Sobey's CEO Michael Medline; Meet the man who’s putting values first in a time of crisis

Why Sobeys is saying yes to ‘hero pay’ and no to gouging suppliers

For Empire Co. CEO Michael Medline, the early days of the COVID-19 pandemic were a flurry of meetings as he and his team scrambled to fulfil the grocery brand’s new role as an essential service.

This included making Sobeys the first grocery store to implement Canada-wide Plexiglas checkout shields, beginning with an order Medline sent out before he’d even hung up his call with the Italian grocery chain CEO who pioneered the technique.

Faced with too many unknowns and not enough data, Medline said the crisis forced the team to cut the picture down to their core goals.

“Everything went back to three things,” Medline said. “Keep our customers and teammates safe, stock those shelves, and support local communities ... especially charitable causes (that) continue to be in trouble.”

That attitude sounds similar to what any corporate leader would say about getting through the pandemic.

What makes Medline stand out nine months in, is his continued willingness to back up that rhetoric with both money and action. He has reinstated hazard bonuses for front-line workers, maintained his commitment to Sobeys’ charity events and declined to raise fees on Empire’s food suppliers, even when that meant breaking stride with major competitors in the grocery industry.

When Medline, 57, stepped into the role of CEO of Empire Co. in 2017, the Canadian food retail giant was in crisis. It was reeling from its shaky 2016 takeover of Safeway Stores in Western Canada, in which supply chain and inventory management issues cost customer loyalty across the newly-acquired brand. That year, the company’s stock plummeted to $15.72 its lowest point since 2010.

Since Medline took over it’s sprung back higher than it was before the Safeway takeover, thanks to Medline’s leadership in policies such as cost-cutting operation Project Sunrise, e-commerce development and the acquisition of Ontario natural food chain Farm Boy.

“I have a theory that anyone can lead in easy times,” said Medline, “You don’t want to do it, but what you’re supposed to be trained to do is lead in bad times.”

And while the pandemic definitely constitutes a bad time, Medline said the company’s experience in springing back from its 2016 slump has been a key resource in meeting that challenge.

Bolstered with that experience, Medline has steered Empire through the pandemic with choices that put the well-being of employees, the public and empire’s partners first. Even though it sometimes meant breaking ranks with other grocery giants on key issues.

For example, last month, Medline declined to follow Walmart, Metro and Loblaws as they raised the fees they charge grocery suppliers to put product on store shelves.

He was widely quoted in his virtual talk at the Empire Club of Canada, calling the fee hike “repugnant” and “just plain bad for Canada.”

In an interview on Wednesday, Medline explained that when he entered the grocery industry after a career in other retail sectors, he was surprised at the adversarial relationship between stores and suppliers.

In a rare upside to the pandemic, he hoped there might be a chance for better relations there.

“When I saw the way that suppliers and grocery stores worked together during the pandemic, they were all centred on how we could stock our shelves and keep people safe,” he said “I thought we were getting to a place where we could have a different kind of industry. But I was disappointed (when competitors raised their supplier fees). I saw what I can only call odious behaviour. Especially in the midst of a national emergency.”

With those hopes for a friendlier version of the grocery industry frustrated for now, Medline has joined supplier advocacy groups including Food, Health and Consumer Products of Canada, in calling for an industry-led code of conduct for grocery retailers.

“I may not get as many Christmas cards from competitors this year,” he jokes. “But I might get a few from suppliers.”

More recently, he reinstituted a pay boost for Empire’s front-line workers at stores inside lockdown zones, placing his grocery stores at odds with those same competitors who have resisted calls to bring back “hero pay” despite rising profits in the grocery industry as Canadians dine in more during the pandemic.

The new lockdown bonus offers front-line workers between $10 and $100 dollars extra per week, depending on how many hours they work, a comparable amount to the original hero pay program’s $2 extra per hour. It will cost the company an estimated $5 million this quarter, and that could rise if other areas follow Toronto, Peel and Manitoba into lockdown.

“I think Sobeys has always been a values-driven company,” said Medline, “But it’s not until the chips are down that you find out whether your values culture is worth anything.”

Medline said when it comes to business conduct, it was his mentor Ron Oberlander, then CEO of Canadian pulp and paper company Abitibi Consolidated, who taught him his priorities.

“I think everyone needs a mentor who will be hard on them to teach them how to do the right thing. For me that was Ron Oberlander. The guy was just special. Instead of making everything a zero-sum game, there were ways to make everyone do better. I haven’t acted that way every time I’ve ever made a decision, but I’ve tried to. Usually you can make the pie bigger instead of trying to take more pie for yourself.”

Jacquelin Weatherby, Empire’s vice-president of communications and corporate affairs said Medline has carried that focus on mentorship forward into his own leadership.

“When he started at Empire, I was in a more junior role. But we connected well and he has mentored me through that progression,” she said. “Michael has sat me down and talked me through so many really tough moments. Especially through the pandemic. He didn’t have to do those things. And he always says ‘Jacquelin, now you have to turn around and do this for someone else, too.’ It’s this constant thought for him about giving back.”

“I think in a strange way that the pandemic has strengthened us,” Medline said. “I see some of our younger teammates, they went through a crisis together. And that cohort of young leaders ... they’ve seen what it means to work together and actually live their values. I think that’s going to pay off for us and for many companies across Canada.”

That focus on living out values is typical of Medline, said Empire’s senior vice-president of marketing, Sandra Sanderson, giving the annual March fundraising partnership with the Special Olympics as an example.

When the initial lockdown forced Sobeys to cancel the campaign, Medline immediately committed Empire to donating a million dollars to the cause outright.

“That’s why he’s a leader who’s so trusted and so inspiring,” she said. Far from costing the company’s bottom line, Medline’s emphasis on doing the right thing first is a smart move from a marketing standpoint. “Customers are rewarding us for it. (They) trust us to keep them safe in stores, and we gain market share because of it,” Sanderson said.

Likewise, Sobeys’ chief human resources officer Simon Gagné said decisions such as reinstating the lockdown pay bonus and fast-tracking the company’s new employee discount program promote loyalty and attract new talent. But more than that, standing up for workers and suppliers offers a sense of purpose.

“More and more, employees want to be comfortable with the purpose of the organization they work for,” he said. And that’s exactly how he describes Medline. Purpose and principle driven.

“I’ve been with this organization for over 20 years and I’ve never worked with such a passionate leader,” said Gagné. “Our turnover has slowed down since Michael started for us.”

Wes Hall, executive chairman and founder of Kingsdale Advisors, who serves with Medline on the board of Sick Kids Foundation, enlisted Medline’s help earlier this year to start the BlackNorth Initiative, aimed at reducing systemic racism in business career opportunities. Hall met Medline through a mutual neighbour. He appreciated Medline’s “unassuming, low key and decent” character and they became fast friends.

“But what really got me to appreciate Michael as a person was when I started the BlackNorth mission. Michael called me up and said ‘Wes, the entire Empire family are here to help,’ ” recalls Hall. “This shows that the stuff that he does with hero pay, with being the first to put Plexiglas in the stores — these things are because of the character of the person. They’re not just for the moment.”

Another leader might have chosen to raise prices, or exploit the crisis to inflate profits and pay himself a big bonus, Hall notes. Instead, he said he’s impressed at the way Medline accepted the nature of the crisis, didn’t take advantage of people in a trying time and led with empathy.

Thanks to that demonstrated commitment to ethical conduct and philanthropy even in a crisis, Medline has earned a rare degree of trust, Hall said.

“If he called me up today and said ‘I want you to be a part of something for the future.’ I don’t even ask what it is. I say yes, because I know it’s going to change people’s lives.”