Southwest

H-E-B Lives by ‘Spirit of Giving’ Philosophy

The Shelby Report Southwest Grocery News

by Terrie Ellerbee/associate editor

H-E-B attracting great people is paramount. The retailer’s efforts to draw them go beyond offering a good salary and great benefits when times are good.

H-E-B goes after those great people by operating a company that offers fulfilling careers, builds strong leaders and pays people well—even when the economy is declining or uncertain.

“Pay is a big topic for us,” Craig Boyan, president and COO of H-E-B, told The Shelby Report. “Our goal is to create great careers for people and to pay people as much as we can.”

Beyond that, H-E-B has refined its true mission and instilled in its employees, whom it refers to as “partners,” a very real sense of purpose. Few retailers embody their mission like H-E-B. The roots of its “Spirit of Giving” go back to when Florence Butt and her son, Howard, took food baskets to the homeless living along the banks of the Guadalupe River. That spirit is as integral a part of everyday business at H-E-B today as it was in 1905, when the small grocery store that was the genesis for

H-E-B opened in Kerrville, Texas, on a $60 investment. Today the company has annual sales totaling more than $16 billion.

“This is a purpose-driven place,” Boyan said. “Part of our mission is to help partners (employees) have great careers but another big part of our mission is to help our communities be great places to live and to invest in our communities.”

H-E-B also strives to be a “champion” for its customers, meaning specifically that it offers excellent quality, low prices and superior service.

“This is our home and this is our marketplace, so we’re very focused on serving the local Texas customer as best we can,” Boyan said.

The company has invested in offering its customers the best possible prices by lowering its costs, and it compares itself to 10 or 15 of the largest grocery retailers across the country to ensure that its prices are among the lowest.

“We take great pride in our low prices,” said Martin Otto, CFO and chief merchant at H-E-B.

The retailer also lives by a commitment to its 76,000-plus partners (employees) and to its home state. H-E-B hired approximately 5,000 people last year, and hopes to do that again in 2011 to get more people to work and to help Texas thrive. Ultimately it likely will lead to improved market share for the retailer as well.

But every move the company makes begins with the customer.

“Our goal doesn’t start with ‘Let’s grow market share,’” Otto said. “Our goal starts with ‘Let’s serve our customers in a better way every single day.’ If we’re able to do that, then we’ll see our sales dollars grow, and then the outcome of that is that market share grows.”

Leaders must run businesses as efficiently as possible, and that certainly has become a top priority for retailers of all stripes and sizes in the past three years. Those across the grocery industry who cut positions and reduce pay are probably making a mistake, Boyan said.

[quote]“Pay is a big topic for us. Our goal is to create great careers for people and to pay people as much as we can.” —Craig Boyan, president and CEO, H-E-B[/quote]

“I think the industry needs to be careful as the economy struggles. Like-store comps for many food/drug players have been negative over the last few years; obviously for some of the big players, they’ve been much lower than they had been in years past. But pulling back on investing in people is the wrong approach in our view,” Boyan said. “It’s a very thin-margin business and it’s a natural thing to try to get more cost-conscious. We’re working very hard every day to make our business a lot more efficient. But that’s separate from how can we create great careers and build great leaders, and we think that there’s nothing more important for us than to have great leaders in our company, great people running our stores, great people managing our categories.”

‘Spirit of Giving’ lives on, grows

H-E-B is among the largest philanthropic givers in Texas, if not the largest, and it provides opportunities for its partners to play a part.

“One of the things that makes us unique is we donate more than 5 percent of our pre-tax earnings to charitable organizations and nonprofit causes that we care deeply about,” Winell Herron, group VP, public affairs, diversity and environmental affairs, told The Shelby Report. “We are committed to providing meaningful support to non-profit organizations across the state. Our partners roll up their sleeves and get involved in their communities.”

[quote]“We are committed to providing meaningful support to non-profit organizations across the state. Our partners (employees) roll up their sleeves and get involved in their communities.” —Winell Herron, group VP, public affairs, diversity and environmental affairs[/quote]

H-E-B’s “Community Investment Program” provides charitable contributions to community organizations in Texas and in Mexico, where the retailers also operates stores. H-E-B established Mexico’s very first food bank in Cuidad Acuna, Coahuila, Mexico. Today H-E-B supports 11 Caritas Banco Alimentos (food banks) throughout Mexico and 15 food banks in Texas. In 2010 alone, H-E-B’s donations to Texas and Mexico food banks reached 26 million pounds with an estimated value of $38.4 million.

H-E-B developed and for 10 years now has organized the H-E-B Excellence in Education Awards to recognize teachers who excel in the classroom. The retailer contributes more than $6 million each year to education-related programs like Classroom Champions, Excellence in Teaching and the Excellence in Education awards.

Recognition of great leadership is part of what H-E-B does.

“It’s a big part of our culture,” Herron said. “It drives what we do as an organization—we are committed to giving back and building healthy communities.”

Other signature H-E-B programs that align with the company’s “Helping Here” philosophy include Feast of Sharing Dinners. The holiday dinners began in Laredo and Corpus Christi in 1989. Today, H-E-B hosts 30 Feast of Sharing Dinners and serves meals to more than a quarter million people throughout Texas and Mexico each year.

H-E-B also supports environmental efforts to preserve natural resources and educate its customers on green initiatives. On Earth Day, it gave away 250,000 coupons for a free reusable bag to customers who brought in five plastic bags for recycling. In 2010, H-E-B and its customers recycled 3.87 million pounds of plastic bags across the state.

The H-E-B Tournament of Champions golf tournament has in its 25 years in existence raised more than $47 million for more than 600 Texas nonprofits focused on youth and education.

These important events occur annually, but H-E-B is ready, too, when disaster strikes. Its Eddie Garcia Mobile Kitchen provides on-site food preparation during natural disaster relief efforts and H-E-B Feast of Sharing holiday dinners.

In addition, the H-E-B Disaster Response Unit is dispatched by the retailer during relief efforts and houses a fully equipped H-E-B pharmacy and business center so that customers even in affected areas can cash checks and use ATM and Western Union services.

H-E-B recently provided support to the American Red Cross and Texas firefighters as they battled wildfires in West and North Texas. The fires ravaged more than a million acres and displaced hundreds of people from their homes. H-E-B brought in pallets of its Hill Country Fare bottled water and private label snack items as well as ready-meals and supplies like sunscreen, goggles, lip balm and moisturizer. One fundraiser it held for the Red Cross in Midland collected $60,000 from its customers and partners.

H-E-B also has one of the largest United Way employee-giving campaigns, and in 2010 alone they raised more than $4.9 million.

In the photo: Craig Boyan, president and COO; Winell Herron, group VP, public affairs, diversity and environmental affairs; and Martin Otto, chief merchant and CFO.

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