The Anarchist's Cookbook

Fast Take: Management Whole Foods Style

Imagine if every new hire had to win a two-thirds yes vote from employees before being permitted to join the staff permanently. And imagine if a list of everyone's pay was posted publicly, with names attached. Those are just two of the distinctive elements at Whole Foods, management ideas born back in the 1980s when CEO John Mackey and his colleagues were looking to scale up the work culture of the corner health-food store. Japanese management ideas were in vogue back then, and Japanese principles of team-based management are infused throughout Whole Foods' structure.

"Empowered" teams

Stores, and even individual grocery departments within stores, such as seafood or produce, still have a lot of say about what gets stocked, based on local products and local tastes. Regional managers design their own new stores rather than take blueprints from headquarters.

"No secrets" management

Whole Foods releases a flood of financial data, far more than most companies. It's aimed not at the public or the press, but really toward employees, in order to help them understand how their company is doing. The information starts with the most basic: Every store contains a binder with the previous year's gross pay for every company employee, including executives.

"Shared fate" from the front lines up

Mackey feels strongly that dramatic pay differences between the front lines of companies and the executive suites are corrosive over time: Executives and the employees who do the day-to-day work end up with completely different perspectives. At Whole Foods, executive pay is limited to 14 times the average pay of frontline workers. Frontline employees qualify for stock options, and the company says 94% of options go to nonexecutive staff.

"Shared fate," part two

Whole Foods has a distinctive profit-sharing feedback loop. Every four weeks, individual work teams (there are roughly 10 per store) are assessed for productivity, and profit sharing is awarded in every other paycheck. That's one reason staff members are careful about who they vote onto teams: Your closest colleagues have a direct impact on your paycheck.

"Team-member happiness"

Whole Foods has always been clear that customers, and their needs, are the number-one priority. Employees aren't far behind. Whole Foods has a liberal dress code, pays 100% of health insurance for full-time employees, and provides full-timers with 20 hours a year of paid time to do volunteer work.

Fast Take: You Decide

John Mackey runs a large coast-to-coast grocery-store chain with a uniquely decentralized style. The key is a single question, says Mackey. "I often ask, Whose decision is this?"

That's why employees voted last year to pick their health-insurance plan, rather than having it imposed from headquarters in Austin. Health insurance is the decision that frontline employees care most about, and whose elements they can most effectively judge.

The fundamental operating unit of Whole Foods is not in Austin, or in one of the regional offices, or even the 157 individual stores. The basic unit at Whole Foods is the team -- the produce, seafood, or bakery team at a particular store. Decisions, from hiring employees to what products to carry, are often made at that level, by a few dozen employees. That reflects the core decision-making philosophy at Whole Foods: Decisions should be made closest to the place they'll be carried out, should directly involve the people affected, and should leave out people who aren't involved. Simple ideas, but not the way most bosses think about their prerogatives. Here's Mackey's matrix for thinking about decision making.

Command-and-control decisions

These are the ones that Mackey makes himself -- or the "boss" in a particular setting makes. They happen when timing doesn't permit wide consultation, or when Mackey thinks the stakes are so high that he feels that he has to decide. "I almost never make a command-and-control decision," he says.

Consultative decisions

These are decisions that Mackey, the senior leadership team, or the appropriate group of people make -- but only after wide conversation and consultation with those involved. It's the most common form of decision making at Whole Foods. "I make a ton of decisions where I consult with people I trust, with the people involved," Mackey says.

Consensus decisions

These occur when the team involved strives for general agreement. Each team at each store meets monthly to provide a forum for this kind of decision making; among the decisions reached by consensus are hiring decisions: Every new employee must be voted onto the staff after a tryout; it takes a two-thirds yes vote from the team to stay. Even Mackey's National Leadership Team of 24 people routinely votes on decisions. "I don't overrule the National Leadership Team," says Mackey. "I've done it maybe once or twice in all these years."

"I will make a decision about what kind of decision something is," says Mackey. The most common decisions, he says, are also his favorites: "decisions that are not my decision."

Charles Fishman, Fast Company's southeast bureau chief, first wrote about Whole Foods in 1996, for issue number two.