MW10 • THEEDGE MALAYSIA | MANAGER@WORK | AUGUST 28, 2006
MANAGEMENT
BOOKS
The 10 Rules of Sam Walton: Success
Secrets for Remarkable Results
By Michael Bergdahl
ISBN: 0-4717-4812-9
PUBLISHER & YEAR: JOHN WILEY & SONS, JUNE 2006
U
S-based Wal-Mart is the most successful retail
chain in history. In “Wal-Mart in Asia”, an INSEAD
case study, authors Philippe Lasserre and Neil
Jones say that if Wal-Mart were a country, it’d be
China’s eighth largest trading partner, ahead even
of the UK. But with success has come fierce criticism.
Michael Bergdahl is the former director of people at Wal-
Mart’s headquarters in Bentonville, Arkansas. His first book,
What I Learned from Sam Walton: How to Compete and Thrive
in a Wal-Mart World, was published by John Wiley and Sons
in August 2004. In an e-mail interview with Dorothy Teoh,
he delves into Wal-Mart’s past — when Sam Walton’s rules
were paramount — and present, and why the retailing behe-
moth is under fire — in particular, for its people practices.
Walton’s 10 Rules must have had strong implications on
your role as director of people at Wal-Mart’s corporate
headquarters. How did they guide you personally during
your tenure with the company?
Walton’s high regard for people put a great deal of additional
pressure on my role as director of people. At Wal-Mart,
Walton called his human resources department the “Peo-
ple Division”. In actuality, Mr Sam (we all called him Mr
Sam out of respect) felt that “managing human resources”
was the responsibility of every manager and supervisor in
the company. He told me that he wouldn’t need a “People
Division” if the management team would use “golden rule”
values by always treating the employees as business partners
or “associates”. To this day, Wal-Mart leaders refer to their
employees as associates. While I was there, Walton focused
the “People Division” on staffing, training and associate rela-
tions. Because he held people in such high regard, it placed
a great deal of pressure on everyone in the division to live
up to his expectations. We focused on three areas: Hiring the
best, providing the best training and being the best place to
work. The cultural mantra at Wal-Mart is “Our People Make
the Difference”. This saying was emblazoned across the sides
of trucks and posted in the break rooms in the distribution
centres and stores. Mr Sam once said, “If you take care of
the associates [employees], the associates [employees] will
take care of the customers and the business will take care
of itself.”
Why do you think Wal-Mart is
under so much fire these days?
Is it because the current Wal-
Mart leadership has strayed from
Mr Sam’s 10 Rules?
With almost 7,000 stores, 120 distribu-
tion centres and close to two million em-
ployees around the world, maintaining its
culture is a big challenge. The company will
open over 500 new stores in 14 countries this
year. It is estimated that 75% of management
positions today are filled via internal promotions,
which leaves 25% of them filled with leaders hired
from outside the company. Many of the negative
stories in the news media are true. However,
the negative story reported typically repre-
sents a single incident in a single store. In
these cases, an individual site manager is
responsible for a poor decision that has
led to company-wide media scrutiny. The
way the news is reported, you would think
the issue reported in the negative story is
systemic across Wal-Mart. Nothing could
be further from the truth.
One criticism of Wal-Mart is that it’s so
powerful it forces suppliers to bend to
its will or suffer. What would Walton
have said to this?
Walton was a proponent of the free
enterprise system. The pressure placed
upon manufacturers and suppliers today
is no different than the pressure Walton Bergdahl is holding a baseball
himself placed on his early suppliers. Wal- bat engraved with his nickname
Mart’s merchandise buyers expect suppliers — given to him by Sam Walton
and manufacturers to earn a fair profit on the
MW_10_615.indd 10
Sam Walton’s 10 rules
for entrepreneurial success
COMMIT to achieving success and always be passionate
SHARE SUCCESS with those who have helped you
MOTIVATE yourself and others to achieve your dreams
COMMUNICATE with people and show you care
APPRECIATE and recognise people for their efforts and results
CELEBRATE your own and others’ accomplishments
LISTEN to others and learn from their ideas
EXCEED EXPECTATIONS of customers and others
CONTROL EXPENSES and save your way to prosperity
SWIM UPSTREAM, be different and challenge the status quo
goods they sell to Wal-Mart and no more. If a supplier can’t
earn a profit supplying Wal-Mart, they should either lower
their manufacturing costs to become profitable or make
the decision to stop supplying the giant retailer. Supplying
Wal-Mart can be a manufacturer’s dream come true or its
worst nightmare. There are many companies that choose
not to supply products to Wal-Mart because they cannot
achieve their profit goals. Other companies are too small
to supply the insatiable product needs of Wal-Mart. There
are companies who choose to supply Wal-Mart whether
they make a large profit or not simply to enhance the vis-
ibility of their brand. For those who do supply Wal-Mart,
the expectation is that they need to partner with Wal-Mart
to ALWAYS deliver value to the retail customer. In reality,
there are three types of companies that supply products to
Wal-Mart: those who make a profit, those who break even
and those who lose money.
Six of the 10 Rules are about how to treat people but
among the harshest criticisms that Wal-Mart faces today
is that it exploits employees. Why do you think this has
happened?
In the US, much of the criticism is brought to the forefront
by labour unions and other special interest groups. In the
US, union membership has declined from almost 30% of
the workforce 30 years ago to 12% today. The labour unions
are desperately trying to organise the world’s largest retailer
and failing miserably. In truth, Wal-Mart pays its employees
a competitive compensation package in retailing, which in-
cludes an above-average retail salary, bene-
fits, annual profit-sharing, 401K and store
bonus. When an employee relations
issue arises, the unions jump onboard
and make a mountain out of a mole
hill! Wal-Mart’s leaders still embrace
Mr Sam’s 6 Rules about how people
should be treated.
Why do you think Wal-Mart is so
reviled? Do you think the criticisms
are fair?
In the US, I think much of the
criticism stems from the im-
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pact Wal-Mart has had on small towns. Adding to the criticism
is every retailing sector negatively impacted by Wal-Mart’s
competition. Grocery stores have been unable to compete in
direct competition. Convenience stores have suffered as Wal-
Mart began selling gasoline: Even banks are up in arms over
Wal-Mart’s announcement that they intend to go into bank-
ing. Wal-Mart has raised the standard of living for consumers
around the globe but in the process, its ‘Every day low prices’
(EDLP) strategy has had a devastating impact on high-priced
main-street merchants. For most competitors, competition with
Wal-Mart is like an ant fighting an elephant!
The world is a very different place today from when
Walton came up with these rules. How applicable are
they still? A company could follow all these rules but
still not be as successful as Wal-Mart. In fact, we haven’t
seen another Wal-Mart. What could be the missing
ingredients?
Rob Walton, who is chairman of the board of
Wal-Mart and the son of Sam Walton, wrote
the foreword for my book The 10 Rules of Sam
Walton. He stated, ‘As large as Wal-Mart has be-
come, we still find ourselves referring to Dad’s
‘Rules for a Successful Business’, embodied in
this book.’ The 10 Rules are timeless because
they are for the most part simple, common
sense notions. Walton would be the first to tell
you that simple ideas have the best chance of
being understood, followed and executed.
Walton’s goal was to make Wal-Mart the
best retailer around, not the biggest. His idea
of success was providing the right products
at the lowest price and providing great serv-
ice. If the leaders at other companies are
willing to focus on running an excellent
operation, treating their people right and
serving their customers, they can be just as
successful. If an ordinary man like Walton
can achieve the extraordinary, it is possible
someone else can too. E
8/24/06 5:58:05 PM