Wal-Mart Reduces Worker Hours at Some Stores to Lower Expenses

31 Aug 2015 | Author: | No comments yet »

After raising wages, Wal-Mart cuts workers’ hours.

Walmart Stores Inc., in the midst of spending $1 billion (U.S.) to raise employees’ wages and give them extra training, has been cutting the number of hours some of them work in a bid to keep costs in check. Regional executives told store managers at the retailer’s annual holiday planning meeting this month to rein in expenses by cutting worker hours they’ve added beyond those allocated to them based on sales projections.

The request has resulted in some stores trimming hours from their schedules, asking employees to leave shifts early or telling them to take longer lunches, according to more than three dozen employees from around the U.S. A Walmart WMT -0.35% spokesman told Fortune said a small number of stores were “significantly over” on scheduling, meaning they were over-scheduling workers beyond what was needed for the sales those locations were estimated to generate. “The reductions won’t affect efforts to better staff stores, shorten checkout lines, and improve cleanliness and stocking,” Walmart spokesman Kory Lundberg said. The news comes just six months after Walmart’s CEO, Doug McMillon, sent a letter to employees “announcing a series of important changes that demonstrate our commitment to you, our associates.” Walmart promised it would raise its starting wage to $9 an hour, start training programs to advance entry-level workers to higher-paid positions, and stick to fixed weekly schedules for some employees. If the goal is making employees better off overall, it’s useless for companies to increase wages while simultaneously cutting hours for individual workers. Chief executive officer Doug McMillon is trying to balance a desire to improve service—partly through increased spending on his workforce—against investors’ pressure to keep profit growing.

At the time, the company warned that current-year operating profit would be pressured because of the higher wages and investments in training and e-commerce. The reduction in hours is taking place only in locations where managers have overscheduled workers, staffing the store for more time than they’ve been alloted, said Kory Lundberg, a spokesman for Bentonville, Arkansas-based Walmart. Greg Foran, the head of Walmart’s U.S. operations, has said the retailer has dual goals of containing expenses and spending more to improve its stores. “Amid the investment, we’re focused on growing sales and controlling costs, as you would expect from Walmart,” Foran said earlier this month after the company announced disappointing earnings. “We are staying true to our roots. However, we are committed to improving the customer experience and we will protect the investments necessary to achieve this goal.” A Walmart employee at a location near Houston, who asked not to be identified because she didn’t have permission to talk to the media, said her store had to cut more than 200 hours a week.

After being asked to stay late to help with extra work earlier in the week, some were told to take two-hour lunch breaks to make up for the additional hours they’d clocked, the employee said. Some of the chain’s more senior employees have criticized the increase, saying it mostly benefited newer workers and that more experienced staff shouldn’t be making at or near what new hires are paid. By cutting hours, Walmart now risks losing some of its best employees to competitors that can provide more stable schedules, said Burt Flickinger, managing director at Strategic Resource Group LLC. Walmart has made strides during the past year in addressing customers’ complaints of barren shelves, dirty stores and long check-out lines, Flickinger said.

But some locations still aren’t staffed well enough during peak times, he said. “Walmart risks a talent drain at a time when McMillon has made meaningful improvements in the company,” Flickinger said. “All these competitors will take Walmart workers to make themselves strong and help make a major competitor weaker.”

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