Wal-Mart’s World 

  Just how does Wal-Mart, the world’s largest retailer, maintain its corporate culture across all of its4,000 stores? How does this giant promote and preserve its image as a small-town store where thecustomer is king? Part of the answer lies in Wal-Mart’s legendary Saturday Morning Meeting.

The Saturday Meeting started with Wal-Mart founder Sam Walton, who thought it unfair that hecould take off on weekends while his employees worked. So, in 1962, Sam Walton began arriving athis store, in Bentonville, Arkansas, each Saturday between two and three in the morning. There, hewould scrutinize the previous week’s records to determine which merchandise was selling and whichwas not, as well as how sales were faring. When his store’s “associates” arrived, he would hold aquick morning meeting to openly share the store’s information with them. He would also ask for their opinions on matters such as what items he should put on sale and how he should display certainproducts. Such meetings served not only to use the store’s employees in multiple ways but also toconvey to his employees that he valued their input and wanted them to learn the business. Even asWal-Mart grew into a multibillion-dollar company, the Saturday Morning Meeting continued

Though Saturday Morning Meeting topics typically include the company’s financial performance,merchandising and areas of improvement, the meeting is, a means to keep the company and itsemployees as close-knit as possible. Such solidarity is imperative to Wal-Mart’s strategy of quickmarket response. When new ideas or problems surface, managers are comfortable sharing them withothers. Decisions are made quickly, and action is taken. For example, while discussingmerchandising mistakes during a meeting, Paul Busby, regional vice president for Northeastern UnitedStates, was concerned about a particular toy that Wal-Mart was not carrying but its competitor Kmartwas selling for $9.99. “We should really have this product because it’s a much better value thanours.”

In response to Busby’s concern, Scott McCall, the divisional merchandise manager for toys, replied,“I’ll check with our sources and get back to you.” A mere 10 minutes passed before McCall askedfor the microphone and stated, “Paul, I just wanted you to know that I’ve arranged for those Kmartpoker sets to be acquired and be available to all the stores next week.” Examples such this illustratethe trust that Sam Walton had in his staff to make decisions. Instead of going through layers of redtape, Wal-Mart’s managers can have their ideas implemented quickly.

Such quick responses are difficult, if not impossible, for other large companies to execute. Asformer CEO David Glass explains, “The Saturday morning meeting was always a decision makingmeeting to take corrective action, and the rule of thumb was that by Saturday noon we wanted all thecorrections made in the stores”. Glass explains that since no other companies could even come closeto the speed at which Wal-Mart executes strategy and change, Wal-Mart developed and sustains acompetitive advantage. Wal-Marts vast distribution network and purchasing power allow it to moveproducts efficiently and sell them at a low price.

In fact, the Saturday morning meeting is not the only meeting Wal-Mart uses to maintaincompany culture. On Friday there is a merchandising meeting, where regional vice presidents gettogether to discuss what products are selling well. And not all meetings are for managers. Consistentwith Sam Walton’s emphasis on employee involvement, every Wal-Mart store has a fifteen minute shiftchange meeting three times a day. During these meetings, managers go over the store’s performancenumbers as well as ask their associates whether they have specific ideas that might improve sales.Managers send what they think are good ideas up to the regional vice president, who then proposesthe ideas at the Saturday morning meeting. The Wal-Mart greeter was one such idea, which a rankand file employee suggested. The greeter helped to put a friendly face on what might be viewed as alarge, impersonal organization. Such structure helps to ensure that Wal-Mart's upper managers keepin touch with the daily happenings of their business.

One other aspect of Wal-Mart’s culture is its frugality, a characteristic of Sam Walton that hasendured even through Wal-Mart’s tremendous growth and financial success. Walton began his strict

 

focus on keeping costs low early on to gain an advantage over competitors such as Sears and Kmart.Walton was known to make executives sleep eight to a room on company trips. He himself drove amodest old pickup truck and flew coach whenever he traveled. The current CEO, Lee Scott drives aVolkswagen Beetle and has also shared hotel rooms to reduce costs. But the new breed of employees do not appreciate this concept of frugality which is deeply ingrained in Wal-Mart's culture.

Perhaps the biggest obstacle to Wal-Mart is the increased public scrutiny that comes with being theworld’s largest company. In the past, the company had more tolerance for employee mistakes. Itwould strongly reprimand an employee who made an offhand sexist remark, for example, but if theemployee altered his or her behavior, then the company let the employee stay. Today, however, Wal-Mart adheres to a stricter policy. As Mr. Scott explains, Wal-Mart is,” Not mean but less kind. Todaywhen you find somebody doing something wrong, you not only have to let them go, you have todocument it so it is covered and people understand. That is a bit of a culture change. It’s a companythat operates in a different context than when Sam Walton was alive and when David Glass ran thecompany.

Wal-Mart frequently finds itself in the news, though lately in stories that paint the company in anegative light. Controversies over Wal-Marts anti-union position, its hiring and promotion practices(outsourcing the cleaning of its stores to illegal immigrants and working them seven days a week), andits treatment of employees (including accusations of discrimination and underpayment) all make itincreasingly difficult for Wal-Mart to maintain the image of a friendly, affordable retailer that SamWalton had in mind when he founded the company. On this topic Scott says, “Over the last couple of years, I have been spending much of the time talking about all negative publicity we have been getting,not from the stand-point that we hate the press, but by asking our people what we are doing thatallows people to perpetuate these kinds of negative discussions about Wal-Mart”.

If Wal-Mart is to enjoy continued success, it will have to find solutions to the above problems andthe negative publicity those results. Perhaps the company should go back to its Walton roots? Or maybe it should alter its culture and market position to match its growth. For a company that has over 4000 stores operating in the United States, Mexico, Canada, South America, Korea, China andEurope; 1.5 million employees; and over 100,000 different products for sale, sustaining or changingthe company’s culture is a tremendous challenge. Thus far, however Wal-Mart appears to be handlingthe challenge well.

(Case Adapted from the following source : Robbins et al, “Organizational Behavior”, Pearson Education, 2007,12 th edition)