In a recent Forbes article Brian Solomon (2013) examines how a family run Florida grocer is beating the competition and using its employee owned model to dominate a cut throat business that runs on relatively small margins. Publix is an 83 year old grocery chain started by George Jenkins and is still led by his grandson, a 4th generation CEO. Jenkins ran a Piggly Wiggly in the 1930’s and was put off by a new corporate ownership that would not grant him a meeting even though he drove from Florida to Atlanta to present his ideas about running the store he managed in Winter Haven Florida. This lack of leadership helped launch the chain that now beats out all the competition in Florida including Piggly Wiggly.
In reading this article one leadership theory and specifically one model stands out from the ones we talked about in Northouse (2013). That is leader-member exchange theory and specifically leadership making. Leader-member exchange theory is based on leaders that operate in an environment where there is an in-group and an out-group. The in-group has a closer relationship with the leader, is more involved, gets special treatment and has a reciprocal relationship with the boss that has benefits in both directions. The out-group in contrast does not have a close relationship with the leader and generally just comes to work for a paycheck and nothing more (pp. 163-164). This model can create tension between the in-group and out-group and can lead to problems.
This is where the leadership making comes into play and Publix is a shining example of the model in practice. Northouse (2013) explains that this is an “approach to leadership emphasizing that the leader should develop high-quality exchanges with all of the leaders subordinates” (pp. 165-166). And from the beginning, Solomon points out that Jenkins did just that. From the time he started the company he gave shares to his employees to gain their loyalty. Today the company is 100% employee owned with 80% of that outside of the Jenkins family.
Another key aspect of leadership building is giving employees the chance to expand their horizons within the organization. Northouse (2013) points out that the Graen and Uhl-Bien study on leadership making that “leaders should offer each subordinate the opportunity to take on new roles and responsibilities” (pp. 168-169). Publix does just that through its manager training program. Almost all promotions are done from within the company and “every store displays advancement charts showing the path each employee can take to become a manager. Fifty-eight thousand of the company’s 159,000 employees have officially registered their interest in advancement (Solomon, 2013).
Through leadership making Publix has shown that you can treat your employees fairly and compensate them well while still running a successful business that continually beats out the industry competition. Competition like Wal-Mart who is usually leading the pack in profits and market share in any area they are in but have a less than stellar record on employee relations. As Solomon (2013) shows “sales were up 6% in the last quarter and net earnings rose 15%-that people-first formula Publix inherited from George Jenkins is working”. This is not only good for the company and management but for the employees as well because as 80% owners they profit when Publix profits.
References:
Northouse, P. G. (2013). Leadership Theory and Practice. Thousand Oaks, CA: Sage Publications, Inc.
Solomon, B. (July 24, 2013). The Wal-Mart Slayer: How Publix’s People-First Culture Is Winning The Grocer War. Forbes.com. Retrieved from http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-mart-slayer-how-publixs-people-first-culture-is-winning-the-grocer-war/
I think you did a great job of connecting the behavior exhibited by Publix’s leadership to leadership making in the leader-member exchange theory. They have certainly taken steps over the years to bring all employees into the in-group and not just some. In reading the Solomon (2013) article further, I think that the commitment to go down that path was cemented when George Jenkins overheard his CEO at Piggly Wiggly talking about golf despite refusing to grant him five minutes. It is interesting how subtle a tipping point can be. The dismissal of a single employee led to a grocery giant that would lead the marketplace four generations later. While I believe that leadership making was a major part of the company’s success, I believe that it was also accomplished through ethical leadership.
Ethical leadership has five basic principles, that is, ethical leaders: respect others, serve others, show justice, manifest honesty, and build community (Northouse, 2013). Publix founder George Jenkins showed respect for all of his employees and their individuality by attempting to bring them all into the in-group, and not shutting them and their ideas out as he had once been shut out. Jenkins served customers by creating a revolutionary (at the time) shopping experience complete with air conditioning and water fountains, and served employees through mentorship and advancement paths (Solomon, 2013). Jenkins showed that he was just by treating all of his subordinates the same and giving them a chance to share in the ownership of his company. Jenkins promoted honesty about the company and its goals, and stayed true to his commitment to serve his people. All of these things worked together to build a strong team of individuals that shared a commitment to the company and the customer. I believe that Publix has demonstrated leadership making as a result of the ethical leadership practices of its founder, George Jenkins.
References:
Northouse, P. G. (2013). Leadership Theory and Practice. Thousand Oaks, CA: Sage Publications, Inc.
Solomon, B. (July 24, 2013). The Wal-Mart Slayer: How Publix’s People-First Culture Is Winning The Grocer War. Forbes.com. Retrieved from http://www.forbes.com/sites/briansolomon/2013/07/24/the-wal-mart-slayer-how-publixs-people-first-culture-is-winning-the-grocer-war/
I really enjoyed your post. I find it slightly difficult to beleive that every employee feels that they are in the in-group. Personally, I have worked in quite a few out groups and it was a terrible experience. It is an interseting idea. The staff owns 80% of the company. I’m sure they are happy and fulfilled. They are benefitting from the company’s success and I’m sure that drives them to work harder. Every company could learn from Publix model. People work harder for something they believe in or take part in. Employees who are part owners would have a great drive to succeed. Every dollar earned is a dollar they are getting a portion of. I’ve worked at Walmart before. It really is a horrible experience. Workers are treated badly and the customer service shows it. Treating employees well causes employees to treat customers well.