Wegmans, a supermarket chained based in the northeast United States, has been in business since
1915. Its founder believes that if the company could survive the Great Depression, it can survive the
intense competition of today’s grocery industry, fueled, of course, by Walmart. The grocery business
has margins between 2 and 4 percent. Plus, because of low pay, long hours, and, frankly, a mundane
industry that doesn’t attract and keep top-notch talent, employee turnover averages 100 percent per
year. In fact, turnover costs are so high and profit margins are so low (because of intense competition)
that over the last 13 years, 13,500 individual grocery stores, 17 percent in all, have closed because they
weren’t profitable. Wegmans plans to beat those odds by differentiating itself through service.
Providing great service requires a highly educated, motivated work force, and accomplishing that
won’t be easy.
The first step in Wegmans’ plan to recruit a highly motivated work force is to offer workers
excellent medical, dental, and life insurance as well as long-term disability coverage. Everyone who
makes less than $55,000 a year receives complete medical insurance and a 401(k) retirement plan in
which every employee dollar is matched by 50 cents from Wegmans. In addition to benefits for
full-time workers, part-time workers such as cashiers and baggers, most of whom are high-school
students, can earn a scholarship bonus (for good grades) of $6,000 over their four years of high school.
In fact, Wegmans has given 17,500 full- and part-time employees $54 million for college scholarships
over the last 20 years. Wegmans also pays some of the highest salaries in the grocery industry, which,
combined with the company’s benefits package, keeps Wegmans' turnover rate at an astronomically
Wegmans also invests in its employees through training. Employees must pass 30- to 55-hour
long training classes before they can work in the meat or fish departments. And some are sent to Italy
to learn about cheeses or to France to work in patisseries (pasty shops). Produce employees might be
sent to California to learn from strawberry growers.
At Wegmans, the motto is “Employees first, customers second.” But because Wegmans’
employees are so satisfied with their work and because the company invests so heavily in them, they
are glad to deliver what Wegmans calls “telepathic levels of customer service.” In pursuit of
“telepathic” customer service, employees are allowed, even encouraged, to do anything they need to
do to satisfy customers – and that’s without getting approval from their managers. In fact, Wegman
chefs have gone to customers’ homes to fix incorrect food orders. When a customer purchased a
Thanksgiving turkey too large for her oven, a Wegmans’ employee cooked it for her in the large ovens
at the store. Bill Gamer, a part-time employee in a meat department, said, “They let me do whatever
comes into my head, which is kind of scary sometimes.” Jack DePeters, head of company operations
concurs, saying, “We’re a $3 billion company run by 16-year-old cashiers.”
102. Refer to Wegmans. Part-time workers at Wegmans such as cashiers and baggers, most of whom are
high-school students, can earn a scholarship bonus (for good grades) of $6,000 over their four years of
high school. These bonuses are examples of ____ rewards.
103. Refer to Wegmans. Because the company invests so heavily in employee training and then empowers
employees to make decisions, Wegmans’ managers increase employee ____.