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Do Investments in Store Managers Trickle Down to Associates?
Walmart announced plans to raise wages for Walmart U.S. store managers for the first time in a decade in a move it sees ultimately translating to an investment in all store associates.
In a note to store managers posted online, Cedric Clark, EVP of store operations for Walmart U.S., said that the No. 1 driver of job satisfaction at the store level is an associate’s manager.
“Not only are you responsible for exceeding customer expectations day in and day out; each of you is the CEO of a multimillion-dollar business,” said Clark. “And you’re the driving force behind the development of our next generation of leaders. We see an investment in you as an investment in our culture, our core values and in the day-to-day experience of every associate in every store.”
Under the new store manager compensation program, the average salary rises to $128,000 a year, up 9.4% from $117,000 previously.
The store manager bonus program is also being redesigned, with the individual store’s profit holding a larger influence, in addition to sales. If all targets are met, the store manager’s annual bonus could reach up to 200% of their base salary.
Walmart told CNN that it hasn’t made any changes to store managers’ pay structures in more than a decade.
Clark described the upgraded compensation package for store managers as the “next step” in broader investments in pay and benefits for front-line workers. He noted that the U.S. average hourly wage will soon exceed $18, up from $17.50 currently. Hourly pay was only $14.76 in 2020, with workers receiving several pay boosts during the pandemic amid a labor shortage.
At $18 an hour on a 40-hour week, the full-year pay for an hourly associate comes to about $38,000, about a third of a store manager’s average salary.
The pay boosts also come after Walmart in July 2021 announced a $1 billion five-year investment in a career-development program.
Clark noted that approximately 75% of Walmart’s field management teams, including himself, began as hourly employees. Clark said, “You’re the reason our associates can build something special working at Walmart – just like many of us have.”
Discussion Questions
Will Walmart’s move to boost compensation packages for store managers lead to benefits for hourly associates?
Do you agree about the store manager’s capacity to support morale, culture, and associate career development?
Poll
Loading …BrainTrust
Sarah Pelton
Partner, Cambridge Retail Advisors
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
Sure – happier and more motivated managers do create a better environment and atmosphere for all store associates. If store performance improves, it may also help with bonuses and opportunities for others. However, at the end of the day, what matters most to workers is the compensation they get in their own pay packet. It’s a bit tone-deaf to say this boost for managers translates to an investment for everyone; there are better ways of expressing and phrasing it!
Walmart’s decision to enhance compensation packages for store managers is likely to have a positive domino effect on other team members. This move signals to team members that sticking with Walmart and advancing their careers within the company can lead to financial opportunities.
Recognizing the untapped potential in every retail employee, regardless of their current status, is paramount for retailers such as Walmart. Encouraging managers to view team members as potential future industry leaders will lead to an environment that steers clear of the prevalent disposable temp mentality in the retail sector.
Walmart seems to have identified the crucial role of retail managers in inspiring and guiding teams. Treating all staff as destined for a career in retail is an investment in the future success of Walmart, fostering a culture of growth and success that extends well beyond the confines of the retail floor.
If the pay raise also comes with extra time to focus on employee development then this is a sure win-win. If the pay raise does nothing more than throw money at already burned-out store managers then this trickle down economics will not work.
It’s unclear just how more pay for managers is going to create more opportunities -and happiness- for associates. Certainly, a happy manager can bolster team mood but but that’s not the same as career advancing opportunities.
Also, something about this seems to fly in the face of Sam Waltons philosophy of everybody wins where all employees had an opportunity to make more money whenever Walmart made more money.
I would keep an eye on this to ensure all store employees are reaping the benefits–in short order. Or else be prepared to pivot in that direction.
Frontline teams are the difference between success and failure, and compensating them in a way that keeps them motivated and engaged is vital. The move by Walmart is yet another example of this retailer making a sound investment in their people, and they’re doing it for one reason: it works. That is, it translates into better store performance and outcomes. Paying store leaders more is part of the equation, since good store leaders do greatly influence the morale, culture and care about associate development. But while increasing pay for leaders is a good move, compensation levels for the legions of lower level store employees who directly deliver the service experience to customers every hour of every day should also be a consideration.
Tom’s first sentence says it all. “Walmart announced plans to raise wages for Walmart U.S. store managers for the first time in a decade in a move it sees ultimately translating to an INVESTMENT in all store associates.” Retail labor is an investment. (So is all labor.) It should be measured with ROI, not as a negative number on a standard P&L.
Let’s not forget that for the last five years, Walmart has been leading the industry in increasing the pay for store associates. Even for the lowest-level store attendants, Walmart employees get pay increases exceeding the inflation rate.
The 9% raise will probably help management retention, but whether it helps make better managers is a different question. I hope Walmart is investing in more management training, not just higher salaries — and I hope that store associates (who are probably not getting 9% raises this year) don’t resent the move.
Definitely. One big issue with the store model as it stands is that it relies on a transient, part-time workforce that doesn’t require fringe benefits. Now that it’s harder to find people to do the work, Walmart is taking some admirable steps to hire, train and retain good in-store employees.
fwiw, “store profit” is generally called “store contribution” which means its contribution to overall corporate profitability. I think it’s a great way to cut back on shrink (since shrink strikes at profitability) and make the store more of a career path than a pit stop. Every retailer is going to have to take a similar look at their stores and decide how they can truly improve the customer and employee experience. This, plus great product, will really help.
Certainly more than putting a bot in the stores though it’s a valiant attempt.
How could it not?
I really like the very plain spoken, straightforward nature of Cedric Clark’s comments. Store managers are indeed the CEO’s of their own domain. They do indeed set the tone for the whole store. So yes, absolutely, an investment in store managers is an investment in the morale and culture of the whole store. But associate pay is a really, really close second. Maybe first in the mind of many associates. It sounds like Walmart is making efforts at the hourly wage level, but they can really demonstrate fairness and support morale and culture by giving associates the opportunity to share in the upside with the structure of the bonus plan. Associates are the folks who get it all done day after day. They too, absolutely deserve to participate in the upside.
Finally, trickle down policy being applied! I totally agree that strong, effective management can make or break both 4 wall profitability but also employee satisfaction. The key to this program/raise/bonus structure is to actually include an employee satisfaction/retention measure along with traditional KPIs. If the ultimate goal is to keep associates engaged and make the stores more customer-centric, then managers need to be held accountable on achieving just that.
Studies have repeatedly shown that relationships with management are the #1 source of job satisfaction, more than pay or benefits. It drives loyalty. Happy employees are more likely to deliver positive customer experiences.
Leadership matters. Get the right leader, with the right values that support the business, and there is definitely an improvement in store performance and associate satisfaction!
Leaders fuel culture and valued + happy leaders will drive a better work environment. Happier leaders have a direct impact on a better work culture which means happier employees, great customer service and an increase in profitability.
It makes business sense and it’s not rocket science.
People do come to work to make a living. That’s a bottom-line expectation. However, they stay (and work hard, engage with customers, etc.) because of how they are treated. That responsibility is a manager or boss. Job fulfillment is more than a paycheck, and the boss they work for, the people they work with, and the culture of the company drives much of that fulfillment. So, investing in good managers is a good investment in overall employee satisfaction and fulfillment.
In retail, investing in people, ALWAYS leads to positive outcomes and improved satisfaction.
Countless studies have shown that the top reason people leave a job is the manager they work for. So yes, this will have a trickle down impact on all store associates. Of course, if it’s also including additional training to develop better skilled store managers than it would truly be a win-win-win for the store manager, store associates, and Walmart. Next step should be investing more in their store associates!
Investments in store managers will likely trickle down to employees even if not in a direct financial way.
Walmart will attract and retain a higher quality of store managers if it invests more in its store managers. Having a better manager, or one who has more experience, will improve employee morale, development, and job security, as they will work in a more stable environment. Stability breeds good things. Db
Yes, but increases in compensation for managers must be coupled with training that fosters good communication with subordinates, creating a team environment, training subordinates so that they can aspire to rise in the ranks and, thus, achieve employee loyalty to the company which, you guessed it, reflects positively on the customer experience.
Ah, the eternal retail conundrum: Do investments in store managers trickle down to associates? Because, you know, it’s not like competent, well-supported managers could possibly inspire and empower their teams to deliver exceptional customer service or anything. Let’s keep pondering while the retail world waits for enlightenment to trickle down from the corporate ivory towers.
Investments in store managers is critical, because everyone on the team benefits if their leaders are given all the good tools and skillsets to succeed. Store managers have many spinning plates in the air, from meeting corporate numbers and store performance, to safety, to hiring, training, scheduling, merchandising and customer service.
But one of the most important things they need to do, and must be given the tools for is truly listening, prioritizing and leading their team with empathy. Team members will perform near miracles if they feel heard, seen and supported.