Stater Bros. Putting People Before Profits
It’s pretty common for CEOs of retail chains to talk about how valuable their people are but when push comes to shove, most make the decision to shove employees out the door if it will provide a small boost to the bottom line. An exception to this rule is Jack Brown, chairman and chief executive of the 66-store Stater Bros. supermarket chain.
Mr. Brown, who started his career in stores like 90 percent of the people who work for him, is serious about his obligation to workers even earning admiration from the union that represents store employees.
He recently told The Press Enterprise, "I am responsible for the future of this company. I owe it to the Stater Bros. family who come to work every day and put their shoulders to our wheel, to be sure the company makes the right decisions to help them and their families."
Mr. Brown added, "My biggest challenge is to keep our people working. When I go to bed at night I think about our people and when I wake up in the morning I want to get there and see what I can do to help them keep their jobs."
Stater Bros. gained a competitive advantage back in 2003 and 2004 when Mr. Brown reached an agreement with the United Food and Commercial Workers while the union was engaged in a lockout/strike with Albertsons, Kroger and Safeway. Consumers who were unwilling to cross picket lines turned to Stater Bros. and many have stayed. Stater Bros., according to Mr. Brown, continues to see customer counts go up despite California’s economic challenges.
Discussion Questions: What leadership lessons do you take from Jack Brown’s tenure running Stater Bros.? Do you think the chain is stronger competitively because of Mr. Brown’s approach to employee relations than others in California with CEOs who are seen as less worker-friendly?
Stater Bros. is more competitive because of their employee relations approach. They have a huge advantage over the sterile publicly held chains. Any time that a company puts the bottom line behind employee relations they will probably gain a competitive advantage. This puts chains like Kroger and Safeway at a disadvantage because they must put Wall Street first. And they should. The stockholders want a good ROI in the short run. But for long run retailers, its smart to take care of your people.
I am a big fan of Jack Brown and the entire Stater Bros. operation. I have had the pleasure of visiting executives at headquarters recently and touring some of their stores. It was obvious to me then that Jack was someone that focused on his people. (Helpful note: If you plan on visiting headquarters don’t forget to wear a tie and “WHITE” dress shirt).
When you focus on your people and they know that, everyone works harder because they spend less time (if any) worrying about their job. When leaders slash employees or have waves of layoffs, not only does moral go down, but so does productivity and, more importantly, innovation. When people are afraid of losing their job the last thing they are going to do is propose something new, exciting and innovative for fear of it failing.
My hat goes off to you Mr. Brown! In tough economic times you have found a way to keep your team busy and employed. In return you have been rewarded with hard working, innovative employees that care about Stater Bros.
As Mr. Livingston points out there is a significant difference in the demands put upon management between a publicly run company and one that is privately held. Having run both I can tell you that managing for the quarter and wondering what the impact of decisions will be on the stock price is not fun.
When we were privately held the Chairman’s motto was “if we want to have good people, we have to treat people good.” While we tried not to let that slip away as a public company we answered to Wall Street, which didn’t know or care about the people – only the profit (and generally short term at that.)
Paraphrasing a VP of Westjet Airlines (similar to Southwest): “When we look after our staff well, they look after our guests well. When our guests are looked after well, they look after our business well.” A pretty simple philosophy that obviously pays dividends.
Create a great staff experience, and you’ll create a great customer experience.
Leaders like Jack Brown are rare. From what I’ve seen and heard over the years, he lives by a strict moral code and always stands by his word. That’s always powerful. What this country needs right now is many more people like him, who would dare to do their best to emulate his ways.
When a thoughtful leader understands and respects his associates who represent a closely-knit culture, a leader who also has the freedom to operate and make decisions for his associates’ benefit without causing far-reaching consequences, he is destined to be successful. That kind of a key leader is Jack Brown, a top retail leader with character.
But if Jack Brown was the CEO of Safeway and did the same fine things he has always done for his associates at Stater Bros., who he has always lived among, he would become a world famous leadership icon. Maybe he really is already.
I am impressed to read when a CEO gets it that people are their most important product. Without the workforce or staff, continuing success is just not going to happen. It bothers me when we read of so many job losses and know it relates to the bottom line vs. staff and good will.
Let’s add Stater Bros. to companies like The Container Store and Southwest Air that get it and do what is necessary to promote staff needs and equate them to success. It might even boost sales if companies promote themselves as employee oriented and state exactly how they intend to stay that way. Asking for the buying public’s help is not such a bad thing.
This approach is not properly called “putting people before profits.” As several commentators have mentioned, good people drive profits. There isn’t a conflict. I can’t think of any highly profitable company filled with poor quality employees who hate working there.
Yes, there are sometimes trade-offs between laying off workers and staying the course. But a CEO properly thinks of these as “short-term” and “long-term.” The CEOs that are in it for the long run (and treat their employees appropriately in that context) typically run companies that win in the long run.
Things are always tough out there and it helps to have the genuine 3-way team: owners/management, coworkers, and customers. The attitude always has to be you look after my back and I’ll be over here looking after yours. When anyone on the team doesn’t get this, they are so “out of here.” And for us, that included the occasional client/customer.
Ultimately, it is up to the owners/shareholders to “enforce” this.
In many ways this represents the advantage a privately held company has over its publicly-held competitors. Jack Brown isn’t beholden to investors, analysts and quarterly reports. He’s able to manage for the long term, even if it means allowing payroll costs to increase as a percentage of sales during a recession.
With this long-term perspective, he’s able to invest in the human capital of his company in a way larger, publicly-held retailers seemingly can’t. And as is being seen, because he’s been able to grow to a critical mass in his markets, that gives him a significant competitive advantage.
With the usually reliable hardcore Darwinist(s) having seemingly gone soft today, I guess I’ll step in and be the hard@#$: sometimes letting people go IS the “people first” approach, if the alternatives are drastically cutting everyone’s hours or, even worse, going bankrupt; it’s also important to remember that every business – private or public – exists to provide a service, not to provide employment for people. That having been said, and as many here have noted, retaining quality employees is often the key to long-term success, so it’s debatable how real the conflict of “people vs. profit” is. Unfortunately, the article provided no detail of Mr. Brown’s strategies, and as I know nothing about Stater Bros. (other than deducing that they’re in So Cal.), it’s hard to comment specifically on their approach.
The funny thing is, leaders always claim that letting people go is the hardest part of their job but I’ve never really believed that. I’ve known a lot of ‘leaders’ who would have willingly sacrificed half their people if it kept the wolves from their door a just little longer.
Frankly, letting people go is easy compared to the really hard work of maintaining a business that keeps them employed. It takes courage to stare down difficult conditions, fend off the board and the shareholder. It takes creativity, ingenuity and passion to reinvent the business continually.
Unfortunately, none of these attributes are earned in an MBA program.