More proof that what What Walmart really excels at is PR and spin.

After years of angry customer complaints about dirty stores, unstocked shelves, uncaring employees and an exodus of customers to the competition Walmart had an epiphany.

Maybe, just maybe, they had cut worker pay too far.

What if paying workers more, training them better and offering better opportunities for advancement can actually make a company more profitable, rather than less? “Efficiency wages” is the term that economists — who excel at giving complex names to obvious ideas — use for the notion that employers who pay workers more than the going rate will get more loyal, harder-working, more productive employees in return.

Of course, Henry Ford figured that out in 1914 and companies such as Costco have followed suit.

Ford astonished the world in 1914 by offering a $5 per day wage ($110 today), which more than doubled the rate of most of his workers. (…) The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs.

However, these days, money isn’t everything. People want more challenges, more ways to grow and better career opportunities.

“We realized quickly that wages are only one part of it, that what also matters are the schedules we give people, the hours that they work, the training we give them, the opportunities you provide them,” said Judith McKenna, who became chief operating officer in late 2014, in a recent interview. “What you’ve got to do is not just fix one part, but get all of these things moving together.”

“Quickly?” Considering the years of complaints, falling sales and stock price I’m not sure “quickly” is particularly accurate.

Just think. People who earn more money have more discretionary money to spend.

Rocket science? No, just logic.

But making your company look like a hero for paying people $18K a year definitely is rocket science.

Flickr image credit: mario

Have you read yet the story of Talia Jane?

She is a customer service rep at Yelp, whose pay puts her right down there with Walmart and bank tellers.

“I got paid yesterday ($733.24, bi-weekly) but I have to save as much of that as possible to pay my rent ($1245) for my apartment that’s 40 miles away from work because it was the cheapest place I could find that had access to the train, which costs me $5.65 one way to get to work. That’s $11.30 a day, by the way. I make $8.15 an hour after taxes.” (Minimum wage in San Francisco is $12.25 an hour.)

She was fired two hours after writing an open letter to Yelp CEO Jeremy Stoppelman on Medium.

Yelp, of course, says the letter had nothing to do with her termination.

Stoppleman has a solution.

“The reality of such a high Bay Area cost of living is entry level jobs migrate to where costs of living are lower. Have already announced we are growing EAT24 support in AZ for this reason.”

Stoppleman’s solution seems to be to kick out everyone who doesn’t earn a fat salary — how dare “them” have the temerity to want to enjoy the pleasures and opportunities of life in San Francisco/Silicon Valley.

That said, I’ve never understood why Walmart, banks, Yelp or all those who follow in their footsteps, pay their front-line people—the actual “face of the company”— what can amount to starvation wages in urban areas and then are surprised when those same people lie, cheat, steal or speak out publicly.

Tony Hsieh, of Zappos fame, Costco and Trader Joe’s are a different story.

What it comes down to is that the further away from contact with customers the greater the money, perks and benefits.

Crazy.

Flickr image credit: Javier Morales

I loathe Walmart; in fact, it is the only thing I have ever completely boycotted. I’ve never purchased anything there and only set foot inside once, because I was with a friend.

Even when I was in a deep financial hole I found what I needed elsewhere or went without.

I’ve written about Walmart before, but their latest move is truly disgusting.

A few years ago Walmart announced a major expansion into small, rural towns. They claimed their low-cost model would save residents money and create jobs.

As recently as 2014 they claimed these stores were a huge success.

What they were most successful at was forcing long-time grocers to close.

The Town’n Country grocery in Oriental, North Carolina, a local fixture for 44 years, closed its doors in October after a Wal-Mart store opened for business. Now, three months later — and less than two years after Wal-Mart arrived — the retail giant is pulling up stakes, leaving the community with no grocery store and no pharmacy (emphasis is mine).

Oriental residents now face a 50-minute round trip to buy groceries.

Residents in these small towns are often seniors, but fear not; Walmart cares (see sign upper left).

And that scenario is being repeated all over the country.

Oriental is hardly alone. Wal-Mart Stores Inc. said on Jan. 15 it would be closing all 102 of its smaller Express stores, many in isolated towns, to focus on its supercenters and mid-sized Neighborhood Markets.

But never fear; Walmart still cares.

“In towns impacted by store closures, we have had hundreds of conversations with elected officials and community leaders to discuss relevant issues and we are working with communities on how we can be helpful,” said Wal-Mart spokesman Brian Nick.

I’m sure the residents really appreciate those conversations when they are reconfiguring their budgets to account for the additional gas required to drive 50-plus minutes to shop.

But the efforts to burnish its image have never been brighter; the TV ads that brag about how they are investing in their greatest asset — their people — will bring tears (of laughter) to your eyes.

And for those of you who believe that these actions are required to provide the best return to shareholders, consider Walmart’s stock is down 29% in the last 12 months.

Walmart’s stock is $65.8, while Costco, its complete antithesis is $147.02.

Or, as Kyle Murau, a self-described “ruthless, rightwing, baby-eating, blood-sucking capitalist Republican,” said  on Quora, “…this just goes to show that publicly traded corporations aren’t, in themselves, evil. It depends how the company’s culture works.”

Flickr image credit: Mike Mozart

Usually, when people talk about “too big to fail” they are referring to financial institutions and insurance companies.

But what happens when a company is too big to reign in? When it does what it wants and wields so much political clout that investigations seem to evaporate?

Walmart is such a company.

But maybe this time they will have to answer for their actions.

Because, fortunately, it is The New York Times that has been doing the investigating, not a government entity or by Wal-Mart—the internal investigation was shut down by company executives when the evidence wasn’t in their favor—and has been ongoing for years.

It seems that much of Walmart’s global growth in Mexico and other countries has been fueled by bribes.

Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.

In a statement a Walmart spokesman said, “We are committed to having a strong and effective global anticorruption program everywhere we operate and taking appropriate action for any instance of noncompliance.”

But actions speak louder than words and Walmart’s actions are a case study of leadership failure in the home office—all the way to the top.

But Wal-Mart’s leaders did not tell Mexican authorities about his allegations, not even after their own investigators concluded there was “reasonable suspicion” to believe laws had been violated, records and interviews show.

It seems similar tactics were used in India and China, too.

The Foreign Corrupt Practices Act is a federal law that makes it a crime for American corporations or their subsidiaries to bribe foreign officials and the Justice Department and SEC Have started their own investigations.

As the investigations unfold it will be interesting to see if a corporation can, indeed, be so big that it’s above the law.

On a related topic.

One more thought for those who believe that newspapers are no longer relevant.

I seriously doubt that any Internet media company, let alone a blogger, could or would have mounted this investigation and stuck with it—nor can this story be told in 140 character spurts.

No matter what happens we owe a debt to The New York Times.

Flickr image credit: The New York Times and Walmart

Bashing Wal-Mart has been the sport du jour for quite awhile, and, although I can’t stand the company for may reasons and won’t shop there, I haven’t bothered to join the fray, since it was all being said so well by others. However, since I preach and push for really open, honest management communications I just couldn’t let the most recent example of callous-demotivation-given-positive-spin go by without commenting.

First, the demotivation. How would you like to work your tail off for 10, 15 or more years only to find that your next promotion or lateral move would require a cut in pay?

That, in a nutshell, is the effect of Wal-Mart’s loudly proclaimed pay increases with caps. And if you happen to be at the top of your category you won’t have to worry about a raise, there won’t be one—ever again—in that position. But, gee, you might have a shot at a $400 bonus at year-end. (Being the cynic that I am, I wouldn’t hold my breath.)

Bless the Associated Press for obtaining an internal Wal-Mart memo written by then executive VP of benefits Susan Chambers, who now heads personnel (watch out Wal-Mart workers), that said, “Given the impact of tenure on wages and benefits, the cost of an Associate with 7 years of tenure is almost 55 percent more than the cost of an Associate with 1 year of tenure, yet there is no difference in his or her productivity.”

Wow! That is the absolutely first time I have ever heard it claimed that a new hire’s productivity equaled that of someone with years of experience who knows all the ins and outs of the job. Yes, there are ins and outs to every job and I’d like to see a new hire who can handle inventory control as well as someone with experience. But then I’m sure that Susan knows far more than Frederick Reichheld about the true value of workers and loyalty (AKA, retention).

Now for spin. Try and wrap your mind around this: Wal-Mart claims that there is absolutely no link between the memo quoted above and the pay caps. If you can swallow that one, the rest should be easy. Wal-Mart claims that their new policy brings them in with other big retailers. Well, I’m no expert, but I know that Costco and Lowe’s don’t work that way, but, then again, maybe they aren’t considered “big.”

Finally, and this is purely my own thought, you can rest assured that this policy will have no effect on the company’s executives (I’m sure Susan’s pay isn’t capped) and that Wal-Mart will continue getting help from Congress if it needs to upgrade the private road leading to it’s headquarters again.

This week I was reading a post about the top companies to work for. The usual were on the list, Alphabet, Facebook, Salesforce and others. Amazon topped the list for a variety of reasons.

In the news as well is the Chapter 11 Bankruptcy that Toys R Us is filing. As I dug deeper, I also learned that Amazon is considering buying up some of the prime locations that will now be vacant, so they can move further into brick and mortar retail.

I found it pretty amazing that for all the news about retail being a dying segment it’s not actually the case. Instead, we are seeing a right sizing and elimination of poor performers across industries. Amazon is willing to move into direct retail in a way that Toys R Us or others never did. In my mind there are a lot of factors that go into it, but one thing is sure, the culture of a company will determine its outcome.

Now I’m not here to dissect what failed at Toys R Us; in fact I have fond memories of it as a child. As an adult, I was less than overwhelmed when I stopped in and I am not that heartbroken that they are closing.

From an economist’s standpoint I applaud the invisible hand working. However I also realize that decisions made years ago, such as a leveraged buyout, made Toys R Us susceptible to market failure.

What lesson can we pull from these two somewhat unrelated events?

On one hand, you have a top ranked company that wants to move further into brick and mortar retail. On the other hand, you have a major player leaving and many others struggling.

Is our future one where we have only a few spots to shop, Walmart, Amazon and perhaps Target? In that same breath do we also have three competing delivery systems now that Target acquired Shipt?

It probably won’t be that simple, but it does make one think how can we make a positive impact in our own industries.

Are we innovating? Are we looking at the needs of our customers and anticipating the future? Are we digesting data in ways not currently mainstream? These all can lead to greater returns and profits.

Now we just have to execute.

Image credit: drivebysh00ter

Yesterday we looked at the hypocritical nature of Walmart’s culture, but perhaps it’s a reflection of what’s happening across the US, as opposed to an attitude unique to Walmart.

In the last half century, economic, political and social changes have altered not only the makeup of the workforce, but also what it takes to get a job and support oneself, let alone a family. 

Public policy does little to mitigate what’s happening, and much of enterprise is retreating.

“You end up with this perfect storm where workplace and public policies are mismatched to what the workforce and families need,” said Vicki Shabo, vice president at the non-partisan National Partnership for Women & Families (NPWF). (…) Overall progress for workers has been slow, because the country is attached to an “ideal myth of America.” One where you pull yourself up by your bootstraps [emphasis mine].

Assuming bootstraps were once real, do they still exist?

Of course, there is no doubt that privilege is real — no matter how often and how much people deny it.

We all need to remind ourselves of our advantages: whether it’s straight privilege, or financial privileges, or able-bodied privilege, or whatever extra boost we’ve gotten. Humans are prone to credit our successes to our own ingenuity, true or not. Researchers at the University of California, Berkeley, asked randomly selected subjects to play Monopoly. But the game was rigged. The winner of a coin toss got twice the starting cash and higher bonuses for passing Go.

Not surprisingly the advantaged players won. But as they prospered, their behavior changed. They moved their pieces more loudly than their opponents, reveled in triumphs and even took more snacks. Some, when asked about their win, talked about how their strategy helped them succeed. They began to think they earned their success, even though they knew the game was set up in their favor [emphasis mine].

Bootstraps depend on who you are.

Thorstein Veblen’s The Theory of the Leisure Class was published in 1899 and in it he coined the term “conspicuous consumption” — no definition required.

Although you still find that in the 1%, Elizabeth Currid-Halkett, a sociologist, has a new book, The Sum of Small Things: A Theory of the Aspirational Class — a new term that better represents the far-reaching consequences of what’s happening today.

Who is the aspirational class?

Highly educated and defined by cultural capital rather than income bracket, these individuals earnestly buy organic, carry NPR tote bags, and breast-feed their babies. They care about discreet, inconspicuous consumption—like eating free-range chicken and heirloom tomatoes, wearing organic cotton shirts and TOMS shoes, and listening to the Serial podcast. They use their purchasing power to hire nannies and housekeepers, to cultivate their children’s growth [emphasis mine], and to practice yoga and Pilates.

These kids grow up with better health, better education, more enrichment, a solid belief of their place in life.

No matter how liberal their parents’ politics, they consider the world they inhabit the norm.

Few consider it privileged — after all, their parents aren’t actually rich.

Most of these kids are white.

And so the cycle continues.

(Thanks to KG for sending me the first article.)

Image credit: Huw

Walmart loves showing off all they do for their employees and it has a lot of them.

From its website (emphasis mine).

Walmart employs 2.3 million associates around the world. About 75% of our store management teams started as hourly associates, and they earn between $50,000 and $170,000 a year. Walmart is investing $2.7 billion over two years in higher wages, education and training.

What isn’t mentioned is that around the same time

Walmart lifted wages [to $10/hr], it cut merit raises and introduced a training program that could keep hourly pay at $9 an hour for up to 18 months.

Walmart especially loves to brag about its special efforts, such as those for military workers and defines its culture as “our values in action.”

However…

What kind of values enable the following scenarios?

The report says that Walmart uses a point system to discipline workers, and too many points results in firing. Walmart reportedly gives workers disciplinary points for any absence they consider unauthorized, and working less than half of a scheduled shift is considered an absence.

• ‘I passed out at work. They sent me to the hospital. The next day, they fired me for it.’
• “I got into a car wreck on my way to work and was sent by ambulance to the hospital. I had two fractured ribs and a concussion. I reached a manager from the hospital, who said it would be ok, and I came into work the next day with wrapped ribs and a concussion. The front manager then said that they wouldn’t accept the doctor’s note from the hospital, and they fired me for missing that day.”
• “My appendix ruptured while at work and because I already had eight points, I could not leave work to go to the ER without pointing out and losing my job. I should have been able to leave to go to the ER and not worry about losing my job. I had even said to management, ‘So if I fall out because of my appendix and have to go out in an ambulance…I will get a point and lose my job?’ The response from management was, ‘Yes.'”
• “I was vomiting blood and had to go to the ER. I was there for two days and each day was a point. I then had two days off, and I brought my hospital notes in when I went back. They would not accept them.”

Of course, Walmart’s well-known attitude towards women is front and center

• “My daughter was having seizures, I had to take time off to monitor her. They counted it against me. I passed out at work. They sent me to the hospital. The next day, they fired me for it.
• Katie Orzehowski was forced to return to work still bleeding after a miscarriage or face being fired.

It would be funny if it wasn’t so grim, but apparently Walmart expects events, such as heart attacks and car accidents, to be scheduled.

If an employee does not call in to report an absence at least an hour in advance, they receive four points, the report says.

Most ironic of all is Walmart’s tag line, which reads, “Save money. Live better.”

More accurately, it should read “Save money. Live better — unless you work here.”

All of this proves once again that there is a major difference between words and actions.

Image credit: Duck Lover

I read an article today about Warren Buffet. His company, Berkshire Hathaway, recently sold over $900 Million in Wal-Mart stock. Why you may ask?

Buffet believes the retailer is a sinking ship and retail as a whole is being completely disrupted. Now by all accounts Wal-Mart is still hugely successful. They sell more than Amazon, are profitable and growing.

Looking at these factors alone it would seem that there is nothing to be worried about, however a man much smarter than myself thinks otherwise. How can that be changed?

Now, this post is not about Wal-Mart per say but more on the retail experience as a whole. I can look throughout my house right now and say that a large majority of what I have purchased in the past few years has been from online.

I have twin girls and my family may singlehandedly keep Amazon in business by all the items we need on a day to day basis.

Recently Wal-Mart began a service in my area where you can pick out all of your groceries online and pay, then you just drive to your location and they load your car with the groceries. You never go in the store and you have everything you need at a great price!

I can tell you that the service would be extremely helpful to my family but I have never once considered it.

Why? Culture.

I am not a snob, in fact I prefer a good burger over whatever hot dish is on trend right now, however I have a hard time considering Wal-Mart or other similar retailers for most of my purchases.

The main reason, for me, is the culture of those locations.

I feel that retail employees are paid too low and not given opportunities for advancement. Is this true? Sometimes, but also it’s a perception thing. The culture would appear to be one of hardship.

On the other hand Amazon has commercials for drone delivery and cutting edge technology. Is the apple I get from Amazon any different than the one from Wal-Mart? Not one bit, but my perception is. I feel pleased that my money is being well spent with one while depriving from the other.

Is retail a sinking ship? Maybe, but quite frankly I do not have enough information to support such an argument. However I can tell you that my emotions are directly connected to my perception of the culture at each company and that is what determines where my dollars go.

Culture is deeds, words and actions. It is the sprit that inhabits a person and an organization. It must be jealously guarded as it could quite possibly be the most valuable thing owned.

My personality is my culture.

The company I work for is an aggregate of all combined to make up a unifying culture.

Do I have an answer on how to fix the ship? I would think it starts with the leaders and then moves down. Perhaps it can also start with the individual?

What fuels that person? What helps them determine right from wrong? Is there a right or wrong?

These are all questions that will determine an individual’s identity and ultimately help them determine their course in life.

Maybe it is time to right our own ship?

Image credit: bertknot

I am not a lover of trendy terms, no matter how hilarious Dilbert makes them, and I’ve found they turn off a lot of people — from workers to bosses.

One of the newest to hit the trendy list is “agile” in all its various forms.

What became trendy agile was born 15 years ago.

The term originated in the Manifesto for Agile Software Development in 2001. It was a specific approach in a specific sector, but soon its core principles – moving quickly to build a minimum viable product, using iterative development to improve it on the go, with testing and feedback built in at every stage rather than just at the end.

Just how ubiquitous has agile become? It was used by Walmart CEO Doug McMillon last fall in a memo to employees to describe the future (and justify layoffs).

“Our customers are changing. Retail is changing and we must change,” McMillon wrote in the memo obtained by The Associated Press. “We need to become a more agile company that can easily adapt to shifting customer demand.”

Many companies talk about becoming agile and a large number of them think a quick and easy means to that end is to lay off the older and bring in the younger.

They couldn’t me more wrong. It’s not age that makes one agile, Salesforce CEO Mark Benioff isn’t young, it’s MAP.

Your MAP is responsible for how you lead, as well as the values that underpin your company’s culture.

If your MAP isn’t agile, or willing to change to become so, there is little hope that your company (or department or team) will be agile.

Hat tip to Wally Bock for pointing me to this article.

Flickr image credit: Martin Pool