Whole Foods gets acquired by Amazon, and, of course, the news is abuzz about how this is going to change the way Americans obtain their groceries. However, there are also commentaries surrounding whether or not this means that the Conscious Capitalism approach taken by Whole Foods is a failure. Of course, this particular issue can be debated, but what’s clear is that being “a great place to work” does not guarantee success, regardless of what all the best employer lists might lead us to believe. Though the focus appears to be on “nailing employee engagement,” throughout much of the practitioner and business community, the Whole Foods acquisition and what has led up to it offers a warning for the employee engagement evangelists.
When examining the past five years of stock performance, Whole Foods reached its peak in October 2013, trading at over $65 per share and reached its low point in October 2016, trading at around only $28 per share. Even the boost from the Amazon acquisition of Whole Foods only bumped the price to around $43 per share, which is still almost 34 percent less than its peak price.
During the past five years, though, Whole Foods has not missed Fortune’s 100 Best Places to Work List (it finished at No. 58 in 2017), an award that largely emphasizes the perks employees receive. In fact, the four highlighted items from the Fortune survey for Whole Foods involve the percentage of employees who agreed they are able to take time off, can be themselves, are treated as full members of the company and feel a sense of pride.
What can be made of this conundrum? How can a company be performing so well when it comes to employee engagement and yet so poorly when it comes to stock price? The answer, much to the chagrin of the employee engagement crowd, is that being a great place to work is only part of the equation. When being a great place to work comes at the expense of business performance, it puts the entire company at risk.
In case you do not believe that was part of the problem, even Whole Foods CEO John Mackey admitted that the company prioritized its employees at the expense of customers, which hurt the company for several years. Employees loved working for the company, but customers were disappearing, and, long term, that is not a recipe for success.
But that’s what happens when a company is so focused on being a great place to work instead of also trying to optimize key performance metrics, such as financial performance. The belief that focusing on employees first will inevitably result in long-term viability is a mistaken one, one that Bob Corlett soundly argued against four years ago.
Employee engagement, like other types of initiatives (e.g., wellness programming) has almost taken on a panacea-like aura, with many consultants and practitioners treating it as a magic bullet that will cure all the ills for organizational performance. But there is no magic bullet, no wand to be waved. Long-term, sustainable, organizational performance requires attention to the entire business, not just one or two elements that contribute to it. While Whole Foods may have become an employer of choice, it slowly lost the mantle of grocery store of choice for many of its original customers. And that is a lesson from which many organizations could learn.