Wal-Mart Shake-up Leaves New HR Head With Challenges

Wal-Mart’s controversial new head of human resources may struggle to sell the company’s self-image as a benevolent employer.

So say some analysts on the news that Susan Chambers has been promoted to executive vice president of Wal-Mart’s people division. She replaces Lawrence Jackson, who after 17 months in the position was tapped to run the retailer’s global procurement division. Chambers gained notoriety several months ago with the public airing of a memo she wrote about limiting benefit costs, including the prospect of making Wal-Mart cashiers do some “cart gathering” to attract a healthier workforce.

That memo was a reflection of Chambers’ background as a logical-minded technology professional, and indicates she wasn’t concerned about how it might appear to the public, says Kevin Berchelmann, president of Triangle Performance, a consulting firm focused on human resource issues. To Berchelmann, the memo signals that Chambers may find the public relations aspect of her new job difficult.

“I think it bodes ominously,” he says.

Wal-Mart spokesman Dan Fogleman disputes the suggestion that Chambers will stumble in the spotlight. “Ms. Chambers is very articulate and very savvy when it comes to the positions that need to be taken in the public venue,” he says. “She’s a great communicator.”

Wal-Mart announced the executive changes Wednesday, April 6. The Bentonville, Arkansas-based company says that Chambers will be responsible for human resources functions and the company’s office of diversity. She will report to chief executive Lee Scott. Among other leadership moves, Wal-Mart says that Linda Dillman, previously executive vice president and chief information officer, will become executive vice president of risk management and benefits administration.

The company cast the changes as part of a corporate policy of rotating executives.

“These leaders are people of great capacity, and today’s changes reflect a long history at Wal-Mart of what Sam Walton used to call ‘cross-pollinization,’ ” Scott said in a statement. “They are good examples of Wal-Mart’s commitment to developing a strong bench, with talent ready to step up and lead this company into the future.”

Wal-Mart has been dogged in recent years by employment-related litigation and criticism, including the claim that the company offers a skimpy benefits package. Chambers’ memo last fall bolstered some of those attacks, admitting that “our critics are correct in some of their observations.”

Scott says Chambers has been instrumental in the retailer’s ongoing efforts to meet the needs of employees with the company’s benefits plan.

“Much of what we’ve done in improving our benefits program, as well as the actions we’ve taken for Wal-Mart to be more proactive on the health care issue in the United States, has happened under her leadership,” Lee says in a statement.

But Wal-Mart Watch, a group critical of the company, labeled Chambers’ promotion “bad news for Wal-Mart employees.”

Among her biggest challenges is facing pressure to change the company’s low-cost approach to compensation, says Jim Walker, a consultant on human resources strategy.

“They’ve been managing people by their own rules for a long time,” Walker says. “The public’s asking them to change.”

Chambers came to Wal-Mart in 1999 and took a benefits management post in 2002. Much of her professional career, though, has been in information technology roles. At Wal-Mart, she served as a vice president of applications development. She also was director of applications development at Hallmark Cards.

Jackson is known as both a hard-driving business manager and a skilled schmoozer. Prior to taking the HR reins at Wal-Mart in 2004, he’d been president and COO at retailer Dollar General.

Procurement is critical to Wal-Mart, and the fact that Jackson is moving to lead that division is a sign that the company believes he succeeded in HR, says Jeff Cohn, managing partner at New York-based consulting firm Bench Strength Advisors. Jackson is likely seen as a rising star within Wal-Mart, Cohn says.

“The grooming is on track,” he says.

Jackson’s experience as a seasoned business leader helped him make the transition into the HR leadership role at Wal-Mart, says Berchelmann at Triangle Performance. Chambers lacks that sort of business background, nor does she have much experience in the field of human resources, he says.

“She doesn’t bring either one to the table,” Berchelmann says. “I think it’s going to be a challenge for her.”

Wal-Mart’s Fogleman, though, characterizes Chambers’ background as broad. And he says that under her leadership in the benefits field, the company has seen greater levels of participation in its open enrollment process. In the company’s most recent open enrollment period, last fall, about 70,000 employees who’d previously waived health coverage signed up for a company plan, Fogleman says. Wal-Mart has more than 1.3 million U.S. employees, and more than 1.7 million employees worldwide.

—Ed Frauenheim