The Whole Foods Market Model

Whole Foods Market uses their business as an example of how a conscious business should operate and approach its stakeholders. They challenge conventional wisdom of profit making models with a more altruistic approach. Creating a virtuous cycle improves quality and standard by appealing to stakeholders’ common goals and generating mutual interest through exchange. This blog is meant to expose the different Whole Foods Market Stakeholders and how they are perceived in the company’s business model.

“Long-term profits are the result of having a deeper business purpose, great products, customer satisfaction, employee happiness, excellent suppliers, community and environmental responsibility – these are the keys to maximizing long-term profits. The paradox of profits is that, like happiness, they are best achieved by not aiming directly for them.” John Mackey

Whole Foods Stakeholder Model

Whole Foods Stakeholders:

1) The customer: The customer is the most important constituency: commitment to service, empathy, and understanding of customers’ well being as the business that treats customers as ends instead of means.

2) Team Members: team members are primarily responsible for creating happy customers. When team members are frustrated, dissatisfied, and unhappy in their work, they are unlikely to provide high-level customer service that the business requires to flourish.

  • Trust team members through open information: Whole Foods provides open financial information—on all levels since they strive to be as transparent an organization as possible – without making themselves overly vulnerable to their competitors.
  • Sharing of salary information: When unjust employment compensation exists, the situation will be noticed and a feedback mechanism will develop to correct it. Conversely, by having such transparency, people can see what skills and qualities are most highly valued and rewarded in the organization so that they can know what to strive for within their own career objectives.
  • Benefits vote: Every three years the team members prioritize and vote on the benefits that they most prefer. This process results in benefits that reflect the needs and desires of the majority of the team members in the company.
  • Promoting gain sharing: By creating incentive based compensation for every team member working at a company, a team member basically receives his/her just rewards for efforts expended. Full participation in teamwork is critical to success.
  • Fully paid health insurance: Providing health insurance for all of the full-time (30 hours per week) team members or close to 90 percent of all the people that work for Whole Foods. The remaining 10 percent part-time (less than 30 hours per week) team members are encouraged to buy the discounted health insurance if they wish. Whole Foods also offers personal wellness accounts that allow team members additional options for their health spending and health saving accounts.
  • Grant stock options: They also grant stock options to all team members who have three years of service with the company, with an unprecedented 93 percent of their stock options going to non-executives.

3) Investors: Whole Foods considers itself a steward of the investors’ money and because of this, frugality is important. Profits are created through voluntary exchange for mutual benefit, not through exploitation of people. Profits create wealth, prosperity, and additional capital.

4) Suppliers: Honesty, fair-trading, and an attitude of helping suppliers to learn, grow, and continuously improve are valuable attributes to have in relating to the vendor stakeholder group. As suppliers improve the quality and efficiency of their goods and services, this will also improve what the business can offer to its own customers. 

5) Community: Business enjoys the same legal status as a person. As citizens, businesses have responsibilities to their communities just like every other citizen. Whole Foods donates five percent of our after tax profits to non-profit organizations, with nearly 75 percent given away on a local basis.

6) Environment: “The voiceless stakeholder”. By helping to develop markets, customers, distribution networks, and even the national standards for labeling of organic foods, Whole Foods Market has also promoted the environmental benefits that accompany the increasing number of organic farms, dairies, ranches and sustainable agricultural practices.

“Having a deeper, more transcendent purpose is highly energizing for all of the various interdependent stakeholders, including the customers, employees, investors, suppliers, and the larger communities in which the business participates.” John Mackey

By: Vanessa Zabala