WEGMANS VISIONARY

DAVID MERREFIELD / Daniel R. Wegman

ROCHESTER, N.Y. -- When the school system sneezes, Wegmans Food Markets here catches a cold.

After all, Wegmans -- with its labor-intensive focus on fresh-prepared food -- is a major employer of school-age youth. And, if the school system near where Wegmans runs stores isn't retaining and graduating students, the labor pool available to Wegmans goes dry. Wegmans is a 60-unit supermarket operation, which generates a top line estimated to be nearly $3 billion. It has a heavy concentration of stores in this area along with stores elsewhere in upstate New York, plus Pennsylvania and New Jersey.

A few years ago, Wegmans became aware that it was experiencing severe hiring difficulties and that those difficulties were rooted in the fact that the high-school dropout rate was extraordinarily high in the region.

So Wegmans took a proactive posture about the problem by inaugurating a training program for youth intended to equip students to be able to graduate from high school, and to work at a Wegmans store in the meantime. The program was dubbed the work-scholarship program.

How did it go? The short version is that Wegmans has been able to dramatically increase the high-school graduation rate for those enrolled in the program, and to sharply reduce the churn rate of store-level employees. In recent months, a permutation of the program started by Wegmans attracted some $4.8 million in funding from New York state, a sum that will permit the program's rapid expansion. Wegmans is willing to make its program available as a model for other supermarket chains to emulate, offering a means to demonstrate the potential for success so funds can be obtained.

In an interview with SN conducted here, Daniel R. Wegman, president, explained why the program was started, how it operated and how it has evolved into a long-term solution to assist youth. And it has proven instrumental in helping resolve the daunting problem of finding young people in numbers sufficient to operate a supermarket chain.

"Many people think of Rochester as being composed of well-educated and affluent people, given our high-tech industries in the area," Danny Wegman said. "But this area is tough. There's a lot of crime and the high-school dropout rate is very high. It shocks me. And it's scary. What happens is that the most impoverished people tend to remain right in the center of the town, and that's where they stay locked. Those that do well move out."

By the numbers, Monroe County, where Rochester is located, has a population of about 1 million. The city itself has about 220,000. There is a vast dichotomy between the fortunes of those in the county and those in the city, the former being largely affluent. The Rochester City School district is the 73rd largest city in the nation, but ranks 13th in terms of children in poverty. The city's school system has a horrific graduation rate: Roughly four of five students who start high school fail to earn a degree. In sum, the school system provided paltry pickings when it came to proffering competent youth for store-level employment.

Several years ago, at the urging of William A. Johnson Jr. -- then president and chief executive officer of the Urban League of Rochester -- Wegmans decided to step into the picture. (In 1994, Johnson became mayor of Rochester after a 21-year stint with the Urban League here. He is Rochester's current mayor.)

"We decided in 1987 we needed to start some sort of program to help youth," Wegman said. "The reason we acted was that Bill Johnson pointed out to us the appalling graduation rate from the city school district. Prior to that, we really weren't aware of it. "But as an employer, we were aware that we had big difficulties in attracting students -- especially minorities -- to come work for us. So we felt it would be very appropriate if we reached out and made a special effort to see what we could do with the graduation rate.

"Also, at that time we were running a scholarship program for our employees, and had been doing so for several years. We noticed in running that program that when people did well working in our stores, they automatically did well in school. We reasoned it was the disciplines that work instills, such as punctuality and organizational skills. Work taught them something to transfer into schoolwork. The scholarship was earned by performing well at Wegmans and by doing well on an application read by the admissions officers of colleges. If that process all went well, we would grant them a scholarship.

"So it turned out that the best predictor of success in college was how students did while working at Wegmans. It was a much better predictor than students' high-school performance.

"The correlation between work performance and school performance suggested to us how to build a program to help youth get through high school. We decided to hire young people, and figure out how to help them be successful on the job since we felt that would enable them to do well in school.

"We started off with 30 young people and we were terrified -- terrified because these young people were selected precisely because the school system identified them as being among those most likely to drop out of school. As an organization, Wegmans has tried to build a culture based on success and excellence. I personally was very concerned we might be tackling an impossible job.

"Nevertheless, we did it, and of the 30 who entered, about 18 graduated."

What the Wegmans organization did at first was to set up an in-store mentoring program for students aged about 16 that was intended to help the students succeed at working in Wegmans stores.

But it was found that this gave just two or three years to work with the students, which wasn't sufficient time: It became manifest that students experienced problems at ages far younger than 16, so it was incumbent to start work with them earlier.

So the Wegmans program was backed up to middle-school level, or about age 13, by layering an "advocate" position atop the in-store mentoring initiative.

The purpose of an advocate is to enter the lives of young people early enough to help them resolve life problems that arise in their family or school life, and to do so before the problems become so severe that they smother any chance of success a youngster could possibly have.

Wegman said the key to the program is that a single advocate joins the life of a student at an early age and generally remains with the student right through high school. (It sometimes takes two advocates to span that time.)

The alternative, and the practice followed by many social-service agencies, is to assign people to work with troubled youth in a vertical, task-based fashion. That means youngsters deal with a host of different helpers and as soon as they get to know and respect one, another steps forward to deal with another situation.

Wegmans' method of youth-aid has produced spectacular results, which are just now being fully analyzed and appreciated, Wegman explained.

"We measure program effectiveness by comparing the group of students who decline to be a part of the program against those that stay in it. Remember that all students invited to enter the program are identified by their schools as being likely to fail to graduate. "The group that should have been in the program, but that declines to enter, produces a graduation rate of one in five," he said. "The group that enters the program and stays in it produces a graduation rate of four in five. That's amazing.

"And, of those that graduate high school, four in five take advantage of the Wegmans scholarship program and go to college. I'm amazed."

From the viewpoint of helping Wegmans resolve its in-store labor problems, the work-scholarship's greatest contribution has been not only in providing labor, but also in retention. Part-time workers at Wegmans who are unaffiliated with the program turn at the rate of 80% to 100% per year. Those in the program are retained at the rate of 90%. Students in the program are also required to perform 20 hours of community-service work annually.

Given that the training cost of a part-time worker is about $4,000, the savings possible from encouraging long work tenures add up quickly.

Indeed, those who work successfully for Wegmans for a period of 18 months or more are eligible for a Wegmans college scholarship in the amount of $1,500 per year, or $6,000 for four years, which represents about half the cost of a state school. Many program graduates attend state schools, although many also leave the region and go to school elsewhere. At present, some 2,500 students are receiving scholarships at an annualized cost of about $3 million. Since the inception of the program, Wegmans has provided roughly $40 million in scholarship funds.

"The good part is that by the time they graduate from the work-scholarship program, they really don't need our scholarship money," he said. "They have access to funds from all over the place. More than that, right now we're very close to being able to actually guarantee that graduates of the program can go on to college. One area college, Rochester Institute of Technology, has offered $300,000 in scholarships, 10 at $30,000 per year. The Monroe Community College allows work-scholarship graduates to attend at no charge.

"Funds from other sources are opening. It's taken the community to work together for this, and that's what it takes for a program like this to work: Each community has to work as a community on this problem."

Indeed, what was originally known as the Wegmans Work-Scholarship Program took a new and broader direction in recent years in a bid to open it to wider community involvement.

About five years ago, it began to occur to those operating the program that it was achieving success rates that were such that the program deserved to be expanded dramatically so additional students could be offered help, and perhaps additional industries could join.

"We decided to find a way to open the program so it would be perceived as a community program, and one that could receive broader community support," Wegman said.

At that point, Wegmans formed a partnership with a local non-profit, the Hillside Behavioral Health System. Hillside, founded as an orphanage in 1837, evolved over the years to become a broad-based social-service agency with six separate residential and non-residential programs. Indeed, the emphasis had shifted in more recent time to efforts aimed at stepping into the lives of at-risk children prior to the time they would need to enter a residential program.

So, the Wegmans Work-Scholarship program seemed a good fit, and it was absorbed into the Hillside range of services. Thereafter, it was renamed the Hillside Work-Scholarship Connection. Its particular mission is to administer the "advocate" aspect of the program. Wegmans continues to provide in-store mentors. The mentors are unpaid volunteers, although their work is accomplished during their regular work shifts at Wegmans stores. There are now about 70 mentors under Wegmans' employ, some of whom mentor more than one student.

The Hillside Work-Scholarship program has now evolved to the point that it has 16 full-time and paid advocates, each of whom carry a caseload of 30 students. In all, some 450 students are in the program here, with offshoot programs aiding about 60 in Syracuse and 20 in Buffalo. There is also a small program in New Jersey that is unaffiliated with Hillside.

In recent years, the Work-Scholarship program has been supported with about $1 million in annual funding: some $300,000 coming from Wegmans, $350,000 from Monroe County, $250,000 from the United Way and the balance from various other sources.

In recent months, though, the Hillside program received a $4.8 million grant from the state of New York, which will allow the program to be greatly expanded. Wegmans and the other organizations plan to maintain their historic contribution levels.

"We haven't got used to the idea of having this state money and all we can accomplish with it," Wegman remarked. That's not a bad problem to have.

Asked if Wegmans plans to support the program even if competition for food sales heats up materially, as may be the case since Wal-Mart Stores has plans to open several supercenters here, Wegman said there's really no choice: "Without the students who work in our stores, we couldn't operate them. And if we didn't have this program, they won't stay with us. That's what's interesting about this: We need to help others for our own good. That's how I feel. That's why there's so much interest in our program from others in the supermarket industry.

"This is a program that makes sense and it's good business. And if other [food retailers] move into Rochester and don't have a training program like this, they will have substantial costs.

"But more than that, it's in [the food-retailing industry's] own interest to help America with its biggest problem, and we're the perfect part of the economy to do it. General Motors and Microsoft can't lead this. The food industry can because we're used to employing young people and that's what we do here. It's pretty exciting for our industry.

"Sometimes we talk about why anyone should come into [the food-retailing business]. One reason is that you can make a major difference with the substantial portion of people in America who are minorities. In many ways, minorities are the future of the food industry."

Charting the progress

PROBLEM:

Rochester, N.Y., the home of Wegmans Food Markets, has a school system with an appalling graduation rate, not much more than 20%. Many of the area's children are also mired in poverty. These facts are bad enough, but they also drain the pool of employees for Wegmans stores.

ALERT:

Several years ago, William A. Johnson Jr., then head of the Urban League of Rochester, now mayor of Rochester, alerted Wegmans to the problem and asked if Wegmans could help.

ACTION:

Wegmans set up a college-scholarship program, but it wasn't enough. Not many student-workers were able to qualify. So Wegmans set up a two-tier work-scholarship help method: advocates to work with at-risk students in any challenging phase of life, and in-store mentors to work with Wegmans workers in the store.

RESULTS:

The program produced remarkable results: About 75% of students entering the work-scholarship program graduate from high school, and 75% of those go on to college under auspices of the Wegmans scholarship program. Wegmans turnover for part-time workers was reduced from about 100% annually to a retention rate of 90% of those in the program.

MATURITY:

As the program grew, it was transferred to a local not-for-profit and dubbed Hillside Work-Scholarship Connection in an effort to obtain wider corporate and other sponsorship. In recent months, the program attracted a funding grant from New York state of nearly $5 million, a five-fold increase in program revenues, which will allow rapid expansion.

ROLLOUT:

Funding is available in other states to support similar programs. Wegmans is willing to make its program available as a model for other supermarket chains to emulate, offering a means to demonstrate the potential for success so funds can be obtained.