BRIEF HISTORY OF THE COMPANY Wegmans is a regional grocery store chain that has built its reputation as a? one stop? shopping experience. In this grocery store you can pick up your prescription, order dinner in the market cafe, rent a video for the night and pick up your dry cleaning. Wegmans mantra? Every day you get our best? is truly what they, as a company, strive to accomplish. From the inception of the first Wegmans store in Rochester, New York during 1930, this family owned company has positioned itself to be unique from the competitor.
When the current President Danny Wegman returned from Harvard in 1976 he helped position the company to be competitive against the emerging competition like BJs and other discounters. In the midst of this unending focus on the needs of their customers we are left to wonder where the Wegmans employee is. In addition to the convenience they offer their shoppers, Wegmans has made itself known as being an exceptional place of employment for its 30, 000 employees. In 2005 Fortune magazine named it number one of the top companies to work for. So again we were left questioning whether the techniques Fortune uses to rank these exemplary companies was reflective of the opinion of the person who is selling you your lotto ticket or the helping hands putting your groceries into your car.
We wondered what it was that Wegmans has done to make their employees so happy, and to earn them the top spot on Fortune? s list. We decided to analyze the reward and recognition system at Wegmans to determine what they are already doing and what improvements will keep them at number one. Information taken from sources such as the company website as well as surveys completed by various store employees show that Wegmans offers it? s employees benefits that are both tangible and intangible. Many of these benefits include a scholarship fund, health insurance, vacation pay, holiday pay, an ESL Federal Credit Union membership, direct deposit, 401 k retirement savings plan, profit sharing, a dependent care reimbursement account, adoption assistance, an employee assistance program, employee discounts on a fitness center, as well as movies, cultural events, and even high wages. Other benefits noted include a satisfying work experience and a friendly team. DESCRIPTION OF OPPORTUNITY A survey developed by one of our group members has indicated that a select group of employees in a Williamsville store location appreciate both the tangible and intangible benefits that the job has to offer.
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Employees expressed many reasons for wanting to work for Wegmans which included great co-workers, opportunities for advancement within the company, the scholarship fund, convenient locations, raises, flexible hours, and even free pizza and soda. A theme that arose in these surveys is the fact that incentives make people work harder. Incentives that have been indicated, such as employee of the month or posting compliments, reinforce the fact that certain employees have an inherent desire to be recognized for their hard work. The question that arises for Wegmans is, what recognition and rewards do employees need to be satisfied, and the amount it will take to make them work harder? Many Wegmans employees find working for the franchise to be quite self rewarding. For example, employees take pride in working hard every day and gain satisfaction from helping customers and other employees.
It is indeed true that many workers are driven by money; however, there are many others who take pleasure in their jobs also because they enjoy doing the work. This theory is reflective of Douglas McGregor? s motivational Theory Y. One of the assumptions of Theory Y as noted in the textbook states that? Employees can view work as being as natural as rest or play? , activities that are undoubtedly rewards in themselves (Robbins, 45).
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Creating a work environment based on Theory Y would mean that no other reward system would be needed. Wegmans would like to believe that all their employees are self-motivated at all times but everyone knows that this is not true. Wegmans employees work harder and are more satisfied not only through self motivation, but also through reward systems.
This behavior is connected with the two-factor theory, which states, ? that an individuals relation to work is basic and that one? s attitude toward work can very well determine success or failure, ? (Robbins 45).
According to the surveys conducted, the only negative or dissatisfying job as Herzberg would say, is dealing with rude, unappreciative, and negligent customers. This every day problem seems to have the greatest effect on an employee? s spirits. Many people wind up quitting because of not wanting to deal with difficult customers.
For example, an employee could be selected for? Employee of the Month? for putting in a great effort while helping unhappy customers. In addition, it is very important in a workplace such as Wegmans that employees have management to encourage and motivate them as the day to day tasks of their can be discouraging. Many employees who were interviewed commented on how they are daily dragged down by customer attitudes and it has an impact on their own personal day when they are called names or yelled at by customers. A system of rewards offered by the firm helps to improve employee spirits in a sometimes difficult work environment. DESCRIPTION OF EVENTS AND CIRCUMSTANCES Despite the prestigious designation as being the country? s #1 company to work for in 2005, there are still areas in which the company can improve its employee reward systems.
In a large grocery store like Wegmans, employees generally specialize within a particular department (i. e. stock, seafood, deli, cashier, etc. ).
Each department is under the supervision of a different management employee. One of the greatest challenges in creating effective and fair reward systems at Wegmans is standardizing the reward systems across this departmental divide.
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In other words, equity should exist between the incentives offered to employees in each department. To a large degree, this equity is maintained at Wegmans. Employees from all departments are eligible for their scholarship program and employee of the month award. However, it is much more difficult to maintain equity in the most vital employee reward? pay.
Robbins speaks to employee rewards and equity in the context of? Equity Theory. ? He defines this theory as follows: ? equity theory says that employees weigh what they put into a job situation (input) against what they get out of it (outcome) and then compare it? to others, ? (Robbins, 50).
Robbins goes on to note that it is vital that the perceived input / outcome ratio must be equal among all employees in order to have equitable rewards. Using this definition, the following inequity can be illustrated at Wegmans through out interview data and general observations. A cashier employee? s perceived input (effort) is higher than that of a typical stock employee; however, the outcome (pay) is the same among employees in both departments with similar experience.
According to Equity Theory, these employees will adjust their ratios to be equal. Given that they cannot adjust their outcome (pay), they will modify their inputs (effort) in order to standardize the ratio. Thus, the cashier feels under-rewarded and may put forth less effort, while the stock employee feels over-rewarded and may work harder. Inequity in this ratio in the long run will cause employee dissatisfaction and a decrease in the efficiency of the cashier department. This inequity in pay may occur in other respects as well. In fact, in one of our interviews we discovered an employee who believed she was receiving inadequate pay between the two different Wegmans that she works at.
This issue is a result of the expectancy theory, which states, ? the strength of a tendency to act in a certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness to that outcome to the individual. ? (Robbins 52).
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She explained how she receives the same hourly wage at a Wegmans in Williamsville, where she is a manager, and a Wegmans in Rochester, where she holds an entry level position in the same department. This issue has created a negative response causing the employee to decrease her input in both work environments. The response to her decrease in input as a manager was, ? Why should I kill myself with all this extra work when I? m getting paid the same amount? . She believed that she wasn? t getting paid enough for the other tasks she had to perform.
A new problem that has surfaced involves the increase of minimum wage. The question is if management should accordingly adjust existing employee? s wages with the hiring of new employees at a higher minimum wage rate. In order to maintain a fair and balanced place of work for their employees, management should adjust wages. Existing employee? s salaries should be adjusted based on the percentage of increase in the minimum wage.
If the New York state minimum wage increased from its current rate at $5. 15 to $6. 15, which is about an 84% increase in salary than existing employee? s salaries should be increased consequently. Even though the results of an event like this could result in inflation, a manager must try to keep all employees content. If a group of experienced employees realize they are being paid an unequal amount compared to new hires it is possible for their motivation and work ethic to fall. There are employees we interviewed who have been working for Wegmans for over a year and are making the same or barely more than someone who has just walked in the door with no previous experience.
Based upon the equity theory a state of equity exists when an employee compares themselves with another worker and finds the ratio to be equal. If this equity is not felt; lower productivity or reduced quality of output may result. An additional issue identified at Wegmans relating to their employee motivation and rewards structure is their use of quantitative performance measures. Wegmans applies quantitative measures to the cashier department, but not to other departments. Cashiers are evaluated on the basis of? items scanned per minute. ? If a cashier meets or exceeds the set number of items per minute, then he or she will continue work as usual or perhaps be verbally commended by a manager.
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Conversely, if a cashier is not meeting this standard, he or she will be poorly evaluated and pulled aside for a meeting with management. A history of low items per minute could potentially lead to loss of the position. This performance measure adds additional stress to the cashier? s position, which must be countered with additional effort. This reality can be viewed once again as a problem as according to equity theory; despite the extra effort expended to meet this measure, cashiers are not paid more nor are they eligible for any different rewards than other employees who are not subject to a comparable performance measure. A cashier may wonder why stock employees are not periodically evaluated on an? items shelved per minute? measure, or cart return employees by? carts returned per minute. ? Inequity in the evaluation measurement may, like interdepartmental inequity, lead to less effort expended by particular employees and hurt the firm.
RECOMMENDATIONS FOR MANAGEMENT As a manager at Wegmans there are many difficult decisions to make and the issues we identified above accompany major choices that will affect the future of the company. The issues we recognized include rewards in relation to equity issues among employees of different departments and / or stores, differences in performance measures of employees with different jobs, and issues associated with a minimum wage increase. Equity issues among employees of different departments are an important matter that management must address. Depending on the department some equality issues may vary, such as pay and reward methods. In order for management to keep employees content they should always remain consistent in their decisions and this means having a consistent method of rewarding each particular department that is fair to everyone. If an employee comes to management with a complaint, management will be able to point out that they have always been unwavering in their approach to motivating and rewarding each department.
Managers should also try to provide a sense of attractiveness and positive outcomes for employees in each particular department by taking note of each individual department and discovering how employees perceive each individual outcome, how attractive the employees consider those outcomes, tell employees how those outcomes can be achieved and then by encouraging employees to obtain the outcomes. Keeping departments at an equal scale is important but it is also essential to have the departments interact and come together as a team. A great idea for management would be to have department softball games, i. e. the deli vs. the cashiers.
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Another recommendation is for management to implement some type of reward that brings the company together as a whole, not something for just a specific employee. Management must try to keep employees who are in the same positions but in different store locations equally satisfied as well. Wegmans management should make sure to keep the motivation and reward system consistent throughout all stores. This would first require excellent communication between managers of different stores. For example, if an employee recognition program is established at a Wegmans in Syracuse than this same program should than be implemented at all locations. Establishing congruent motivation practices results in a similarity among the entire company.
If employees obtain the same treatment in all locations than customers will likely see a similar environment at all Wegmans stores. Management should make the effort to regularly assess each individual department at every level to find out employee motivation and what type of benefits they are receiving. This information should than be disseminated among all stores in order to coordinate a uniform system. Employee feedback is also very important; management should keep current information on how employees are feeling about their equality in the company. Management will have to address issues concerning performance measures of different employees. Depending on the position, performance is measured by different methods.
Management should have a standardized means of evaluating each specific job done by an employee. Based on different levels of performance, rewards should be given to each employee and managers should always have knowledge of what actually shows performance relative to each position. This may become easier as more jobs can be aided by new technologies. Employees should be able to view their own performance reports and should be shown both areas they are excelling and in areas where they need improvement.
Management should not only reward an employee for performing well but also help them to excel in the areas where they are underperforming. Dealing with a minimum wage increase is a reward issue that will have to be dealt with by management of virtually every enterprise in New York State. If Wegmans seeks to maintain its status as a top employer, their management must address this challenge. One way to keep existing employees happy would be to adjust their wages to the same percentage above the new minimum wage as their salary currently exceeds the present minimum wage.
This policy would prevent new employees who begin at minimum wage from earning the same salary as a worker with one year experience whose salary may be simply adjusted to the new minimum. It is vital to keep existing employees content, as it is very expensive to the firm to have employees quit (hiring and training costs for new employees are very high).
There are many challenges that management could possibly face in the future. Management should always be analyzing the company? s policies and obtaining feedback from employees. Managers should be familiar with what makes their specific employees pleased and what makes them perform.