Walmart’s Strategy to Cut Workers’ Hours, Demand More Productivity Cost Them Billions
By Tamar Auber, March 30, 2014.
As it turns out, cutting back your workforce’s hours to part-time and forcing unrealistic productivity standards on understaffed stores is not the best business practice. At a recent meeting of Walmart employees, the mega-chain (nearly) admitted that having poorly stocked stores and a strapped workforce cost them $3 billion each year.
During March’s Beginning of the Year meeting, Walmart executives announced “plans to add labor hours as part of an effort to bolster ‘in-store execution’” acknowledging at least in part, that their minimum wage, skeleton crew tactics meant they were missing out on billions of lost revenue due to empty shelves.
Of course, it did not hurt that last month, Wolfe Research, an equities research firm, downgraded Walmart stocks due on on-going labor disputes and chronic empty shelves, no doubt making for unhappy investors.
“Walmart U.S.’s relentless focus on costs does seem to have taken some toll on in-store conditions and stock levels,” the firm pointed out. “[O]ur store visits over the last six months show a repeating pattern of stocking issues in many departments in the store.”
While some poorly stocked shelves can be attributed to an increasingly disgruntled workforce tired of having their hours cut and earning so little they must rely on food stamps, many workers point out that there is just no way to keep inventory on the shelves with so few workers.
“When you have to pick up the slack of people not there, you can’t do the job the right way,”said Richard Reynoso, who stocks shelves at a California Walmart.
He added that chronic understaffing at his store means that he is often forced to work in many departments on any given night and a lack of training and time means stuff gets put on the wrong shelves.
“Some people don’t know where things are supposed to go, so the merchandise ends up getting scrambled everywhere,” he said. “Either that or they don’t have enough time to put it in the real spot.”
It is unclear yet how Walmart plans to roll out their new staffing plan, but one thing is certain-Walmart has announced no plans to raise existing employees salaries which current hover near minimum wage. This means that even if the workers get more hours, most are still likely to earn less than $25,000 a year, making the latest Walmart decision once again far less about workers than it is about their bottom line.
Photo Credit: WT90410