John Mackey is not your typical CEO. But it works—better than expected.
Whole Foods has skyrocketed in popularity in the past 10 years. What once began as a three-floor joint in Austin, Texas, Whole Foods is now nationwide, and is taking the industry by storm. This notoriously overpriced, but wildly popular grocery store (with a penchant for “natural, local, and organic” labels), is now one of the largest agricultural powerhouses of the decade.
“In the last five years, grocery sales in the United States have grown a total of 13%, or 2.5% a year compounded. Here, in reverse order, are the year-over-year sales increases at Whole Foods, starting with last year: 17%, 21%, 21%, 23%, and 14%. For Whole Foods, the five-year total growth in U.S. grocery sales would have been a bad single-year performance.”
Mackey makes it clear: Employees first.
In the food-services industry, there is a common underlying business model: customer service above all. This concept is respectable, but idealistic; especially in big firms, it dumps responsibility on front-line employees, while leaving executives behind the scenes in the office, with little control over what happens in day-to-day operations. This, also, tends to come at the expense of employee care. Most commonly, those who work with the customers every day—the cashiers, individual store managers, clerks—are the ones who get pushed under the rug. In stores and restaurants, especially chains, employee negligence is common—moreover, it’s even harder for executive leaders and those high up on the ladder to notice (and do much about) the everyday standards of those at the bottom.
Oftentimes, customer service suffers, not because of an ineffective business plan or faulty products, but because the servers who interact with them don’t feel valued.
John Mackey, however, has leveled the playing field, making for a completely restructured (and incredibly effective) company style.
“The company had a written "Declaration of Interdependence" …It had a set of written core values ("satisfying and delighting our customers," "team-member happiness and excellence"). And most striking of all, even for a small company, it had a set of quirky management rules that made Whole Foods an odd but effective workplace.”
To add, Whole Foods has an employee wage rate book in each store, which compares, openly and candidly, the salaries of each and every worker from the past year, from cashier to Marketing Director. Executive leaders are limited to 14 times the salary of those working the floors, and frontline employees aren’t limited to one hourly wage, either—they qualify for stock options over executives, and have 100% of their health insurance paid.
“Chris Hitt, who was at Whole Foods for 16 years and who left as president in 2001, says, ‘Customers experience the food and the space, but what they really experience is the work culture. The true hidden secret of the company is the work culture. That's what delivers the stores to the customers.’”
In doing so, Mackey has created one of the most long-lasting and effective work cultures in the United States. By stepping away, rather than strengthening his grip, Mackey has allowed the seeds of his idea to blossom into a booming and profitable food empire.
What do you think about such a decentralized style of management?
The full article, “The Anarchist’s Cookbook”, inspired this story. http://www.fastcompany.com/50426/anarchists-cookbook