John Lewis model doesn’t float the City’s boats

Now, another term has shoved it aside. Mutualisation. As in old-fashioned building societies which, if we still had them, would not have brought the banking system crashing down. And as in that exemplar of sound common sense and old-fashioned integrity, John Lewis.

If John Lewis is a good business, the banks are bad. The store group pays its staff bonuses of 15% and that is regarded as fine. When a bank pays its staff bonuses it is a target for opprobrium. But then John Lewis did hand out only 15%, not the 100% or 200% or 300% or more regarded by some in investment-banking circles as the norm.

All permanent staff, regardless of position, get the same 15%. They're all "partners" and everyone uses the same facilities (there are no lifts or eating areas reserved for senior management). The in-house paper, the Gazette, contains letters to the high-ups from partners with this or that complaint in a way which would not be tolerated in a City firm.

Staff get a 12%-25% discount on goods they buy. The pension scheme is non-contributory. There are offers galore for holidays and theatre tickets. There are numerous leisure and sports societies. And after 25 years' service they are entitled to six months' paid leave.

John Lewis grows organically, not via acquisition. Its senior people are groomed, not poached from outside. Its staff are older, on average, than elsewhere and they stay longer.

Charlie Mayfield, the chairman, who sits atop 70,000 staff, is paid less than £1 million a year, a level which many in the City at much smaller partnerships would regard as derisory for his degree of responsibility. And he has no share options due to him.

That's not to say John Lewis is all sweetness.

There are those among the partners who believe they should all be paid an identical amount, regardless of position, length of service and seniority, including Mayfield. At times, holding the ship together must be a nightmare.

But everything is up — sales, market share, profits. Those are measures the City understands and appreciates. Yet, the love-in goes no further.

Indeed, what is puzzling about John Lewis is that the same City figures who shop there — who would not dream of going anywhere else for a fridge and buy all their weekly groceries from its food chain, Waitrose, and constantly sing its praises to the heavens over the dinner-party table — do not apply the same lessons to their own organisations.

Perhaps Mayfield's predecessor, Sir Stuart Hampson (14 years in the post), hit it on the head when he said to me once: "If you want a yacht and racehorses, don't come and work for John Lewis." For many in the City that would be a step too far and that's the problem.

In hindsight I always knew something was fishy...

Twice recently, I met Elio Leoni-Sceti. And he didn't drop any hint that he was leaving EMI.

Similarly, last year, I spent some time with Mike Geoghegan of HSBC and there was no suggestion he would soon be announcing his relocation to Hong Kong.

When such things happen, your immediate reaction is to beat yourself up — did I not ask the right question? Should I have realised? But even if had put them on the spot they could not have answered honestly — not without telling their own people first or, in Geoghegan's case, falling foul of Stock Exchange disclosure rules.

Even so, was there anything in their demeanour or what they said that afforded any clue? Well, yes, there was.

Both men at first cancelled, then begged to delay our meeting. When I saw Geoghegan he wanted to show me his state-of-the-art, hi-tech monitoring system. By pressing a button or even the giant plasma screen on his office wall he could bore down, right through HSBC's vast empire, to individual branches and their performances. And he could do that from anywhere in the world.

In other words, he did not need to be in Canary Wharf in the HSBC building but could be in Hong Kong, for instance. Except he did not say it so specifically. He also spoke at length about China and the emerging Far East markets and how HSBC with its historical stronghold in Hong Kong was ideally placed. And how, increasingly, the bank was looking east.

Nothing special in that — if I had a pound for every corporate chief who has banged on about China, I'd be as rich as Mike Geoghegan — but the pointers were there.

As for Elio, he was not quite as jaunty as I remembered, not so gushing about the future. I put that down to the relentless task of running EMI. He also did not go into much detail about the plan he was due to be preparing for the music group's investors but I attributed that to the need for them to be told first. He was just as charming and good humoured, repeatedly flashing a big white smile. When I said, after his departure was announced, he had hidden it well, he said, laughing, "I am Italian."

Hindsight is playing tricks — I couldn't have known.