Introduction

Walmart, the planet’s biggest retailer, made its name by undercutting its competitors on prices
while innovating in areas such as distribution and logistics to reign supreme in the brick-and-
mortar stores arena. However, the Bentonville, Ark.-based company—along with nearly every
other retail operation in existence—has been forced to reckon with one of the biggest disruptors
in recent memory: Seattle-based Amazon, which, within the space of 20 years, transformed itself
from an online bookseller to the world’s fourth-most valuable company and the most
dominant—by far—online retailer. Thanks to Amazon and its ilk, shoppers have become
accustomed to browsing for what they want from the comforts of home, potentially putting a big
question mark over the long-term existence of brick-and-mortar stores.

Walmart’s chief people officer, Jacqui Canney, says the company is fully aware of what’s at
stake.

“Our customers are driving what we do—they’re changing the ways in which they shop and live,
and that’s why we’re thinking about our online and offline experience,” says Canney, executive
vice president for the retailer’s global people division.

At Walmart, Canney—who joined the company after spending most of her career at consultancy
Accenture—oversees the people strategy as the company undertakes its quest to achieve “digital
maturity,” gearing up to compete in a world in which shopping is increasingly a digital activity
while maintaining its dominant presence in the brick-and-mortar realm.

“Our ultimate goal is a frictionless, seamless shopping experience for our customers, whether it’s
online or offline,” she says. “That’s the quest we’re on because our customers’ expectations are
only going to get higher.”

“Bricks and Clicks”

Fred Foulkes, a Boston University professor and longtime observer of Walmart’s business
strategy, says the company appears to be positioning itself well for a battle of retail dominance
with Amazon.

“The world wants bricks and clicks—Walmart has bricks and wants clicks, and Amazon’s got
clicks and wants bricks,” he says, referring to the online retailer’s recent move to open physical
bookstores in a small number of cities and its acquisition last year of Whole Foods Market Inc.

By keeping expenses low and offering a wide selection of goods at lower prices than nearby
competitors, often in under-served rural locations, Walmart founder Sam Walton led the
company from a single discount store in Rogers, Ark., in 1962 to a retail behemoth with 371,000
employees (or “associates,” in Walmart parlance) across nearly 2,000 stores and clubs at the time
of his death in 1992, shortly after he was awarded the Medal of Freedom by President George
H.W. Bush. Last year, the company employed 2.2 million associates around the world, and its
global sales totaled $485 billion. (For more than 22 years, Walmart has owned the No. 1 spot on
HRE’s Nation’s Largest Employers list.

Walton was a retail innovator, deploying pioneering logistics strategies (no Walmart store could
be more than a day’s drive from a company distribution center, for example), sharing sales trends
with store managers via satellite and keeping associates motivated (via in-store rallies and stock
grants that allowed many employees to retire comfortably) to steamroll competitors. The
company remains profitable even in today’s challenging retail terrain, with U.S. same-store sales
growing for each of the last 13 consecutive quarters and online sales expanding rapidly.

“It’s been an amazing story, the discipline that [Walmart] has exercised to keep their strategy
working,” says Foulkes, professor of organizational behavior at B.U.’s School of Management
and director of its Human Resources Policy Institute.

Walmart’s series of recent acquisitions—last year it acquired online retailer Jet.com for $3
billion, giving Walmart access to the site’s innovative pricing software—are part of a strategy to
compete aggressively in the e-commerce space, says Foulkes.

“Retail is competing with a lot of other service industries in an era of 4-percent unemployment,”
says Pete Sanborn, global practice leader and HR transformation consultant at Aon Hewitt.

Retailers are finding themselves in the same boat as companies in other industries, such as tech
and financial services, that are competing with Silicon Valley for tech talent and are being forced
to get creative in how they find and lure that talent in, says Sanborn. Unlike those other
industries, however, retail has a generally poor reputation when it comes to the employee
experience, he says.

“We saw a dip in employee engagement across all industries last year, but the dip was most
pronounced in retail,” he says. Retailers are trying to adjust, raising starting wages and
experimenting with scheduling innovations that allow employees to, for example, bid for the
most desirable hours based on their tenure and job performance and creating a core of full-time
workers supplemented by part-timers who can fill in during busy times, he says.

Indeed, another thing Walmart has in common with its biggest rival is unflattering publicity
about its workplace environment.

Amazon was the subject of a scathing New York Times article in 2015 that depicted a Darwinian
corporate culture in which white-collar employees were encouraged to criticize each other, work
brutally long hours and were pushed to their limits by unreasonably demanding bosses. Reacting
to the Times story, founder and CEO Jeff Bezos said, “This is not the Amazon that I know,” and
promised an investigation.
For its part, Walmart has been long pilloried for paying its workers low wages and offering them
skimpy benefits. During the 1990s and 2000s, the company was hit with wave after wave of
class-action lawsuits by employees alleging overtime violations, sexual harassment by managers
and gender discrimination, to name a few. Labor groups used the company as a rallying cry for
organizing efforts, painting it as an exploitative employer whose practices were ultimately
driving down wages and opportunities for middle-class Americans.

In 2015, the company’s leaders, including CEO Doug McMillon, announced that Walmart would
spend $2.7 billion to raise its starting wage for new employees, offer them more training and
make work schedules more predictable.

Canney says Walmart has spent heavily to upgrade its reputation as an employer. In January, the
company announced that, as a result of savings it will see as part of the tax-reform bill passed
late last year, it will raise its starting wage for hourly employees from $9 to $11 per hour. It will
also expand its leave policies to give full-time hourly employees 10 weeks of maternity leave
and six weeks of paid parental leave. It will also award bonuses of up to $1,000 per employee,
based on their tenure.

Keeping Customers “Delighted”

Walmart and other retailers have little choice other than to improve their HR practices, says
Sanborn.

“Retailers must create an attractive and competitive employee-value proposition in the midst of a
tight labor market,” he says.

Large retailers building their online presence need web designers who can create a customer
experience similar to that of Amazon, as well as data scientists and analytics experts who can
determine where online customer traffic is coming from and adjust prices in the face of supply
and demand. Many are adopting a multichannel strategy in which customers order products
online and pick them up at the retailer’s physical stores.

To compete successfully with Amazon, Walmart will need a culture that attracts and retains the
type of talent that’s helped make Amazon, Google, Facebook and others into the dominant
players in today’s global economy, says Foulkes. These are employees who are attracted to
flexibility, innovation, financial rewards and risk-taking.

“Clearly, you need the right talent, and it needs to be motivated and compensated appropriately,”
says Foulkes, citing General Electric, which adopted a different pay and promotion plan for
technical roles. “You’ve got to have very different HR practices and policies to recruit and retain
these people.”

Walmart is doing much more than simply raising wages, however. It’s created Walmart
Academies, which are physical locations in the back of stores where associates can learn about
management responsibilities, such as running a store department, using mobile tools, and leading
and motivating associates. Through virtual-reality training tools, they can experience a simulated
store opening on a Black Friday, for example, to practice preparing for those often-tumultuous
events.

The goal is “learn in the back, practice on the store floor,” says Canney. “Ultimately, you can
learn how to be a store manager, which is a coveted role in many of the communities we serve.”
Store managers, she adds, earn up to $170,000 a year.

The Academies are supplemented by apps. If, for example, an associate is stocking shelves and is
queried by a customer looking for a particular lightbulb, the associate can use a mobile device to
see whether the store has it in stock, then walk with the customer to the location where the
lightbulbs are or help the customer order the lightbulb online if it isn’t in stock.
“Associates can use these devices to provide the service a customer expects, and hopefully the
customer will be delighted with their experience and will keep coming back,” says Canney.

Foulkes says it’s notable that Canney comes from Accenture.

“It’s probably a brilliant move to bring someone like her, from Accenture, to oversee Walmart
HR,” he says. “Accenture is, essentially, a group of knowledge workers and, to a certain extent,
Walmart is going to look more like that in the future.”

The Four Pillars

In laying out its strategy, McMillon has spoken about the retailer’s “four pillars,” which are to
make life easier for busy families, being the most-trusted retailer in areas such as food safety and
quality and prices, becoming a digital enterprise and “changing the way we work.”

The last entails being more nimble and less bureaucratic.

“These four areas are what we’re measuring ourselves against as we become a more digitally
mature company,” says Canney.

One of the key drivers behind Walmart’s transformation is design thinking.

“We’re applying design thinking to how we solve problems,” says Canney. “It’s not just the
product on the shelf, but the experience you have as a customer.”

This has led to noticeable changes in Walmart’s physical stores, including “Scan and Go”
stations that allow customers to check themselves out and, at its Sam’s Club division, a process
that lets customers check out via a button on their phones.

These days, customers can use a Walmart app on their phones to shop for groceries online and
then pick up their orders at a nearby Walmart store. The service, expected to be available at
2,000 Walmarts by the end of this year, lets customers select the time they want to pick up their
orders, which are loaded into their cars by Walmart associates.

“It’s receiving great marks from busy moms,” says Canney.

In the home office, the company is implementing continuous feedback for associates, including a
digital tool that will let managers not only provide continuous feedback but tie it to goals and
measure progress against those goals in real time. “We haven’t abandoned annual reviews,
because we still believe they’re important for measuring progress,” says Canney.

HR department,
In the HR department, she says, the staff has been given tools that allow them to predict attrition
rates, identify better hires and spend more time talking to candidates.
“We want to be able to identify potential in our people, give them the tools to do their job really
well and let that potential shine,” says Canney. In that vein, assessment has become a bigger part
of the company’s recruitment process and is being combined with what Canney calls a “system
of development” to help associates continuously improve once they’re hired.

There’s also been a change in the culture at headquarters, in particular an effort to reduce the
time it takes to develop and roll out new initiatives, says Canney. “Traditionally, we had a really
long tail to operationalize, but working cross-functionally, sprints, prototyping—these have been
embedded more deeply in how we work,” she says. “We’re moving more quickly, and a digital
system of development is just an example of what we’re pivoting to.”

This strategy includes what Canney refers to as “collisions,” or collaborations between

employees working in different departments to come up with new concepts for improving
customer service or new apps or services that could be delivered in an exciting new way. “These
‘collisions’ are how ‘Scan and Go’ came to life,” she says.

“The way to do this properly is to have cross-functional teams,” she says. “We’re spread out here
on a big corporate campus, and if you’re not physically sitting together, you might end up going
down a path where you’re delivering something that’s not wanted. But when you put people
together, the product becomes better because the iteration is more connected.”

At Walmart, teams may now include someone from the merchandising unit, a data scientist or
someone from the data team, a designer and someone from HR working together to come up
with and refine new ideas or concepts, says Canney.

In terms of getting managers onboard, “digital leadership,” or the ability to understand and
master digital trends, is now a required competency for all of Walmart’s top corporate officers,
says Canney.

“Given where we are in our transformation, we’ve decided that our officers need to understand
how digital trends work, stay up to date on those trends, identify ways of using them to our
advantage and lead by example,” she says, adding that the initiative has been well received.

Coming to work at Walmart represented a homecoming of sorts for Canney, who joined in 2015.
“My first job ever was as an hourly associate at a small store in Westwood, N.J.,” she says. “I
learned so much, not only about customer service and merchandising, but in building confidence
in myself. I remember telling my dad that I was going to ask for a raise, and he said, ‘Well, I
don’t know … .’ Well, I went for it, and I got that raise.”

In fact, the evolving digital strategy is a “going-back-to-the-future” moment of sorts for

Walmart, says Canney, noting that the effort harkens back to Walton’s principles of listening to
customers and associates, and avoiding bureaucracy at all costs.

“In a sense, we’re standing on our history as we evolve with the customer,” she says.

Andrew R. McIlvaine is former senior editor with Human Resource Executive®.

Improving employee motivation and
employment practices at Wal-Mart
As HR professionals continue to seek bright, talented and highly engaged workforce,
motivational theories can provide insights on how Wal-Mart can improve employee motivation
and engagement. Several motivational theories have been suggested including the Expectancy
Theory, Maslow’s Hierarchy of Needs theory, Herzberg’s motivator Hygiene Theory, Goal
Setting Theory, and Equity theory (Lockwood et al. 2010)
Herzberg’s motivator Hygiene Theory is perhaps more applicable to the case of Wal-Mart. The
theory suggests that two main factors must be met for employees to become satisfied with work.
These are: the hygiene factors and motivator factors. The hygiene factors include meeting the
basic needs such as adequate pay, comfortable working environment, effective supervision and
good relationships with the core workers. On the other hand, motivation factors include
advancement and professional growth, and rewards or opportunities for recognition (lockwood et
al. 2010)
Wal-Mart needs to consider applying the two-factor theory of motivation if they are to improve
on the performance of their employees. They need to revamp their policies, increase the salary of
their employees, and the safety and security of the employees. Further, they need to consider
motivators that are intrinsic to the job which include providing rewards for achievement and
increasing their growth opportunities.
Pundits, policymakers and activists outraged by the company’s low wages have been calling for
protests. According to Robert Reich, a professor at U.C. Berkeley, Walmart’s net income is
estimated at $17 billion meaning that they can easily afford to give its workers a small pay-rise
(Atner 2013). The Chancellor professor of public policy has in fact urged shoppers to boycott
Wal-Mart since they do not want to share even a little bit of their income with their employees
(Atner 2013).

Strategy 1: How does HR help protect Wal-Mart’s price advantage?

Wal-Mart’s pricing strategy is simply put: ‘to provide value for its customer’s hard earned
money’. The HR strategy is to focus Wal-Mart’s employees to do everything they possibly can
to hold down costs… and, they do. Whenever Wal-Mart is successful in lowering its expenses, it
passes those savings along to its customers in the form of lower prices putting even more
pressure on its competitors.

Strategy 2: How does HR focus people to insure operational success?

HR’s role is to focus Wal-Mart’s leaders and employees on continuous learning, continuous
improvement, superior execution, employee empowerment, and employee ownership all
designed to create synergistic teamwork. Wal-Mart teams are highly productive but at the same
time the staffing levels are lean. HR insures employees are held operationally accountable for
keeping a balanced focus on customer service, expense control (theft prevention) and keeping
products in stock.

Strategy 3: How does HR foster a culture committed to business success?

At some point early on in their career managers attend a week of cultural training at The Walton
Institute at the University of Arkansas. The Wal-Mart culture, carefully maintained by HR, is a
diverse collection of entrepreneurial-minded people who by design all have a stake in the success
of the company. Acting like business owners they look for opportunities to solve problems that
help eliminate business risk.

Strategy 4: How does HR connect Wal-Mart’s people to products?

At Wal-Mart Sam Walton expected everyone to think and act like retail merchants. Everyone in
the headquarters, no matter what job they held or what department they worked in, was expected
to focus on how to help the stores improve service to customers. Walton pushed the decision-
making process downward, empowering local managers and associates to make business
decisions on behalf of customers as quickly as possible.

Strategy 5: How does HR focus employees to reduce expenses?

The philosophy on expense control at Wal-Mart is quite simple: as sales go up expenses as a

percentage of sales must always go down. At many companies, once an expense budget is set,
expenses rise as sales rise. The risk with this approach is that if sales fall a weak expense
structure is exposed immediately. Wal-Mart’s approach protects the company, if sales were to
fall, and allows it to drop expenses savings to the bottom line as sales rise.

Strategy 6: How does HR’s talent strategy drive results at Wal-Mart?

Simply having the right talent in place to match the growth of the company may be the biggest
risk Wal-Mart faces. Wal-Mart hires aggressively from more than 100 colleges and targets the
colleges with Retail Institutes. People have always been the company’s greatest asset. Their self-
professed talent goal at Wal-Mart is to hire the best, provide the best training and to be the place
to work.
Strategy 7: How does HR align every functional area with service?

Sam Walton always said the biggest risk to his business was that his customers would stop
shopping at his stores. That fear translated into customer fanaticism is reinforced by HR to this
day. Culturally, everyone is focused on improving every aspect of customer service, because
they know the biggest risk of all may depend on it… their own job.

Minimising risk by aligning business strategies with HR practices

The successful management of business risks at Wal-Mart is reliant upon the success of people.
Wal-Mart’s leaders credit their employees around the world who make the difference every day
by achieving sales goals, serving customers, controlling expenses, and by doing so they help to
eliminate business risks.

Michael Bergdahl (SPHR) a professional international business speaker, author and turnaround
specialist. Bergdahl worked in Bentonville, Arkansas for Wal-Mart, as the director of people for
the headquarters office, where he worked directly with Wal-Mart’s founder Sam Walton. It was
Sam Walton who gave Bergdahl the nickname, Bird Dawg. Prior to Wal-Mart he worked in the
FMCG industry for PepsiCo’s Frito-Lay division in HR in the sales organisation and
headquarters staff assignment