Tawn Parent is on vacation. In her absence, this column, which appeared on May 9, 2005, is being reprinted.
I fought through Castleton traffic recently to pick up a few bottles of wine at Trader Joe’s. It was a brand I’d bought before and liked. But the first bottle I opened was spoiled. So was the second bottle.
I called Trader Joe’s. They said to bring the bottles back. I told them I hadn’t saved my receipt. “It doesn’t matter,” they said.
So I took the bottles in. They gave me a full refund, no questions asked, even for the two partial bottles. Then something unbelievable happened: The manager thanked me. “We would hate to think you were unhappy with one of our products and didn’t let us know,” she said. I have been scowled at, threatened and almost thrown out of stores for attempting to return merchandise, but never in my life thanked. Clearly, something funny was going on here. I’d been thinking that for some time, given the relentless helpfulness and good cheer of the staff. Their behavior contrasts starkly with the indifference I have come to expect at my neighborhood Marsh, where once a cashier managed to check me out without ever making eye contact or even speaking. She just shoved the requisite pieces of paper at me, threw my groceries in the cart and sent me on my way. What makes Trader Joe’s so different? The company takes care of its people. Some background: Based in Monrovia, Calif., Trader Joe’s has more than 225 stores in 18 states, including two local stores, both on the north side. The company controls expenses by shunning debt, taking a no-frills approach to store design, offering private-label products instead of brand names, and buying directly from manufacturers, according to the Trader Joe’s Web site. “We’re able to spend money where we think it’s really worth it, which is our people,” said Trader Joe’s spokeswoman Audrey Dumper. Usually, when you hear about a company throwing a lot of money into salaries, it’s for a handful of executives. But at Trader Joe’s, the attitude extends to front-line employees. Here is a sampling of the company’s unusual personnel policies. Trader Joe’s: promotes only from within; allows store managers to choose their own product mix and make merchandising decisions; pays an average first-year salary of more than $40,000; offers a company-paid retirement plan that puts 15 percent of an employee’s gross income into a personal retirement account. “[Trader Joe’s is] known for being a leader in staff and manager pay,” said Jon Hauptman, vice president of Willard Bishop Consulting, a Chicago-area firm specializing in the grocery business. “They’re really looking for people to build careers there.” Trader Joe’s Web site states that “employee autonomy is a staple” and that it offers an “atmosphere of no bureaucracy” and “an environment that allows [employees] the freedom to be themselves so they have the ability to be their best.” If a customer has a question about a product, employees are encouraged to open up a package and offer a taste. Employees also are invited to recommend products they like and inform management about those they don’t. Trader Joe’s has adopted Kaizen, a philosophy of continuous incremental improvement that originated in Japan. Key elements of Kaizen are quality, effort, involvement of all employees, willingness to change, and communication. Valuing employees appears to be paying off. Trader Joe’s had 2004 sales of $1.1 billion, which puts the company among the largest 50 grocery companies in the country, according to Tampa, Fla.-based Chain Store Guide. The chain is adding about 15 stores a year. Plenty of companies fail to recognize the impact of employee satisfaction on company performance. Thanks to strong business opposition, the U.S. Senate this spring resoundingly defeated a bill to raise the federal minimum wage. It would have been the first increase since 1996. Many employers would probably claim they can’t afford to treat people better. But maybe they can’t afford not to, given that Indiana Chapter 11 bankruptcy filings rose almost 78 percent in fiscal 2004. Besides, it’s not all about money. Giving employees freedom and responsibility doesn’t have to cost a thing. While some retailers harass employees with drug tests and other policies that kill morale, Trader Joe’s, for one, is thriving by focusing on fun. When employees are enjoying themselves, the feeling rubs off on customers. And that’s worth braving Castleton for.
Parent is associate editor of IBJ. To comment on this column, send e-mail to [email protected]