For decades,experts have praised Jack Welch as a model leader. The former CEO of General Electric was famous for firing the lowest-rated performers every year, causing employees to compete with each other to retain their jobs.
John Mackey, co-CEO of Whole Foods Market, rejects that approach. He prefers to have his teams engage in friendly competition to earn rewards—without terminating the ones who don’t win.
Teams permeate Whole Foods. Mackey favors an organizational structure built on interlocking teams.
At the store level, managers often serve as team leaders. Some of those managers also belong to regionalteams. Even the firm’s senior executives are on teams.
These groups make their own decisions about hiring, product selection, merchandising and compensation. Participants share ideas and try to outshine other teams.
For example, a produce team in one store may experiment with ways to boost sales and productivity. If the store outperforms other produce teams in the same region (or throughout the company’s more than 340 stores), its members may all earn bonuses.
To promote fair pay, the company’s policy caps total cash compensation for any employee at 19 times the average pay of all team members. In publicly traded firms of a similar size, this number can be 400 or higher.
In terms of benefits, Whole Foods holds a vote every three years in which all employees select the perks they want. But first, senior executives allocate a percentage of revenue for benefits and disclose to employees the cost of every benefit. Staffers then prioritize and vote on their favorites.
— Adapted from Conscious Capitalism, John Mackey and Raj Sisodia, Harvard Business School Press.
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