and commitment.” They go on to add that relationship marketing investments in customers such as free gifts can led to “gratitude-based reciprocal behaviours” which can result in the company having a stronger relationship with their customers.

Ethics is key to the running of The John Lewis Partnership, and without it customers would feel there is a lack of authenticity and staffing would be managed in a more traditional way. These two factors are key to the success of John Lewis and Waitrose, so they need to keep doing what they are doing, performing in their absolutist ethical approach, in order to compete in the retail market....