Sam Walton, [CEO of Wal-Mart] whips out his primary tool of empowerment his tape recorder. I’m here in Memphis at store 950, and George has done a real fine thing with, this end cap display of Equate Baby Oil. I’d like to try this everywhere. George blushes with pride.
A manager rushes up with an associate in tow.
Mr. Walton. I want you to meet Renee. She runs one of the top ten pet departments in the country.
Well, Renee bless your heart. What percentage of the store (sales) are you doing?
Last year it was 3.1 percent. Renee says, but this year I’m trying for 3.3 percent.
This situation as recalled by Fortune reporter John Huey, typifies the management style of Sam Walton, founder of and inspiration behind Wal-Mart. For many years, such situations were commonplace as Walton and his tape recorder visited stores around the country. Until the organization became too big, he visited every Wal-Mart store at least once a year.
Right now there are probably about 30 stores I’ve never been to and a launch of others I haven’t seen in more than a little while, said Walton in the fall of 1991. I’ve got to get to ‘em soon”. From one store in 1962, he developed his organization into a $40 billion enterprise by the time of his death 30 years later. Walton never lost the personal touch. He was adored by his employees and took every step necessary including buying airplanes for the Wal-Mart air force claimed were responsible for his company’s success.
Visiting stores was as important to Walton as it was to the workers who received a personal connection to management. This is still the most important thing I do going to the stores, and I’d rather do it than anything I know of I know I’m helping our folks when I get out to the stores. I learn a lot about who’s doing good things in the office and I also see things that need fixing and I help fix them. Any good management person in retail has got to do what I do in order to keep his finger on what’s gong on. You’ve got to have the right chemistry and the right attitude on the part of the folks who deal with the customers.
Walton’s tape recorder – his ‘tool of empowerment’ – was a constant reminder that Walton and Wal-Mart cared and listened. His taping of impromptu conversations with people at various stores not only served to refresh Walton’s recollection later and remind him of things that needed to be done, but also immediately demonstrated that he was listening to what his colleagues had to say. Perhaps most important about these taped conversations, however, is that he later acted upon what he found out. If employees expressed dissatisfaction with their supervisors, Walton would often good naturedly assure them, Don’t worry, I’ll kick his butt. In addition, Walton treated people with respect to start with workers are called “associates” not employees. This indicates that these men and women have a substantial stake in the company.
What sets us apart is that we train people to be merchants said Walton. We let them see all the numbers so they know exactly how they’re doing within the store ad within the company; they know their costs their mark up, their overhead mad their profit It’s big responsibility and a big opportunity. You give a pet department to someone like Renee and she gets at it. She learns that what’s important is buying stuff four gross at a time and then selling four gross. Nobody gets anything out of just standing there going through the motions.
Walton realized that all the cheerleading in the world could not feed an associate’s family; therefore he included financial incentives to keep associates happy. Profit-sharing incentive bonus, and stock purchase plans liked associates to Wal-Mart’s financial success. I know your backs are sore, and your feet hurt, but this is one of the very best Wal-Mart stores in the US and no other stores have this much fun. Has sharing the profits with you made the difference? [A deafening YES! Here] A lot of companies would have shared them with the stockholders but as you know we don’t pay much dividend.
Walton will always be remembered for the level of motivation to be achieved from his Wal-Mart workforce. Indeed Wal-Mart stands as a model that many strive to emulate. Because of what he has done virtually every consumer in this country is better off, said retail analysts Kurt Barnard. Giant corporations in the world of industry send their key executives to Bentonville, Arkansas outlearn how it is done.