Publix & Wegman's: Engaged Employees, Happy Customers

 Last month, Beth Kowitt penned a good article for Fortune about the unique organizational culture and work practices at Publix and Wegman's.  She tries to explain why the companies are highly popular with customers and well-known as good places to work.  She points out that employee turnover is usually very high in the supermarket industry, and it has only gotten worse during the pandemic:

Most striking about the Publix and Wegmans streak is that supermarket jobs, already notoriously low paying, have become even more grueling over the past two years as workers put their lives at risk by showing up every day in the middle of a pandemic. Layer on the stress of dealing with disgruntled customers, and it’s clear why so many workers have reached a breaking point. In December 2021 some 786,000 retail employees quit—a record in an industry already plagued by high turnover. The sector has become the melting pot of all the big labor market issues of our time: minimum wage, the Great Resignation, a desire for remote work and flexibility, the childcare crisis.

Kowitt explains some of the things that Publix does differently.  She stresses that Publix has not responded to the Great Resignation by trying to replace humans with technology. Publix is privately held and still partially owned by the founding family, providing some protection from the usual pressures faced by publicly traded companies. The chain invests heavily in worker training so that the employees know the products and can converse with customers about those items.  The firm has a "promote from within" culture. Kowitt writes that, "Store managers have an average of 24 years at Publix, and 90% of them started out working on the floor." She also explains that don't tend to hire meatcutters from other chains. Instead, they bring on entry-level employees into the meat department and train them how to become meatcutters.  Finally, the employee equity plan provides real skin in the game for everyone and creates an incentive for people to build their career for the long term at the company.  Kowitt explains:

"With 230,000 employees, Publix is by far the largest worker-owned company in the U.S., and that has a lot to do with why people stick around. Employees who work at Publix for a year and at least 1,000 hours receive shares that can only be traded with the company. Just like at a startup where workers are given equity, the model entices people to stay. It’s money on top of their salaries (last year, Publix employees who qualified got the equivalent of 8% of their earnings). But Jones says Publix benefits, too. By having skin in the game, workers are invested in the company’s success. It’s an ownership structure that has turned many Publix associates into millionaires—the kind of lore that gets passed down."

As I read about Publix, I thought about one other key benefit of largely developing their managers from within the company, rather than hiring from the outside.  The managers have a much easier time empathizing with the front-line employees. Why?  They have been there!  They have worked at the checkout counters, bagged groceries, unloaded trucks, and stocked shelves.  Having done that work creates a genuine understanding of the obstacles and challenges front-line workers experience every day.  As companies think about the benefits of developing their talent in-house rather than constantly going outside to attract managers, they might consider the power of empathy and the inherent advantage of building empathy by having people promoted from the front lines to managerial positions.