Whole Foods' Open Policy Makes Salaries Transparent
Whole Foods operates on an open policy that allows each employee to learn the salary of any co-worker, including the CEO. The company gives each employee access to the salary and bonus information of any other employee for the previous year.
The point of the policy is to encourage open conversation about salary and promote healthy competition. Whole Foods co-CEO John Mackey implemented the open policy back in 1986 as a way of helping employees understand why some are paid more than others, as well as what performance level and achievements lead to higher pay.
"I'm challenged on salaries all the time," Mackey said in the new book The Decoded Company: Know Your Talent Better Than You Know Your Customers. "'How come you are paying this regional president this much, and I'm only making this much?' I have to say, 'because that person is more valuable. If you accomplish what this person has accomplished, I'll pay you that, too.'"
Whole Foods also shares each store's sales data every day, regional sales data once a week, and a detailed report on profitability every month.
"If you're trying to create a high-trust organization, an organization where people are all-for-one and one-for-all, you can't have secrets," Mackey said.
This open policy seems to have worked for Whole Foods thus far. Basing pay on performance and achievements, and being clear about exactly what is expected from workers at all levels is sure to spike productivity levels. This culture of transparency helps to motivate employees to work toward nice little pay hike.