Case: Self Competency Wegmans

Wegmans, which has been named one of Fortune's 100 Best Companies to work for in 2009, is highly respected as a tough competitor in the supermarket industry in New Jersey, New York, Pennsylvania, Virginia, and Maryland. Known for its gourmet cooking classes and extensive employee-training programs, Wegmans operates 70 stores in these states and has sales exceeding $4.5 billion annually. Founded in 1916, Wegmans is still owned and operated by the family of the founder, John Wegman.

One of the reasons why Wegmans is so successful is its values. When John and Walter Wegman opened their first store in Rochester, New York, it featured a café that served gourmet foods and sat nearly 300 customers. The store's immediate focus on fine foods quickly separated it from other grocers. Many of the employees were hired by Wegmans because of their interest in fine foods, a tradition that still holds today. People who do not express an interest in food may not fit in and are sometimes not hired.

In 1950, Walter's son, Robert, became president and immediately added a generous number of benefits for all employees, including profit sharing and medical insurance, both of which were paid for by the company. The reason that he offered these benefits was "I was no different from them," referring to the company's employees. Though the benefits are still generous at Wegmans, today employees pay a small amount into these plans.

Today, Daniel (Danny), Robert's son, is the president and he has continued the tradition of taking care of Wegmans' employees. Wegmans has paid millions of dollars into college scholarships for both full-time and part-time employees. In addition to benefits, employees receive pay well above the average for the market. As a result, employee turnover is around 6 percent, well below the national average of 25 percent according to the Food Marketing Institute.

The culture that has developed at Wegmans is an important part of the company's success. Employees are proud to work there because of the way they are treated. Sara Goggins, a college student who worked part time for Wegmans during her college days, recalls the day that Danny Wegman personally complemented her on her instore display that she helped set up. "I love this place," she said. "If teaching doesn't work out, I would love to work at Wegmans." Kelly Schoeneck, a store manager, recalls that her manager asked her to analyze a frequent-shopper program that a competitor had recently adopted. She naturally assumed that he would take credit for this analysis, but was totally surprised when her supervisor asked her to make the presentation to Robert Wegman.

Maintaining a culture of driven, satisfied, and loyal employees who are eager to help one another is not easy. For example, when the company opened a new $100 million distribution center in Pennsylvania to serve its newer MidAtlantic stores, it needed truck drivers. Rather than hire experienced drivers, Wegmans allowed current store employees to apply for the job. Twenty-one weeks later Wegmans had 24 drivers with commercial licenses. Since day one, Wegmans has carefully selected each employee.

The emphasis on developing people attracts people who never thought that they would work in retail. Heather Pawlowski, an electrical engineering major at Cornell who began her career at National Semiconductor, thought of herself at a "techie." But she had always enjoyed walking through the aisles of retailers wondering why people bought different brands. After getting her MBA, she entered a Wegmans store in Rochester, New York, and introduced herself to the store manager. Shortly thereafter, she found herself in Wegmans' store manager training program. While many of her classmates were off to Wall Street, she wore long underwear and got up to her elbows in fish guts, just like all other store trainees. As she moved from packing fish to cutting meat to baking bread, she learned all aspects of store operations.

When a new store is opened, employees from existing stores are brought in to the new store to establish Wegmans' culture. The job of these employees is to help the new employees "learn the ropes to skip and those to know." When Wegmans opened its Dulles store, for example, all its managers came from different Wegmans locations and dozens of other employees drove to the store to temporarily get the place up and running. Wegmans spent $5 million on training to open its Dulles store. New employees learn what behaviors are rewarded and those that are not rewarded. Wegmans never opens a store until its employees are fully prepared.

More than half of all Wegmans' managers started working at a Wegmans during high school as part-time help. Edward McLaughlin, director of Cornell's Food Industry Management program, says, "When you're a 16-year-old kid, the last thing you want to do is wear a geeky shirt and work for a supermarket. But at Wegmans, it's a badge of honor. You are not simply a cashier. You are a part of the social fabric."

Jack DePeters, chief of operations at Wegmans, says "We're a billion dollar company run by 16-year-old cashiers. The key is to motivate them".

Questions

1. Using the values listed in Table 16.1, describe the culture of Wegmans.

2. What is the primary source of Wegmans' culture? How has Wegmans been able to sustain the culture? Go to www.wegmans.com and search under "About Us."

3. What are some threats to sustaining Wegmans' culture? How can these be overcome?