HANNAFORD BROS. TO EXPAND EMPLOYEE MANAGEMENT USE

CHRIS O'LEARY

SCARBOROUGH, Maine -- Hannaford Bros. here will expand its use of employee management teams to its newest warehouse while accepting that the program may not achieve all the ambitious goals the retailer originally had conceived.

The new distribution center, under construction in Butner, N.C., will service Hannaford's Southeastern stores and is expected to be completed by year's end. Once operations begin, Hannaford will evaluate its employee capabilities and start establishing employee management teams.

Such teams are now in place in two of the chain's three operating warehouses. A committee of employees is responsible for writing budgets and schedules, hiring and training new employees and arranging product orders and deliveries, with a salaried Hannaford manager in the warehouse only about 50% of the time.

The new warehouse's employee management program may be structured differently than those in its other warehouses, said Andrew Westlund, vice president of distribution.

"We don't feel we own the book on how to do this, so we will continue to pilot and experiment with different techniques," he said. "There needs to be some differences based on the skill levels and history of the associates in the [Butner] region, so I don't know if all the program design will look the same."

While it is expanding employee management, Hannaford is also taking a more pragmatic view of the program's future potential, Westlund said. In theory, employees would ultimately run all aspects of warehouse operations with very limited outside supervision, but in practice, employees may not ever become quite so autonomous, he added.

The program "is evolving slower than I would have liked," Westlund said. "Originally, I wanted self-directed, self-managed teams [in the warehouse] after five years. In order to hit that target, I would have to put more effort into it than I wanted to budget."

For example, while Hannaford has been using employee management in its Schodack, N.Y., warehouse for six years, it anticipates at least two more years will be needed before the program's benefits reach critical mass, he said.

"We may have to think more in terms of semi-autonomous rather than totally self-directed teams," he said. "Maybe three-fourths of what we originally [conceived] might work."

Conditioning employees to become self-reliant is a time-consuming and costly process for a retailer, Westlund said. "It's worth it, but it requires so much change and so much training," he said. "It seems like it's quite a shock for many employees to really accept the responsibility and accountability that goes with being self-directed."

Hannaford's current system, where corporate-level managers still retain a good degree of influence on employee management decisions, seems to be a good fit for now, Westlund said. "Our current management structure appears to be about right, because some employees still need some attention, help, and frankly, they still need some supervision."

The retailer's payback from employee management has been substantial, however: on-time delivery rates as high as 98.5% and customer service levels up to 99.98%, as well as greatly reduced employee turnover and injury rates. In the future, Hannaford hopes to have employees move into handling areas like reordering and procurement, he said.

While other distributors, including C&S Wholesale Grocers, Brattleboro, Vt., are using similar employee management programs for their warehouses, Westlund said he did not expect the programs to make a major impact on the supermarket industry.

"There's just not enough tangible proof in the pudding for most people and I think the natural inclination unfortunately is to be very short-sighted," Westlund said.