Founder's leadership legacy lives on - Back to Business: Culture - Sam Walton, Sam's Club

DSN Retailing Today, April, 2003

It was all-hands-on-deck following a major snowstorm in mid-February that caused a portion of the roof to collapse at a Sam's Club in the Washington, D.C., suburb of Hyattsville, Md. The roof had given way on a Saturday afternoon, but by 10 a.m. the following Monday, the damaged portion of the club had been walled off, and the remerchandised club was open for business. Kerry Harmon, a regional vp for the Northeast, was among those who worked around the clock restocking shelves and folding clothes to get the club righted.

"I am so impressed with our people when we run into those kinds of circumstances, because there is such a focus and sense of urgency to get back in business, to serve our members and to do the right things," said Greg Spragg, evp of operations for Sam's Club. "What is most powerful is when the regional vp is willing to leave his family on a Sunday afternoon and spend another week in the field after he had just spent a full week in the field. And not only to be there to supervise, but to help and do the work. To say, 'I'm willing to do what I am asking you to do to get this job done.' I think it is a phenomenal story and it is just part of this company's culture."

It is that culture and the three principles which serve as its basis--respect for the individual, service to customers and strive for excellence--that helped Sam's Club achieve success during the past 20 years and is expected to drive improvement for the next 20 years. As Sam's ceo Kevin Turner told several hundred financial analysts last fall, virtually everything has changed inside the Sam's Club and Wal-Mart organization during the past 10 years except the company's corporate culture.

"Our culture is simply our three basic beliefs, and those are the same all over the world regardless of the division that we work in at Wal--Mart," Turner said.

Critics and competitors have claimed the relationship Sam's Club has with Wal--Mart is its biggest disadvantage, but for those inside Sam's Club, the relationship with Wal--Mart is viewed as its greatest strength because without that connection, Sam's would not have benefited from the principles upon which Sam Walton founded Wal-Mart and that were extended to the division that bears his name.

Those principles are expected to strengthen under the leadership of Kevin Turner who, in a classic up-through-the-ranks career at Wal--Mart, experienced Wal--Mart culture first hand. He worked as a part--time cashier in Ada, Okla., for three years beginning in 1985 and then joined the company full-time in the internal audit department.

"He has grown up with the WalMart culture and that is one of the great things he has brought to the Sam's organization," said Celia Swanson, evp of membership, marketing and administration. "It has been awhile since we had a leader who actually came from within Wal-Mart. Kevin is grounded in the core values and culture of this company and is really reinvesting in the culture of our organization."

According to Swanson, the Sam's Club culture was a key reason she joined the company in 1994 after Sam's acquired Pace, Swanson's previous employer. Swanson was head of human resources for Pace at the time of the acquisition and worked closely with Sam's on the retention of Pace employees.

"How Sam's Club handled the whole transition from a people perspective was very respectful and very open and I developed a rapport with them that ultimately led to a job offer that I totally did not expect," Swanson said. "I flew down thinking this is not going to work because it is hard when you are competing against somebody to all of a sudden switch hats and become part of that team."

It only took one trip, a Saturday morning meeting and Swanson was hooked by a culture she said aligned with her personal values.

"The next thing I knew I was moving my family from Denver to Bentonville and it was one of the best decisions I personally ever made," Swanson said.

While the culture at Sam's Club is the same as at Wal-Mart insofar as both are based on the same three core beliefs, there are some subtle differences owing to the nature of Sam's business and its size.

"Even though we are nearly S32 billion in sales, we are small. That might seem strange to others, but the 525 clubs we have is enough to keep your arms around," Swanson said.

The smaller size, fewer number of items relative to a supercenter and a closer relationship with business members who frequent the clubs also fosters an entrepreneurial spirit among Sam's Club associates. An attitude that is now more highly encouraged thanks to communication processes put in place that allow club-level employees to channel ideas to the home office.