The primary driver for this change at the moment is Walmart’s decision, announced in February, to boost compensation for its lowest-paid workers to at least $9 an hour, or at least $1.75 above today’s federal minimum wage, and then to at least $10 an hour by next February 1. CEO Doug McMillon also announced enhanced training for some workers and other improvements such as work-schedule transparency and flexibility.
“I think we expected a positive reaction” to the increases, Oliver told CEO Briefing, “but the length of time it’s been discussed since the announcement is a little bit of a surprise. The people who already were getting paid above those levels asked questions, but we also have been improving enough other things—such as training and advancement programs—that they have been relatively happy.”
The moves were driven in part by a tightening U.S. labor market and in part by how McMillon has tried to make the company more responsive overall to outside opinion about Walmart, at a time of slowing U.S. sales. Earlier this year, leftist activists put Walmart, along with McDonald’s, at the center of the growing national debate over payment of a “living wage.”
McMillon was resolved anyway to recast some of the oft-criticized aspects of Walmart’s internal culture and external reputation. Because of the chain’s low-price business model, its approach historically has included a huge cadre of workers compensated at low levels. Female workers also alleged gender discrimination was rife at Walmart but lost their bid to get certification of a class-action lawsuit against Walmart on behalf of 1.6 million current or former employees of the company, after a U.S. Supreme Court ruling in 2014.
Some of this shading was a predictable outgrowth of the Walmart business model, which for decades brought uniquely low prices to American consumers and, in fact, ensured that even non-customers benefited by hundreds of dollars a year from lower prices across the U.S. economy. And, notably, another major aspect of that business model was strong upward mobility that enabled thousands of Walmart employees to get on the management track and those with the right capabilities to advance quickly.
In announcing the changes in February, which will cost Walmart $1 billion this fiscal year, McMillon said, “We’re pursuing a comprehensive approach that is sustainable over the long term. By realigning our store operational structure, associates can enjoy a closer relationship with their supervisors. In addition, associates will have more control over their schedules.”
Specifically, in addition to the wage increases per se, Oliver said in a recent speech that Walmart launched a new training program called Pathways that will “provide transparency to possible career paths, teach associates about the retail business model, explain the ‘why’ behind the tasks they are asked to do, and give them a chance to develop soft skills that are so necessary for success in life.”
Also, Walmart launched a pilot program to give associates more choice in scheduling, and either a more flexible or more consistent schedule, whichever fits their needs, and plans to roll it out chain-wide next year.
“We are doing better in helping people with how many hours they work and with their [schedule] predictability,” she told CEO Briefing. “We’re giving them longer notice of their hours, for example, posting schedules now two and a half weeks in advance.”
How are employees and potential new employees reacting to all the changes? After all, one of the biggest reasons for these strategies was to attract and retain workers in a tightening job environment.
“We got a lot of positive feedback from people already working at Walmart who stayed because of this, and a few people who were going to leave who didn’t leave,” Oliver said. “And we also have gotten a 5% to 10% increase in applications in the period since the announcement.”
If Walmart can change its stripes on such a hot-button issue, it could be one of the more interesting business stories of the next few years. Nevertheless, McMillon, Oliver and company have a huge challenge ahead of them.