Photo: RetailWire
Did Whole Foods just give conscious capitalism a swift kick to the curb?
There are times when a few years gone by can feel like a lifetime. It wasn’t that long ago, 2013 to be precise, that Whole Foods CEO John Mackey was making the rounds promoting his new book, “Conscious Capitalism: Liberating the Heroic Spirit of Business,” telling journalists and whoever else would listen that it wasn’t capitalism that was ailing America, but capitalists without a conscience.
Mr. Mackey, who co-founded the conscious capitalist movement and an organization that promotes its tenets, has occasionally been accused of talking the talk while failing to walk the walk when it comes to actual practice.
Consider the following passage regarding employees from the credo of the Conscious Capitalism organization: “Conscious businesses have trusting, authentic, innovative and caring cultures that make working there a source of both personal growth and professional fulfillment. They endeavor to create financial, intellectual, social, cultural, emotional, spiritual, physical and ecological wealth for all their stakeholders.”
With the preceding as a backdrop, consider the news that Whole Foods has decided that employees working under 30 hours a week will no longer be eligible to participate in its medical benefits program. Until now, those working at least 20 hours a week were eligible.
As many as 1,900 of Whole Foods’ 95,000 employees will lose their medical benefits as a result of the new criteria. The company, Business Insider reports, said the move was being made “to better meet the needs of our business and create a more equitable and efficient scheduling model.”
The average cost for insuring employees is around $15,000 per year, with large employers typically picking up 70 percent of the cost and workers the balance, according to a report on the SHRM website.
Last year, the starting wage for hourly workers at Whole Foods was raised to $15 per hour as part of a corporate initiative by Amazon.com after the company came under pressure from Sen. Bernie Sanders and other political leaders.
- Conscious Capitalist Credo – Conscious Capitalism
- Whole Foods is cutting medical benefits for hundreds of part-time workers – Business Insider
- For 2019, Employers Adjust Health Benefits as Costs Near $15,000 per Employee – SHRM
- Should retail rivals see Amazon’s $15 minimum wage and raise it $1? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Will the decision by Whole Foods to cut medical benefits for employees working fewer than 30 hours per week hurt the chain’s reputation as an employer? Can conscious capitalism work — or is it only good for selling books, get speaking gigs and making shareholders feel better about their investments?
Poll
BrainTrust
Heidi Sax
Director, Growth Marketing for Wizard
This is a pathetic move by Whole Foods (Amazon). Seriously, cutting medical benefits for part-time employees? To “better meet the needs of the business…” Yes, conscious capitalism can work, but it takes leadership to do it, and this move by Whole Foods (Amazon) runs counter to this ideal. Some might say, it’s just business, and business is business. I think companies can do better, and must do better.
Conscious capitalism can definitely work. 1950 – 1970 were the most prosperous times in the US economy (in terms of median income increasing). This is also the time period people refer to as the “good ol’ days, when a company took care of its employees.” Conscious capitalism is as simple as that. Employees are looked after, so they’re more engaged and the turnover is low. With employees invested in their job, you will likely see higher returns … and then your stakeholders are happy.
Mackey’s definition isn’t complete and it is more talk than practice. I think this cut will add to the growing skepticism consumers have around Whole Foods.
It seems to me that there were some not so nice moments mixed in that happy era of capitalism.
Let’s see …
Truman ordered the Army to seize the railroads to prevent a strike in 1950. Two years later he did the same thing to the steelworkers. The Teamsters and Longshoremen’s unions were exiled from organized labor because of rampant corruption. Several pieces of legislation including the Landrum-Griffin Act and Taft-Hartly were used to break labor’s efforts to secure a living wage. The United Farmworkers Union was formed in response to inhuman working conditions in the agricultural industry. Labor reformer Joseph Yablonski and his wife and daughter were murdered. And after 20 years of non-stop strikes across a variety of industries, the decade of the 1970s ended up with the first mass work stoppage in the history of the United States Post Office.
And this isn’t even beginning to talk about racism, segregated hiring, wage inequality between white male workers and workers who were female and/or persons of color.
Yup, those were the good old days of conscious capitalism alright. Just ask any of the farmworkers who died in the fields or workers who were beaten by the Army.
The prosperity of the period is undeniable, but it was a byproduct of a period of massive social change that began with the the G.I. Bill, which transformed what would have been a generation of manual laborers into a generation of college graduates and entrepreneurs, and ended just after the Summer of Love, urban riots, and a pitched decade of struggle by the civil rights, women’s, gay liberation, and Hispanic rights movements.
Employees don’t need to be “looked after” like children, they need the opportunity to work hard, make a positive contribution to their employer and be treated as human beings. And that begins with the ability to earn a living wage, provide adequate benefits for yourself and your family, and — hopefully — having the chance to save enough to secure food, shelter, etc., and maybe even buy stock in the company you work for.
So with respect, conscious capitalism is NEVER as simple as that. People will always seek more rewards and businesses will always seek more profit. Can both sides be accommodated in more humane ways? Sure, but taking away benefits you’ve been paying out for years isn’t a good start.
Conscious capitalism has a place in things like preventing the release of pollutants and toxic waste. Those affect everyone, including non-employees. Since the medical benefits only affect employees, it appears that, from a profit motive perspective, the company can decide to curtail or eliminate the medical benefits to part-time employees. There is a more interesting question, and that is: are those employees seeking part-time employment or full-time coverage?
I’m assuming (hoping) your externalities example is in areas where such isn’t illegal. To describe (simply) following the law as “conscious capitalism” seems reminiscent of Bobby Jones comment: “You might as well praise me for not robbing a bank.”
I am afraid that most businesses — which are first and foremost, profit motivated — if they were not mandated by law to do the right thing, would not voluntarily control toxic emissions, eliminate non-sustainable production, etc. However, when it comes to the benefits that businesses provide to part-time employees, I differentiate from those bad things that have more wide-reaching effect. If it is not mandated that they provide benefits to part-time employees, most of them won’t. If a minimum wage is not mandated, they will only raise wages in a tight labor market, and return to lower wages as the market loosens. Some companies do the right thing without being prodded or mandated; others just naturally don’t.
Whole Foods’ workforce has already taken a nosedive in terms of engagement in recent years, and this will solidify that trend. It’s particularly alarming that they’re removing benefits from established employees. Couldn’t they have been grandfathered in?!
Whole Foods was perhaps an outlier in offering medical benefits to those working under 30 hours, but it reads as callous and careless to now strip loyal team members of such a critical benefit. As for whether conscious capitalism can work at scale, I’m not sure, but it seems to be working for REI and The Container Store.
This is certainly a step away from the founding values of Whole Foods. It will also likely cause upset among staff who are already unhappy with some of the changes being made. I think that needs to be looked at carefully as such dissatisfaction could ultimately affect service. That said, I do see the other side of the coin. For all the lauding of good principles, the previous owners of Whole Foods did not run the business all that well and there are now significant issues that need to be addressed. I am not saying that cutting healthcare benefits is a solution to those issues, but it serves as a warning that good principles and generosity can only come from successful and profitable businesses that can afford them.
Consumers are starting realize that underbelly of Amazon is not as warm and welcoming as the smile under the logo implies.
As more consumers shop according to their values, this move could harm the Whole Foods brand. The retailer could see attrition, and lower engagement and morale among associates who stay. Notably, this move comes at the exact time California advanced a bill to protect contract (“gig”) workers and give them access to benefits because stability and security boost loyalty.
Oh no! Now all the better and talented staff run to find a better deal. It is hard to take away something that is thought of as a benefit. I am sure Whole Foods thought this through, but with long term impact and perspective on the business? I will be watching inside their four walls.
Oh boy. Everyone used to ask me, “so, what do you think will happen to Whole Foods now that the behemoth Amazon is at the reins?” Well, now we know. I’d expect more of this type of move, especially if I worked for them.
Terrible move and terrible timing, especially in light of the current political discussion on health care within the Democratic party. There are many other ways to “meet the needs of the business” without taking away the benefits of your front line customer-facing employees. This decision is in stark contrast to the stakeholder tenet of conscious capitalism and it isn’t in the spirit of “to value and care for EVERYONE that touches your business.”
There is an often used expression “It’s not personal. it’s just business.” Well it is personal. Just ask those affected by this policy change. A sad decision that will also affect the Amazon brand. Does anyone think it is a secret that Amazon and Whole Foods are one company?
Let’s not overreact: there was a limit before (20 hrs). This is just another, albeit stricter, one. That having been said, it’s useful to remember that Capitalism has always abided by rules. Stores (used to) close on Sundays, you need permits to operate, false advertising is illegal (sort of), etc. But the rules change. Yesterday’s “mustn’t” can become tomorrow’s “must” — and they’re as dependent on society’s dictates as owner’s whims, if not more so.
It’s not necessarily wrong to do (only) the bare minimum, but, likewise, if one does more, it seems pretentious to call attention to it. To paraphrase the song: “a lot less talk and a little more action.”
The timing of this decision seems to be a bit tone deaf — but that seems to happen all the time these days. What would happen if competitors of Whole Foods suddenly offered better insurance/benefits as a move to get Whole Foods employees to jump ship? Probably won’t happen, but it’s a thought, right?
Ouch! This has been one of the benefits of working at Whole Foods. It’s a move driven by business. Is it about making more money, or trying to save to stay competitive and profitable? Conscious capitalism isn’t about giving away the business to the point of losing money. If so, there will be no capitalism to be conscious of. This was a major perk that most companies don’t offer. It was one of the reasons Whole Foods was getting amazing part-time help. I’m sure there will be more information shared about the “why” behind the decision.