On the Front Lines
To much fanfare, most of it probably self-generated, Walmart issued its second round of wage increases in late February, taking the minimum hourly pay for as many as one million workers at its domestic stores up by a dollar to $10 an hour. The company increased wages, again after much ado in the press and after tremendous pressure from labor groups, for these very same store employees last year as well.
According to officials at the nation’s largest retailer, the increase in wages cost the company a whopping $1.2 billion in 2015 and will add another $1.5 billion in costs this year. Big money for most of us, but for Walmart and its half-trillion dollars in annual revenue it is just a drop in the bucket and a much-needed pay raise for workers who were—and perhaps still are—paid too little.
But are these pay increases going to make a difference for consumers? Will a couple of bucks per hour encourage these Walmart store employees to work harder and more efficiently and will it encourage these same workers to more successfully engage consumers?
The bet here is there is no way. In fact, I believe these pay increases will do little to change the culture and mindset among workers at Walmart over the short and long haul. Walmart has developed a successful business strategy built on two very important factors: a large assortment of products and low, low prices. Nowhere in that strategy, which has worked quite well for the last 50 years or so, have customer service or friendly faces among the store workers been important cogs in the business plan.
However, while it may work for Walmart and its unique business model, unhappy or unmotivated employees are not a good thing for most retailers conducting business with the general public on a regular basis. Store employees are the face of the business and the focal point between the store operators and the shopper. For most merchants, they are the difference between a happy customer and one who walks out of the store confused about what may have just taken place in store aisles.
So paying employees a livable wage is vital to a retailer’s existence, and each merchant must come up with a pay policy that is fair to all involved. More importantly, though, is the fact that empowering the best employees with responsibility and showing them that growth is possible is an even better way to get the most out of your workers.