More HR in Store at Wal-Mart A Q&A With Sue Oliver

For the past few years, Wal-Mart has been operating under a microscope. Some of the scrutiny has focused on how the Bentonville, Arkansas, retailer locates its stores, with charges that it is bent on driving out smaller businesses. Its hard-nosed drive for lower-cost goods, and the effect that has had on both foreign workers and domestic suppliers, has been another area of inquiry. But most of the attention has focused on how Wal-Mart deals with its own employees.

    Wal-Mart has been the target of class-action lawsuits alleging that the company engaged in sexual discrimination, sexual harassment and wage-and-hour violations, the last by denying employees meal breaks and overtime pay.

    The labor movement has become increasingly active in criticizing the employment policies of the world’s largest retailer. Last year, two union-funded groups formed, Wal-Mart Watch and WakeUpWal­Mart.com, both of which have been active with protests and public campaigns urging reforms in Wal-Mart’s employment and business practices.

    And then in January, the Maryland Legislature passed what has become known as “the Wal-Mart bill,” which forces employers with more than 10,000 workers to devote at least 8 percent of payroll to health care benefits. Last month, however, a federal judge in Baltimore ruled that the measure violated the federal ERISA law, a decision that is being appealed by Maryland’s attorney general.

    Also last month, Chicago passed an ordinance aimed at chains like Wal-Mart. It requires “big box” retailers, whose stores are 90,000 square feet or more and who generate $1 billion in annual sales, to pay workers a minimum wage of $10 an hour and $3 per hour in benefits by 2010. Wal-Mart has been planning to open its first store in the city this year.

    The retailer seems to have gotten smarter about how it responds to such salvos. A year ago, company executives would say that they were just being targeted because they’re the biggest retail chain in the country and leave it at that.

    Today, however, Wal-Mart seems to recognize that the best way to defend itself is to make sure its employees are happy. To that end, the retailer has embarked on a major workforce management reorganization. The company is hiring more than 300 human resources managers to work in the field, instead of just having 100 executives in its headquarters oversee everything, says Sue Oliver, senior vice president of the Wal-Mart Stores Division.

    Oliver joined Wal-Mart in April 2004. She had previously been at American Airlines, where she was head of human relations. Oliver reports to Susan Chambers, executive vice president of risk management and benefits. Oliver is helping to oversee the new workforce management strategy.

    Oliver says once its HR staff is in place, Wal-Mart hopes to be able to better communicate with its associates and better engage them in the business goals of the company. If Wal-Mart can communicate better with its associates and make sure it is hiring and retaining the best people, it will also be able to stay ahead of customer demand and trends as well, she says.

    “We have never been resistant to change, but we are now embracing change as necessary because our customers are changing,” she says.

    Oliver recently spoke to Workforce Management staff writer Jessica Marquez.

    Workforce Management: What three initiatives that you have worked on this year are you most proud of?

    Sue Oliver: First is our new human resources organization. A year ago we had no more than 100 field human resources managers who all worked from Bentonville. We were more centralized in terms of HR support and we did not have enough HR support in the field. Over the last six months, we have created five divisional HR leaders, 27 regional HR directors and 342 field HR managers. A number of those positions have been filled with people who were willing to move from Bentonville or from the stores, and half of the field positions were external hires.

    The second thing I’m proud of is how the restructuring of the field operations supports the operations. For each region now, there is a regional general manager, who is an officer of Wal-Mart, and then five to six people from different business units, including HR.

    The third initiative stems from the first two, in that now we have HR strategies integrated with the business strategies. Now, human resources leaders can take our business strategies that are unique to their geographical areas and translate them into human resources strategies.

    WM: Can you give an example of that?

    Oliver: For example, in the Northeast there is a business strategy of growing a number of supercenters and neighborhood markets. Therefore, we need talent to staff them. That means the HR support members will look at the people and ensure that the business strategy won’t be compromised. That strategy integration is different than what we had in the past.

    WM: What prompted Wal-Mart to reorganize its HR operations?

    Oliver: As we think about the three- to five-year time horizon, we know we have to be having the right talent to secure our future. Our business strategies won’t be successful if we don’t have the right talent, and the only way to do that is to make sure that HR is more integrated.

    In the past, we were more focused on the basics, of making certain that the operations were running as they should. Now we are looking at longer horizons than we have focused on in the past, and with that comes a different type of HR professional.

    WM: When we met a year ago, you said your goal was to reduce associate turnover by 10 percent. Have you achieved that goal?

    Oliver: We are still very focused on that. Turnover is better than it was a year ago, but our goal is to make certain that we have the right processes in place so that whatever improvements we see, we will continue to see. We don’t want this to be a temporary improvement. So that means we need to make certain that we are hiring appropriately. New associates need to be made to feel comfortable with their work environment and get training and that they are not put in front of customers before they are ready.

    If we can get associates past the first 90 days to six months, most of the battle has been won. Another big piece to this is having our associates quickly understand that the position they are entering with Wal-Mart is one of many personal growth opportunities we have.

    WM: Some of your critics would say if Wal-Mart paid better compensation and benefits, that you would have an easier job of attracting and retaining talent. How do you respond to that?

    Oliver: We are doing a good job of addressing both compensation and benefits. We want to be an employer of choice, and to do that you need to be market-competitive with wages, whether the workers are hourly or in management. For our hourly associates we have an annual review process where we take an outside vendor, like Hewitt Associates or the Hay Group or other compensation firms. They help us analyze by market and by store whether or not our start rates are market-competitive.

    We are very focused on that, and we believe the best indicator of that is what people do in response. If you look at one of our newest stores in Evergreen Park, near Chicago, we got 25,000 applications for 325 positions.

    WM: In a recent internal memo, Wal-Mart CEO Lee Scott warned managers against cutting corners. What is Wal-Mart doing to be tougher on managers who cut corners or break the law?

    Oliver: We do have situations where there may be a manager who has acted inappropriately. In my tenure, I have found that it is a very small number. But most importantly, when those situations arise, Wal-Mart makes no compromises. We are very resolute that all of our people are held to the same standards.

    We also have a number of hot lines for employees. We have an ethics hot line that an associate can call anonymously if they prefer to handle it in that manner. We have staff that promptly investigates anything. We have an open-door policy. Our associates do not hesitate to raise issues. And while they can raise issues to a manager, they can also go to the senior management if they feel more comfortable at that level.

    WM: There have been reports about Wal-Mart hiring political public relations experts to help with its communications strategy. Why has Wal-Mart suddenly this year become so much more proactive on the public relations front?

    Oliver: What we have found ourselves doing is making certain that the facts are out there and that we are telling our story. It became clear that we needed to share the facts, and that’s why today you can go on our Web site and read about up-to-date issues and controversial issues. We will include what we think is going to be a sensitive issue. Our senior management has also made it a point to speak out more and make certain that people know what we are doing. We will always want to improve, but there are many wonderful things we are doing. Our associates have said to us, “You can’t stay quiet; you have to speak up.”

    WM: Some of your critics might view all of the changes you have made in the past year as a victory for them. What is your response to that?

    Oliver: We are a growing company. That means from an HR perspective, we need to think about where that talent is going to come from, whether it’s a necessary focus on developing our own associates or whether it’s attracting new talent. We want to get the right associates and we want to make sure that associates want to stay with us in the long term.

    WM: What is your biggest challenge today?

    Oliver: Our biggest challenge is meeting our growth needs around talent in the future. I think if I had a second-biggest challenge, it would be the fact that it’s always a daunting challenge to be able to have our associates understand all of the good things we’re offering them. When you have 1.3 million [U.S.] associates, it’s daunting. I believe that having teams out in the markets will help us immensely and that we will be able to communicate more quickly.

Workforce Management, August 14, 2006, pp. 28-32 — Subscribe Now!