Wholefoods Market, Do They Practice What They Preach?

Whole Foods Market, Do they practice what they preach? Festus Acha, Jaesang Kim, Wanda Moss, Linda Pressley, Alioune Thiam The Johns Hopkins Carey Business School Management & Organizational Behavior Professor Rick Milter March 22, 2010 Whole Foods Market, Do they practice what they preach? Abstract The purpose of this paper is to show a correlation between what is perceived about Whole Foods Market and what is factual about them. We intend to explore and investigate the following key points such as their mission statement, vision, their strategy for success, and empowerment techniques. We will look at how they motivate, compete with others, and the type of inspiration used as a whole to promote cohesiveness throughout their business. We want to feel out their communication techniques as well as the emotional intelligence of their employees. It will be an experience to observe their team leadership in action rather than by hearsay. Coaching and mentoring has to be an important function for such a global organization as well as the steps taken for decision making and problem solving. We have come to realize that change is inevitable in any business and we want to know what their plans for change are and how it will be dealt with. Lastly we take our information collectively and see just how Whole Foods holds up through our audit of their leadership. Our leadership audit of Whole Foods Market, Inc. (WFMI) was based on the following criteria: Mission & Vision Statement (Core Values) Strategy for Success Empowering Employees Motivation & Inspiration Competing without fear Communication Emotional Intelligence Team Leadership Effectiveness Coaching & Mentoring Problem solving & decision making Organizational Change Overall Management We graded them on a sliding scale of Excellence to Needs Improvement and based on the financial data and management of their competitors such as Kroger’s, Safeway, and Trader Joe’s their score was given based on overall performance in those areas. Their biggest competitor being Trader Joe’s being a privately held company it was difficult to obtain financial information to do an effective comparison. Whole Foods Market has a running history of being a family oriented company. It is also reported that upper management uses a hands off practice of allowing its employees complete autonomy in decision making regarding the operation of their stores. Based on primary information obtained through observations and interviews at multiple Whole Foods Markets throughout the Maryland area we are able to shed some validity to some of the theories currently circulating. We also have information that may show or allude to controversial information as well. During these interviews we talked with employees and the managers on duty. What we learned is what people say and what you see may not always be the same. Our secondary information was obtained through reports found through second party interviews, up to date journals and magazines such as Harvard Business Review. Vision & Mission (Core Values) Whole Foods Market came into existence on September 12, 1980. Workers for Whole Foods Market experience this organization as a positive paternalistic organization. It is characterized by very high trust levels, complete autonomy and accompanied by very little uncertainty. Their vision statement speaks of their objectives and goals reaching beyond a food retailer. It highlights its customer satisfaction, healthy employee environment, profits, investments and stockholders always ending on a positive note. Their mission is to lead by example. Some of their core values are things such as: Ensuring they are selling the best quality all natural and or organic products available for resale. Making sure their customers are always satisfied Support team members Invest in the community and the environment Great relationships with our suppliers and business partners Whole Foods truly believes in creating wealth through profits and growth for the company and its employees. However, on March 17, 2010 one of our team members Wanda Moss visited the Whole Foods Market located at 1001 Fleet Street, Baltimore, Maryland 21202. Her visit revealed that workers were friendly, outgoing, and very accommodating as she sought out a particular herbal seasoning to use in a seafood casserole. Her curiosity and interest in their herbs and spices made G. Singh, an employee more relaxed as she divulged her interest in their company for a school project. Ms. Singh has been working for the company for a little over four years she revealed. When questioned about the mission of Whole Foods as it pertained to her store and she replied that they are very good to her and they act as family towards one another. The employee was asked one other question in regards to the company’s position on unionized labor and she replied no one that she knows in her store wants to be in a union and that they like things just fine. Wanda Moss said she felt a defensive spirit as â€Å"G† responded. Nonetheless Ms. Moss continued to check out with her items and thanked the young lady for her time. Whole Food Markets employees are very knowledgeable about the store and its practices almost as if one has to rehearse. We have surmised either these employees are well prepared for inquisitions or the vision or mission statement of Whole Foods is genuine being practiced. We rated them good in their ability to mirror their vision and mission statement. Strategy for Success Which leads us to what is their marketing strategy to remain successful and move forward? Information obtained from their website suggests that they rigorously will be vigilante assessing their current situations in all aspects of the business in which they operate and examine as to how they can stay the front runner. Part of that plan is to expand geographically in the future and give consideration to altering their product mix to attract more main stream customers. Since they are not really clear on their plan of execution for expansion and innovation in altering their current mix, we rated them average and the need for improvement. Empowerment Their strategy will lead us to how they intend or are currently empowering their employees and low level managers to remain on the frontline for the business. What was learned is that their empowerment techniques equate to trust all day long. For instance the employees believe that with management placing an immeasurable amount of faith in them, a high value is placed upon them. That same value is transferred to the customers and other stakeholders that help them to remain profitable and a front runner in their field. Their CEO John Mackey is walking the talk by nurturing from the inside out to enhance the quality of benefits distributed in all of their stores. The empowerment of their employees and or team leaders is unique and inspiring so we rated them excellent in this category. Inspiration Whole Food Market was created by local business people who had the conviction that the natural food industry was ready for bigger stores. They decided to opt for the supermarket format that was hosted by only â€Å"half a dozen† stores providing natural food in the United States. In terms of nutrition, Whole Food Market claims to always look for the â€Å"highest quality, least processed, most flavorful and natural food possible†. They believe that their products are the purest within the US and that everything that you can pick up at the store will be healthy. The company also buys from local growers in order to support them and reduce their â€Å"carbon footprint†. That way, Whole Food Market is then really â€Å"committed to helping take care of the world around [them]† and the â€Å"support of organic farming and sustainable agriculture helps protect our planet†. The company also supports food banks and all sorts of micro lending operations in order to leave something positive to the community. Whole Food Market also believes that its employees make the company. They select them carefully, making sure that their values and the Whole Food market’s values are in sync. The company is trying to create a workplace where employees are pushed to improve and feel respected as well. Motivation Several factors have to be taken into account when assessing the origin of employees’ motivation. One important factor that motivates employees is that Whole Food Market support â€Å"advancement from within†. In other words, they promote their current employees to apply for the higher responsibilities positions. According to Whole Food Market, once an employee has gained valuable knowledge, he may qualify to apply for any available opportunity in the Whole Food stores and facilities. Whole food makes a point to post all the openings for positions â€Å"at team leader level or higher† only in their internal job site. It prevents outsider to access high level responsibilities positions as well as it promotes current employee to expand their product knowledge, develop their skills, enhance their value to the team, and advance inside the company. Another important factor that keeps the employees motivated is the benefit packages provided to them. Fortune Magazine recognized Whole Food Market to be one of the â€Å"100 best companies to work for during the last 13 years†. In 2009, Whole Food Market was part of the only 15 companies that would provide 100% coverage on their employees’ health insurance premiums. Their benefit packages include â€Å"health insurance, paid time off, retirement savings and generous store discounts. The company also claims to be unique in the way it allocates benefit packages. Indeed, since every team member is important to the companies, they all get a voice when it comes to the content of their benefit packages. Team members will vote every three years to determine the content of the benefit packages offered by the company. This system results in different benefit packages according to the country or region employees are working in. The Paid- Time –Off policy, for example, is different depending on where the employee is working. For US employees, the paid time off depends on whether the employee is working full-time or part-time. In Canada paid-time-off depends on the time spent within the company in years, and In the UK, every single employee gets 7 days and the possibility to add an extra day. The last factor (but not least) that we discovered to be pushing employees is the learning experience and the experience itself. Alioune Thiam, one of our team members interviewed a couple of employees at different positions. When they were asked the question † what motivates you† one of them spontaneously answered that the learning experience was her principal source of motivation when the other stated that he just love the company and what the company does for the environment. Competition Based on the multiple interviews held with the store managers, Whole Food Market does not consider other giants of the food industry as threatening competitors. They acknowledge that other stores also carry organic food but they are convinced that the high quality standard set is not rivaled. Employees also mentioned shopping at Whole Food Market as an experience where the customer and the team members are educated. They emphasized a lot about the learning experience that makes them unique and out of reach for other grocery stores. However, according to Hoovers, a business analysis company, Whole Food Market still has dangerous competitors. A business analysis of the Whole Food market shows us that The Kroger is the most important competitors to Whole Food Market closely followed by Safeway and Trader Jo’s. Even though these stores do not provide only natural, organic, healthy food, they do offer a wide variety of food ranging from organic/natural to less healthy and more commonly found nutrition. Communication Communication is essential in any organization and it would appear that Whole Foods has communication as one of its top priorities. There is great communication among team members as well as the different teams in each store. I visited the Whole Foods store in Mt. Washington and spoke with Joe Young, Associate Customer Service Team Leader regarding how communication. Mr. Young stated that the employees feel that the communication is very transparent, from team leadership to team members. Any communication from the corporate office in Texas is given to the regional offices. Information is then given to the stores and is disseminated to the team leaders who, in turn, give it to the team members. I asked about feedback from customers. Mr. Young stated that feedback from customers is encouraged. Whenever feedback is received from a customer, it is given to the team leader for whichever section it concerns. The question along with the answer is posted on a bulletin board for customers to see. This feedback response is usually given within a week. However, some of the research that I have found indicates that team members are not allowed to say anything about working at Whole Foods on social websites, such as Facebook. According to some blogs, John Mackey uses pseudo names to become â€Å"friends† with some of his employees on Facebook to keep a tab on what is being said about the company. These employees face repercussions from posting on the website. Communication Grade – Good. There seems to be good multi-directional with team leaders and customers. However, employees should be able to express themselves constructively through social websites and not feel they will be penalized. Emotional Intelligence Emotional intelligence is defined as an ability to recognize the meanings of emotion and their relationships and to reason and problem-solve on the basis of them. The employees I interview seemed to really enjoy working for Whole Foods. According to Fortune 500 Magazine, Whole Foods is listed as one of the best places to work and has been for the past 10 years. When I visited the Mt. Washington store, the atmosphere had a relaxed feel. People seemed to enjoy shopping there and the employees were attuned to the customer needs. While I was speaking with Mr. Young, he greeted several customers by name. Mr. Young pointed out the core values of Whole Foods which are listed on huge individual placards in the store. The quality standards were also listed individually on placards. As I stood in line to purchase my items, the cashiers had a great attitude. They also knew customers by name, commented on their purchases – one cashier spoke about the dinner and dessert from purchases of a customer. I also interview a long-time customer of the store. She stated she could not find anything to say negatively. She recently moved for New Orleans and shopped at those stores as well as the store at Mt. Washington, Maryland. She felt the employees enjoyed working at Whole Foods and would stop whatever they were doing to help customers, even if it meant walking over the whole store to help them find products. She felt that the service and atmosphere of Whole Foods makes customers feel good about what they are buying there. In her opinion, the team members take pride in the products that they sell. Emotional Intelligence Grade – Excellent Team Leadership & Effectiveness In the textbook The Future of Management, author Gary Hamel describe the type of management of Whole Foods. Each store is considered a team and inside the each store, there are departmental teams. According to my research, this concept seems to work. Leadership decisions are made from the bottom up instead of from the top down, which is the industry norm. Each departmental team has team leaders. It is very intriguing the way team leadership is chosen. The leader of each team is interviewed by a panel. The panel includes Regional Vice Presidents, various Team Leaders either from the same store or another store in the region, as well as a cross of team members. Mr. Young also said there is no â€Å"seniority† when choosing a leader. Leaders are chosen by the panel if they exhibit the ability to lead a team and not by how many years they have been with the company. Mr. Young also stated that when decisions affecting their team members need to be made, all team members are allowed to vote on the changes. For example, when it comes time to choose health care, the team members all vote for their health benefits. Team Leadership Grade – Excellent Coaching & Mentoring Decision Making The Whole Foods culture is built on decentralized teamwork. Decisions in Whole Foods are not made by upper management but each store has been empowered to make its decisions independent of the other. Critical decisions, such as whom to hire is made by those who will be directly impacted by the consequences of such decisions. Decision making in Whole Foods is made by teams. Each department and its team are responsible for all key operating decisions, including pricing, ordering, staffing, and in-store promotion. With regards to product selection, team leaders are given the authority to stock products they feel appeal to customers. Stores are encouraged to buy locally as long as the items meet the stringent standards of Whole Foods. With this empowerment given to teams comes accountability, which ensures that associates use their discretionary decision-making power in ways that drive the business forward. Part of Whole Foods’ strategy is to put decision right down to the front lines and hence teams make many important decisions. Problem Solving Teams maintain a culture in which open dialogue and debate is the norm. This is reinforced by openly addressing behavior that involves excessive criticism or cynicism. Not tolerating such behavior sends a strong signal to the team and sets behavior patterns. Team processes have a profound influence on team effectiveness. Effective processes ensure rigorous and optimal decision-making; generate buy-in from team members, balance the influence each member exerts on the group and minimize interpersonal conflicts while encourage constructive debate. Information and ideas of each team member is properly incorporated into the decision making process. Whole Foods has multiple processes built into its teams to achieve optimal team functioning. The tight linkage between business intelligence and decision-making authority at Whole Foods ensures that little problems do not have to compound into big problems before action is taken. Organizational Change Whole Foods Market started with a small single store. In 1978, twenty-five year old college dropout John Mackey and twenty-one year old Rene Lawson Hardy opened a small natural foods store, Safer Way, in Austin, in Texas. Two years later, John and Rene merged Safer Way with Clarksville Natural Grocery and then they opened the original Whole Foods market in 1800. Even though Whole foods Market focused on natural foods, it tried to change structure and management to improve its performance. In 1986, it was first time to purchase an existing store, when Whole foods bought the Bluebonnet Natural Foods Grocery in Dallas and converted it into a Whole Foods Market. After that, Whole Foods not only open new stores but also purchased their competitors in new regions. Through the expansion program, Whole Food Market reached out to potential customers. Whole Foods Markets launched a private label called Whole Foods. Whole Foods Market tried to find smaller manufacturers who produced quality organic products. The private label encouraged customers to return to Whole Foods Market. Its own Whole Foods brand became the first retailer to maintain a private label line featuring organic food products. In 1996, in order to resemble other Whole foods store, Whole Food Market started to transform the Mrs. Gooch's stores and made them adopt the Whole Foods Market name. The change in name caused a 5 to 10 percent sales drop. After that, Whole Foods was more careful about changing the names of acquired stores. To improve productivity, Whole Foods established a centralized purchasing system. By the end of 1997, the system facilitated the company to track product movement and prices. In addition, Whole Foods made a low priced private label, 365. The 365 products were different from the Whole Foods products. The 365 products did not provide organic products, but they were priced about 20 percent cheaper. The 365 products attracted more customers who typically bought groceries. Moreover, Whole Foods Market has expanded into global market. In 2002, Whole Foods Market expanded into Canada and two year later it entered the United Kingdom. In 2010, Whole Foods employs 53,300people in more than 290 stores in the U. S. , Canada, and the UK. The tenth-largest food and drug store in the U. S. , Whole Foods ranks 324th on the Fortune 500 list, with annual sales of approximately $8 billion. Whole Foods Market has high standards and provides organic and quality foods. In 2003, Whole Foods Market was designated America's first National Certified Organic Grocer. Three years earlier, Whole Foods was the first national food retailer to join the USDA advisory board to help increase the U. S. Organic Standards. In 2008, Whole Foods established stricter guidelines to reduce environmental impact and to require vendors to pass a third-party audit. Over the past decade, Whole Foods Market is increasing its reputation with organic, fair-trade, or locally produced food. Even though Whole Foods Market is a huge food store, it is going to change and to pursue what people need. Over the next decade, Whole Foods will offer more resources to emphasize healthful eating. If Whole Foods Market stops changing, it cannot survive in the food industry. Overall Management Whole Foods Market believes that customer experiences anticipate and predict its business outcomes. Whole Foods Market also knows employee performance has influence on customer experiences. Therefore, Whole Foods Market tries to satisfy its employees by offering adequate compensation program, safe and friendly work environment. These facts are able to motivate and guide employees to increase productivity and effectiveness. Whole Foods Market also makes employees feel like a part of the company. So every employee takes an important role to achieve its goals and their performances affect directly to the company’s outputs. Especially, Whole Foods Market is a workplace to respect for all individual team members and self-empowerment. At Whole Foods Market, there are five values to affect the employees’ performance outcomes. First, Whole Foods Market believes one of the most important jobs is talking to team members. Whole Foods Market knows what its team leaders say and do affect their team members. If team members cannot trust the leader, they also do not trust the mission of the company. Each leader represents their teams. Whole Foods Market knows communication is very important. So each leader attempts to share the mission and core values of Whole Foods Market. Also, Whole Foods Market emphasizes a self-directed team structure. It organizes Whole Foods store and company into a variety of teams. In small team organizational structure, every member is vital and important. The contributions of every member make the success of the team. Whole Foods think self-directed teams are the key work unit of the company. So Whole Food pays more attention to each team. To discuss issues, solve problems and appreciate each others' contributions, each team meets regularly. Whole Foods Market insists empowerment enhances the effectiveness of teams. When each team is fully empowered to do their work and to fulfill the organization’s mission and values, empowered organizations have great advantage. Empowerment improves creativity and innovation. Whole Foods support individual team members. Next, Whole Foods Market attempts to optimize transparency to all team members because an important element of trust is transparency. Whole Foods Market allows every team member to access information that affects their jobs and annual individual compensation report. When a company decides to hide some information, the motivation is a lack of trust. Whole Foods is afraid that the information that would cause more harm than good if it was known. However, Whole Foods is willing to take the risk. Without transparency, Whole Foods cannot reach out to high level of organizational trust. Finally, Whole Foods is not able to create high trust organizations without love and care. We are more likely to look for love and friendship with our families and friends, but not from our work. If the leadership expresses love and care in their actions, then love and care will flourish in the organization. For example, everyone participates in the meeting and gives the opportunity to voluntarily appreciate other members in the group for services. Appreciating team members helps encourage every team member. They want to get involved in their teams and trust each member. As a result, in 2010, Whole Foods ranked 18th on Fortune’s list of the â€Å"100 Best Companies to Work For. Appendix Table of opportunities: Table of opportunities: Competitors list: Leadership Audit References Diamond, D. (2009, October 1). Perception Vs. Reality. Progressive Grocer, 88(7), 34. Hamstra, M. (2010, January 1). Mackey No Longer Chairman? Supermarket News, 58(1), 1-7. Hoovers Company Records, 10952. Dow Jones Financial Data on Whole Foods Market. 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