3/4/2014 8:14 PM ET|
Whole Foods lets workers see everyone's salaries
Co-CEO John Mackey says he gets challenged all the time on the practice, but believes it motivates employees.
Leaders of the supermarket chain believe in keeping employees as informed as possible, even when it comes to pay.
Under the company's open policy, staff can easily look up anyone's salary or bonus from the previous year -- all the way up to the CEO level.
The unusual Whole Foods policy is designed to both encourage conversations about salary among staff members and to promote competition within the company, according to "The Decoded Company: Know Your Talent Better Than You Know Your Customers," a new book by entrepreneurs Leerom Segal, Aaron Goldstein, Jay Goldman, and Rahaf Harfoush on innovative management practices.
Whole Foods co-CEO John Mackey introduced the policy in 1986, just six years after he co-founded the company. In the book, he explains that his initial goal was to help employees understand why some people were paid more than others.
If workers understood what types of performance and achievement earned certain people more money, he figured, perhaps they would be more motivated and successful, too.
"I'm challenged on salaries all the time," Mackey explained. "'How come you are paying this regional president this much, and I'm only 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.'"
Beyond making compensation data available to all employees, Whole Foods also has its managers post their store's sales data each day and regional sales data each week.
Once a month, Whole Foods sends each store a detailed report on profitability and sales at each of the chain's locations. In fact, in the late 1990s the widespread availability of so much detailed financial data led the SEC to classify all of the company's 6,500 employees as "insiders," according to a 1996 story by Fast Company.
Mackey and others at Whole Foods believe that a culture of shared information helps create a sense of a "shared fate" among employees. "If you're trying to create a high-trust organization, an organization where people are all-for-one and one-for-all, you can't have secrets," he says in the book.
For their part, the authors applaud Whole Foods' practices. They contend that its open policies prove the benefits of experimenting with data and using information to establish a "direct relationship between an individual's decisions and their impact on the business" -- something the grocery chain accomplishes by giving each employee high-level access to the company's financial data, and therefore a greater stake in the business.
"Whole Foods is an intriguing example of a company that has successfully bridged the gap between soft-hearted values and logic-driven business acumen," the authors write. "The combination has resulted in a highly motivated workforce with a deep sense of community who value productivity."
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Sounds OK to me. Maybe it'll force the slackers to work harder
& pay more attention to CUSTOMER SERVICE (who pays their
No experience and no education, OK... low wages.
but what about a ton of experience, and a good education, and you STILL make less than one hundredth of what the CEO makes?
The argument isn't whether the CEO should be paid well, but the division between them and everyone else should not be so large. The contributions of a CEO are not worth the rest of the company's salaries combined. The ratio is out of whack... Big time
I think that it is a great idea. Employees are not stupid. They will know who among their colleagues is being treated fairly or unfairly. And they will know if THEY are being treated fairly or unfairly as well. It is called transparency!
walmart needs to do this. then maybe they will see after 25 years working in one of their stores you still make as much as the new employees. why is the older workers not able to get hired they work the hardest they appreciate the work.
You can see what the military and federal workers make on line.
Its not like these people are surgeons or astronauts... They pretty much all do the same jobs so the only difference is seniority.
If you have sound, realistic reasons behind differences in pay, there should be no fear in sharing them. A company who forbids or discourages their employees from discussing salaries, or refuses to engage in questions about salary discrepancies often has no idea why some employees are paid more than others, hasn't kept up with salary changes in their own market (meaning they have to hire someone new at a rate equal to or higher than the employee who has been at the company for 5 years and is doing the same job), or worse, they're playing favorites or discriminating. Usually, they just can't explain it (over the years different management will often lead to a discrepancy that later a company is unwilling to fix...often because it will cost them more money and new management usually wants to cut costs), but it should be a red flag, not only to the "lowly" employees asking, but those in charge.
It doesn't mean the discussion with an employee about wage differences will always be pleasant or understood, but if you have sound reasoning behind you, it shouldn't be a discussion any HR or manager should be afraid of, even if the employee doesn't agree.
The very fact that Whole Foods shares salaries means they're confident in what they're paying and know why Jane is paid less than Sarah. Good job, Whole Foods!
no political remarks on concerning this article
now that's a first!!
m/b a good idea...finally a common sense management decision which appeals to all
As the President and Chief Executive for an enterprise, I made all pay ranges in the enterprise (including my own) publicly available along with detailed and easy to understand explanations of the the methodology used by management for determining and changing individual compensation. All employees were provided with this information during their initial employee orientation sessions as well as during their normal performance evaluations. The transparency regarding the determination of compensation proved beneficial to both employee morale and company productivity.
However the company did NOT allow the earnings of employees (except those required by law) to be made available without written consent from them deeming it a violation of their right to privacy and an open invitation for public shame, resentment and retribution by employees who were deemed less skilled and productive. The practice was warmly accepted by the vast majority of all employees (99%+) and after it was installed proved highly beneficial to authentic discussions between members of management and their respective employees while preventing most workplace misunderstandings regarding pay.
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