Feedback Loops and Organizational Learning at Whole Foods Market

Introduction

To remain competitive and responsive to internal and external pressures, firms need to observe and monitor the outcomes of their activities (Mintzberg et al., 2011). Feedback loops explain the mechanism by which processes may be maintained or change takes place. Like other businesses, Whole Foods Market cannot avoid the presence of feedback loops. When feedback loops are recognized, they can provide a useful source of data that a firm may use to maintain and improve performance. The aim of this report is to review the two different types of feedback loop that may exist, and then examine some of the feedback loops found in Whole Foods Market.

Types of Feedback Loops

Two types of feedback loops exist: the reinforcing loop and the balancing loop, each operating in different ways with reference to cause and effect (Bellinger, 2004). Reinforcing feedback loops, as the name indicates, are loops that reinforce existing patterns of behavior, either amplifying or magnifying outcomes by reinforcing attitudes and activity patterns, so the outcome becomes exacerbated as the loop repeats (Bellinger, 2004). Reinforcing loops may have positive or negative outcomes (Bellinger, 2004). For example, a lack of discipline in the workplace may result in employee negative behavior. If employees see their peers escape any form of discipline, they may also choose to indulge in negative behavior—a negative reinforcing cycle. If the situation were reversed, and employees were working hard and saw peers gaining benefits and rewards for their hard work, they might emulate that behavior, creating a positive reinforcing cycle. In each case, the cause is the outcome of the first loop, and the effect is the way in which the pattern changes.

A balancing feedback loop is a loop where the same patterns are maintained as the loop repeats (Bellinger, 2004). Just as with reinforcing loops, balancing loops may also be positive or negative (Bellinger, 2004). For example, balancing loops may provide resistance to change, which has a negative outcome for an organization. Alternatively, they may provide support for the maintenance of high standards, which would be seen as a positive balancing loop.

With an understanding of the different types of loops, both types may provide useful input for an organization that wishes to improve. There is no singular definition of organizational learning. The literature generally indicates that organizational learning occurs when individuals within an organization learn and collectively apply knowledge, which creates an improvement. Organizational learning can include learning from mistakes and will involve utilizing feedback as a source of information to review and improve operations or actions. It may be linked to double loop rather than single loop learning (Argyris and Schon, 1996). Vassalou (2001) argues that the concept will incorporate the concepts of know-how and know why. Senge (2006) takes the concept of organizational learning to a further stage with the concept of the learning organization, which is seen where learning takes place on an ongoing and continual basis and forms part of the culture. With organizational learning, the process may not be as ingrained in the culture or as holistically applied.

Reinforcing Feedback Loop at Whole Foods Market

Many reinforcing feedback loops exist at Whole Foods Market. The reward strategy utilized by the firm is a good example of a positive reinforcing feedback loop. The organization has a rewards system referred to as "gainsharing," which is linked directly to employee remuneration (Whole Foods Market, 2015). The gainsharing program provides a basis for productivity-related pay, allowing employees to benefit from good productivity performance. All employees participate in the scheme and receive a bonus every other month, with bonuses calculated on their own teams' productivity. Each employee receives a proportional amount of the bonus allocated to their team based on the hours they work (Whole Foods Market, 2015).

The program provides significant potential for learning, as the loop itself is relatively short, with bonuses calculated and awarded every two months. Employees as individuals may notice ways in which they can increase productivity and team performance, and make suggestions that will benefit themselves and others. Likewise, management may pursue innovation and improvements in order to improve team performance. Just as strategies that may improve productivity may be pursued, learning may also take place with reference to practices that did not work, as they are unlikely to be repeated.

In the retail environment, each store is a team, so teamwork is also encouraged, which facilitates the potential for peer learning. The basis of the bonus allocation also creates the potential for peer pressure to influence employees who may be perceived as inefficient or not contributing their full effort. The outcome aligns with motivational theory, allowing for financial rewards which address the lower-order needs of Maslow's hierarchy of needs, as well as providing a basis for motivation in terms of expectancy theory (Buchanan & Huczynski, 2010). The tangible results of the positive benefits of the reinforcing loop for employees are seen in their wages. An employee working 40 hours a week benefited from an additional $1,788 in their 2013 paychecks, and for the company, it has resulted in lower labor costs with more self-managing teams (Whole Foods Market, 2015).

Conclusion

Whole Foods Market appears to take a proactive approach towards organizational learning, seeking opportunities to not only learn but provide support for ongoing learning processes at both team and organizational levels. The two examples of the reinforcing and balancing loops demonstrate some of the processes which are in place. Gainsharing provides ongoing opportunities to learn, while the inventory balancing loop may appear mundane; nonetheless, the processes are essential for the efficient operation of the organization and support a competitive advantage for fresh quality food. However, even with learning already taking place, there will still be additional opportunities for further improvement. In both of these examples of feedback loops, potential sources of improvement have been identified, which may help to support the feedback loops the company designs.