Whole Foods: Transparency + Innovation (case-study)

whole foodsSalary transparency

Have you ever wanted to know how much money your colleagues make? Whole Foods Market, the popular American supermarket chain, gives every employee access to company-wide salary information.  Similarly, managers are required to post their store’s sales data each day, along with regional sales each week.  Once a month, Whole Foods sends each store a detailed report on their profitability and sales.  Their unique emphasis on transparency is in the interest of avoiding certain abuses that often occur under typical corporate structures.

Co-CEO John Mackey introduced this open policy six years after founding the company, in order to foster a culture of “shared fate” by instilling this culture of sharing information in the workplace.  He states, “If you’re trying to create a high-trust organization, an organization where people are all-for-one and one-for-all, you can’t have secrets.”   This kind of transparency eliminates exaggerations about who is making what and leads to a greater justice in compensation for individual efforts. To learn more about how other companies have embraced transparency, read these blog-posts (one is a profile of a company that also publicizes salaries, and another lists best practices by a variety of transparent companies). 

Freedom to Innovate

In an attempt to decentralize decision-making, Whole Foods lets employees experiment and collaborate in new and creative ways.  One such example: a California Whole Foods store opened a tap room with artisan micro-brews without asking headquarters for permission.  Within a month, the taproom was making more money than the store’s seafood department, leading to the company now having 100 such taprooms across the country.

Store departments are organized into teams, made up of individuals that the group votes on.  These teams receive bonuses based on their sales success and are motivated by one another, rather than a manager, to improve.

HOW analysis:

The Freedom Report is a recent study which sets out to measure the “return on freedom” in companies. One of the key criteria of “freedom” in the report is that managers encourage employees to take risks and pursue good ideas, which is evident in the spread of taprooms in Whole Foods. Additionally, transparency is a key quality of  freedom, namely, “freedom from” information hoarding and opacity. A key finding of the report is that companies with these types of high level freedom outperform other companies in their industry, which helps explain why Whole Foods’ stock price has risen considerably in the past five years.

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