Profit share hard wired at Whole Foods

Walter Robb, co-CEO of Whole Foods, provides good insight into its success secrets in an interview with Fortune, just published, that retailers should read.

In a company with 78,000 staff members, it says voluntary staff turnover is 9 per cent compared to an industry average of 100 per cent plus. At departmental manager level it is 3 per cent.

What makes this possible?

"Everyone belongs to a team. Labour is a fixed cost not a variable cost. If a team can generate revenue that exceeds a budgeted margin between the revenue and the labour cost, they share in the gain. Every 30 days it is in their paycheck. If they build sales or save costs, the productivity they create is shared with them. On average in the last year it was over $1 an hour in their paychecks from gain sharing, which they created through their own efforts," Robb told Fortune's Geoff Colvin.

There is an important principle in here that you can use in your business. You need to operate with discipline but what you get in return is the power of the creative energy of your staff being unleashed - the people closest to the shopper.

If you are doing something similar, let me know. I would love to discuss how you structure it.

For more, see Better Retailing.

Comments

Three secrets of great merchandising

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Busy street, empty shop, missed profits

True in part to my New Year resolution, I held a business meeting in an independent coffee shop today just next door to a Starbucks. The cafe was presented well and four staff were busy preparing for the lunchtime rush, at 11am. As my guests were late, I had a half hour overview of footfall on the street outside and in the restaurant. Six customers. Barely enough to form the queue in Starbucks or Pret-a-Manger just down the road. Plus one Italian girl who dropped off her CV. Some people stopped to look at the posters in the window and moved on. The owners seemed quite happy. When I left just after 1215, they were doing brisk trade. However, I have the impression that the business is not working hard enough. It could easily have managed 120 customers between 11 and 12, instead of 12. This is lost profit as the fixed overheads and staff costs are already in place. The owners are clearly busy - perhaps too busy to take time to look at the potential that their cafe has. What shou...

Sticks and stones do hurt

My 17 year-old son returned from a rock festival this week wearing a wristband proudly declaring him 0ver 18. He explained how easy it had been to use someone else's ID to get the identification and said it was ironic that he had not needed to show the over 18 band when buying alcohol. Today, Scottish retailer Abdul Qadar is complaining that public authorities are asking people to lie about their age when making test purchases. What trading standards officers may be forgetting is that the fact that retailers invest in a business premises and trade consistently from it make their job much, much easier. The alternative, a world of markets and itinerant traders, will be far harder to police. Mr Qadar's sense of injustice is fair. Those retailers, like Mr Qadar, who value their investment will seek to trade legally and will not sell alcohol to people under the age of 18. Asking children to lie about their age to local traders is a slander on all retailers.

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