Employee Engagement and Competitive Advantage

Posted on April 27, 2009

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How many times have you heard the following:

“Our people are our most important asset.”

If you’ve spent any time in the corporate world (or the non-profit world, for that matter), chances are good that you’ve heard this line, or a variation, pretty often.

While stated by many, following through on it is a different matter.

Last week, the WSJ published an article about Publix, a grocery chain in the Southeast that is rapidly expanding, despite the poor economy. Here are some key stats taken from the article:

  • In Q4 of 2008, the chain had the industry’s second-highest annualized sales per square foot, second only to Whole Foods
  • Publix received a customer approval score of 82 out of 100 in an industry-wide customer satisfaction survey, marking the 15th consecutive year outranking its main competitors
  • In 2008, the chain opened 79 stores, in addition to acquiring 49 stores from rival Albertsons. Kroger opened 60 new stores, while Whole Foods opened 20 and Suvervalu opened 14

A key part to the company’s success, according to the article, is its focus on customer service. And one of the primary drivers of a high level of customer service is the way the company treats its employees. The company has sacrificed some short-term profitability in order to gain a longer term competitive advantage: “[Publix] also has avoided cutting back staff – which has resulted in faster service times than other grocery stores at the bakery, deli and checkout, key factors to customer satisfaction.

After reading the article, I contacted the grocer’s corporate office to find out if they would be able to comment further on the role of employee engagement in the company’s overall strategy. I got an email back from Maria Brous, the company’s director of media and community relations. She wrote:

Employee ownership has its benefits – we are an employee owned and operated supermarket chain. Our associates have skin in the game. It makes us different than most of our competitors. We’ve always had a philosophy of treating our associates as a family and our customers like guests in our homes.

It’s important to note that treating employees well is only one element of the chain’s strategy that is contributing to its success. Simply doing right by one’s employees is no guarantee that a business will prosper and outflank its competitors. But employee engagement is certainly one key component of an effective long-term corporate strategy, one that more organizations should make a higher priority.