Reference no: EM132178889

Management in Action

Teamwork Is a Driver of Success at Whole Foods Market

Whole Foods Market was established in 1980. In 2015 it had grown to 413 store locations and 91,000 employees in the United States, Canada, and the United Kingdom. The company is the first certified organic grocer in the U.S. Whole Foods “only sells products that meet its self-created quality standards for being ‘natural’, which the store defines as: minimally processed foods that are free of hydrogenated fats as well as artificial flavors, colors, sweeteners, preservatives, and many others as listed on their online ‘Unacceptable Food Ingredients’ list.”105

Whole Foods was rated as the 75th best place to work in 2016 by Fortune. This rating is partly a function of the company’s commitment to teams and an egalitarian culture. For example, the company has a policy capping executive salaries at no more than 19 times the average worker.106

Organizational Culture

Whole Foods creates competitive advantage through its quality products, service, and organizational culture. An organization’s culture is driven by its mission and values. Whole Foods is clearly a mission-driven company. Its managerial practices and procedures are guided by its purpose statement and core values. The company’s purpose statement is “With great courage, integrity, and love—we embrace our responsibility to co-create a world where each of us, our communities and our planet can flourish. All the while, celebrating the sheer love and joy of food.”107 You can see the theme of collaboration and teamwork in this purpose statement.

The theme of collaboration and teamwork also shows up when considering Whole Foods’s core values. They include the following: sell the highest quality natural and organic products available; satisfy, delight, and nourish our customers; support teamPage 462 member excellence and happiness; create wealth through profits and growth; serve and support our local and global communities; practice and advance environmental stewardship; create ongoing win–win partnerships with our suppliers; and promote the health of our stakeholders through healthy eating education.108

The culture at Whole Foods focuses on team-based activities and transparency. All employees are encouraged to participate in monthly team and store meetings, as well as hiring decisions. According to one business writer, the company “integrates the principle of transparency. The company aims to keep stakeholders informed. Whole Foods Market provides financial reports not just to investors but also to employees. Employees use this information to understand the firm’s situation.”109 The company also makes its annual individual compensation report available for all to see.

Structure, Hiring, and Rewards

Each store is structured around 8 to 10 semi-autonomous teams. Each teach represents a department or section of the store such as produce, meat, prepared foods, and checkout. The teams are given autonomy and empowerment. Tom Neal, the store team leader in Glastonbury, England, commented that “workers are empowered and encouraged to learn about the products, resolve problems and take part in the company’s growth.” As examples, he noted that “if there’s a new kind of cheese, everyone gets information on it and they all try it. We’re always trying to bring in new kinds of produce. When the first crop of peaches comes in from Georgia, we all try it so that when the customer comes by you can say, ‘I’d give ‘em a week,’ or ‘They’re comin’ in nice this year.’”110

Teamwork extends behind the stores. Regional presidents are considered a team, and founder John Mackey is co-CEO.

The hiring process revolves around team input. “New associates undergo a 60-day process that involves a variety of interviews, including phone interviews, one-to-one interviews with store leaders, and panel interviews with teams built from recruiters, managers, and select employees.” Once hired, store managers provisionally assign the employee to a team, but only on a trial basis. “After the trial period, the existing team votes on whether to fully vest the new associate. It takes a two-thirds majority vote from the team to become an employee. The voting step is required, but the method is left up to the team. New associates who don’t get voted in are off the team and must either find a new team—repeating the trial period—or leave the company.”111 This process is used for all employees.

Teams are also the basic unit of measurement for performance and rewards. All teams are given “their profit per labor-hour every four weeks, as well as their historical performance, the performance of other teams in their store, and the performance of similar teams in other stores.”112 Teams ultimately compete against other teams and themselves as one method to improve performance. Bonuses also are based on team data. The greater the increase in a team’s performance gains, the more team members receive in bonus pay.113

FOR DISCUSSION

1) Are the department teams at Whole Foods more of a group or a team? Explain your rationale.

2) What does Whole Foods do to promote collaboration and cohesiveness among their teams?

3) What are the pros and cons to the company’s hiring and rewards process? Discuss.

4) The text discussed seven considerations for building a group into an effective team. To what extent has Whole Foods effectively implemented these considerations?

5) What is your biggest takeaway about teams based on this case?