United Supermarkets CEO Puts Service Above Sales

JON SPRINGER

Lubbock, Texas — A new era in business will reward those companies that emphasize sincerity and service and reject an outdated and broken price-profit model.

So says Dan Sanders, chief executive officer of United Supermarkets here, in a new book published this month by McGraw Hill Business. In “Built to Serve,” a book based on a United Supermarkets training manual, Sanders uses the success of his family-run supermarkets to model what he calls “a culture committed to people and servanthood” that will drive “a return on investment in humanity,” along with profits and growth.

“Most businesses today are built to sell, not built to serve, and as a result there's an emphasis on numbers. It seems to me business leaders are spending far too much time focusing on spreadsheets and not enough time focusing on people, which is the true lifeblood of a sustainable organization,” Sanders told SN in a recent interview.

“Most companies today use a profit-and-loss statement that's really a stagnant holdover from the industrial revolution,” he added. “If you use standard accounting practices, this telephone I'm speaking into is considered an asset and I'm considered an expense. I think that's a broken system and it needs to be fixed to reflect a new era in business.”

United operates 46 supermarkets under the United Supermarkets, Market Street and, as of this month, Amigos banners in Texas. It was founded in 1916 and remains privately held and in the control of its founding family. While small, closely held companies are better able to focus their attention on long-term goals, Sanders said he feels all organizations can do a better job of expressing to their stakeholders the importance of reassessing the value of quarterly financial pressures.

“At United we have the luxury of assessing our performance a quarter-century at a time, not a quarter at a time,” Sanders said. “Dave Dillon [CEO of Kroger] doesn't have that luxury. He's a very bright guy, very smart, but more has to be done to educate all of the stakeholders — the team members, the communities in which they serve, the stockholders and the directors — to really rethink the myopic way we approach business today that places such a heavy interest on not just the numbers, but the numbers last quarter, or last trimester.”

Sanders suggested that instead of companies measuring performance against prior quarters, they measure against potential. “It strikes me that's a much more meaningful benchmark,” he said. “What could we have done? That's a pretty compelling question, and one that rarely gets asked.”

Tapping into an innate desire to serve others has been key to reaching potential for United, Sanders said.

“When you engage people on a personal level and you demonstrate to them that you care about them for more than what they can produce for the bottom line, it really sets in motion some positive things,” he explained. “I think people are eager to participate in something that's bigger than they are.”

Sanders said the model at United is rooted in faith — “to serve God by serving others” — but said the need for a new approach to business transcends religion. “It's not about any doctrine or denominationalism,” he said. “I think anyone would have a hard time taking issue with being encouraging to people, being compassionate and serving others. I think that's what we're about. In my case I go further and think we were built to serve — that we're wired that way.”

While the framework for United's approach to business has been in place since its founding 91 years ago, Sanders made it a part of the company's official approach shortly after becoming CEO in 2004. The effort coincided with a period of growth of the company.

“One of my concerns when I became CEO was that as we continue to grow, I was concerned that we might lose some of our culture,” he explained. “So as part of the effort to really perpetuate our culture and make sure new folks coming into the company understood what we were all about, we put in a program to educate all our team members about the vision and mission of the team.”

Sanders said he set up around 1,000 one-on-one meetings with company managers, who spread word of the program at their stores. Along the way a company mission statement — “Ultimate service, superior performance, positive impact” — brought clarity to the organization, allowing employees to make decisions within that framework.

“By getting eyeball to eyeball with the people who had leadership in the organization, we were able to make enormous progress in sustaining the mission,” Sanders said. “They've gone back to the stores and modeled the behavior, and as a result the folks on the front line have responded favorably.”

United also made an effort to shift perceptions by referring to employees as “team members,” vendors as “partners,” the corporate office as a “support center” and customers as “guests.”

“It humbles me every day to see the teenagers and seniors working part-time as sackers. They spend more time with the guests than anybody, and they truly get it,” Sanders said. “They're not incredulous when you talk about human goodness and sincerity. They recognize they have a better day, and find more meaning, when they're serving others.”

United operates 46 stores currently, and is building two Market Street stores and a new support center around the Dallas metroplex, where the company sees more opportunity for growth. United does about $1.2 billion in annual sales.

“We don't ever have a discussion about a certain number of stores by a certain date. What we talk about is how many stores we can build while remaining faithful to our mission and vision,” he said. “If we can have 100 stores and be faithful to our vision and our mission, great. If we can do only 48 and remain faithful, that's good too.”