With 5 Short Words, Walmart Just Taught a Brilliant Lesson In Leadership

A “conditional statement” in English is one that begins with a hypothesis, and follows with a conclusion.

Often, we think of these as “if/then” statements. Examples:

  • “If you think you make more money than someone who works at Walmart, then you might be wrong.” 
  • “If you find that idea surprising, then you’re probably not alone.”
  • “If you’re wondering why I’m explaining conditional statements in an article about Walmart, you might find the answer in the next paragraph.”

I’m bringing this up because of the new pay structure that Walmart rolled out earlier this year for its 4,700 U.S. store managers. The top performers can now earn as much as $530,000 annually in total compensation.

But the way in which Walmart announced it made me think of the power of conditional statements, and why you should consider using them more often in your business. 

Let’s set the stage: $530,000 is an eye-opening number. In fact, one Walmart Supercenter manager who was interviewed this week by Bloomberg said that he “almost fainted” when he realized how much he could make under the plan.

Granted, managing a Walmart is a very difficult job. As John Furner, president and CEO of Walmart U.S. put it, Walmart store managers are actually running multimillion dollar businesses, usually with hundreds of employees.

Another manager followed by The Wall Street Journal for a day managed 300 employees, brought in $100 million in annual sales, worked at least 50 hours per week, and walked between 8 and 10 miles per day. 

I admit: I think I work hard, but that sounds a lot harder. 

Anyway, long time readers will know that I am a big proponent of the simple idea that whenever possible, business owners should:

  1. Pay employees to do the things that further their businesses, and
  2. Try to avoid paying them to do things that do not further their businesses.

Unless you’re omniscient, and you can figure out in advance in every instance what would advance your business in every situation, that means building incentives into pay structures and empowering employees.

All of which brings me to the conditional statement that got me so excited.

It’s from the announcement that Walmart’s executive vice president of store operations, Cedric Clark, sent to all Walmart managers announcing this whole thing to begin with:

As you know, your pay is made up of two parts: base pay and annual bonus. We’re updating both. 

First, base pay. We’re simplifying and increasing store manager wages. With this investment and upcoming annual increases, the store manager average salary will go from $117,000 to $128,000 a year.

Second, we’re redesigning our store manager bonus program. In addition to sales, your store’s profit will play a bigger role in calculating your annual bonus.

If you hit all targets, your bonus could now be up to 200% of your base salary.

That last sentence is a thing of beauty for a conditional statements aficionado.

Frankly, the first five words make it pop: “If you hit all targets, [then] your bonus could now be up to 200% of your base salary.” 

Walmart store managers make between $90,000 and $170,000 per year, Anne Hatfield, senior director of global communications at Walmart confirmed to me Friday.

Besides the salary and bonus bumps, Walmart also announced a $20,000 annual stock grant to store managers this year, so if you add everything up, it would put total potential compensation between $290,000 and $530,000.

Why offer this kind of compensation and structure, outside of the goodness of Walmart’s publicly traded corporate heart?

One obvious reason has to do with retention and motivation; Bloomberg points out that as of a few years ago, Walmart store managers had a much higher attrition rate than their peers at places like Target and Home Depot.

Another benefit might have to do with setting an aspirational example for line Walmart workers, since the vast majority of Walmart managers, reportedly 75 percent, started out as hourly employees.

(Furner, Clark, and Walmart CEO Doug McMillon all started out in those kinds of roles too, in fact.)

Anyway, I’ve never worked at Walmart, and I can’t say for sure what the response will be long-term. 

But as a business owner, I suspect you’ll agree with me on this: If you treat people well and give them incentives to do the things you’d like them to do for your business, then you might be very happy to see how well it all works out.

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