After giving more than one million associates a pay raise to start 2016, Walmart made another move to boost annual entry-level managerial pay by $3,500. Despite being done to avoid newly mandated overtime payments, Walmart’s wage increase is one of multiple steps in a two-year, $2.7 billion investment in its workforce training, education and wages.
The retailer has made a concerted effort to turn its brand into a company people would want to work for, with CEO Doug McMillon appearing in a commercial designed to show Walmart’s commitment to its employees. The question remains, however, whether other industry players will be able to adapt to the new overtime rules in ways that will be beneficial to both employers and employees.
The RTP team discusses whether the wage changes are smart business moves on the part of Walmart, and whether its decisions will influence other retailers to consider restructuring their salaries and benefit packages.
Debbie Hauss, Editor-in-Chief: Walmart has had a reputation for under-appreciating its employees for decades, so yes, it is smart to improve pay structures and market the effort. But the underlying reason for this move may be purely bottom-line related: it will reduce the amount of overtime the retailer will be required to pay. Therefore it remains to be seen how the effort is received by Walmart employees and how effectively it works to improve employee motivation and loyalty, while reducing overall workforce expenses for the mega retailer. I don’t know that other retailers are going to jump into the pool with Walmart here, unless they also anticipate similar bottom-line results.
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Adam Blair, Executive Editor: I’m all for Walmart (and other retailers) paying their associates and managers more equitable wages — even if, as Debbie notes, it’s not being done out of the goodness of anyone’s heart. The cold hard reality is that the tighter labor market is FINALLY creating some upward pressure on wages overall. Walmart’s moves also represent a long-overdue recognition that, as a New York Times Magazine piece recently pointed out, the majority of jobs in this country are now in the service sector rather than in manufacturing (despite one Presidential nominee’s rhetoric). If we want to boost the consumer spending that powers much of our economy, wages and benefits for these workers need to climb. I also like what Garrett Boone, co-founder of The Container Store, recently said about that retailer’s philosophy around hiring store employees: “We wanted people who would be successful in any organization.”
Alicia Fiorletta Esposito, Content Strategist: I’m not an expert in employee benefits or store policies, but I think the moves Walmart has made thus far are wise ones. I truly believe that the most important investments retailers can make are in their people — making sure they find the right employees, train them and empower them, and offer them tools and technologies so they do their jobs better and feel more confident in their employer (i.e. the brand/retailer). If retailers want to address high turnover rates and cultivate a great company culture, they need to put the time, work and money into it. They need to show employees that their organization will give them the salary, benefits and other perks so they can thrive in their roles or possibly even move up within the organization.
David DeZuzio, Managing Editor: If the customer experience is better at Walmart as a result of the wage increases, it sounds like a good deal to me. I’m not sure how giving employees more money will minimize ridiculously long lines and wait times or get a slow-moving cashier to go any quicker during a transaction, but maybe that’s being too negative. The fact is, I applaud Walmart for valuing its employees more than it has in the past. Yes, it’s really a work-around to keep from paying them overtime, but in reality, mobile devices have turned most 9 to 5 gigs into 24/7 marathons, regardless of pay scale. Will this spur other retailers to consider restructuring their salaries and benefit packages? Possibly, but only those that are financially sound enough. Ultimately, it’s good to see an employee like Garret Watts set his sights on reaching a higher position in the company rather than looking at his job as short-term stepping stone. Hopefully this will prove that when you give employees something greater to aim for, it will pay off.
Klaudia Tirico, Features Editor: I’ll be honest, I’ve been to my share of Walmart stores and have never really had a great customer experience. Shelves were empty, the selection of products was subpar, employees weren’t welcoming, etc. So if these salary changes are truly improving the company’s customer service, I’m all for it. Just because a retailer is in the discount or low-price category doesn’t mean it has to present itself that way. Target is a perfect example of that, and it’s no surprise that some people pronounce it as “Targée.” With that said, if Walmart is only improving employee salaries just to avoid paying overtime, any improvements may be short-lived. I’m curious to see if employees’ loyalty will continue to boost the customer experience. Perhaps there are additional ways of empowering employees through fun perks or other benefits in order to live up to CEO Doug McMillon’s “good place to work” motto.
Glenn Taylor, Associate Editor: I’ll admit that when the first news of Walmart’s wage increases came about in early 2015, I was slightly skeptical about the idea in that it seemed to be more public relations-driven than anything else. While I still believe PR is a major factor in workforce decisions (as is the case with many business decisions), the total investment is so vast that I have to believe the people at the top have finally come to understand what it means to deliver an experience that matters for retail to thrive. While there are definitely more steps to take when it comes to employee appreciation, whether that’s through better communication within the store, increased emphasis on education or advanced employee training, Walmart is throwing itself in the right direction here. Plenty of other retailers such as Costco, The Container Store and Starbucks have made these efforts, and they have done wonders for brand reputation, so it’s not a stretch that more brands would opt to follow the model of the industry leaders if they work for everyone.
