How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More

[JiriHrdina]

Originally Posted by Harry Lime

People who think that paying an employee more causes an increase in motivation are not acting in a way that takes into account the long term behavior of the employee. Respect goes a lot farther than money.

If higher wages increased motivation, the motivation would wane as the employee became used to the greater compensation, and service would fall to the original point. This doesn't happen generally (in a situation like this), so I would propose that the wages don't increase motivation due to the monetary windfall, but because an employee feels valued by their employer.

When an employee feels valued, they take pride in the job that they are doing. They want to work harder for the employer that respects them. This results in a lasting increase in productivity, which should be the goal of an business owner or executive.

Paying someone more to motivate them is a losing strategy. Paying them in line with what the employee is potentially worth to the company is a winning one. Employees know the difference, managers know the difference, and CEOs on the golf course apparently frequently do not.

Yes and no.
Employees need to earn "enough" and once they have that - then deeper drivers of motivation are more effective: Autonomy, Mastery, Purpose (source: Drive by Daniel Pink).
But they need to have enough to feel like they can meet the needs of their life. If they don't have that - then they won't be motivated.

[Gozer]

[GGG]

Originally Posted by iggy_oi

Some people seem to feel that there is a psychological correlation. I think that theory is bunk. In every environment there are people who earn similar wages, and there is always a difference in the work they do and at what efficiency. My point was that higher wages don't always make a business crumble.

You have to acknowledge though that Walmart went further in reducing costs then any other company. Minimum wage, no raises, supervisors with non living wages, non full time hours to avoid payroll and health care costs. Essentially giving them the lowest staff cost of any business. So a company that is paying the absolute minimum may benefit from raising them.


And Walmart could not pay their employees more AND stay at the same sales levels. So an increase to a minimum wage would have harmed them. Here their was a net benefit to higher wages. The wages were paid for with increased profits.

so your conclusion is not proved or disproved from the data here.

What is being shown is that a better quality employee can improve profitability.

[Handsome B. Wonderful]

Originally Posted by sun

Curious to know what your other go-to stores are.

I'm going to assume Dollar Stores.

[Locke]

Originally Posted by iggy_oi

Yes, we've seen this happen at a lot of places, Walmart has been notorious for it for years, funny how now they are paying people more without needing to cut hours. This scare tactic that companies use to try and convince the public that higher wages will always result in job cuts or reduced hours has really consumed you to the point where I'm not even sure you would be open to even acknowledging that maybe just maybe, these actions aren't always done as a cost saving effort in reaction to a wage hike, and instead are done to gain support in opposition of another hike.

Gain support from whom? You've mentioned this a few times, but it seems like a Conspiracy Theory. Are the Bilderburger Group or the Lizard-Men involved?

The thing is that while this...what political buzzword shall we call it? Taxable Economic Pressure?

While this Taxable Economic Pressure is being accrued by these businesses they still have to run.

Unlike when Politicians accrue 'Political Capital' they dont care about the costs because they're not the ones actually bearing them, in this case it would be actual real dollars coming out of actual real pockets and businesses, unlike Governments, cant constantly lose money to make a point, they're eventually forced to stop.

So if I concede you have a point, and I will concede that, I'm sure there is an element of Political Pressure involved, I dont believe that measures like these are undertaken explicitly for future political, and eventually, profit-driven purposes.

And again, even if you're right, why are you opposed to businesses opposing a future 'hike?' Without opposition to wage increases costs would skyrocket out of control because it would be too easy for Governments or prospective Governments to buy votes with other people's money.

We already know that the current Government believes that $1 - $10 Billion = 'Just Fine.'

[Gozer]

Originally Posted by Locke

Gain support from whom

You.

There is a wonks policy position (that you seem to hold) that increasing minimum wage is detrimental to private business. It behooves an employer to support this position.

[blankall]

Originally Posted by Gozer

Correlation does not equal causation.

The issues of income disparity go way beyond minimum wage. The bigger issue is that the cost of entering the market has gone way up. Capital costs and real estate are huge compared to what they were a generation ago. Additionally, people work longer hours and harder for less. It's more an issues of haves and have nots, and IMO is largely a generational issue. Simply put, a select group of baby boomers have entrenched control the resources. They don't like to share. I'm not just referring to the 1% either. It's baby boomers who work longer for huge wages and hold onto large detached properties long after the nest is empty.

Young people, in general, now work harder and longer for less. Increasing minimum wage only provides a temporary benefit to workers, until inflation caused by that increase catches up. Meanwhile it places a further burden on young people trying to start businesses. It can widen the gap your trying to close.

[Gozer]

Originally Posted by blankall

Young people, in general, now work harder and longer for less. Increasing minimum wage only provides a temporary benefit to workers, until inflation caused by that increase catches up. Meanwhile it places a further burden on young people trying to start businesses. It can widen the gap your trying to close.

That makes sense in the abstract.
But if we're talking about a married couple that both work at Walmart, the 'temporare benefit' of a living wage isn't being weighed against the other. It just makes their lives better, and Walmart charges a little more or profits a little less.

[AcGold]

Originally Posted by GGG

You have to acknowledge though that Walmart went further in reducing costs then any other company. Minimum wage, no raises, supervisors with non living wages, non full time hours to avoid payroll and health care costs. Essentially giving them the lowest staff cost of any business. So a company that is paying the absolute minimum may benefit from raising them.


And Walmart could not pay their employees more AND stay at the same sales levels. So an increase to a minimum wage would have harmed them. Here their was a net benefit to higher wages. The wages were paid for with increased profits.

so your conclusion is not proved or disproved from the data here.

What is being shown is that a better quality employee can improve profitability.

Having worked in a nearly identical situation at another company I'd say it's not that simple. Most employees start out incredibly optimistic with a desire to bring value to the company. People were happy to get the job at first, it didn't pay well but the employees were content enough to bring their individual strengths to the job. Almost everyone is initially a quality employee that brings value.

Over time the refusal to consider raises, messing with shifts to minimize the amount paid out, reducing benefits, coercing and generally being dishonest slowly erodes the employees goodwill towards the company. It was more than just a wage issue, it was an amalgamation of everything over time that slowly makes the employees feel undervalued.

The employees see so much money coming and going and they feel they are generating more value than they are being paid and when they get insulted by poor management skills they no longer care whether they bring value to the company. It's like a psychological switch that gets flipped where the underlings no longer care at all about what happens to the company.

Optimism turns to malcontent and general dislike for the company, this is the scenario all companies should try to avoid because over time enough employees in this situation create a toxic work environment. It's not just wage it's multiple confounding variables that slowly denigrate the faith an employee has in their employer to the point they feel like they are simply being exploited and used as objects to be discarded at a whim. The funny thing was I took several management training courses that scientifically studied the psychological effects management techniques have on employees and everything they said directly contradicted what our managers did.

[iggy_oi]

Originally Posted by Locke

Gain support from whom? You've mentioned this a few times, but it seems like a Conspiracy Theory. Are the Bilderburger Group or the Lizard-Men involved?

The thing is that while this...what political buzzword shall we call it? Taxable Economic Pressure?

While this Taxable Economic Pressure is being accrued by these businesses they still have to run.

Unlike when Politicians accrue 'Political Capital' they dont care about the costs because they're not the ones actually bearing them, in this case it would be actual real dollars coming out of actual real pockets and businesses, unlike Governments, cant constantly lose money to make a point, they're eventually forced to stop.

So if I concede you have a point, and I will concede that, I'm sure there is an element of Political Pressure involved, I dont believe that measures like these are undertaken explicitly for future political, and eventually, profit-driven purposes.

And again, even if you're right, why are you opposed to businesses opposing a future 'hike?' Without opposition to wage increases costs would skyrocket out of control because it would be too easy for Governments or prospective Governments to buy votes with other people's money.

We already know that the current Government believes that $1 - $10 Billion = 'Just Fine.'

It's not a conspiracy, it's plainly evident. In the same way that pro labour groups lobby more liberal/social parties, big companies lobby the more conservative parties. In an effort to gain more favourable economic conditions to operate in(which conservatives provide them) businesses use the fear of job loss to get people to vote for these parties. A companies books are not made public, they have nothing to lose by saying that reason X will cause job losses in an effort to gain a more favourable economic system. Without the books, we have no way of ever proving whether or not they really did need to make job cuts in reaction to something like a minimum wage increase. The data that people use to argue these claims are typically word of mouth references. Ie a company says they will need to cut jobs, or an employee who says they had their hours reduced because of an increase to minimum wage because that's what they were told(by their employer)

Most people just take what they hear at face value without putting much thought into it. Yes an increase to the minimum wage can have a potentially devastating impact on some businesses, however is it not suspicious that almost every company makes that claim? Even the ones who's CEO have seen compensation gains at exponentially higher rates than their workers. Think about it, they can't afford to pay a worker 50% more than what they were making 10 years ago, yet in that same timespan they've given their CEO an increase of 500%, when their CEO was already making way more than the average worker.

[Azure]

Wall Street is also a problem. Constant pressure to increase stock price which usually means cutting costs.

Of course, one has to blame the previous leadership at Walmart for not seeing the writing on the wall. Treat employees like garbage and you will get a garbage return. Wages aside, there are a lot of other policies they enacted that were painfully stupid.

[iggy_oi]

These companies can afford to pay 1 person over $7k/hour but they can't afford to pay workers $15/hr? Think about it. If your CEO makes $7k/hour that is the equivalent of paying 1000 of your $8/hour workers $15/hour. Yet for some reason it always means cutting hours and jobs.

[GGG]

Originally Posted by iggy_oi

These companies can afford to pay 1 person over $7k/hour but they can't afford to pay workers $15/hr? Think about it. If your CEO makes $7k/hour that is the equivalent of paying 1000 of your $8/hour workers $15/hour. Yet for some reason it always means cutting hours and jobs.

Your math is pretty questionable. Walmart employs 2.1 million people. Let's say 20hrs a week average (no idea but it doesn't change the number). Let's say the CEO decides to work for free.

The good news is that each employee now gets $7 per year more money. Or working it back to an hourly amount about .7 cents an hour.

Executive pay, while ridiculous, does not change the ability of a company to pay its employees. For someone who blames corporations for lying about their ability to pay employees this type of example is very hypocritical.

[Kjesse]

There are very good reasons the CEOs make what they make. First, they aren't paid an hourly rate they'll have a salary, which by itself is usually in the millions. But then they have all kinds of incentives to grow the company and increase its value.

The decisions made by the CEO, in the case of McDonalds, have literally billions of dollars of consequences each and every month. Contrast with the decisions the guy flipping burgers makes and how much he can impact the corporation's bottom line --- which is almost zero. Also, anybody can flip burgers but to run a megacorporation takes a rare breed.

Ultimately it is the shareholders who decide what compensation they are willing to pay to their executives. Some companies have had shareholders who have grouped together to lower executive salaries and have had some success.

The hired CEOs have to decide the optimal amount to pay their staff to keep their company viable and profitable. Shareholders don't set employee compensation but if they did I don't think you'd see much difference.

Edit: And some of the best CEOs take zero salary at all. They still make massive multiples over the front line workers.

[Azure]

I think a billion dollar company can afford to pay the CEO $30 million, and have a $13/h starting wage.

[GGG]

Originally Posted by Azure

I think a billion dollar company can afford to pay the CEO $30 million, and have a $13/h starting wage.

Where does the 11 billion dollars to pay for that come from?

[GGG]

Originally Posted by Delgar

There are very good reasons the CEOs make what they make. First, they aren't paid an hourly rate they'll have a salary, which by itself is usually in the millions. But then they have all kinds of incentives to grow the company and increase its value.

The decisions made by the CEO, in the case of McDonalds, have literally billions of dollars of consequences each and every month. Contrast with the decisions the guy flipping burgers makes and how much he can impact the corporation's bottom line --- which is almost zero. Also, anybody can flip burgers but to run a megacorporation takes a rare breed.

Ultimately it is the shareholders who decide what compensation they are willing to pay to their executives. Some companies have had shareholders who have grouped together to lower executive salaries and have had some success.

The hired CEOs have to decide the optimal amount to pay their staff to keep their company viable and profitable. Shareholders don't set employee compensation but if they did I don't think you'd see much difference.

Edit: And some of the best CEOs take zero salary at all. They still make massive multiples over the front line workers.

I'd disagree with you quite stongly here. As far as I'm aware there is no link between CEO pay and company performance and there is no statistically significant predictor between a CEOs past performance and his future performance. I will dig around for some sourcing on this.

So I believe CEOs are significantly overpaid based on their value over replacement. There's also the problem where BODs, CEOs, and the institutional investors are all able to enrich themselves with high compensation with no common shareholder oversight. Executive pay is broken.

[Kjesse]

Originally Posted by GGG

So I believe CEOs are significantly overpaid based on their value over replacement. There's also the problem where BODs, CEOs, and the institutional investors are all able to enrich themselves with high compensation with no common shareholder oversight. Executive pay is broken.

Are you suggesting regulating it?

The way to change it is, read the annual reports, if executive compensation for that company is too high and you don't like it, then don't invest. If enough did that -- or told their brokers that is a significant issue to them, you would see some changes.

[GGG]

Originally Posted by Delgar

Are you suggesting regulating it?

The way to change it is, read the annual reports, if executive compensation for that company is too high and you don't like it, then don't invest. If enough did that -- or told their brokers that is a significant issue to them, you would see some changes.

Yes, in publicly traded companies some restriction on executive pay should exist because the average investor does not have the knowledge base to enact change. It's like the arguememt that we don't need food safety rules because the reputation of companies would suffer if people get sick or we don't need to mandate seat belts or day time running lights in cars.

I'm not sure what such legislation would look like.

http://www.wsj.com/articles/ceo-pay-...nce-1464880505

The above source isn't the best link to good peer reviewed research but it does show the lack of correlation.

[iggy_oi]

Originally Posted by GGG

Your math is pretty questionable. Walmart employs 2.1 million people. Let's say 20hrs a week average (no idea but it doesn't change the number). Let's say the CEO decides to work for free.

The good news is that each employee now gets $7 per year more money. Or working it back to an hourly amount about .7 cents an hour.

Executive pay, while ridiculous, does not change the ability of a company to pay its employees. For someone who blames corporations for lying about their ability to pay employees this type of example is very hypocritical.

The math is not questionable at all. $7000/hour divided by 1000 employees is $7/hour that could be paid to those 1000 employees. The hourly rate for the CEOs in that graph were calculated by dividing their salary by 60hours per week for 50 weeks in a year, So if those 1000 $8/hour workers are working less than 60 hours per week they could actually afford to pay more more than 1000 workers $15/hour.

If paying out ridiculous amounts of money to executives doesn't not affect the ability to pay their employees, why would paying their employees a little bit more have an effect? I'm asking you in all seriousness, I'm sure even the posters who are on the opposite side of my position are a little confused by this statement.