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How Albertsons’ top HR exec led his workforce through 2,700% growth

Albertsons Executive Vice President of Human Resources Andrew Scoggin enjoys the open space of the atrium of the Albertsons headquarters on Parkcenter Boulevard. A veteran of the old Albertsons Inc., Scoggin says employee pride has grown since the old chain’s surviving stores were reunited three years ago. The company has renovated its Boise headquarters, which has roughly five times as many employees as it used to.
Albertsons Executive Vice President of Human Resources Andrew Scoggin enjoys the open space of the atrium of the Albertsons headquarters on Parkcenter Boulevard. A veteran of the old Albertsons Inc., Scoggin says employee pride has grown since the old chain’s surviving stores were reunited three years ago. The company has renovated its Boise headquarters, which has roughly five times as many employees as it used to.

If you’re looking for an expert on leading employees through tremendous change, consider Andrew Scoggin. You’d be hard-pressed to find a human resources executive whose resume includes a steeper uphill climb.

Scoggin is the executive vice president of HR, labor relations, public affairs and government relations for Albertsons, the grocery chain based in Boise.

Albertsons in the past four years has transformed from a midsized company to the second-largest traditional grocer in the U.S. It also went from owning none of Idaho’s Albertsons stores (despite having its headquarters and roots in Boise — a quirk that confused many Idahoans) to owning all Albertsons stores in its home state and many other grocery-store chains nationwide.

Albertsons four years ago:About 10,000 employees192 stores$4 billion sales

Albertsons now:283,000 employees2,300 stores$58.7 billion sales (fiscal year 2015)

“The growth, from an employee standpoint, has been the smoothest that I’ve experienced doing this kind of work for 27 years,” Scoggin says. “These two very large transactions [acquiring stores from Supervalu in 2012 and merging with Safeway last year] have been remarkably smooth.”

The original Albertsons Inc. fell on hard times and broke up in 2006. Minnesota-based Supervalu bought some of its stores, including those in Idaho. An investment group led by New York’s Cerberus Capital Management bought the rest and ran them from Albertsons Inc.’s old headquarters on Parkcenter Boulevard.

Both new owners closed struggling stores. After years of losing money, Supervalu sold its remaining stores to the Cerberus group in 2013, reuniting what was left of the supermarkets from the Albertsons Inc. days.

The company says it is turning around sales where Supervalu couldn’t. Scoggin says that turnaround — and CEO Bob Miller’s decentralized management approach — helps employees take pride in their stores once again. Meanwhile, the Cerberus consortium plans to sell stock to the public, though it isn’t saying when.

Miller was among those who spearheaded a companywide effort to help Albertsons employees in the Baton Rouge area after catastrophic flooding this summer destroyed their homes. Miller traveled to Louisiana to talk with employees who lost everything — many of whom continued coming to work.

Boise-based Albertsons created this video to share what the company's Baton Rouge-area employees were going through in August, when record rainfall caused massive flooding. The floods left many of Albertsons' Louisiana employees without homes. CEO

Scoggin says Albertsons is retaining more employees than is typical in the retail sector. Bloomberg News says retailers had a turnover rate of 5 percent a month last year.

He describes Miller’s and other executives’ management approach as “high trust, high accountability.” The corporate leaders delegate most of the decision-making to Albertsons’ 14 divisions.

“Far fewer decisions are made in the headquarters here in Boise,” he says. “Far more of those decision are made by people closer to the customer.” That includes setting prices on sale items, choosing which products to stock and where to place them in the store.

Q: As you’ve bought stores in places like Texas, California and even Idaho, how do you integrate the new employees?

A: As we’ve done an acquisition and come in and laid out our way of operating to a new group of managers and even hourly employees, you have seen a light come in in their eyes when they think, “You’re going to let us do what we know how to do.”

We back way off, and we’re here to support, to help them be successful, to give guidance and direction.

It takes a leap of faith for companies to be willing to give that much control and discretion. We have very strong rules about following the law, moral and ethical considerations.

What we’ve found is that that’s the best way to integrate a workforce. It’s a great paradigm. We owe a lot of that to our CEO’s vision of how we should run the company. There’s a strong sense of ownership.

We run our stores from the floor.

A merchandise executive describing the Albertsons Cos. management style to Andrew Scoggin

And one of the things that has been a hallmark of our journey over the last 10 years is we have had the ability to acquire longstanding brands. Brands that have been around for 80 to 100 years, known for service, innovation, for right prices, for all the right things, and that’s how they have grown. Then they came under new ownership, and they’ve declined.

We’ve been able to come back in and work with them to restore the glory to their banner. ... Their neighbors start to say, “Wow, your store is back.” None of them had given up on their brands but were skeptical. The realization that it is different has been incredibly rewarding to us.

Every one of them since we’ve had the opportunity to bring them back into our fold has experienced sales increases. ... And having positive sales means our employees have been validated by our customers: “We want to be back in our stores.”

We’ve seen our turnover be lower than national average. All of them are staying and being part of this journey with us.

Every one of our transactions and acquisitions has added jobs at the store (but) reduced overhead, including positions at the corporate level.

Andrew Scoggin, Albertsons executive vice president

As an employee, to see your company invest in your store and clean it up and brighten it and make it welcoming also makes you want to be there, [versus seeing] a lot of neglect in the building you work in, that you present to your neighbors and customers.

Q: How do you keep your turnover rate low? Even if you’re improving stores, it’s harder now to keep good workers than it was a few years ago.

A: Direct ownership at the store level, pay that tends to exceed the average, and many of our employees are unionized in a number of areas in the country. And those that are not, we tend to pay certainly above minimum wage. We have retirement and health insurance for every employee who meets the hours requirement.

But I don’t think that, in and of itself, is enough. ... We try to select for people who enjoy [grocery retail work]. That has been a great formula for keeping people for years. You’ll find people in the meat department or produce department that have been there over 30 years.

Albertsons’ mid-20 percent turnover rate is below average for retail, which executive Andrew Scoggin says exceeds 30 percent.

Our CEO started by sorting bottles. Our COO [chief operating officer] started bagging groceries. ... Most of our senior executive team started in our stores. [Scoggin joined Albertsons in 1993, after working at a law firm.]

The employee in the store, on the floor of the store, knows that the executive knows where they come from. Knows what they have to deal with on a daily basis. Our senior executives have high credibility with people in our stores.

Q: What has been one of your greatest challenges in your career as a grocery executive?

A: In the few years leading up to the dissolution of Albertsons Inc., I dealt with a group of managers who were very inwardly focused rather than focusing on the employees. There was a lot of corporate politics. There was too much ego and not enough concern about the growth of the business itself, amongst a number of people who had risen to levels of power. Resulting in the company having to sell itself. That was a difficult time to watch.

A loss of focus on the customers and their employees and increased focus on the people in the executive office can destroy a company and a culture. ... Luckily I was fortunate enough to come out of that and come into a very positive organization.

Run really good stores.

The de-facto Albertsons motto, said frequently by Andrew Scoggin and Albertsons CEO Bob Miller

I trusted that I had the skill and ability to be able to continue to contribute, and I have developed a lot of patience over the years.

Q: The company is still planning to go public with an initial public offering of stock. What else is next for Albertsons?

A: We are continuing to look for more acquisition opportunities. We’re also building stores, which we hadn’t done in a long time. We’re hoping to get to the point where were building 20 to 25 new stores a year around the company.

Audrey Dutton: 208-377-6448, @IDS_Audrey. This story appears in the Sept. 21,-Oct. 18 2016, edition of the Idaho Statesman’s Business Insider magazine. Click here for the Statesman’s e-edition, which includes Business Insider (subscription required).