Whole Foods started out in 1980 with one small store in Austin, Texas. Today it employs 54,000 employees in more than 300 stores in North America and the United Kingdom. And despite having higher product prices than most of its competitors, during the recession, following a downward dip, the company managed to emerge with higher sales and strong profits. How has Whole Foods done it? For one, as the company expanded Whole Foods adopted many of the successful practices of the companies it bought—especially those of Boston-based Bread & Circus, renowned for its fresh produce, meat, and seafood. "Whole Foods has been very smart about their expansion program, taking time to digest acquisitions before moving on to the next one," says Darrell Rigby, a retail consultant. Second, the company has stayed true to its vision. It works to ensure that all of its efforts and practices are externally and internally aligned with the following three principles: Whole Foods, Whole People, and Whole Planet.

The "Whole Foods" principles relates to the company's mission to provide customers the highest quality, least processed, most flavorful and natural foods possible. "Whole planet" relates to the company's endeavors to protect the environment and nurture the communities in which it operates. For example, in addition to participating in a multitude of green initiatives, at least 5 percent of annual profits go to local charities.

The company's "whole people" principle is arguably a huge part of its success. Whole Foods' website points out that the grocer's employees are the company:

Our success is dependent upon the collective energy and intelligence of all our Team Members. In addition to receiving fair wages and benefits, belief in the value of our work and finding fulfillment from our jobs is a key reason we are part of Whole Foods Market.

The key word? Team, Whole Food isn't "run" by executives and store managers but by in-store teams. Each team is responsible for one area of the store, such as baked goods, meat, poultry, and so forth, and is empowered to make product, pricing, and staffing decisions. This high degree of decentralization allows the stores to better tailor their offerings and services to meet the needs of the communities, which helps them be more competitive.

The decentralized approach begins on the front end with hiring, As Whole Foods grew. it found that centralized, online recruiting left local stores awash with resumes but not much knowledge of applicants. Applicants can still submit resumes online, but now each store has its own human resources department that aids in hiring and recruiting and in-store kiosks where applicants can apply.

Many interviews at Whole Foods Market are conducted by teams of employees who look for applicants who share the 'Whole food, whole people, whole planet" vision. Once an applicant is hired, he or she is assigned to one of the store's teams for a trial period, after which the team members vote to determine if the person deserves a full-time spot on the team. Think of it in terms of the TV show Survivor, but in reverse in that newcomers have to be voted onto the island, or team. The same processis used at the corporate level for employees who want to join the firm's marketing, human resources, finance, and IT departments.

The voting is not done for entertainment or team-building purposes, though. It's crucial because it affects workers' paychecks. The teams are treated as separate profit centers and rewarded with monthly bonuses if their profits exceed a certain level. Consequently, nobody wants to vote in a slacker. (Talk about peer pressure.) Not surprisingly, the company does not have to do a lot of monitoring of its employees. They do it themselves. "We don't have lots of rules handed down from headquarters in Austin," John Mackey, the founder of the company and its CEO, has said. "Peer pressure enlists loyalty in ways that bureaucracy doesn't."

Speaking of bureaucracy, Mackey has also been quoted as saying that Whole Foods is a "social system" and not a "hierarchy." He wasn't kidding. In many companies CEOs earn literally hundreds of times what the average worker does. Not at Whole Foods. Mackey's salary and those of other executives are capped at 14 times the average annual salary of a full-time employee. If he and other executives want a raise, they have to increase what employees are paid. Employees also vote on all company-wide initiatives, and full-timers get 100 percent of their health care costs paid for—under plans the employees have selected. And unlike most firms, employees own about 95 percent of the company's stock options.

Invariably, Whole Foods lands on Fortune's 100 Best Companies to Work For list each year "I love working at Whole Foods, and I hope to grow with this company for years and years to come," says Simon William Griffith, one of its employees. "This company empowers me and makes me feel valued and valuable."

Questions

1. Why don't all companies treat their employees like Whole Foods does? Do you think they will in the future?

2. Mackey is one of the firm's founders. But is the company at a disadvantage once he retires, given Whole Foods' salary cap? And will the new CEO have to be voted "in"?

3. Can "eco-consciousness" effectively be incorporated into high-performance work systems? Sources: Gary Hael and Bill Breen, "Creating a Community of Purpose: Management Innovation in Action," Harvard Business School Press, 2007: "Whole Foods Market's Unique Work Culture and Practices,”

Answer rating: 100% (QA)

1 The company WF believes that if they made their employees happy they will make the customers happy ... View the full answer