Should retail boards include seats for store associates?

Sources: Walmart
May 22, 2019
George Anderson

Bernie Sanders is not a fan of Walmart’s business practices when it comes to how the retailer compensates its hourly workers. Next month, the senator from Vermont and Democratic Party presidential hopeful plans to attend Walmart’s annual shareholder meeting in Arkansas where he will introduce a shareholder proposal requiring that hourly workers get a seat on the company’s board of directors.

“If hourly workers at Walmart were well represented on its board, I doubt you would see the CEO of Walmart making over a thousand times more than its average worker,” Sen. Sanders told The Washington Post.

Walmart has said it will address shareholder proposals formally presented at the meeting on June 5. The retailer, CNBC reports, did issue a statement that urged the senator to “approach his visit not as a campaign stop, but as a constructive opportunity to learn about the many ways we’re working to provide increased economic opportunity, mobility and benefits to our associates — as well as our widely recognized leadership on environmental sustainability.”

Sen. Sanders and Rep. Ro Khanna of California introduced a bill last year that would force Walmart and other large companies to:

  • Raise the hourly minimum wage to $15;
  • Enable employees to earn up to seven days sick leave;
  • Cap CEO compensation to not more than 150 times the median pay of all employees.

The senator has criticized Walmart for using share buybacks as a means to increase shareholder value while failing to pay its workers a living wage. He has asserted that more than half of Walmart’s hourly workers are food insecure while the Waltons, the founding family of the chain, own more than the bottom 40 percent of all Americans.

DISCUSSION QUESTIONS: Do you think retailers would benefit from having store associates represented on company boards? How likely is it that Walmart’s shareholders will support such a proposal?

Please practice The RetailWire Golden Rule when submitting your comments.
"It would be lovely to have store associates represented on company boards but, to do so, retailers have to be willing to retain good employees. "
"Bernie Sanders’ suggestion of associates on the board might have some merit, just like Lee Iacocca put the union on the board."
"The notion of including store associates on retail boards may sound seductively progressive and customer-centric; but it is not."

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26 Comments on "Should retail boards include seats for store associates?"

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Bethany Allee

Diversity on boards has proven to net better decision-making. At this point, boards primarily diversify themselves based on gender and ethnicity. The addition of socioeconomic and role diversity to retailer boards is progressive and something that could give them not only additional insight, but a competitive edge.

Bob Amster

The question is two-sided. There is the influence on compensation for hourly workers and there is the mutual benefit of hearing an actual voice of the people in the trenches on how to improve working conditions, processes, policy, merchandising and, ultimately, customer service.

Neil Saunders

While this should never be mandated by government, having store associates on boards is a sensible idea. They can provide honest feedback about what’s happening on the ground, and provide input on ideas and initiatives from a practical point of view. Of course, boards should be listening to associates anyway, but having high level representation never hurts.

However, I must take issue with Bernie’s suggestion that having workers on boards would somehow limit pay for the CEO or top people. It won’t because not everyone – including many Walmart employees – shares Bernie’s socialist view of the world!

Anne Howe

Store associates are often the closest to the shopper. Adding them to boards ensures the shopper voice is represented appropriately. But these new board members have to be trained and grounded in the reality that board jobs are serious positions intended to drive growth and return value to shareholders.

Laura Davis-Taylor

I totally agree with Anne here. The first thing that we do when on a new project is immerse into the employees on the floor — they see the day-to-day and are invaluable voices regarding the realities of what’s happening with the store and shoppers. They would, however, need some training, coaching and moderating or it could be a gripe session or lack realistic applicability.

Lee Kent

Yes, Anne, I agree. A jump this big to board members is a huge leap. I suggest that they form a group of store associates to represent them and then have a leader who represents them on the board. For my 2 cents.

Frank Riso

While I think employees do have some representation on their board of directors, I do not see a direct representation having any benefit. By law, the board of directors looks after the interests of all shareholders including those who work for the company. I do not think Walmart would support such a proposal as it moves the company’s ownership more toward a state-owned company and that is not what our retail or any industry is all about these days. This may be a very dangerous move and Mr. Sanders appears to be more political than helpful.

Mark Ryski

I appreciate the idea and believe that executive management could benefit greatly by getting direct input from store associates and front line managers. However, I don’t think having an associate on the board of directors is the best way to get this input. For those who have had the “pleasure” of sitting on a board know, these discussions can get very convoluted and complex, and I’m not sure a store associate would have the knowledge and expertise to contribute to the discourse regarding strategic initiatives – which are topics with which boards are primarily concerned. A better approach might be to a form a president’s “round table” consisting of the senior executive team and a small group of store associates, store managers and district managers.

Jeff Sward

Agree. The right kind of “listen and learn” platform within the company would surface all the issues employees at every level want to get on the table for consideration and action.

Paula Rosenblum

Well, it would be lovely to have store associates represented on company boards but, to do so, retailers have to be willing to retain good employees. One thing I also know is that Walmart employees really do care. They may not be able to articulate issues in a manner that BODs are used to, but they are the people who see the problems in stores every day.

In other words, this requires a big change in the dynamic between store associates and chain management. How many retailers are willing to change that dynamic?

Chris Petersen, PhD.

This discussion seems to have two separate tracks: representation on company boards and equitable pay for workers. Having store associates on a retailer board may add some perspectives on direction, but not necessarily address salary issues.

Retail boards would most certainly benefit diversity. Age is often overlooked as a valued perspective. Given the rapid growth of Millennial presence and buying power, boards would certainly benefit from having Millennial input. If associates are not full-time members, boards need to be taking Millennials and store associates to lunch on a regular basis.

Lee Peterson

Talk about an idea that should’ve been pervasive 20 years ago. Good ideas, like BOPIS, might’ve been executed better from the start. I remember when Crate & Barrel only hired HQ execs from their stores, that’s a solid idea as well. I think you do have to take some things like the old, “we tried that before” into account, but that could be said of any board member.

Harley Feldman

Retailers may benefit from having an employee on the company board as the board could be provided with information concerning employees’ perspectives. But expecting an employee to make the kinds of decisions the board regularly makes is above the skills level of the typical employee. The board should already have the kind of information that an employee would bring through the HR executive or through employee satisfaction surveys. Walmart may support such a proposal due to its positive PR effects to the public.

Georganne Bender

This is really two different issues, isn’t it?

Placing store associates on Walmart’s board of directors might be an admirable idea, but probably not a practical one; associates and CEOs come from different places in thought and experience.

The two levels absolutely need to interact. Walmart’s board – every board – has a lot to learn from front line employees, but I think this would be frustrating for both sides. Active task forces or committees, headed by board members, that include associates would be a better fit.

Rich Kizer
So you want to get the true perspective of what is going on in the stores, from a board of director view. I love the old United Airlines commercial where the CEO announces that their best customer just fired them. At that point, he hands each board member a round trip ticket to visit one of their biggest customers to make sure things are good. One member asks the chairman, where he is going to go, and the answer should have shaken every board member in the country. His reply? “I’m going to go see our best customer who just fired us.” I don’t think we will see associates in the board room, but how about a dose of reality for board members? Each member visits at least two stores a quarter, and works there alongside the associates. Then at their meetings, everyone could give the entire board their “doses of reality.” The associates’ voices will be heard. And I really think those voices not being heard is the crux of this story.
Cathy Hotka

I’m no fan of Mr. Sanders, but executive compensation isn’t tethered to reality. Walmart’s CEO makes over $62,000 per day. PER DAY. Could he have a relevant conversation with a store associate? A board seat may not be in the cards, but unless we want a permanent underclass in this country, things have to change.

Tony Orlando

First off Bernie Sanders and his ilk have no business trying to mandate anything, as typical politicians do, all while stuffing their own pockets and getting rich. Associates serving directly on the board sounds good, but who gets picked, and are they going to understand the P & L sheets enough to make decisions that also affect the shareholders? Yes they want more money, who doesn’t, but the bottom line still matters for growth, and everyone needs to understand that.
Managers at store level need to engage with their employees on a level that shows respect, and remember it is always about the customer and things can improve by working together.

Mohamed Amer

Corporate boards provide the governance structure that guides a company’s strategic decisions and CEO succession. A board’s primary responsibility is to ensure optimization of capital allocation, maximization of company performance over the long term, and increasing shareholder value.

The notion of including store associates on retail boards may sound seductively progressive and customer-centric; but it is not. More important for successful boards is being independent, competent, and dynamically reflective of leading business and social trends. They need to have a diversity of experiences and open mindsets. They need to challenge and coach the CEO, rather than nod approvingly at every turn. They need to keep their fingers out of business execution, but be fully engaged in guiding strategy, capital allocation, while holding company executives accountable for results. It’s a fiduciary responsibility, not a popularity contest.

Joel Rubinson

Bernie Sanders’ suggestion of associates on the board might have some merit, just like Lee Iacocca put the union on the board. HOWEVER, the rest of his socialist agenda is nuts. Who is he to say what a CEO deserves to make? The free market determines what the multiplier should be. So basically, the Bernie Sanders “ice man cometh” world would require an analysis of every business in America and mandating wages, comp packages, etc. Let him start with the money stars make for pictures vs. production crew, or boxing champs vs. sparring partners, or Clinton speeches vs. admins who report the schedules … on and on. Madness.

Cyrus Tookes

Those closest to where revenue is generated should most definitely have a seat at the table…

Cynthia Holcomb

Politics … A feel-good, Hollywood movie ending with the little guy/gal overcoming great odds to earn a seat on a corporate board. The audience is reduced to tears and happiness abounds! In the real world, retailers like Walmart would benefit by filling a board seat with an experienced negotiator, who through personal experience empathizes with the little guy/gal. Someone with the ability to navigate board politics to increase wages, sick days and a host of other benefits Bernie is seeking to “enforce.”

Ken Morris
Ken Morris
Retail industry thought leader
6 months 16 days ago

It is an interesting idea that seems to make sense. High level executives don’t have a grasp of what is going on in the store on a daily basis and having a store associate or two on the board may bring another perspective to the decisions the board makes. Some executives may make routine store visits, but it isn’t the same as walking in the shoes of a store associate.

Walmart is one of the most innovative companies and it wouldn’t surprise me if they follow-through with this idea. It would also go a long way in improving goodwill with its employees and enhance public perceptions. I hope they try it, some of the best ideas filter up from the stores.

Craig Sundstrom

The board represents the shareholders (i.e. “owners”), so legally I don’t know what the basis for this would be. Of course that’s not to say that the current orthodox corporate structure is perfect. There are all kinds of stakeholders (employees, creditors, suppliers and — yes, last but (hopefully) not least — customers) who are affected by corporate governance, yet have no say in it beyond the take-it-or-leave-it proposition of simply not doing business with a firm.

As for the support this will find: pretty sure it will be another “out-of-stock.”

Cate Trotter

I can’t see how having input from store associates can be a bad thing. There’s often a disconnect between those at the top and those who are day-to-day working in the spaces and with customers. You could even argue that a lot of retailers might be in a better position if they’d had this input earlier because they could respond to the problems, criticisms and customer wants that staff deal with on a daily basis. I think there would obviously be some training/understanding required, but the more staff feel listened to and understood the better the retailer can also retain them.

Shep Hyken

I can’t see putting store associates on the board of directors. Those members have experiences are more at a leadership and strategic levels. Some are large shareholders. That said, having an advisory board to hear the ideas from the store associates is a good idea. Just as having a “customer board of advisors” works well for some organizations.

Kai Clarke

No. Good corporate governance has nothing whatsoever to do with having store associates represented on their board of directors. The board of directors has a vested interest in maximizing their shares and those of the shareholders they represent. This may not always be in the best interest of the public, but the ability of the board to better manage the corporation is key to the company’s success. This is why boards of directors have well-versed members who can provide value from their experiences, and add diversity to the corporation from a corporate perspective.

Having store associates as board members does not assure success in any way. In fact, losing this seat to an employee who is unaware of how to manage corporations, including budgeting, forecasting, legal issues, etc. would prove to be a hindrance, not an asset.

"It would be lovely to have store associates represented on company boards but, to do so, retailers have to be willing to retain good employees. "
"Bernie Sanders’ suggestion of associates on the board might have some merit, just like Lee Iacocca put the union on the board."
"The notion of including store associates on retail boards may sound seductively progressive and customer-centric; but it is not."

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