How Companies Like Boxed and Wegmans Have Mastered Employee Engagement

July 25, 2017 Appirio

On May 19, 2016, dozens of workers surrounded their boss inside a cavernous fulfillment warehouse in Edison, New Jersey. It was the annual company-wide meeting of Boxed, the online wholesale retailer, and its CEO, Chieh Huang, stood between towering aisles of paper towels and baby diapers, preparing to reveal a surprise to his employees. He first turned to Marcel Graham, a 26-year-old who had been working at the company for one year, picking, prepping, and shipping boxes of bulk items to customers. Graham’s fiancee stood beside him. “We wanted to tell you that we want to pay for your wedding,” Huang said.

Graham had been saving up for his wedding, but after his mother fell ill, he had spent through most of it to pay for the medical bills. Before Huang could finish his sentence, Graham and Huang both broke into tears.

Huang wiped his face then turned to the crowd. From now on, he said, every full-time employee across the company, from New York to Atlanta, to Las Vegas, to Dallas, would receive the same $20,000 benefit to help pay for their weddings.

“I was blown away,” Graham later told Forbes of Huang’s gesture. “It was amazing to see that they recognized my hard work.” It also went hand in hand, Graham added, with what Chieh always talked about since they first met, “when he was like, he cares about family, education, and hard work. He’s definitely showing what he’s talking about, so I really appreciated it.”

The Ellen-worthy moment is, in fact, central to how the fast-growing wholesale retailer builds employee engagement and loyalty since its founding in 2013. “Our goal is to strengthen the overall employer-employee bond,” Huang recently told Benefit News. In addition to paying for weddings, Boxed preempts many of its employee needs by offering benefits such as unlimited maternity and paternity leave, and offering financial assistance for employees going through a “major life change.” For its unsalaried warehouse employees, Boxed pays a minimum wage of $14 per hour, a rate significantly higher than is required in most states.

“I can’t do what I do without people putting in a lot of backbreaking and hard work,” Huang told ABC News. “It’s just my way of thanking them.” Huang estimates that roughly 10 percent of his 125-member full-time staff will get married, translating to an estimated $250,000 in cost. Huang justifies the expense by reasoning that the company doesn’t offer the standard perks that have become familiar at Silicon Valley startups, such as ping pong tables and indulgent happy hours. “We don’t do free meals, we don’t do $10,000 happy hours, we’re lean all around,” he told “We don’t have extravagant salaries, but we focus on a few fringe benefits.”

The culture at Boxed has been key to building a brand that stands out amid big box wholesale clubs and the ever-expanding universe of e-commerce apps. Since starting the company out of a garage in New Jersey in 2013, Huang said he has raised roughly $150 million in investments. Their latest round of funding — in November 2015 — valued the company at $400 million.

Huang first attracted national attention in 2015 after announcing that he would commit a portion of his stock in the company to pay the college tuition of his employees’ children. “I realized only two people out of 20 could afford private transportation to get to work,” Huang said in one interview. “Even if we doubled their salary, these people couldn’t afford a car or a college education for their kids. So I decided to do something about it.”

The move not only led to a spike in publicity — with featured spots on Good Morning America, Forbes, and NBC — but for some members of the staff it also solidified their commitment to the company. Joe Bobko, who oversees logistics at Boxed, was one of the first employees to benefit from the tuition assistance program. With Huang’s help, Bobko was able to send his son to college without worrying about finances. “It ultimately lessens the burden, whether that was loans, or dipping into savings,” Bobko said in one interview. If it was even possible to become more loyal to helping the organization succeed, Bobko said, “then I’m more loyal than I was before, and that’s really hard to say.” But even stripping away the flashy benefits, Bobko said, at the heart of the company was “a good, close-knit organization with a mission.”

Getting employees to buy into the company’s mission and its “we’re all in this together” culture has been key to Boxed’s growth. “Building culture is a money-saver over time,” Huang told Quartz. The company’s investment in longer-term rewards and benefits seems to have inspired loyalty, helping explain the company’s low attrition rate — the company lost just five employees between its founding in 2013 and May 2016. Employee retention can add up to significant savings considering that turnover has been reported to cost as much as 150 percent of a given position’s annual salary — including hidden costs like lost institutional knowledge, lowered productivity, and an overworked remaining staff.

These savings can go a long way for a rapidly growing company like Boxed, whose business relies as much on physical labor and quality customer service as it does on its mobile app interface. More than 80 percent of Boxed customers are between 25 and 44 years old, and the “Costco for Millennials” is vying to win the loyalty of everyone from college students and young parents to those living far away from a brick-and-mortar store. Boxed shipments often come with handwritten notes from staff, and the company regularly engages with customers on Instagram and other social media channels.

The company’s investment in its employees and customers appear to be working so far: Boxed has watched its sales skyrocket in just two years, from $8 million in 2014 to $100 million in 2016. Thousands of customers have posted selfies, or pictures of their kids or pets expressing their excitement over their Boxed shipments. “I love love love that Boxed is all about surprises and delights,” one customer wrote. “They often send along freebies that they think we’ll like and every box includes a hand-written thank you note!”

Changing tides in the employee-workplace relationship

Outside the box it may seem, but Huang’s approach speaks to a broader shift taking place in employee engagement and workplace management. “The employee-work contract has changed,” corporate analyst Josh Bersin wrote in a 2015 issue of Deloitte Review, “compelling business leaders to build organizations that engage employees as sensitive, passionate, creative contributors.” The new reality is that in-house offerings like Google’s sushi bars and dry cleaners, or flexible work hours like those at Zappos are “no longer just perks,” Bersin wrote. “They are essential elements of making work fit into our lives.”

There is mounting evidence linking higher employee engagement to boosts in productivity and profitability. A 2012 Gallup poll found that organizations with higher employee engagement levels — measured by surveys to gauge employees’ involvement, enthusiasm, and commitment to their jobs — experienced:

  • 37 percent less absenteeism.
  • 25 percent less turnover in high-turnover organizations.
  • 65 percent less turnover in low-turnover organizations.
  • 28 percent less shrinkage (theft).
  • 48 percent less safety incidents.
  • 41 percent less patient safety incidents.
  • 41 percent less quality incidents (defects).
  • 10 percent higher customer metrics.
  • 21 percent more productivity.
  • 22 percent more profitability.

Still, many companies have yet to figure out the question of how to increase engagement or measure its success. In January 2016, employee engagement researchers Annamarie Mann and Jim Carter wrote in Gallup’s Business Journal that employee engagement had “barely budged” since 2000, with less than one-third of US employees being “involved, enthusiastic about, and committed to their work and workplace.” Worldwide, that number dropped even lower, to 13 percent. “The world has an employee engagement crisis,” they wrote, “with serious and potentially lasting repercussions for the global economy.”

It’s no wonder, then, that after interviewing hundreds of companies over a two-year period, Bersin found that the issue of employee retention and engagement was one of the highest priorities in the minds of business leaders — second only to building global leadership.

As a result, more and more companies have leaned on annual surveys to gauge employee satisfaction. Bersin estimates that the marketplace of employee satisfaction survey providers totals around $1 billion in size. Surveys often rely on statistical models built by industrial psychologists that correlate staff turnover with a range of variables. “While none of these models are ‘wrong,’” Bersin wrote, “companies tell us the surveys don’t prescribe actionable details.”

In fact, surveys are just the starting point, according to Gallup’s Mann and Harter. “High-growth companies have a clear purpose behind their strategy for engaging employees,” they wrote. This approach includes leadership involvement and commitment, a communications strategy, and systems that hold leaders and managers accountable for following up on their findings.

Take Wegmans Food Markets, for example. The family-owned grocery store chain with more than 47,000 employees is consistently named in Fortune’s list of the top 10 best places to work. Wegmans boasts a series of programs designed to put employee ideas into action, including open door days, team huddles, focus groups, and a two-way Q&A blog with the company’s senior VP of operations. Since 1984, the company has awarded $105 million in tuition assistance to more than 33,000 employees.

Wegmans, which is privately owned, reported annual sales totaling $8.3 billion in 2016, representing a near tripling over the previous 15 years — including 2004, when the rise of competition from Walmart pressured the company into lowering its prices. “Our employees are our number one asset, period,” Kevin Stickles, Wegman’s senior vice president for human resources, told The Atlantic. He added that the company wants employees to extend the brand to customers, and that “when you think about employees first, the bottom line is better.”

There’s evidence that Wegmans’ strategy is working: The company is known for having an almost cult-like loyalty among customers. “There’s a joke up in Buffalo that with all the bad weather this past winter, people would go shop at Wegmans just to cheer up,” one consumer industry consultant told the Washington Post. “That tells you how people feel about this place.”

Over at Google, CEO Sundar Pichai hosts a weekly company-wide meeting called TGIFs, which are shared on live broadcast with offices around the globe. In these sessions, which started in the 2000s, Googlers can ask Pichai and other executives questions in an ask-me-anything format. Outside of TGIF, employees can submit questions through an internal system called Dory, and their colleagues can influence which questions get answered by up- or down-voting the questions. And through its internal “employee resource groups,” Googlers can self-organize around shared issues and identities. It’s this “rigorous analytical approach to morale,” Fortune said, that has helped keep the $75 billion tech giant at the top of the magazine’s list of best places work — for six consecutive years.

A 2014 study of high-turnover companies by Quantum Workplace found that the second-highest issue in employee engagement was the organization’s willingness to “listen to an employee’s perspectives.” Employees who feel they are being listened to and included by their employer, meanwhile, report a better ability to innovate, respond to customer needs, and collaborate with teams, according to a 2012 study conducted by Deloitte Australia and the Victorian Equal Opportunity and Human Rights Commission.

Managing with equity and empathy

What began as a few people packing boxes and watching Sunday night football in Huang’s garage has quickly expanded into four massive warehouses staffed by roughly 125 full-time and 275 hourly employees. But there’s one vestige of their past that the company has never lost, according to Huang: “Everyone starts in the fulfillment center.” At Boxed, each new employee — from line packers to C-suite executives — start their trainings at the fulfillment center, and line up for their morning shift.

All staff members also share the same spaces, Huang said. “No matter if you’re blue collar, the pick-pack and shippers, or if you’re in the office hacking away at code,” staff share the same break room, bathrooms, and office space. “We don’t separate,” he said. “For us, it’s very important to be one team, and not to just say that.”

Financial assistance benefits at Boxed are an extension of that “all are equal” philosophy — one rooted in Huang’s own upbringing. As the son of Taiwanese immigrants, Huang said he understands the daily struggle of blue-collar families. Growing up in Baltimore, Huang’s father swung between unemployment and selling knick-knacks at flea markets; his mother worked as a cashier at a Chinese restaurant near Johns Hopkins University. “She would always say, ‘We have to do what we can as a family to get our kids to go to Hopkins,” Huang told Forbes. Huang later graduated from Hopkins, then from law school, and after a stint as a corporate lawyer, he went on to run Astro Ape, an iPhone game maker that was later bought by Zynga, Huang said, for “eight figures.”

“Going into our fulfillment centers brought back memories of how my parents struggled,” he said.

When Huang told Boxed board members that he wanted to personally front the college tuition of employees’ children, they weren’t surprised. Huang “always had a big focus on Boxed being a unique place to work,” Jeff Richards, a Boxed board member and partner at GGV Capital, told Forbes.

“Why is it that someone makes a few bucks an hour and some tech execs make hundreds of millions of dollars?” Huang asked after making the announcement to the public. “If nothing much changes, those families will still be in lower income jobs without access to upward mobility two or three generations from now.” Huang’s hands-on, heartfelt management style shows how meaningful employee engagement goes deeper than survey metrics; it is woven into the fabric of culture and community.

“At Boxed, the company’s success is everyone’s business,” Elana Krieger, former head of human resources, said in a September 2016 statement. “Boxed focuses on customers first. The HR team is dedicated to putting our employees first; which means making our offices and distribution centers great places to work. Dedicated, motivated, empowered employees in turn drive superior value and experience to our customers.” Plus, she added, “an endless supply of Boxed snacks doesn’t hurt.”

Want to get your workers more engaged? Download our ebook, The Recipe for Worker Engagement.

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