Here's Why Whole Foods Lets Employees Look Up Each Other's Salaries
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."