America is in “disintegration mode,” and unless businesses, government, and the media behave more ethically and more cooperatively, high unemployment levels and economic decline will continue. So said John Mackey, co-founder and co-chief executive officer of Whole Foods Markets, when he took the stage at Inc.’s 2013 GrowCo conference in New Orleans.
The remarks were part of a free-ranging conversation with Inc.’s Lewis Schiff, a chat that covered the unique ways Whole Foods operates today, the state of the American economy, and the supermarket icons ideas for improving the way American entrepreneurs do business.
“The virtues that made us a great nation are beginning to disappear,” Mackey said. “Capitalism needs to renew itself, and we need new ethcial foundation for business.”
Mackey went on to outline the tenets of what he calls “conscious capitalism.” (It also happens to be the title of his recently published book.) Business should fundamentally be about creating value for others—be they customers, suppliers, local communities—and not just investors, he said. Business leaders need to possess “higher emotional and spiritual intelligence,” as well as be committed to helping their employees flourish and feel “self-actualized.”
The fun of this approach, he said, is finding new ways to help everyone win. He urged business leaders to shed the old metaphors of war and Darwinism. “You can not build a good society solely on the basis of self-interest,” Mackey said. “When you come up against a trade-off, that’s actually a great opportunity, it means something is wrong with your business model.”
At Whole Foods, Mackey said, many of these ideas come down to finding clever ways to empower and energize employees at the store level. Here are a few examples:
LET EMPLOYEES EXPERIMENT: The company tries to decentralize decision-making as much as possible, in an effort to give workers the feeling of autonomy. “We encourage people to try things, to do experiments. Most of them fail, but a small percentage are very successful,” said Mackey. He mentioned, for example, that three-and-a-half years ago, a California Whole Foods store opened a tap room with 16 artisan microbrews, without asking headquarters for permission. Within 30 days, the taproom was doing more volume than the store’s seafood department. Now 100 Whole Foods stores have such tap rooms.
BUILD TEAMS: The departments of each store are organized into teams and employees can vote on who joins their group. The groups receive bonuses based on improvements in their sales. “The team is constantly striving to improve sales,” said Mackey, and they do so without the nagging or whip-cracking of a manager.
MAKE COMPENSATION TRANSPARENT: “Everybody can see what everybody else gets paid” at Whole Foods, says Mackey. This kind of salary transparency quells the gossip mill and exaggerations over who is making what, and leads to “greater justice” in compensation. “Any kind of favoritism or nepotism is seen,” said Mackey. Meanwhile, lower-wage employees can see what the best paid positions are—which provides motivation to strive to build their careers within the company.