Will job cuts affect Whole Foods’ image as an employer?
Whole Foods announced plans yesterday to cut 1,500 store-level jobs over the next two months, 1.6 percent of its workforce, as part of a plan to invest in technology and reduce the prices it charges its customers.
The chain has always sold itself to prospective employees as a retail employer of choice, offering above market wages, competitive benefits, opportunities for professional growth and an employee-friendly workplace. Will the announcement of job cuts — particularly as the company invests in non-human assets — cause workers and prospective employees to view Whole Foods in a less favorable light?
To be sure, Whole Foods has sought to minimize any negative imagery tied to its announcement. In fact, a statement posted on the company’s website makes it sound as though almost no one will really lose their job.
The chain "anticipates many of the reductions to be managed through natural attrition and expects a significant percentage of affected team members will find other jobs from the nearly 2,000 open positions across the company or via new jobs created from the more than 100 new stores in development."
Photo: RetailWire
Clearly, Whole Foods has made the calculation that the announced job cuts are necessary in light of its continuing efforts to rid itself of its "Whole Paycheck" image while facing increased competition from conventional grocers as well as a host of chains targeting the natural and organics market.
According to reviews on Glassdoor, 72 percent of current and former Whole Foods employees would recommend the company to a friend as a place to work. Seventy-nine percent approve of the company’s co-CEOs, Walter Robb and John Mackey.
A review on Glassdoor posted yesterday by a former employee had the headline, "Use to be great." Among the cons listed by the poster were, "Down sized, last minute changes constantly." The poster’s advice to management: "Communicate with team members."
- Whole Foods Market statement regarding reduction in positions – Whole Foods Market
- Whole Foods cutting 1,500 jobs – USA Today
- Whole Foods co-CEO: Food industry experiencing ‘tectonic shift’ – Fortune
- Whole Foods Market – Glassdoor
- Whole Foods Says It’s Cutting Jobs to Help Bring Down Prices – Slate
- Whole Foods’ job cuts ignore a bigger problem: We don’t like being treated like chumps – The Dallas Morning News
BrainTrust
Warren Thayer
Editor Emeritus & Co-Founder, Frozen & Refrigerated Buyer
Ryan Mathews
Founder, CEO, Black Monk Consulting
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Discussion Questions
Do you see job cuts by Whole Foods as necessary for the chain to maintain its competitive position? Will the cuts alter how prospective and current employees view the chain?
The 1,500 jobs is about 1.6 percent of Whole Foods’ workforce. While there is no denying that this will reduce their labor cost, I don’t see it as a “company saver.” If, as stated, many of the reductions are coming through natural labor turnover then this could have been handled very quietly.
However, if you want to make a stronger statement that you are serious about lowering price then this a way to do it. My suspicious nature tells me that this can be as much about marketing (hey we are serious about lowering our prices) as it is about cost savings.
Whole Foods is taking necessary steps to improve its competitive position, like every good retailer should. It’s 1.6 percent of the workforce, with the people being let go given decent packages or possible positions at other jobs. After a brief blip with some media hand-wringing and malcontent blogging, this will be forgotten. (Which is not to say that Whole Foods doesn’t still have work to do in its competitive dogfight.)
I really didn’t see any job cuts announced. It sounded like they just were not going to replace people who leave or move them into other positions. Maybe a few would get cut but they will have a shot at finding something else within the company. Whole Foods also mentioned they have 2,000 open positions. To me this just sounds like business as usual at any other grocer. Plus it sounds like a net growth of 500 more jobs.
This announcement was probably more for the press release to tell Wall Street they are trying to save money. I really doubt that it will have much impact on the company’s image as an employer. I don’t know why they would want to rid themselves of the “Whole Paycheck” image. That’s the image that has made them successful.
Whole Foods is still the dream job in retail, far out of reach for most retail employees.
The cuts are no doubt “necessary” to allow Whole Foods to maintain its margins, not necessarily its competitive position.
If competition was the only issue I assume Whole Foods could have employed different strategies such as reducing price, limiting assortment and/or adding technology at the expense of margin.
Current employees probably haven’t consumed the Kool-Aid that Whole Foods is the “people’s store.” After all, they work there and realize how fragile a thing like employer loyalty really is.
As for potential employees, if they are looking for a job they won’t refuse one if Whole Foods offers. But they probably won’t be counting on a conflict free gold watch either.
Let’s do the math. Opening 100 new stores but cutting 1,500 jobs. In my opinion, in two years Whole Foods will employ more people than they employ today. What am I missing here?
Jobs should be cut when you find the people aren’t necessary. Every company should go through a process annually to determine if they need all the labor they have. Gee, they might even find out they need more. But, 1 percent, 2 percent or even 5 percent is meaningless (Except for the people who lose their jobs.)
How will employees’ perspectives change? Not at all. If they like working at Whole Foods, they will still like it!
Any time successful niche players attempt to dilute their position by becoming more like their competitors, there is danger that their efforts will result in alienating their core shoppers while not being sufficiently impactful to extend their reach in terms of new shoppers. That is a risk that must be contemplated.
If, as conjectured, the move is part of activities deemed necessary for financial investment, it should be noted that often times what looks good on paper is not so good for the shopper and ultimately the bottom line.
The strange thing about the announcement is that it was really not about change in HR staffing or personnel policy. It was all about marketing trying to create an image about lowering prices. As the article said, less than 2 percent of the employees will be affected. If they just didn’t fill positions where employees left it would most likely take a month to reach their goal of reduced staff.
Do I think it was a smart move? No. They will end up with more bad press than good press out of this one.
This is simply a marketing ploy. They didn’t have to make an announcement for job cuts that are really a wash. They just wanted the public to hear that they are taking steps to reduce prices. Ho-hum. Meh. For my 2 cents.
Like others here, I see this announcement from Whole Foods as an assurance to investors and competitors about its determination to control costs and be more price competitive.
It’s a tipping point, however, for a company that seemed to put employees first, even at the expense of its price image. Not that very many will be escorted to the door in the scenario it describes. But it does send them a message about the economic realities of their employer:
Eventually, even organic free-range chickens return home to roost.
Interesting question (in that we hear endlessly what kind of place WF is to shop, at but seldom to work at). I agree with everyone here that the actual fact of the “cuts” is a non-story…it’s pretty much what would be accomplished through normal turnover. So the real issue is whether or not it was wise to mention a perceived negative (“cuts”) in order to promote a perceived positive (“lower prices”)…or will it not even matter to anyone? Probably the latter.
Heck, we could cut 10 times the stated goal and still be a little heavy at store level! It should send a message out to employees and prospective employees that being a “foodie” is cool, but being a productive foodie is what WF is looking for. Kudos to WF!
I don’t believe customers shop them for price first. Quality and assortment appear to be more important. No, they take good care of their employees.
This is a dangerous position for a company who has built its reputation upon enhanced, and maximized customer service. Employees, like the focused and enthusiastic employees which Whole Foods focuses on, are difficult to find and even more difficult to train and keep. Losing these employees will only hurt customer service, and all for a few pennies on a product? Wake up Whole Foods, you are not a price leader!