Fair shares pay off for the firm that delivers the goods to its staff

There are some who refuse to buy cushions from anywhere else and swear blind its electrical department is superior to any other department

store. So much so, that, while much of the High Street has been struggling to shift stock, a steady stream of customers has continued through the doors of John Lewis. At Christmas, previous sales records tumbled and the World Cup has seen the retailer enjoy a much better performance than the England team, with sales of televisions up by 42 per cent.

However, even by its high standards, this week is shaping up to be a pretty good one for John Lewis, with the company's model cited as the solution to everything from Royal Mail's problems to dwindling church congregations.

Amid a sharp decline in the number of letters and parcels and a massive pensions deficit, the future of Royal Mail has looked increasingly uncertain and ever since the General Election, rumours of a possible privatisation have been circulating.

In last month's coalition agreement, the Government said it was committed to seeking what it called "an injection of private capital". As further details emerged this week, it seems the postal service may be on the brink of a John Lewis-style overhaul where every employee would have a stake in the new company.

Postal affairs minister Ed Davey, even went so far as to name-check the company, adding: "Employee share ownership can be critical in turning round a company's fortunes. With great British companies and organisations like John Lewis already involved, it shows how powerful it can be."

So just what is the secret of John Lewis's success? The company and its supermarket arm, Waitrose, employ 70,000 permanent staff, who in the world of co-ownership are always referred to as partners. Each and every one of them shares in the benefits and profits of the business. In this egalitarian world of retail, the managing director's salary is capped at 75 times the average wage of his lowest earners, results are reported on a weekly rather than a quarterly basis and once a year they all gather in-store to hear how much bonus they will all receive. The partners also get access to a 16th-century castle with private beach in Poole harbour, a watersports club in North Wales and a country house hotel in Hampshire.

The philosophy of putting staff before shareholders was the brainchild of John Spedan Lewis, who decided it was "all wrong to have

millionaires before you have ceased to have slums" when he took over

his father's Oxford Street department store in the 1920s.

Many thought Lewis would live to regret his sudden rash of

philanthropy, but his decision to introduce shorter hours and longer holidays saw him turn round an annual loss of 8,000 into a profit of 20,000.

Today the company is headed by the chairman and board of directors, but a council of 82 partners, representing each department from pictures and lighting to floor coverings and furnishings, have a direct say in its running. Given John Lewis's pre-tax profits have recently risen by nearly 10 per cent, giving the staff a bonus of around two months' salary each, it's easy to see why the Government is keen to roll the template out to other companies, schools, hospitals and even local councils.

However, while John Lewis makes it look easy, the reality of co-ownership is complex. The involvement of staff means vital decisions can take much longer to make and ensuring there's enough money to invest and develop the business after bonuses have been paid out is a hurdle Royal Mail may not be ready to cross.

"There has been a long-held belief that shareholder value is the only way to judge a company" says a spokesman for the think-tank Demos. "In fact, a company is about far more than the prices of its shares. It's about people, relationships, knowledge and reputation, all of which

have enormous impact on long-term value.

"Having said that, co-ownership is not a panacea. It needs careful thought and planning. It can certainly work in some sectors, but big complex enterprises running on fine margins may be more problematic."

While the jury may be out on whether Royal Mail can be run on the department store's model, the John Lewis effect is already being embraced by the clergy. The Diocese of Wakefield has drafted in former customer service manager, Mark Hope-Upwin to give tips on how churches can make themselves more welcoming.

Since John Lewis has long been seen as a temple to Middle England, it clearly knows a few things about inspiring devotion.