My Last (Whole) Paycheck
Yahoo Messenger: (08/13/2008 8:25:26 AM):
>mpress77: They are going to lay off 50 people today, Miranda heard it on the elevator.
>santafekid: Really? But not in IT.
>mpress77: She said they said in IT, too.
The instant messages were flying around all morning. My team was worried, even though our project was the only one still getting funding. Our CIO even told the entire Information Technology (IT) team—all 175 plus of us—that we didn't have as much to worry about as the rest of Whole Foods. He was finding the shortfalls elsewhere: in outdated service agreements, unnecessary licensing fees, and wherever else it was that a CIO and a team of accountants could find hidden pockets of cash.
But the email from our manager (team leader, in Whole Foods Market parlance) had come as such a shock. The gist of it: There will be a workplace reduction today happening between 9:30 am and 2 pm. The way it is working is that a team member from the human resources team will approach you in your workspace and take you to a conference room to finalize paperwork. His tone was uncommon for a Whole Foods Market (WFM) team leader, the usual personal and personable tone that he always used with us had been replaced by sentences that looked like they had been cut and pasted from an official memo. It was unsettling that he should be talking to us like we were his employees and he our manager. On any other day, we would have all just been “the team.” And at WFM, the term team was not just used as a form of corporate lip service, we all meant it, most of the time.
Yahoo Messenger: (08/13/2008 2:05:26 PM):
>santafekid: Are you there?
>santafekid: It's 2:05... can we exhale yet?
I had just instant messaged my manager, more out of curiosity than nerves. I had been there for nearly 12 years, and while my work performance lately hadn't been the greatest, it was still better than several other team members on the IT floor. All morning, I had heard rumors about who had just left the building, what was happening in other departments. This was the first time the company had ever had layoffs at the head office, known as simply “Central” or more recently “Global.” and the entire network was buzzing with unofficial instant messages, calls on personal cell phones, whispered news in the break-rooms. This is a grocery store, not a tech company. We were supposed to be immune to the ebbs and flows so common at some of Austin's other major employers like Dell Computers and Symantek Semiconductors.
And then, all of a sudden, my life changed.
“We need you to come with us to the fifth floor.” My director and his director were standing at my cubicle wall. Their faces were both uncharacteristically blank.
“The fifth floor... as in the Human Resources fifth floor?” I was so shocked, that I didn't even protest (which was pretty uncharacteristic of me). I just numbly stood up and followed them. And they took me upstairs and told me that the only real job I had ever had didn't want me anymore.
How did this happen? How did the largest natural foods retailer in the United States, Wall Street darlings, and one of Forbes' best companies to work for eight years in a row, get here? How did we both get to this place of hushed and tearful conversations?
Whole Foods started out in Austin, TX when the owners of a small distribution company called Safer Way Natural Foods (so small it was originally run out of an apartment living room) John Mackey and his then girlfriend, Renee Lawson, joined forces with Craig Weller and Mark Skiles, the owners of Clarksville Natural Grocery. They opened up a new store on Lamar Street called Whole Foods Market in 1980. That first store employed 19 people and nearly went under less than a year after it opened due to a record-setting flood in 1981 that wiped out all of the store's inventory and much of its equipment. Employees and neighbors rallied and contributed the money for the (uninsured) Whole Foods to get back on its feet. Within a month, it was re-opened for business and poised to slowly but steadily grow over the next twenty years into a health and wellness juggernaut.
The company liked to open new stores, but the majority of its growth has come from acquisitions. Now part of the “Whole Story” on the corporate website, the early incorporations of Whole Foods Company (Louisiana), Wellspring Grocery (North Carolina), Bread & Circus (Massachusetts and Rhode Island), Mrs Gooch's (California), and Bread of Life (Florida) all expanded the company into tested and loyal markets full natural food shoppers. When WFM bought these smaller chains, customers were often off-put at first, but the buying power of the larger chain usually meant lower prices which won over “legacy” shoppers quickly.
The acquisition of Fresh Fields in the mid '90s was unusually difficult. Fresh Fields (FF) had over 20 locations from Chicago to New York. In some of those cities, Whole Foods had already opened stores, and in those markets customer loyalty was a bit harder won. Fresh Fields was a top-down company with employee handbooks as stringent as their quality standards. Old timers from before the buy-out (as it was called on the FF side) could be heard to whisper about an old joke ad campaign that had been bandied about when the two companies were competitors in the Chicago market. The ad, while it would never be any more than just a joke between coworkers, typified the difference between the two companies, both in the employees and customers eyes: Fresh Fields: good food, no nose rings
It was widely known that Whole Foods was run by a bunch of freaky hippie types. The Mid-West and Mid-Atlantic customer's loyalty might have taken a bit longer to win, but WFM's unflinching commitment to stakeholder happiness, the most natural food available, and pleasing and delighting their shoppers eventually did win out. By the early part of the new century, WFM was over 150 locations strong and beginning to spread outside of the US, with annual sales in the billions according to Forbes.com. By 2007 the stores in Canada were joined by 5 stores in the United Kingdom as WFM expatriates.
I started with Whole Foods in 1997 at the Esplanade store in New Orleans. I was a newlywed with a Bachelor's degree in Fine Arts when I arrived in the Crescent City. My first job was at Tower Records, part of a closing crew of over-credentialed clerks that included a Bachelor's in Theater Arts and one in Archeology. My husband was a line cook, and between our two jobs we barely had enough money for bus fare and rent. So I decided to find work at a grocery store, rationalizing that the discount on food would be more useful then my discount on CDs. The hiring process took longer than most since I was interviewed by three separate managers before I was offered a job. This seemed excessive for five bucks an hour, but I was glad for the offer when I finally got it. One of my coworkers at Tower, on hearing about my notice, said without any awareness of the irony, “Why would you want to work there? Everyone's so happy all the time.” And they sure were. I started on the Front End team, made up of the cashiers and their support staff. As a team we voted on every new member and gave important feedback on nearly every new policy. We met every month to celebrate our outstanding performers and discuss team challenges and opportunities.
Every department in a Whole Foods store belongs to a self-governing team. The team has its own labor and sales targets that must be met each month and inventory levels that must be maintained. Each team has a team leader and might have one or more assistant or associate team leaders. The product teams, such as Grocery and Produce, also have specialists—formerly called buyers—for each sub-team. For example, Dairy and Frozen are subteams of the Grocery team, Cheese and Beer are subteams of the Specialty department. So if you want to know about a particular cheese, you can talk to the cheese specialist who is responsible for sourcing it from the vendor, ordering it into the store, and educating his or her coworkers about it. It is this de-centralization in both management and purchasing that had been one of Whole Food's greatest assets. Each store utilized buying patterns that were customized not only for their exact geographic location but were maintained by locals.
Unfortunately, as the company grew, this model would not prove scaleable. Computer systems and analytical tools would slowly take the autonomy away from specialists; and stores would rely more on trends and comparative sales to determine product mixes. The theory was that this would improve sales and increase inventory trends, and it might have if it had been the only change variable in the Whole Foods equation.
I was never the fastest cashier at the Esplanade store, but I had an easy and helpful way with customers that was noticed by other teams. Within a year, I was asked to apply for a position on the Whole Body team, which included all vitamin and supplement products as well as body care, books, cards, and magazines. Whole Body team members had to know a lot about a huge range of health and beauty products and be able to easily talk to customers about them. Before working at Whole Foods all I knew about vitamins and minerals is that they came in two varieties: Flinstone's and adult. Having worked for an environmental group for a few years in Oregon, I knew that natural body care items consisted of patchouli oil, and Dr. Bronner's eucalyptus soap, which could be used to clean everything from a kitchen floor to a load of laundry to a person, head to toe. But I love to learn, and so excelled in this new position as assistant team leader and body care buyer. I learned all about what made our products different, our commitment to quality standards and no artificial colors or flavors. And through vendor calls and monitoring every item in my inventory, I continued to educate myself about all of my products every chance I got. In fact, I was consistently encouraged to excel at my job, and being ready and willing to please, that is exactly what I did. Within less than two more years, I was groomed and ready to take on the team leader position in the Whole Body department at a store that was set to open in late 1999 in Santa Fe, NM. The company gave my husband and I a few thousand dollars to defray moving costs and we headed for the high desert.
Whole Foods has always been known to promote and grow employees in direct relation to their interest and potential without regard for seniority. In many other grocery chains, I would likely have had to wait much longer than I did for my rise from entry level cashier to department manager. Especially without any formal education in management or business. Much of this policy can be traced back to the now CEO of the company John Mackey, who was himself a philosophy major prior to dropping out of college to sell granola and spirulina out of his apartment. In the sink or swim culture, you could rise as far as you could handle.
And Whole Foods as a company would echo that rise throughout the late nineties and early aughts. Every quarter, a new record was set, every acquisition raised the company worth, and all of earliest stockholders couldn't believe the golden egg they had found. The company went public in 1992, and the stock first split two for one in 1993. It would do so again in 2001 and 2005. Whole Foods was like Manhattan real estate: no matter how high the price went, it was always a good buy because it was going to be worth more the next day. Even major dips in the stock price at the time, would prove minor blips in a steady uphill climb that lasted until early 2007.
I didn't stay in Santa Fe very long. I was newly separated and my job was no longer inspiring me: I was not only supposed to keep my department numbers up, but keep my team members happy. At times these two directives seemed in direct opposition, and that sort of problem solving did not appeal to me. One day I saw a job posted in Austin on the Information Technology team. I wasn't even sure what “IT” meant, but I had recently gotten my first computer, and was enjoying it. The team in Austin wanted someone to answer help desk calls and route them to the right expert. This sounded like it would appeal to the natural learner in me. Again, my aptitude got me a job for which I had zero experience. My new team worked with an accounting system, and they were excited to have someone around who knew how it was used in the stores. At the time, the growth opportunities in IT were the stuff of dreams. My Team Leader to-be told me that her salary had grown over 75% in her first year! Just like stock market promises, getting into technical support seemed a low risk, high return venture.
And for both Whole Foods and I, it was. While on the IT team, the company moved me two more times: first to just outside of Washington, DC and then back to Austin (both moves were opportunities I sought out). I was such a frequent traveler that I have gotten two free vacations from all the airline and hotel miles I amassed as first a programmer, then project manager, and finally business analyst. My various different IT teams paid for an undergraduate certificate in technical communications, my project management certification, and tens of thousands of programming classes from the vendors whose software I supported. After a few years on the IT team, I could research, implement, upgrade, and support multiple systems in multiple programming languages. I had actively participated in every phase of the project life-cycle and had led more than one major projects myself.
Meanwhile, Whole Foods was experiencing crazy growth in every direction as well. After a failed attempt at e-commerce, the company decided to look to more concrete ways to reach out to current non-shoppers. Wanting to put it's commitment to quality standards at the forefront, Whole Foods joined the Marine Stewardship Council to promote responsible fishing and harvesting practices in the world's oceans. Also to promote a core company value related to community, a non-profit organization called “Whole Planet Foundation” was formed in 2005. A lot of press coverage was devoted to the Foundation's partnership with Professor Muhammad Yunus and his organization Grameen Trust. According to Grameen's website, the Nobel Laureate Yunus and the Trust are committed to using micro-lending (loans averaging $200 each) in impoverished countries as a means of eradicating poverty one family at a time. The loans are used to start small businesses, and have proven very successful. Whole Foods sponsors loans in countries that supply the stores with products (and team members can apply for peace-corp-like positions in some of the communities that receive the micro-loans).
The company also continued to acquire not just retail locations, but suppliers as well—expanding the company's ability to provide lower cost products (relatively speaking) were Amrion, a supplement company; Allegro, a coffee roaster; Pigeon Cove in Maine and Select Fish in Seattle, both fishing outfits; and Tiny Trapeze, a candy company.
More acquisitions and growth, and by early 2007, Whole Foods Market had over 270 stores in North American and the United Kingdom. The company was employing over 50,000 team members and had bakehouses and kitchens strategically located all over the US to provide fresh products to the majority of its locations.
And then, some say, a major misstep was made.
In February of 2007, Whole Foods announced that it would acquire it's largest US competitor, Wild Oats Market. Wild Oats had long been a fixture in several Whole Foods Markets, but as team members we came to understand that some fundamental differences in vision and management style were the reasons that our stores always did better. Oats tended to prefer slightly lower income geographic locations, where rent (and earnings potential) were less, and after 20 years as a rival, they were ready to become a member of the Whole Foods family. The Austin American Statesman reported that the selling price was a little over $550 million dollars, a steal at only $18.50 per Wild Oats share (NASDAQ records show Whole Foods stock to have been trading around $50 a share during that time).
The acquisition was a mess from the beginning. The Federal Trade Commission filed an administrative complaint in an attempt to stop the deal from closing, claiming that the purchase would create a monopoly and higher prices for consumers. Since most grocery retailers had begun to explore natural or organic lines by then, the federal appeals court refused to block the deal. But some damage had already been done. The FTC papers included allegations that John Mackey had violated insider trading laws with message board posts he made under a pseudonym on the Yahoo finance pages. This led to a Security and Exchange Commission investigation, which major media like Reuters and the Wall Street Journal covered. While the purchase of Oats was approved in mid 2007, the SEC charges weren't cleared until April 2008.
The long delay in the purchase papers, coupled with the long process of bringing the Oats stores up to the look and feel of Whole Foods meant that the company spent a lot more on administrative tasks in 2007 and early 2008 than it had predicted. And if that weren't enough, the poor performing Oats locations ended up hurting the bottom line twice, they were failing to make enough money at the same time that they were costing extra money to improve.
All of this may have been just another blip on the 10 year stock chart, if it hadn't happened at the start of the first major US recession since 1979. Recession.org lists the high oil prices and failing banks as the major contributors to the current global economic situation. Whole Foods was a victim of high oil prices like every other retailer. It was costing substantially more to get products to the store, and it became impossible not to pass along the extra expense to consumers who were already cutting back on luxuries. While it has spent the last 5 years actively trying to sell consumers on the value of products, Whole Foods is still considered a boutique by most shoppers, and is often on the short list of expenses to reduce. And as the stock fell, and the investors started looking away, the top executives started to discuss ways to reduce expenses themselves.
Lay-offs were supposed to be the last option. When they were finally happening, this supportive, nurturing company was at a loss for how to proceed. Many individual terminations happened so awkwardly and uncomfortably, that John Mackey declared within a week of the “workplace reduction” that everyone's severance packages would be doubled. Now they, like those of us they left behind, have begun the process of reassessment and regeneration.
My termination was partly due to the unfortunate economic circumstances affecting the rest of the world and partly due to my own poor performance. I had been reaching out in every direction: documentation, digital media production, training—none of it felt right, and I could no longer rally the enthusiasm that I once could. I needed a major change, to get me back to thinking about what was really important to me. I just couldn't see it being software and the cube life. And for one last time, Whole Foods came through and gave me, perhaps not what I wanted, but possibly what I needed most: the opportunity to start all the way over and get it right this time. Hopefully as a company, the same considerations are being discussed in conference rooms as they ready themselves for the next phase as well.