Whole Foods Is All Teams

By most accounts, rank-and-file team members don't spend much time consulting the salary book. Once the novelty wears off, and people discover that the cashier in the next aisle (or city) makes roughly what they make, they focus on team goals and job satisfaction. That's not always the case at higher levels. According to Morgida, store leaders "tend to be more interested" in the salary book, "looking at their earnings potential if they go to this store or take that job."

Mackey leads a team composed of headquarters employees and regional presidents. He says the open-salary policy does spark disagreements -- but disagreements with a purpose. "I'm challenged [on salaries] all the time," he says. "'How come you are paying this regional president this much, and I'm making this much?' I have to say, 'Because that person is more valuable. If you accomplish what this person has accomplished, I'll pay you that too.' It leads to deeper conversations than you'd have otherwise."

2. Anything worth doing is worth measuring. It's one of the most popular aphorisms in business: what gets measured gets done. Whole Foods takes that simple proposition to remarkable extremes -- and then shares what it measures with everyone in the company. Mackey calls it a "no-secrets" management philosophy. "In most companies," he says, "management controls information and therefore controls people. By sharing information, we stay aligned to the vision of shared fate."

The curious team member at any level of the company has access to nearly as much operating and financial data as anyone in Austin. In Ron Megahan's Bread & Circus, for example, a sheet posted next to the time clock lists the previous day's sales broken down by team. Another sheet lists the sales numbers for the same day last year. Once a week, Megahan's store posts a fax that lists the sales of every store in the New England region broken down by team, with comparisons to the same week last year, as well as year-to-date totals. Another weekly fax gives sales information for every store in the company, although it doesn't break down sales by team.

There's more. Once a month, stores get detailed information on profitability. The report analyzes sales, product costs, wages and salaries, and operating profits for all 43 stores. Because the data is so sensitive, it is not posted publicly. But it is freely available to anyone who wants to see it. And store managers routinely review it with their team leaders. Since individual teams make decisions about labor spending, ordering, pricing -- the factors that determine profitability -- the reports are indispensable.

It's hard to overstate how devoted Whole Foods is to measurements. Once a year, for example, it conducts a morale survey to probe employee attitudes. This is a no-holds-barred exercise. The company asks questions about rank-and-file confidence in team leaders, store leaders, and regional leaders. It asks about fears and frustrations. It asks where the company seems to be straying from its values.

Brutally honest stuff -- the results of which, like almost everything at Whole Foods, becomes public information. The company describes the results of the morale survey in its annual report to shareholders. According to the most recent annual report, team members in the northeast region are disgruntled with the company's health insurance changes; employees in southern California worry that the Whole Foods gainsharing system "is increasing competition among teams and lowering overall store cooperation"; stores in Houston, Chicago, and west Los Angeles report low confidence in their leadership.

Does Mackey worry that Whole Foods distributes too much information to too many people across the company? Hardly. "If you're trying to create a high-trust organization," he says, "an organization where people are all-for-one and one-for-all, you can't have secrets."

3. Be your own toughest competitor. "All-for-one" doesn't imply complacency. Whole Foods is serious about accountability -- far more serious than lots of tough-talking companies with less humane values. Teams are expected to set ambitious targets and achieve them. But accountability does not imply bureaucratic oversight. At Whole Foods, pressure for performance comes from peers rather than from headquarters, and it comes in the form of internal competition.

Competition is ubiquitous at Whole Foods. Teams compete against their own goals for sales, growth, and productivity; they compete against different teams in their store and against similar teams in different stores and regions. This competition is a major reason why performance information is so available. It becomes the gauge by which every team can measure itself against every other team. Ron Megahan's little supermarket in Wellesley won't ever surpass Aimee Morgida's store in total sales -- but it can try to beat it in growth rates, employee morale, customer service, and other performance indicators.