Walmart Refocuses Its Employee Retention Strategies

For Walmart, the competitive environment keeps getting tighter. The company, which operates 5000 stores and employs more than 1.5 million people in the United States, is trying to stay ahead towards online shopping. Meanwhile, continually falling unemployment rates have been making employee retention difficult. Somehow the company needs to keep getting efficient (meaning spending less) while maintaining employee engagement.

Competing with online retailers, especially Amazon, requires low prices because price comparisons are easy online. It also replaces some demand for store employees and need for workers in warehouses and other parts of the distribution system. Walmart has addressed these challenges by restructuring work and closing some lower- performing stores, including more than five dozen Sam's Club stores. The cuts free up money for offering more generous pay and benefits and for directing more resources to online retailing. Some of Sam's Club stores that closed were to be converted to distribution centers.

The restructuring decisions include a revised approach to store management, with fewer assistant managers. Walmart also cut department managers in certain departments such as mobile phones, where it could bring in representatives from the phone service providers. In addition, store closures helped to set the stage for several rounds of layoffs: the downsizing of store payrolls by 16 000 and eliminating 7 000 back-office jobs in 2016, a layoff of 1 000 corporate positions in 2017, and the elimination of another 10 000 store jobs and 1000 headquarters employees in 2018. Automation has enabled a 15% reduction in the number of workers per square foot in stores. But many of the laid off employees, according to Walmart, were able to move to different positions within the company. At the same time, Walmart is placing more workers in warehouse jobs and store positions that fill online orders.

Simultaneously, the company cannot just be a job cutter and maintain its strength in the labour market. Even as it closes stores, Walmart has announced pay increases from $ 9 an hour starting pay in 2015 to $ 10 in 2017 and aiming to reach $ 15 an hour by 2021. Early in 2018, Walmart announced that it would spend about $ 400 million to give employees wage increases and onetime bonuses of up to $1000. The new hourly pay rate matched wages paid by Target and came closer to the $13 paid by Costco.

Walmart's management appreciates the pay alone will not be enough to create employee engagement, especially for relatively low-paying retail jobs. So the company has announced other initiatives aimed at making the company a preferred employer. Along with the 2018 pay raises and bonuses, Walmart announced it would extend to store employees the paid family leave benefits previously available only to office workers. At the same time, the company promised to spend some of its savings from lower taxes on training. Months later, Walmart announced it would pay college tuition for employees who pursue degrees in business or supply chain management at three schools selected by Walmart. Finally, in a bit to make work more comfortable, Walmart announced it would relax its blue-shirt-and-khakis dress code to allow a variety of solid-colour clothing.

Questions

i. Discuss the circumstances that makes employee retention challenging for organisations like Walmart. Support your discussion with specific examples from the case study.

ii. Identify various sources of job satisfaction Walmart provides to its employees to retain its employees. List and discuss two additional sources of job satisfaction that may help Walmart retain its employees.

iii. Evaluate the importance of employee retention to organisations like Walmart. Support your discussions with relevant examples.