Publix Sees Benefits in Pay for Performance Strategy

JON SPRINGER

LAKELAND, Fla. — Paychecks for hourly employees of Publix Super Markets here have begun to reflect the workers' efficacy, and not necessarily their longevity.

The decision to bring the “pay for performance” trend to hourly supermarket workers is paying dividends for the retailer, Publix spokeswoman Maria Brous told SN last week.

“Our goal is strictly to reinforce positive behavior, enhance the shopping experience and provide good service,” Brous said. “We want to reward associates who go above and beyond — who do their jobs and do them well.”

Launched a little more than a year ago, Publix's system is designed to reward exceptional performers with larger pay raises and, for the first time, threaten poor workers with pay cuts, Brous explained. That's a departure from typical pay schemes employed by food retailers, where employee seniority often carries the most weight and weaker workers tend to be reassigned or terminated.

Under the new system at Publix, workers undergo periodic evaluations by their department supervisors and store managers during which they are graded in various criteria and informed of areas that need improvement. An employee's ability to raise those scores in a subsequent evaluation determines any pay adjustment, Brous said.

Workers facing a decrease in hourly salary — no more than 25 cents per hour — have comprised as little as 1% and as much as 4% of Publix's hourly employees in a given evaluation period, she said. The “majority” of Publix employees receive pay raises, she added, with exceptional employees seeing raises of up to $1 per hour.

“Longevity used to be what determined pay increases, but longevity isn't an indicator of job performance,” Brous said. “You can become complacent.”

Industry observers contacted by SN last week applauded the program, predicting it would improve customer service and the standard for all employees at Publix stores, while weeding out less acceptable workers.

“Frankly, it's nothing short of brilliant,” Joyce Gioia-Herman, president and chief executive officer of the Herman Group, a human resources consultancy based in Greensboro, N.C., told SN. “It puts a pressure on employees that I think is very positive. The ones that are really working hard will love it, and the ones not pulling their weight will leave. It's a brilliant concept that gets the best workers choosing to work for Publix and the worst players choosing not to.

“They will have some turnover in the short run, but it's the kind of turnover that's welcome, because it eliminates their C- and D-level players, painlessly,” Gioia-Herman added. “In the long run, they'll be more profitable, have more customers and get better customer service.”

Some rejected workers may seek employment at a competitor, she added. “It reinforces Publix as an employer of choice,” she said.

Union influences at many companies, as well as the complexities of measuring job performance, have tended to prevent food retailers from attempting pay-for-performance strategies with their workers, but, sources said, it is a trend growing in HR departments nationwide.

Effective implementation of the programs requires comprehensive job standards and the discipline to enforce them fairly.

“It's a challenge to build the system and structure. When you go to pay-for-performance, you've got to be able to measure performance, define those measures and hold people accountable for them,” Mel Kleiman, president of Humetrics, a Houston-based human resources consulting firm, told SN. “Publix has put a tremendous amount of effort into building a system that can measure performance. It also has to be perceived as fair.”

Making those changes can put an organization under stress, Kleiman said.

Competitor pressure may also have sparked the changes, some sources said, noting that Publix's Florida-based competitors have made recent efforts behind improved service and training. Tampa-based Kash n' Karry is renewing itself under the service-oriented Sweetbay banner. And at Winn-Dixie Stores, Jacksonville, service is the centerpiece of the chain's efforts to rebound from bankruptcy.

Burt P. Flickinger III, managing partner, Strategic Resource Group, New York, said recent store visits in some urban Publix stores revealed what he called “uncharacteristically weak” customer service for the chain. “It should be a wake-up call for Publix employees to be more productive and more personable.”