Hy-Vee Builds a Legacy of Employee Empowerment

Partners Charles Hyde and David Vredenburg — the “Hy” and the “Vee” in Hy-Vee — opened their first store together in 1930 in Beaconsville, Iowa, and from very early on established the principle of store-level autonomy that still guides the chain today.

As the chain began to expand, it began paying store managers on a profit-sharing basis in 1933, according to a history on the company’s website. Store managers met at one of the stores to discuss store operations and plan their advertising, and managers were given the freedom to alter their ads.

Hyde and Vredenburg, together with 14 other partners, rolled up a network of 15 grocery-store locations in Iowa and Missouri in 1938 that formed the nucleus of the chain. Then in 1945, the company purchased a wholesale grocery business in Chariton, Iowa, where it established a headquarters and where it still operates a distribution center.

The company formed the Employees’ Trust Fund in 1960, allowing workers to take ownership in Hy-Vee, which remains employee-owned.

Three years later the slogan, “A helpful smile in every aisle” was introduced, reflecting a commitment to customer service. That slogan has been reincorporated in the Hy-Vee’s current marketing efforts, which now span 235 stores in eight states.

Hy-Vee Names First Chief Customer Officer

WEST DES MOINES, Iowa — Hy-Vee here said it has realigned its operations into three divisions instead of two and named its first chief customer officer to oversee training and the chain’s renewed focus on customer service.

Paula Correy, a longtime Hy-Vee veteran who had been senior vice president of the company’s West Division, was named to the newly created position.

Taking over the newly created North Division as executive vice president is Ron Taylor, who had been executive vice president and chief administrative officer at corporate headquarters. Jon Wendel, who had been executive vice president of supply chain and marketing, was named executive vice president of the West Division, succeeding Correy.

Tom Watson, who had been senior vice president of the East Division, was named executive vice president of that division.

Previously the company had been operating with two divisions, East and West, approximately divided by Interstate 35.

In addition, Jay Marshall, who had been vice president of Center Store, was named senior vice president of marketing and merchandising.

Also, the company has added a ninth region with the three major divisions, with an additional assistant vice president to oversee that region.

The changes are designed to give top officers within each division more time to visit the stores in their territories, a Hy-Vee spokeswoman told SN.

All of the changes are effective Oct. 1 at the start of the company’s next fiscal year.

Service With a 'SMILE'

URBANDALE, Iowa — Hy-Vee is embarking on a comprehensive effort to improve customer service at its stores and is training employees to be attentive to customers’ needs.

The effort is being promoted with the advertising that features the chain’s longtime slogan, “A helpful smile in every aisle.”

Employees of the West Des Moines, Iowa-based chain are being trained to “take care of that customer who is right in front of you,” explained Jay Marshall, who was recently named senior vice president of marketing and merchandising, effective Oct. 1.

The campaign marks a shift from the Red Hot Deals price-oriented effort the company had been emphasizing during the recent recession.

“We will never walk away from price, and we haven’t raised our prices, but what we really want to be known for is, ‘A helpful smile in every aisle,’” Marshall told SN.

During the pre-opening rally with employees at the company’s new Urbandale location, they were led on a cheer that revolves around the “SMILE” approach that Hy-Vee is teaching workers as a reminder of the service imperative. It stands for:

• Stop: Employees should stop what they are doing when a customer needs assistance.

• Make them feel important: Employees should give the customer their full attention.

• Investigate their needs: Employees should ask how they can help.

• Listen to what the customer has to say.

• Exceed their expectations.

Autonomy as an Asset

One of Hy-Vee’s best assets, according to Executive Vice President Tom Watson, is the autonomy of its store directors.

The West Des Moines, Iowa-based chain is known for its innovative compensation program for store managers, through which they earn a share of their store’s profits as their salary and have a high level of control over their store’s operations.

“It lets us react quickly, and lets us go to market with different philosophies according to each store and each market,” Watson explained. “It also makes it tough for competitors because we are not the same in every market and at every store. We don’t have a ‘Playbook 101.’”

To become a store director — Hy-Vee has several years’ worth of candidates in the pipeline — would-be candidates are closely watched, groomed and trained throughout their careers. They can receive training from Hy-Vee University, which teaches skills like bookkeeping, and some are also sent through the Dale Carnegie leadership training program. Potential store directors also may be sent to some industry conferences such as the Food Marketing Institute Show.

Hy-Vee’s assistant vice presidents of operations come up with a list of a handful of candidates each year, who are presented to a selection committee of Hy-Vee officers for final approval.

Read the main feature: Hy-Vee Wins Retail Excellence Award

“We watch them throughout their careers,” said Watson. “There’s a lot of input from everyone, and by the time they get the job, they are ready.”

Hy-Vee has never hired a store director from outside of the company, he said.

Neil Stern, managing partner at  McMillanDoolittle, Chicago, agreed that store-level autonomy has been an important asset for Hy-Vee, although he also cautioned that it can tend to make such individuals risk-averse.

“Store directors might be unwilling to test new systems, for example, if they are afraid they will lose money,” he said. “But somehow they are bringing store innovation to the store level. If there is a secret sauce, I’d want to understand how they are making that happen. I suspect it is very effective management.”

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