Whole Foods Bans Postings After Online Blunder

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After its CEO got caught bashing competitors and talking up his company's stock in anonymous Internet forum posts, Whole Foods Market Inc. late last week changed its corporate conduct policy to ban company leaders from posting anything online about the company.

John Mackey, chairman and CEO of Whole Foods, came under fire in July after eight years of anonymous posts on Yahoo bulletin boards were cited by the Federal Trade Commission in a lawsuit against the company. The lawsuit, filed in June, sought to prevent Whole Foods from acquiring competitor Wild Oats Markets Inc. because the FTC contended that the deal would be anticompetitive.

In an anonymous posting on Yahoo, Mackey disparaged the management of Wild Oats and questioned why any company would be interested in acquiring the Whole Foods competitor. He also talked up his own company's stock and operations. Mackey said in July that he posted anonymously because it was "fun" and that he never intended any of the postings to be associated with him. He said his posts were sometimes personal opinions, and other times aimed at playing the "devil's advocate" with readers.

On Nov. 2, Whole Foods amended its corporate code of conduct, noting that no member of company leadership could "make any posting to any noncompany sponsored Internet chat room, message board, Web log [blog] or similar forum concerning any matter involving the company, its competitors or vendors, either under their name, anonymously, under a screen name or communicating through another person" without the approval of the governance committee at Whole Foods. Violation of the policy is grounds for dismissal, the policy said.

A Whole Foods spokesperson declined to comment about the change. The policy notes that the changes are to "avoid the actual or perceived improper use of company information and to avoid any impression that statements are being made on behalf of the company."

Josh Bernoff, an analyst at Forrester Research Inc., said that while many companies are currently hammering out policies with regard to what employees can say online, Whole Foods' policy "is an overreaction -- perhaps an appropriate overreaction, given what happened" with Mackey.

"The very tight restrictions on online speech here are clearly a reaction to the posts of the CEO," Bernoff said. "That level of reaction is unusual."

Other companies, like Hewlett Packard Co. and Microsoft Corp., he said, have much more broad policies with regard to blogs and other online posts -- namely prohibiting employees from posting material information about the company that would violate legal rules or that would harm it competitively.

Microsoft's policy, he said, is a single sentence: "Don't be stupid."

"They're trusting the intelligence of their employees to know what that means," he said. "The interesting thing is that these rules are not any different than they are in any other environment. If you're a product manager in a company and you stand up in a conference ... and say 'I think our sales are going to go through the roof next year, and I think our competitor's product will fall apart if you buy it,' then you're going to get in trouble. It is no different online."

Ironically, he said that those companies that are moving to aggressively embrace blogging, online forums, social networking and other Web 2.0 communication projects are in a better position to identify and avoid these types of mistakes than those that have not wholeheartedly embraced the new technology.

"They make their mistakes in a relatively controlled setting and learn," he said. "They develop policies that come out of their proactive communications. The lesson is a little bit startling: You are much better off moving forcefully into this space in a deliberate way than trying to all things off and prevent comments and putting Draconian policies in place."

This story, "Whole Foods Bans Postings After Online Blunder" was originally published by Computerworld.

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