Is it Making Money or Making Meaning?

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In the comments to my post on The Biggest Challenge Facing Whole Foods Market, Harry Joiner raises an interesting question. Does money matter more or does meaning matter more when hiring and retaining employees?

Being a recruiter, Harry has direct experience with this issue and his comments seem to indicate making money matters more in employee retention matters. Harry links to this letter that John Mackey, Whole Foods CEO, recently posted on his pseudo-blog where he explains the need to better compensate employees at the company in order to minimize the effect of poaching by recruiters.

[SIDE BAR: You gotta admire the transparency here as Mackey breaks down the corporate pay conundrum in a very, easy to understand way.]

I believe there is a difference when it comes to the matter of compensation as it relates to hiring and retaining employees.

My experience isn’t in the recruiting world, but my opinion is based upon working ten years at two values-based companies (Starbucks and Whole Foods). And from that experience, I found that making meaning is more important when hiring employees and making money is more important when retaining employees.

In the 90s, Starbucks attracted lots of candidates interested in working for a company they could believe in. That desire led many candidates to accept a lower salary in exchange for being happier on the job. I saw this time and time again where new hires signed on at Starbucks because of the opportunity to leave a company they didn’t believe in to join a company they did believe in. In this transition, they would be more willing to accept less pay for greater happiness.

However … once these new Starbucks hires became weathered and tenured employees, the aspect of making meaning and being a part of a company they believed in became less important. Remember, these folks signed on for less money and as the years went on, their salary increased with meager merit pay increases ranging from 2.0% to a maximum of 5.0%. (This was especially true if they remained in the same job with the same job title.)

Thus, job offers from the outside, with considerably higher salaries, start to look more attractive. In order to retain these employees, Starbucks would need to pay them more money.

Whole Foods Market is in a similar situation. Many of their current team members (employees) probably joined the company because of the making meaning aspect and the desire to a part of a company they could believe in. And after they get to enjoy those benefits, many of these team members may become enchanted with the idea of getting exactly what they believe they are worth somewhere else.

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What’s your experience here? Does money matter more or does meaning matter more when hiring and retaining employees? How does all this play out at companies that lack the feel-good juju Starbucks and Whole Foods enjoy? Is there a sweet spot?

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Comments

[matt]

I was with Whole Foods for 10 years, starting in Austin and working as art director in 4 regions all over the United States. It was an exciting time, the company was growing, but I soon began to realize that the culture had changed and felt that compensation wasn't quite what it should have been. It was a huge reason why I left WFM.

"many of these team members may become enchanted with the idea of getting exactly what they believe they are worth somewhere else." That statement definitely hit the nail on the head in my own case.

[Tom Ehrenfeld]

And yet, the issue blurs slightly, when you consider the fact that because the values creating the WFM/SBUX "meaning" often leads to MORE money for the employees. I've been shopping Whole Foods in Cambridge for many years (in fact did so at Bread & Circus before it was assimilated) and I know a handful of employees who stayed for years and as a result made a healthy amount of money through their stock. Also with Starbucks: for people at the lower levels, it has always seemed to me that the total company package (stock/training/health/other benefits) made the compensation better than competitors.

On a pure meaning v. money debate, I personally choose meaning, with qualifications--the money must be of a certain level to enable meaning to win the prize. But this will always be a question of nuance more than absolutes--overpay someone wildly and they will probably make the "mistake" of choosing too much dough.

[Mike Landman]

Holy crap! John! You nailed it. This is *exactly* the phenomenon that occurs. I never really put it together quite like this before.

It's great having friends that are geniuses :)

[Rick Turoczy]

As always, excellent--and thought-provoking--insight. It caused me to riff a bit in my own post (which started out as a comment). To summarize...

I see the situation this way:

Yes, meaning is the impetus, but money only becomes an issue after the employee has entrusted the company to continue delivering meaning.

If that trust is rebuffed or broken, then no amount of money will resolve the issue.

[Harry Joiner]

Your question is: "Does money matter more or does meaning matter more when hiring and retaining employees?"

It's not an "either/or" situation. My experience is that all candidates are driven by a blend of the 3 Fs: Fun, Future, and Finance. What that blend is depends on how many kids the candidate has, how far from retirement they are, whether or not they owe alimony and child support, etc.

We all want to work for a company that does good things, but at some point we have an important responsibility to provide for ourselves and our families.

Some people call that "selling out." As a father of five, I call it "self-sacrifice."

[Rob Fields]

I recall reports that CAA under Mike Ovitz took the approach, particularly with its top agents, that it would pay them a LOT of money. Why? Ovitz wanted to avoid this situation entirely. He felt that money shouldn't even be in the equation, so he compensated them more than enough so that they could have a single-minded focus on business results. And, as everyone knowws, CAA had a great period of several years of really great employee loyalty and great business. So, yeah, money is key to retaining talent, provided that the meaning machine's functioning the way it should.

[Steve Liberati]

Seriously, how does Starbucks and Whole Foods Market make meaning? Maybe their products mean a lot to a lot of people and its a geat place to work and all, but I can also name thousands of other companies that do the same thing. Just because these companies have values as should every business, doesn't mean they make meaning. Now a company like Acumen Fund makes meaning. Their mission/goal benefits society as a whole and exists mainly for the greater good of the community. Whole Foods and Starbucks only exist to make a profit. If they BOTH closed shop tomorrow I doubt the world would be any less worse off than it is now.

[johnmoore (from Brand Autopsy)]

Steve … I'm way biased, but ... name another publicly-traded company that began offering, in 1992, its part-time employees (those folks working 20-hours per week) a full healthcare benefits package AND stock options a la Starbucks? Name another $6 billion company that allows its employees to choose all of the components of its healthcare package a la Whole Foods?

Bueller? Bueller? Liberati?

People can dog Starbucks all they want to for its imperialistic growth, which as someone in an earlier comment said has caused Starbucks to become a parody of itself. Truth is … Starbucks does a lot of things right in how they treat their employees.

And folks can criticize Whole Food all they want to for making natural and organic foods more accessible. However, they’d be hard pressed to find another company its size that gives every employee an equal vote in how best to design the company’s healthcare benefits package.

Those two examples only begin to scratch the surface in how Starbucks and Whole Foods make meaning. The beauty here is that by making meaning, both companies are making money.

[Buzzoodle Ron]

This is a great analysis. It is the exact same issue in Start ups. People join start ups because of the excitement of building something they believe in. If the start up limps along and they do not get substantial increases, at some point money becomes the bigger issue and you lose all the people that helped start the company.

I never thought of how the same thing applied in bigger businesses. Thanks

[Dan Gilliland]

Many times people are asked to take more money to do things they don't like or want to do. I'm always looking for people who can become evangelists for the company. Even if they didn't work for us they would still love to use the products or services. When employees believe in the company & they feel their input is important they will argue less about money. They will be satisfied in many other ways.

The most of the baby boomer generation decided to work at a job that would pay good money & wait until they retire to find their dream job. Many of those people have been miserable all of their lives & only now are they reaching their full potential by finding destiny.