Wal-Mart Stores Inc is hoping its decision to boost workers’ paychecks will help it boost its bottom line.
The largest private employer in the US announced on Thursday that would give a raise to about half a million US workers as part of a US$1 billion investment that includes changes that Wal-Mart says are aimed at giving workers more opportunities for advancement and more consistent schedules.
The changes come as the company has faced increased pressure to pay its hourly employees more. Wal-Mart, which has been criticized for its messy stores and poor customer service, says it is also focusing on recruiting and retaining better workers so that it can improve its business.
The company has struggled with disappointing sales for most of the past two years, even though it posted better-than-expected results during the most recent holiday season. Wal-Mart hopes that taking better care of its workers will lead to better-run stores, more satisfied customers and an increase in sales and profits.
“What’s driving us is we want to create a great store experience for customers and do that by investing in our own people,” Wal-Mart CEO Doug McMillon said in an interview two days ahead of the wage announcement at the company’s headquarters in Bentonville, Arkansas. “A better store experience results in happier customers, resulting in stronger sales.”
The company had previously cut back on staffing in stores two years ago in an effort to be more efficient, but the moves have backfired. Morale among workers was low at stores, employees were not able to quickly restock items on shelves and shoppers came to expect unkempt stores.
Wal-Mart’s US business, which accounts for 60 percent of its net sales of US$482 billion, had declines or no growth for the past eight quarters, and an annual survey by the American Customer Satisfaction Index, which polled 70,000 customers, found that Wal-Mart’s customer satisfaction fell to the lowest level since 2007.
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