From The Atlantic – Train your workforce and profit handsomely.

The Anti-Walmart: The Secret Sauce of Wegmans Is People

DAVID ROHDE

MAR 23, 2012

An East Coast supermarket chain shows that a business can generously train its workforce and profit handsomely

Reuters

ROCHESTER, N.Y. – Cashiers are barred from interacting with customers until they have completed 40 hours of training. Hundreds of staffers are sent on trips around the U.S. and world to become experts in their products. The company has no mandatory retirement age and has never laid off workers. All profits are reinvested in the company or shared with employees.

A doomed Internet startup? Occupy Wall Street fantasy? Bankrupt retailer recently purchased by Walmart?

No, a $6.2 billion-a-year, 79-store-supermarket chain with cult-like loyalty among its customers. Wegmans, which operates its 79 stores in New York, Pennsylvania and four other East Coast states, shows that a business can generously train its workforce and profit handsomely.

Privately owned by the Wegman family, the chain employs 42,000 people – 20 times the number who work for Facebook – and defies quarterly-driven Wall Street wisdom. Executives say their most important resource is their workers.”Our employees are our number one asset, period,” said Kevin Stickles, the company’s vice-president for human resources. “The first question you ask is: ‘Is this the best thing for the employee?’ That’s a totally different model.”

Yet the company is profitable. Its prices are low. And it is lauded for exemplary customer service.

“When you think about employees first, the bottom line is better,” Stickles argued. “We want our employees to extend the brand to our customers.”

The Wegmans model is simple. A happy, knowledgeable and superbly trained employee creates a better experience for customers. Extraordinary service builds tremendous loyalty. Where, though, is the profit?

High volume, according to company executives. The chain’s stores are enormous – usually 80,000 to 120,000 square feet – larger than a typical Whole Foods and roughly double the size of a traditional supermarket. And they feature a dizzying array of 70,000 products, nearly twice the number available in a standard grocery store. Across the East Coast, Wegmans supermarkets have the highest average daily sales volumes in the industry.

Employees are omnipresent in stores and do seem knowledgeable. With little prompting, they launch into exhaustive but friendly accounts of where the meat, fish or produce they sell hails from, what each item tastes like and how best to prepare it.

A fish salesman raved about the exhausting standards of the company’s distributor in Alaska. A butcher said he had visited the ranch where a steak came from in Montana. And Maria Benjamin, a 38-year Wegmans veteran, started running a store bakery after managers loved her homemade Italian cookies.”They let me bake whatever I want,” said Benjamin, one of 1,015 people employed at the company’s 135,000-foot flagship store in Pittsford, New York. “They’re really down-to-earth, wonderful people.”

Executives say the company is also able to invest in its employees and focus on steady, strategic growth because it is not publicly traded. They said cutting jobs or shipping them overseas was, in part, the product of having to relentlessly please the stock market.

“Some of that is that public mentality,” said Stickles, who has an MBA and once planned to be a stock broker. “The first thing they think about is the quarter. The first thing is that you cut labor.”

The Wegman family, which grants few interviews, has owned and run the company since 1916. Robert Wegman, whose father and uncle opened the first store, dramatically expanded the business in the 1970s by being one of the first chains to vastly expand store size, include pharmacies and use bar codes.

Today, the chain is run by Robert’s son, Danny, 65, and his two daughters, Colleen, 41, and Nicole, 38. Mary Ellen Burris, a 78-year-old senior vice-president and family confidant, said the owners refuse to open more than three stores a year because “we cannot continue to be the best if we try to go at a faster pace.” She said the family has no interest in taking the company public.

“No, absolutely not,” Burris said. “It takes away your ability to focus on your people and your customers.”Like other companies, Wegmans has made mistakes. Over the years, it has had to close nine stores that failed to generate adequate revenues. And critics have accused it of moving stores out of poor urban neighborhoods and focusing its operations on wealthy suburbs. And while the benefits are generous, its pay rates are good, not extraordinary.

Wegmans has also clearly benefited from being based in Rochester, a small but historically prosperous area in upstate New York that was the birthplace of Western Union, Kodak, Xerox, Bausch & Lomb and other companies. Wegmans treats its employees well in part to keep them from gravitating to other firms.

Competition has also forced the company to change. The arrival of Walmart-owned supermarkets caused a sharp reduction in prices in 2004.

“It was clear that people were gravitating to the discount stores,” said Jo Natale, the company spokeswoman. “And so we completely changed the way we did our prices.”

But she and other executives insisted that Wegmans’ real advantage was the company’s happy, high-quality workforce. It sends butchers to Colorado, Uruguay and Argentina to learn about beef. It sends deli managers to Wisconsin, Italy, Germany and France to learn about cheese. Last year, it awarded $4.5 million in college scholarships to employees.

The company has half the turnover of its peers. In February, Fortune magazine declared it the fourth-best company to work for in America in 2012. In 2005, it was number one.

“What some companies believe is that you can’t grow and treat your people well,” Burris told me. “We’ve proven that you can grow and treat your people well.”

Wegmans is a model. It shows that companies can train, innovate and profit at the same time.

This article also appears on Reuters.com, a partner site.

THE CURSE OF THE EMPLOYEE SATISFACTION SURVEY

** An open letter to my HR Friends **

Dear HR Friends,

Fundamental for an organization to thrive and grow is having talented employees who are committed, motivated and engaged.screen-shot-2016-12-29-at-5-47-43-pmThis is an accepted conclusion of scores of studies on employee engagement, now a commonly overused buzzword with an entire leadership curriculum behind it. Research studies, as cited by Debbie Hance, Head of Business Psychology, Head Lamp, HRZONE.com – such as those by UK government’s 2009 review on employee engagement [1], Gallup [2] and the Corporate Leadership Council [3] –

“[Research studies] champion the transformational possibilities of engagement and seduce us with the promise of increased productivity, improved financial performance, lower attrition and absenteeism, and higher levels of customer satisfaction and innovation.

In the hopeful expectation of reaching this euphoric nirvana – where employees are more motivated, happier, more committed and more involved – many organizations have embarked on their own engagement journey … only to flounder on the rocks of disappointment.”

Yes! For most companies, there is difference between actual engagement and desired engagement.  Old response: Let’s do an annual survey! 

Avoiding the CURSE of the employee engagement process.

The truth is that the process of trying to achieve something positive and beneficial for employees can actually lead to disengaging them. Take for instance the employee satisfaction survey.  In most organizations, it creates exactly the opposite of what is intended.

In the annual survey, organizations ask questions about how employees feel about their work, their management, their working environment. Answering these questions exposes gaps.  Sometimes survey results are benchmarked vs. other organizations as if to say, “It’s ok if we are deficient or mediocre, so is everyone else”.  Once gaps are identified and no action is then taken to address these issues, employees become skeptical and are left feeling worse than they did before.  Essentially their expectations have been raised with the unspoken promise that something will be done with the results.  To add to the insult, the survey is repeated every year.screen-shot-2016-12-29-at-5-35-56-pm

Lack of action on important issues, after the survey, is a root cause of this engagement curse. There are at least four reasons I can think of for why no action is taken:
  1. Employee surveys don’t ask the critical questions that will pinpoint exactly what actions need to be taken. The questions are generic about attitudes, perceptions, and job satisfaction, but they don’t focus on the specific issues, activities or behaviors, that drive engagement, or the barriers that employees face to be engaged.
  2. Surveys don’t ask the importance (or other strength metrics) of each of the key areas that drive engagement. The results are often reported, and all are blinded by too much information. Everyone sighs, ‘hmm’.  As a result, no one knows where the real challenges lie or what actions are needed to take to improve the situation.
  3. Action and behavioral change is difficult to translate from a pile of raw data. Altering managerial behavior and company culture are challenging aspirations. Strong commitment and project management are required to effect change in organizations and these are rarely associated with engagement surveys. The survey doesn’t go far enough to tell management what to do next.
  4. Engagement is not perceived as a leadership issue.  Employee surveys are usually driven by HR practitioners who believe in their potential. As a result, practitioners treat engagement measurement as a standalone activity, sometimes conducted by an external entity. It is separate from other talent management initiatives and not tied to management performance metrics. The survey becomes just a tick-box exercise for management and employees. No one is held accountable for change.  HR may even be blamed for the lack of engagement initiatives or improvement in satisfaction metrics overtime.  (Quick!  Bring in the HR event coordinator!  Again, the company sponsored event strategy for improving employee satisfaction can backfire and have the opposite effect on boosting engagement.  But that is another story for another time.)

What is the answer?hands-up

The answer is to turn these negatives around:

  1. Ask employees what is important to them and listen to their input. Of the universal areas that fundamentally effect how people feel about their work and their employer, key areas that are common are wellbeing; motivation; reward and recognition; involvement; autonomy; teamwork and collaboration; purpose and meaning; relationships; trust; career/personal development; communication and performance management. What specific actions can the organization take to improve these areas?  Are there other important areas specific to your organization or industry that call for unique action?  Ask and listen.
  2. Assign practical action at three levels:As a part of performance metrics, senior executives, line managers, and individual contributors are responsible for organization satisfaction. To initiate behavioral change, prioritize a small number of personalized, easy-to-implement actions in critical areas, in each of these organizational levels to improve and embed engagement.  This can create a more conducive work environment and improve any areas of disengagement. Even small changes can make a noticeable difference in attitude and productivity, leading to general increased satisfaction.
  3. Clearly hold senior management accountable for engagement and everyone in the organization responsible for personal action. Engagement should be driven by leaders and managers, with HR providing support, and ultimately everyone’s responsibility. Line managers have an influence, and employees need to recognize that they choose their own attitude. Everyone should be free to implement their own ‘engagement actions’.

Engagement may be a concept that builds on commitment, motivation, and job satisfaction. It is fundamental to the psychological contract and the employment contract that is defined as ‘work’.  No doubt: it can pay dividends for organizations who do it well.employee-satisfaction.jpg

About Applied Group Concept Mapping

The key to breaking the curse of engagement surveys is to gather important employee insight and to prioritize specific, practical, manageable actions that senior executives, line managers and individuals can take to drive engagement levels higher.

APPLIED GROUP CONCEPT MAPPING is a brilliant process that can translate employee insights into action-oriented plans that drive engagement and satisfaction.  It works because of four key benefits:

  1. Active employee engagement
  2. Emergent and open ended input
  3. Data-based methodology
  4. Value-added action-oriented results that feed directly into planning.

Take employee satisfaction and engagement to the next level with APPLIED GROUP CONCEPT MAPPING.  Call us at INSIGHTOVATION®, 585-820-7761.  Visit us at APPLIEDGROUPCONCEPTMAPPING.COM

Sincerely,

Karen Dworaczyk and your friends at INSIGHTOVATION®

[1] MacLeod, D. and Clarke, N. (2009), Engaging for Success: Enhancing Performance through Employee Engagement. Department for Business, Innovation and Skills. London.

[2] O’Boyle, E. and Harter, J. (2013), State of the American Workplace. Gallup Inc. Washington DC.

[3] Bedington, T., Smith, D. and Chung, J. (2004). Driving Performance and Retention Through Employee Engagement. Corporate Leadership Council. Washington DC. (Catalog no.: CLC12PD3N8).