Wal-Mart Misses The Boat With Employee Recognition
On December 4, The New York Times published an article about Wal-Mart’s plans to increase employee recognition. (“With a Shirt and Discounts, Wal-Mart Says Thank You to Workers” by Michael Barbaro and Steven Greenhouse) It seems that Wal-Mart has decided to polish its tainted image by showing more appreciation for its 1.3 million workers in the US. Promising increased access to managers, increased discounts and reduced healthcare premiums during the holidays, the “Associates Out in Front” program made its debut.
Now, don’t get me wrong, I’m all for employee recognition. If you’ve read any of my previous writings, or my website, you’ll recall emphasis on optimizing Structure to create value for employees. In my opinion, employee rewards and recognition are a key component of the Structure of a business. That being said, optimizing Structure requires a solid understanding of a business’s Strategy and its existing strengths and weaknesses.
It is mind boggling to me that Wal-Mart’s employee incentive program could have missed the boat so miserably – at least on one point: personalized golf shirts after 20 years of service. Wal-Mart’s employee turnover is approximately 44%. (I gleaned this tidbit from a timely article in the December issue of Harvard Business Review, “The High Cost of Low Wages” by Wayne Cascio.) So, with the average employee working at Wal-Mart for less than 2.5 years, exactly who do executives think they are motivating with a golf shirt after 20 years of service?
Clearly, the powers that be at Wal-Mart have neglected to notice that workforce trends are changing. Today’s employees change jobs relatively frequently, voting with their feet in the constant quest for the perfect job. Long gone are the days of lifetime employment, expected by employees and promised by employers…At least in those days 30 years earned you a gold watch and a retirement party.
Wal-Mart would be much better served to establish modest, yet meaningful rewards at much smaller milestones: 3 years, 5 years, etc. This would create an attainable recognition for employees and demonstrate that Wal-Mart executives both value and understand their employees.
Now, don’t get me wrong, I’m all for employee recognition. If you’ve read any of my previous writings, or my website, you’ll recall emphasis on optimizing Structure to create value for employees. In my opinion, employee rewards and recognition are a key component of the Structure of a business. That being said, optimizing Structure requires a solid understanding of a business’s Strategy and its existing strengths and weaknesses.
It is mind boggling to me that Wal-Mart’s employee incentive program could have missed the boat so miserably – at least on one point: personalized golf shirts after 20 years of service. Wal-Mart’s employee turnover is approximately 44%. (I gleaned this tidbit from a timely article in the December issue of Harvard Business Review, “The High Cost of Low Wages” by Wayne Cascio.) So, with the average employee working at Wal-Mart for less than 2.5 years, exactly who do executives think they are motivating with a golf shirt after 20 years of service?
Clearly, the powers that be at Wal-Mart have neglected to notice that workforce trends are changing. Today’s employees change jobs relatively frequently, voting with their feet in the constant quest for the perfect job. Long gone are the days of lifetime employment, expected by employees and promised by employers…At least in those days 30 years earned you a gold watch and a retirement party.
Wal-Mart would be much better served to establish modest, yet meaningful rewards at much smaller milestones: 3 years, 5 years, etc. This would create an attainable recognition for employees and demonstrate that Wal-Mart executives both value and understand their employees.
Labels: employee recognition, organizational Structure, Wal-Mart
1 Comments:
Amy,
I agree with you about how Wal-Mart handles employee recognition. However, this is an ongoing problem in misunderstanding employee loyalty and occurs across all industries and every size organization. One time benefits like a gift even after 3 years is not enough to keep a top performing employee. How many employees would stay at Wal-mart for an embroidered golf shirt if they gave them out after 3 years? Not that many. What if the amount of their employee discount increases and/or they get improved benefits (not like Wal-Mart gives many associates benefits)? Even low level benefits create very high switching costs at lower income levels. However that does not align with Wal-Mart's strategy or structure.
The key to success in any major corporate initiative is aligning company culture, structure, and strategy. For instance if a company is acquiring a number of smaller organizations that have a related customer base but have very little product overlap, then their primary strategy is often cross sell to reduce selling costs and expand market share across each division. If the existing company culture embraces training that will help the sales force succeed at cross selling - great! So now we have Strategy and culture aligned - what about structure? The company does not have an institutional development or training team to get the ball rolling in training the sales force - uh oh we have trouble! What if the business unit head of one of the largest BU's does not have any of her compensation tied to cross selling? She is most likely going to ask her sales managers to have their teams focus on selling that BU's primary product and not encourage cross selling. She may not agree to have her sales people off the street for training on other solution lines whose P&L fall outside of her own. I guess my point is people have to be incented on all levels and strategy structure and culture have to be aligned. Trying to change culture without shifting strategy and structure will surely result in failure and missed opportunities.
Call me next time you are in New York.
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