Wal-Mart ties executive bonuses to success of diversity program

Retail giant also turning to technology to improve working conditions for hourly employees

Wal-Mart executives could feel a pinch in their wallets if the company doesn’t meet its diversity goals.

Lee Scott, Wal-Mart’s president and chief executive officer, said the retail giant will slash bonuses for top executives by 7.5 per cent this year, and 15 per cent next year, if the company doesn’t meet the goals.

“Our goal is to make sure that the percentage of qualified minorities and women we promote is equal to the percentage who apply,” Scott told shareholders.

For example, if 50 per cent of the qualified applicants for assistant store manager jobs are women, then 50 per cent of the promotions should actually go to women, he said.

He said the company has strengthened diversity training programs for managers and supervisors, working with J. Howard and Associates to design comprehensive education modules on diversity and inclusion.

“To ensure accountability for these diversity initiatives, Wal-Mart has modified the compensation program for all officer-level management, starting with me and my own compensation,” Scott said. “If we do not meet our individual diversity goals for the year, our incentive compensation will be reduced.”

Scott also said the company will live up to commitments it made last year to be a leader in employment practices. At last year’s shareholder meeting, Scott said that “with 1.3 million associates, and plans to create many more new jobs, it is our responsibility to make sure we offer an attractive place to work and continue to focus on fairness and equal access to pay and promotion.”

In addition to diversity, the company is also focusing on the following areas:

Pay and working hours

Wal-Mart has established a “corporate compliance” team in the U.S. to oversee the company’s compliance in a number of areas, including its obligations to employees in terms of pay, working hours and time for breaks.

One way of doing this is through technology, and Scott said the company is currently piloting three changes to the company systems:

•An alert will now be sent to remind cashiers that it is time for their meal break. Cash registers will automatically shut down if the cashier does not respond to the alert.

•Associates will be notified any time a manager adjusts the amount of time put on their time records. For example, sometimes employees forget to clock in or clock out and adjustments are made. Regardless of the reason, the change is communicated to the employee and the employee has to verify the change is correct.

•New scheduling software will help ensure managers comply with the unique work hour requirements of individual states. For example, if a state does not allow minors to work later than 10 p.m., the system will not schedule them past 9:30 p.m. In-school times and maximum hours per week considerations are also included.

New job classification and pay structure

In June, Wal-Mart is implementing a new job classification and pay structure for all hourly employees in the U.S.

Scott said this would help the company maintain internal equity and external competitiveness. As a result, some hourly staff will receive a wage increase and no pay cuts are planned.

Scott also said Wal-Mart will maintain its current practice of not capping pay for individual positions, meaning employees can continue to receive annual wage increases.

Earlier in the year, Wal-Mart hired the Hay Group, an HR consulting firm, to analyze all positions and establish job-related criteria for determining pay and promotions. Each hourly position was evaluated, based on criteria such as the required level of knowledge, problem solving and accountability. Wal-Mart said it also reviewed local and national market analyses to ensure its pay and practices were competitive when compared to similar retail positions.

Career path

Later this year the company will introduce a “Career Preference System” to help employees indicate their interest in specific management jobs and geographic locations. If they are qualified for the position, associates will be notified automatically when one becomes available.

For example, Wal-Mart said an employee in Dallas could register an interest in assistant manager jobs in Seattle or Denver and then be notified when these jobs become available.

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