Associates keystone to structure - Wal-Mart

Discount Store News, Oct, 1999

Stop any store manager on the sales floor, on any given day and ask a few questions. Chances are that manager will speak with pride about his or her store, recounting their length of tenure with the company and pointing out just what makes their store different or special.

At Wal-Mart, It's all about empowerment.

It's been that way from the start. "If you want the people in the stores to take care of the customers, you have to make sure you're taking care of the people in the stores. That's the most important single ingredient of Wal-Mart's success," Sam Walton said in his book "Made In America."

Walton took big risks and allowed his store managers to do the same. The results are some of the most interesting and highly successful merchandising initiatives in the history of retail. Door greeters, blow-out sales, Moon Pie eating contests and Oreo-Stacking contests came about because of associates' involvement.

The driving force behind Wal-Mart's success is the associates in stores. That core belief is as deeply entrenched as the retailers' dedication to EDLP.

"Sam Walton believed in an inverted pyramid with the associates in the store being the most important part of making the company successful," explained Tom Coughlin, president and ceo of the Wal-Mart Stores division. "To me that just makes all kinds of sense. It is the line person in the store that dictates whether you are successful."

In this inverted pyramid, store associates are on the top, while the people at headquarters are there to support the associates, thus making it easier to take care of the customer.

Steve Curry, store manager at a Wal-Mart discount store in Mesa, Ariz., recalls how he learned that lesson first hand from Sam Walton 15 years ago. Curry was an hourly associate, just 18 years old and working in a discount store. "The first time I met him it was interesting. He told us to grab some snacks and we went to the break room for a meeting," said Curry. "(Sam) wasn't real interested in walking the store with the management team. He wanted to talk to the associates and solicit ideas from them, because they are in touch with the customers and know better than anyone what is going on."

Even as it nears 4,000 stores and 1.1 million associates worldwide, Wal-Mart continues to empower its employees. Not only do store managers have the authority to alter the product mix, but every associate can participate in the chain's Volume Producing Item (VPI) program, developing personalized displays within the store.

The benefits of such programs are multiple. Not only does Wal-Mart inspire employee loyalty, but it reaps the rewards of paying attention to the people on the front lines.

"It is amazing what comes back from these associates on what we need to do. They understand better, and are closer to the customer than we are, so they know what the customer wants," Coughlin said.

Buyers are expected to include store associates in conferences calls if they are contemplating a change associates will ultimately be responsible for executing. And then there's the infamous annual shareholders meeting.

Associates attend from all over the country; it is considered an honor.

"These people work in a variety of departments," explained Coughlin. "It is a fun time for them, and there are a lot of things that are done to make it exciting for them. [But] we also take one full day [by department] and we have special seminars where we listen to them. Everyone is told to wear their ears and leave their tongues at home." Since these are the associates that are closest to the customer, "you are getting the very best advice that you can."

Wal-Mart associates have a financial incentive to help the company do well. Most full-time associates and many part-time associates can participate in the company's profit sharing program, regardless of participation in the available 401K plan. In 1999, Wal-Mart contributed $388 million to the program, and the company's contribution continues to grow relative to increases in sales and earnings.

If ever there was a question about whether Wal-Mart still manages to inspire its employees, all you'd have to do is visit a store on grand opening day. The newly hired associates aren't the only ones cheering; long-time regional managers and visiting executives from corporate offices exhibit a sustained level of enthusiasm as well.