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Walmart Rebounds By Paying, Training More

Saturday, October 15, 2016

A few years ago, mega retailer Walmart was facing a serious image problem. Shoppers were sick of dirty bathrooms, unstocked shelves, ambivalent employees, and mile-long checkout lines. This dissatisfaction wasn't just qualitative, either. Sales at stores that had been open for at least a year fell for five straight quarters, and the company's revenue fell for the first time in its 45-year run as a public company. To solve the problem, Walmart executives came up with an idea that would test well-established economic theory and long-standing beliefs: What if paying workers more, training them better, and offering more opportunity for advancement would make a company more profitable, rather than less? The thinking is that if employers pay their employees more and devote more resources to them, they will, in turn, be more loyal, hard working, and productive. As a result, customer surveys have improved, rising for 90 consecutive weeks, and sales have once again rebounded. Although national profits took a bit of a dip reflecting the higher labor costs, at the store level, managers are seeing an increase in the quality of the employees they are able to hire. "We're attracting a different type of associate," said Tina Budnaitis, a Walmart manager. “We get more people coming in who want a career instead of a job.”

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