Retail

The Challenge Of Culture And Compensation At Whole Foods, Post-Amazon Acquisition

Whole Foods

Amazon’s acquisition of Whole Foods has led to higher sales, but changes at the grocer haven’t been well-received by some workers who have noted a shift in compensation and culture. In response, a group of workers reportedly sent an email to staff at nearly 500 of the retailer’s locations to ask them to support their efforts to unionize. The message, which The Wall Street Journal said it viewed, noted that workers are seeking to “collectively voice [their] concerns to Whole Foods Market and Amazon leadership.”

To that end, workers are asking for an improvement in benefits, compensation and profit-sharing. In terms of stock options, the retailer had reportedly made them available to employees for years: Non-executive employees had received about 94 percent of them after the program’s founding in 1992. But when Amazon took control of Whole Foods, workers contend that the retailer stopped giving lower-level workers stock options.

A spokesperson for Whole Foods, however, was quoted in WSJ as saying that the company offers “competitive wages and benefits and [is] committed to the growth and success of our team members.” The spokesperson also said that employees at the grocer are reassured that they can talk to their managers about concerns in the workplace. In addition, the paper noted that “the chain has appeared near the top of lists ranking companies by the benefits they offer and the gap in pay between managers and workers.” To that end, the retailer’s pay was an average of $41,911 and $20.15 an hour in 2016, which WSJ said was “more than many other grocers.”

But with changes this year, Amazon workers have been hired to work at Whole Foods. They included “a new head of compensation and benefits who worked at Amazon’s Seattle headquarters for nearly four years as senior compensation manager,” the paper reported in July. That comes even as the latter firm has been laying off hundreds within its own ranks, tied to in-store marketing positions. Those employees were tasked with creating local events and making chalkboard signs. In an audio recording of a conference call reviewed by the paper, leaders from Whole Foods reportedly said, “this wasn’t an easy decision and isn’t a reflection of the dedication of the work you do.”

It should be noted that in 2015, before its acquisition by Amazon, Whole Foods was reported to be laying off 1,500 employees, or 1.6 percent of its workforce at the time, as it worked on reducing prices for its customers and investing in technology upgrades. Whole Foods’ efforts to reduce prices came as the company faces pressure and stiff competition from emerging and existing brands venturing into selling organic and healthy products.

 Executive Departures

The news comes as more than a dozen executives and senior managers have left Whole Foods since Amazon acquired the organic grocery chain last year. Citing former employees and recruiters, The Wall Street Journal stated that the employees who departed after the acquisition included leaders of Whole Foods’ bakery, produce, sustainability and local foods divisions. While some veterans left even after they were asked to stay, others were reportedly forced out after the deal was announced but before it closed.

The personnel changes have caused concerns among both employees and suppliers that Whole Foods’ distinctive qualities will get lost under Amazon’s ownership. “Culturally, it’s been a rough start,” said a procurement veteran who left Whole Foods earlier this year after nearly a decade, it was reported in March.

Some of the issues include top Whole Foods managers’ unhappiness at reporting to younger Amazon executives and the eCommerce giant’s lack of transparency in its plans for the grocer. In addition, there seems to be differences in issues such as promoting and grooming talent and determining whether it’s more important to focus on the needs of customers or employees.

Additionally, suppliers have complained that new hires have been slow to learn Whole Foods’ techniques for sourcing and marketing products. To be fair, departures are common after mergers. And Amazon and Whole Foods have hosted town halls for store employees to share their concerns and ease the transition. Even so, how will Amazon handle the efforts of Whole Foods’ workers to unionize going forward? That remains to be seen, but it is an issue that may be hard for the grocer to ignore as workers voice their concerns.

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