CASE STUDY 5.1: THE WHOLE CULTURE OF WHOLE FOODS

There's a palpable delight in the atmosphere of a business whose employees are actuallyhappyand there is a visible difference when that atmosphere changes. Smiles come naturally. Help is offered without reservation. Prices may be a little steeper, but customers are less likely to balk. They know they are getting more for their moneyan experience with their product.

Whole Foods Market is a prime example of what can happen when you create culture that keeps employees happy, empowered, and engaged. The organic grocery super-chain booked $178 billion in fiscal year 2017 and currently has four hundred eighty stores in the United States, Canada, and the United Kingdom with another 100 stores under development. By the end of 2018, the company wants to reach five hundred locations; the ultimate goal is said to be one thousand. Yet despite its mammoth size and the notoriously staffing-challenged industry it occupies, Whole Foods has a remarkably low turnover rateabout 26 percent annually compared to the 90 percent standard. It's been named one ofFortunemagazine's "100 Best Companies to Work For" every year since the list began in 1998; the distinction is earned, in large part, by independent surveys of its employees.

How does Whole Foods keep its 91,000+ team members motivated? Founder and co-CEO John Mackey says it doesn't. You can't really motivate someone, he told a student audience in 2011; it's better to focus on selecting the right people from the start and create "conscious culture" in which motivation perpetuates itself. If that sounds a bit philosophical, it is. Mackey studied philosophy during the 1970s is the author ofConscious Capitalism, a book whose title has since become a buzzword in business. "Conscious capitalism" refers to an "evolved" capitalism, shaped by humanistic and environmental principals. This approach is not just a reflection of Mackey's social leanings; he argues that it is smart business. Increasingly, consumers want to purchase from businesses they can feel good about. And Whole Foods, as well as their new ownerAmazon, have principles that are aligned with the desire of the millennial workforce to make a difference in the world; they help Whole Foods attract motivated, high-quality employees.

Mission (Not Profit) Driven

Whole Foods makes money, to be sure, but Mackey makes it clear that profit is not his or Amazon's primary motivation. It's telling that among Whole Foods' eight core values (Table 5.1), only one of them is tied to the quality and performance of the physical goods in consumers' grocery carts, and there is not a single mention of price or convenience (compare that to the focus of a traditional grocery chain, like Safeway). Although "We create wealth through profits and growth" gets the number four spot, the other core values focus on ethical pursuits: sustainable and ecological farming practices, fair trade, and helping the community. In this way, Whole Foods positions itself more as the leader of a food/productmovementrather than simply a food/product provider. These were all reasons for Amazon to see Whole Foods as a great opportunity for them to further their own goals of "selling everything to everyone" in a new and efficient way.

Employees as Stakeholders

Investors are important, but Whole Foods stresses they are not the most important of stakeholders. For Whole Foods,stakeholderis defined broadly: it means anyone who has "an investment in what we do or sell," which includes customers, employees, suppliers, and the communities within which they operate. Decisions are made, ideally, with the interests of all these stakeholders in mindnot just those of the investors, as is the case in traditional capitalism.

And to keep its employee stakeholders happy, Whole Foods aims to empower them: employees at every level have input on decisions about policy, including benefit options, plus product offerings and more. Robust compensation doesn't hurt, and a stock option plan is available to workers at all levels, even the front-line staff manning cash registers or stocking shelves. A whopping 94 percent of the company's stock options are distributed to nonexecutives. At the same time, Whole Foods' open-book policy gives team members access to the firm's financial records, including compensation information for all associates, including the top management team and the CEO. Since 2007, Mackey himself earns a symbolic $1 per year, and executives may make no more than nineteen times that of the lowest-paid associate (the US average for top executive-to-worker pay ratio is 30:1). Together, these policies help to enforce a shared identity under which everyone feels equal and valued.

Other stakeholder-benefiting programs include the distribution of $10 million in grants to small food producers each year. Whole Foods holds seminars that teach small farmers and producers how to get their products onto its shelves. The company also donates 5 percent of its annual profits to a variety of nonprofit and community organizations. In the stores, employees are encouraged to recycle and reuse (a nod to the community in which a store operates, another stakeholder). Whole Foods was also the first to build its stores to meet Leadership in Energy and Environmental Design (LEED) Green Building Rating System.

Table 5.1Whole Foods' Core Values

1. We sell the highest quality natural and organic products available.

2. We satisfy, delight, and nourish our customers.

3. We support team member excellence and happiness.

4. We create wealth through profits and growth.

5. We serve and support our local and global communities.

6. We practice and advance environmental stewardship.

7. We create ongoing, win-win relationships with our suppliers.

8. We promote the health of our stakeholders through healthy eating education.

Source:Whole Foods. "Our Core Values."www.wholefoodsmarket.com/mission-values/core-values.

Cultivating Conscious Leadership

From empowering employees with fair pay, ample benefits, and decision-making powers, to grants that benefit small farmers, Whole Foods, especially with Amazon behind it, aims to be a corporation with a conscience. To that end, Mackey created the Academy for Conscious Leadership, located in Austin, Texas. With conscious capitalism as the guiding principle, the academy is another opportunity for Whole Foods to reinforce the culture it's worked so hard to build, through courses on sustainable agriculture, whole and organic foods, and fair trade. During four-day retreats and other special events, the academy "prepares leaders to lead from a place of service by guiding them through experiences that identify their higher purpose and create cultures of meaning."

Whole Foods' brand of conscious capitalism is no longer the relative novelty it was in 1997it's hard to find a large company these days without some sort corporate social responsibility program or a philanthropic arm. Though skeptics may argue the shift is all about marketing or positioning, paying attention to a broad swatch of "stakeholders"with a special focus on employeescan be a win-win. As Mackey's co-CEO Walter Robb told Snagajob in 2015: "[Whole Foods'] strong culture of empowerment is really the secret to the company's success. . . . Culture is the living, breathing heart of the company."

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