Why Pixar, Netflix, Airbnb, and Other Cutting-Edge Companies Succeed Where Most Fail
Author: Robert Bruce Shaw
Pub Date: February 2017
Print Edition: $27.95
Print ISBN: 9780814437179
Page Count: 256
e-Book ISBN: 9780814437186
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Extreme Teams: Revolutionizing the Way We Work
Young, Scrappy and Hungry
Imagine you are 22 years old, just out of college and starting a new job. Further imagine being a foodie and your new job is with Whole Foods - a company second to none on its impact on what American eats. After all, how many multi-billion dollar grocery companies refuse to sell popular products, such as Coke, that they view as unhealthy? How many build a national supply chain for natural foods such as pesticide-free produce and organic milk? How many have nutritional counselors in their stores to offer advice to their health-conscious shoppers? None – other than Whole Foods. The company is also notable in being viewed by employees as being a great place to work. Whole Food strives to create a friendly environment where its team members share ownership for the success of the business and, in turn, all share the benefits when the business does well. The company offers a broad range of worker-friendly programs such as profit-sharing, team performance bonuses, employee health and well-being incentives and time-off sabbaticals. One program, for example, enrolls team members in a weeklong clinic that includes health seminars, medically supervised health testing, discussions with nutritionists and cooking classes. Whole Foods, in short, is a purpose-driven company that takes very good care of its people.
The company, now with 450 stores and 86,000 employees , is built around small, highly focused and cohesive teams. Each new hire becomes a member of a team within a store - such as produce, meat, seafood, bakery and prepared foods. These teams range in size from 10 to 50 people, depending on the work to be done and the size of the store. Each team operates in many respects as an independent business, making a range of decisions including what products to offer and how they are promoted. Approximately 10% of a store’s goods are ordered by headquarters staff in Austin Texas and another 30% comes from the firm’s twelve regional offices - all other product decisions are made by the in-store teams. The degree of autonomy that these teams have in Whole Foods is exceptional in an industry where almost everything sold in in a neighborhood grocery store is dictated by a few people sitting in a store’s central headquarters office.
The teams at Whole Foods also have a great deal of power in the management of people. Consider that store employees are largely responsible for the hiring new people. Job candidates are interviewed by a small group of team members. The interviewers asks focused questions regarding the job candidate’s knowledge (“What are the advantages of locally grown produce?”), love of food (“Describe a meal you recently ate in as much detail as possible”), customer orientation (“Describe a time when you disappointed a customer. How did you fix it?”) and level of personal awareness (“If you don’t get this job, why would that be the case?”). Gaining the approval of those on the interview panel is only the first hurdle that a job candidate must overcome. Each team, after working with a new hire for several months, votes as a group on who stays and who goes. In other words, the members of a produce team, not the team’s leader or the store manager, will decide if a new member remains on that team. A new hire is voted out if team members conclude that he or she lacks what is needed to contribute to their team’s success. The vetting of new members is treated seriously because teams are rewarded in Whole Food based on team performance in areas such as overall sales and profit per labor hour. A team bonus is paid monthly, which can result in thousands of extra dollars each year for the members of a successful group. Whole Foods then goes one step further. It posts each team’s monthly results for everyone to see. A produce team, for example, will see how it stacks up on key performance metrics compared to the meat or seafood teams within its own store. The team leader can also compare his or her team’s performance against other produce teams across a region. A new team member who does not pull his or her weight poses two risks. First, a poor performer can reduce the bonus pay of all team members if the team’s results suffer. That gets everyone’s attention. Second, a weak member can damage a team’s reputation, as each team’s results are posted within each store. Reputation is no small matter in a company that where ownership for results resides with each team.
New hires in Whole Foods need two-thirds of their team members to vote “yes” if they are to remain with the company. In the vast majority of cases, new hires are accepted by their team. But there are cases where individuals fail to gain the necessary team support. For instance, one team member was rejected after he repeatedly took an overly casual approach to working with customers (hands in his pockets, sitting on counters,….). He was warned by his colleagues to change his demeanor but he failed to realize that this feedback from his peers was important. A Whole Foods manager described the dynamic within the company’s teams, “There are people who are really good about working when the manager is on the floor….but as soon as the manager disappears, they lose control….I'm not the one you need to impress. It's your fellow team members. And they will be as tough as they can be, because ultimately [the hiring decision] will be a reflection on them.”
Being “voted in” by one’s new team fosters an emotional investment in the team’s success and the overall success of Whole Foods. More generally, the company emphasizes about the importance of team member happiness and a friendly work setting. Team meetings both in the stores and headquarters often end with what the company calls “appreciations.” Team members, each in turn, expresses thanks for the support that another team member provided as they worked together or, more generally, their contribution to the company. While this can seem somewhat “new age” to those joining the company, or to outsiders, the practice demonstrates the value the company places on positive team member relationships. One person commented about the culture of the company, “I never thought in a million years I'd work at a grocery store and feel so at home. Showing up to work every day, I'm happy to be here. When I leave, even if I'm exhausted from working hard, I'm still happy.”
Three guiding principles underlie the team environment at Whole Foods. First, the company believes that people are by nature social beings who feel most comfortable when part of a small group. From this perspective, building a company around teams is building a company around human nature. As a result, everyone in the company belongs to at least one team. The most basic are those noted above working within each store. The leaders of these teams are also members of the leadership group running a store. The leader of each store is a member of a regional leadership team – and so it goes to the top of the company. But Whole Foods doesn’t use teams simply to provide its employees with a sense of community. The firm believes that teams, when designed and staffed properly, also maximize what people can contribute to the success of a business. John Mackey, one of the firm’s founders, set out to build a company that taps into each individual’s creativity and potential: ….Working in teams creates familiarity and trust and comes naturally to people. Humans evolved over hundreds of thousands of years in small bands and tribes. It’s deeply fulfilling for people to be part of a team, where their contributions are valued and the team encourages them to be creative and make contributions. A well-designed team structure taps into otherwise dormant sources of synergy, so that the whole becomes greater than the sum of the parts. The team culture of sharing and collaboration is not only fundamentally fulfilling to basic human nature, it is also critical for creating excellence within the workplace… .
Whole Foods, in sum, thinks teams when most companies think individuals. This is a profound difference that influences its policies, practices and, most importantly, the way people think and behave within the company – including their interactions with customers. An executive of Whole Foods suggests that the firm’s success is based on the experience of customers when they shop at its stores, “Customers experience the food and the space, but what they really experience is the work culture. The true hidden secret of the company is the work culture. That's what delivers the stores to the customers.
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