At Publix, a regional grocery store chain that started in Florida and is prominent throughout the southeastern United States, a key differentiator is its ownership structure. That might seem like a strange thing to use as a strategic advantage, considering that grocery shoppers are unlikely to take the time to think about who owns the store where they pick up their milk and bread. But according to the company’s CEO, because employees account for a substantial portion of ownership shares—around 30 percent of the total shares available—the owners are what makes Publix different from any other chain.
In particular, the CEO cites the improved service that employees provide, because they have “skin in the game.” This effect has been in place since the start of the firm. Its original founder believed that employees would be more conscientious and careful in their work if they could also earn profits from improved store performance. As a result, Publix frequently appears in lists of the best places to work; one survey showed that 78 percent of its employees would recommend it as an employer.
These positive reviews affect the stores’ performance in the consumer market too. In various polls, it ranks as the best grocer in the south, as well as second in the nation, behind only Trader Joe’s. Thus it appears that the founder was right: Giving employees a vested interest in the company’s performance leads to better performance, both at the bottom line and in the store aisles.
Discussion Questions:
- How important is employee ownership to Publix?
- Is Publix a special case or do you think employee-owned companies are always stronger than those not owned by workers?
Source: George Anderson, Retail Wire, May 13, 2015