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June 12, 2024
Are Bonuses a Morale Booster for Walmart’s Hourly Associates?
Walmart announced that its full- and part-time hourly workers will now be eligible for annual bonuses based on store performance and tenure as the chain seeks to bolster retention and recruitment in a tight labor market.
About 700,000 U.S. store associates will be eligible for annual bonuses up to $1,000 for those who have been with the company for 20 years or more. For full-time employees with at least a year but less than five years at Walmart, the annual bonus is capped at $350.
“It’s important that we are competitive on base wages,” Walmart U.S. CEO John Furner said on a media call.
Furner noted that Walmart has hiked base wages by about 30% over the last five years, with the average U.S. wage about $18 an hour. Its minimum hourly wage starts from $14, less than the $15 starting wage at Amazon.com and Target as well as $16 at Costco. However, starting pay for a Walmart associate can be as high as $19 an hour, depending on the store location.
Beyond pay, Walmart has invested in employee benefits supporting healthcare, career development, and family planning in recent years.
“Everything’s better when turnover goes down and tenure goes up,” Furner said on the call. “We’re really pleased that our turnover has gone down over the last year.”
The unemployment rate has risen slightly in recent months but remains low, at 4% for May, according to the Labor Department’s report released Friday.
“This is a big move from Walmart, which is allowing more people in the business to share in success,” Neil Saunders, managing director of GlobalData and a RetailWire BrainTrust panelist, told the Washington Post. “The new bonuses may not address all the complaints about employee compensation, but they do blunt them somewhat.”
The move to offer bonuses to hourly associates was announced just ahead of Walmart’s annual shareholders’ meeting. Walmart also introduced new training programs and certifications to fill high-demand roles across its business, such as HVAC technicians, opticians, and software engineers.
In January, Walmart announced plans to raise wages for Walmart U.S. store managers for the first time in a decade. Average store manager salaries increased 9.4% to $128,000 a year. The store manager bonus program was also reworked to have the individual store’s profit hold a larger influence, in addition to sales. If all targets are met, the manager’s annual bonus could reach up to 200% of their base salary.
Base pay, flexible hours, and benefits are more emphasized than bonuses in retail recruiting, but many other retailers, including rival Target, have performance bonus programs for hourly associates. Among better-known bonus perks, Home Depot offers a “Success Sharing” program that provides semi-annual cash awards for performance to hourly associates against its business plan, including sales and productivity goals. Costco offers twice-year “Extra Checks” when an hourly associate reaches about five years of service, with the bonus ranging from $2,500 to $3,500.
Discussion Questions
Do performance bonuses offer a major perk for Walmart’s hourly workers?
Should performance bonuses be more prominently positioned across retail as an incentive for hourly workers or reserved for salaried positions?
Poll
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Georganne Bender
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Mohamed Amer, PhD
CEO & Strategic Board Advisor, Strategy Doctor
Lisa Goller
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Allowing associates to share in the success of a store is a positive move, and one that is part of Walmart’s vision to become a more inclusive company in terms of rewards and empowerment. Of course, Walmart will still come under fire for what many see as its low wages – but the fact remains that Walmart has to be broadly competitive on base pay (especially in this tight labor market) otherwise it would simply not get the workers it needs.
Speaking as a former partner of the John Lewis Partnership – where the bonus is an integral part of the business – I think there should be more sharing of the rewards in retail. It’s not altruistic, it’s just good commercial sense to ensure everyone works hard and pulls in the same direction.
I’m not sure how this couldn’t be a good thing. Paying people more money for their efforts gives a sense of ownership. Who would’ve thought beginning Walmart associates could start at $19 even five years ago? They’re becoming an employer of choice and whether that’s out of necessity or the right thing to do, it serves both well. A bit surprised brands like Apple and Lululemon do not do the same
Every American who isn’t independently wealthy is struggling economically with Bidenomics, high gas prices, 21% inflation from just three years ago, credit card debts, and more, so every Walmart hourly employee can benefit with up to $1,000 more than salary itself.
The bonuses will be a moral booster, at least temporarily. Will the bonus help to retain the best employees? Not necessarily, but it will not hurt. Db
These bonuses are a great thing and could be a differentiator for prospective employees. Also please define Bidenomics.
Boy you don’t waste a minute to put your politics into every comment. The 4 trillion dollar infrastructure program is providing more good jobs in every state. With all your doom and gloom, the reality is all levels of consumers are spending, minimum wage is a thing of the past when workers are now getting $15-22 entry level jobs. An of course the bonuses will help retail employees. Geez
$1,000 for those who have been with the company for 20 years or more (emphasis added)
Gee WalMart…thanks! I didn’t have much heart to read beyond that point, so my apologies if there’s a plot twist, but… But so many bromides – “something is better than nothing”, “$1000 is a lot of money to many people”, “it’s the thought that counts”(or lack of same) – are put to the test here, I’ll just say I’m underwhelmed.
In isolation, Walmart’s associate benefit announcements can seem paltry. Together, they create a compelling opportunity for associates to build a future with Walmart. When too many folks are cobbling gigs together to make ends meet, tuition, training, bonuses, stock options, healthcare, and pay raises aren’t anything to sneeze at. Walmart is no longer taking a reactionary stance, it is starting to set new standards that will benefit the industry as a whole.
As inflation has risen, more people across the economic strata have flocked to Walmart. More customers = more sales and presumably more profit. A retention bonus is great, but the fact that a majority of Americans can’t cover a $400 emergency expense makes the $350 (or closer to $308-ish after taxes) look more like a PR move. Walmart didn’t have to do it though, so I hope it pays dividends in morale and retention.
A little retail math: at $14/hour for a 40-hour work week, an employee would be at $560 pre-tax and approximately $493 post-tax assuming a 12% tax rate. That bonus is material when you look at it that way.
Are bonuses a morale booster for Walmart’s hourly associates? Is this a trick question? Bonuses at any level boost morale.
Most often we hear about bonuses for higher level workers; I like that Walmart is including those who work the front lines.
Agreed, it’s a great initiative. That said, the moaners are still out in force. I had someone on LinkedIn telling me that Walmart should pay more as it makes profits of over $500 billion a year (lol).
Performance bonuses add to Walmart’s increasingly attractive bundle of benefits, which can improve engagement, loyalty and retention. Adding these bonuses proves Walmart is serious about reducing turnover to stay competitive and show it values its people.
$1,000 annually to more tenured hourly employees may not be a large amount of money, but it’s a start. It could help with important things like covering Christmas bills, for example. Ideally the incentives are clear, are reasonably attainable, and everyone knows how to meet them.
While the idea is sound and welcomed, the bonus amounts must be sufficient to make a difference. Capped at $350 for workers with less than five but more than one year, that bonus equates to 15-20 hours. The payout can nearly triple for those over 20 years. While Walmart’s intentions are good and enhance its status as the largest retail employer, the program’s long-term impact on store performance may be less than expected or desired.
I assume (or at least I hope) that there is a bonus tier available to those with over five but less than 20 years of tenure. That 20-year goal (with a $1000 annual bonus at the end) is a big mountain to climb, and I agree with Craig that associates with meaningful tenure — say, 10 years instead of 20 — might be rewarded more generously. That being said, any effort at profit-sharing among hourly associates is better than nothing.
Walmart has hiked base wages by about 30% over the last five years and is now adding bonuses to the mix.
Indeed, unlike most retailers, Walmart recognizes store employees as an asset to the business and not an expense. That attitude will result in a better workforce and better financial results. Normal retail industry turnover is a horrendous 60% plus. That is no way to run any business.
While some may question the size of the bonus, recognizing the employee’s efforts is priceless.
Utilizing industrial psychology, the bonuses are only a short-term motivator, but having associates more invested in the store’s success and feeling that they reap the benefits of growing sales and minimizing expenses is how you ensure long-term engagement.