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Capitalizing on Human Resources Encourages Growth at Whole
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Just Another Word
by Peter Block
and Lows Of Participation
by Cathy Kramer
Business News Briefs
for a Change
Foods Includes Whole Self
Capitalizing on Human Resources Encourages Growth at Whole Foods
Walk the aisle of your local grocer and look around. Do
you see shelves filled with organic nut butters, books on aromatherapy and
giant bins filled with coffee beans? If so, you are probably one of millions
of Americans shopping in a new breed of store - the organic supermarket.
From the exotic to the mundane, shoppers find products that feed their families
and ease their minds. And it's not what these stores do have that matters
- it's what they don't. You will not find breads with artificial colors,
sweeteners or synthetic preservatives; meats with antibiotics and synthetic
hormones; or healthcare products tested on animals.
Attribute the trend to an awakening social conscious, pressure to live healthier
lifestyles, or call it the latest fad - whatever it is, it's big business.
A recent Business Week article reports that organic-food sales have been
growing 20-25 percent in the last seven years. And Whole Foods Market is
leading the way.
Five years ago, Whole Foods operated only 10 stores totaling $92.5 million
in sales. Today, through aggressive mergers and acquisitions, the Austin,
Texas-based chain employs more than 11,000 people in 75 stores, under the
names Whole Foods Market, Wellspring Grocery, Bread & Circus Whole Foods
Market and Fresh Fields. It is the largest chain of natural food supermarkets
in America. Combined, these stores accumulated total sales of $1.1 billion
in fiscal year 1997.
But it's not their appetite for growth that makes Whole Foods unique - it's
their culture. Every store is organized into self-managing teams responsible
for their own hiring, training, ordering, scheduling and outplacement. Gainsharing
and stock-option programs reward team members for store and team performance.
An open-book communication policy provides every team with reports on sales,
labor, margins, balance sheets and other key financial information. Every
team is expected to run their department as a business. From the cheese
shop to the meat counter, every team member is given the tools to make decisions
about how they work.
News for a Change Editor, Bill Brewer, spoke with Jody Hatch, vice president,
human resources, Whole Foods Market, about the challenges of tremendous
growth, merging organizations and managing employees in an empowered environment.
NFC: Whole Foods
has experienced rapid growth through mergers and acquisitions, what are
the challenges of incorporating new employees into the system of accountability
and responsibility at Whole Foods?
do have significant challenges from a cultural standpoint. For the employees
of the company that we merge with everything can be quite traumatic. One
of the interesting things that I've noted in the last couple of mergers
that has been difficult for the employees is our notion and our core value
In traditional organizations it's "so and so told me what to do, so
I'm doing it." It's a way to abdicate responsibility and ownership.
We certainly have company policies and we certainly have people that direct
other people in how to do their jobs, but we also have the notion that if
you're on a team you're accountable for the success or failure of your team.
You can hire whomever you want on the team as long as their references check
out and as long as they meet basic good hiring practices. You can hire four
or five people if you want or you can hire two. We hope you stay within
the wage guidelines and labor budget, but if you see a shining star and
you want to pay them a little bit more, you can, because it's your team.
You would have to answer to your co-workers for any decisions like this.
And of course financial results are key as well, so there are some built
in checks and balances that guide team decision making.
Even though you have the latitude to make certain decisions
and go outside of the box, you are accountable. That can be a bit scary
for some people. So, we've seen some, especially team leaders of the companies
we've hired, get a little nervous with this concept. A couple have actually
left. They said, "No, I don't like this. I like being in a safer environment
where I don't have to shoulder the responsibility and be accountable."