Sam Walton: Made In America

by Sam Walton

Our relationship with the associates is a partnership in the truest sense.

Really?

the more you share profits with your associates—whether it’s in salaries or incentives or bonuses or stock discounts—the more profit will accrue to the company.

the way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising.

Nagy—the district manager—took a lot of the department managers out of that store, out of that losing environment, and got them to rubbing shoulders with some of the folks from the successful stores in his district. They had a weekend meeting, and they talked about their departments, and he made these folks participate. Then he had them set their own goals. And maybe while they were having lunch with these winners from the other stores, maybe they started to dream a little and think a little about how they could improve the mess they were in. He and the other managers talked about the numbers with them and began to show them how their jobs and decisions related to those numbers, so they would care about whether their sales were up and not just stand there going through the motions.

Totally what we need to do

I learned this early on in the variety store business: you’ve got to give folks responsibility, you’ve got to trust them, and then you’ve got to check on them.

Another important ingredient that has been in the Wal-Mart partnership from the very beginning has been our very unusual willingness to share most of the numbers of our business with all the associates. It’s the only way they can possibly do their jobs to the best of their abilities—to know what’s going on in their business.

Sharing information and responsibility is a key to any partnership. It makes people feel responsible and involved, and as we’ve gotten bigger we’ve really had to accept sharing a lot of our numbers with the rest of the world as a consequence of sticking by our philosophy.

All of us like praise. So what we try to practice in our company is to look for things to praise. Look for things that are going right. We want to let our folks know when they are doing something outstanding, and let them know they are important to us. You can’t praise something that’s not done well. You can’t be insincere. You have to follow up on things that aren’t done well. There is no substitute for being honest with someone and letting them know they didn’t do a good job. All of us profit from being corrected—if we’re corrected in a positive way. But there’s no better way to keep someone doing things the right way than by letting him or her know how much you appreciate their performance. If you do that one simple thing, human nature will take it from there.

That’s not to suggest that they always like what I have to say. I don’t always solve their problems, and I can’t always side with them just because they bring their situation to my attention. But if the associate happens to be right, it’s important to overrule their manager, or whoever they’re having the problem with because otherwise the open-door policy isn’t any good to anybody. The associates would know pretty soon that it was just something we paid lip service to, but didn’t really believe.

The other thing, of course, is that he has absolutely no tolerance for managers mistreating the associates in the stores. When he finds something like that going on, he gets on us about it instantly.”

We formed a partnership to conduct our business, with one of the most important outcomes being that we started sharing information by computer. P&G could monitor Wal-Mart’s sales and inventory data, and then use that information to make its own production and shipping plans with a great deal more efficiency. We broke new ground by using information technology to manage our business together, instead of just to audit it.”

“A lot of this goes back to what Deming told the Japanese a long time ago: do it right the first time. The natural tendency when you’ve got a problem in a company is to come up with a solution to fix it. Too often, that solution is nothing more than adding another layer. What you should be doing is going to the source of the problem to fix it, and sometimes that requires shooting the culprit.

I don’t have any doubt that Wal-Mart will stay the course and reach $100 billion in sales by the year 2000.

When did they hit $100B?

I do seem to have a couple of dozen things that I’ve singled out at one time or another as the “key” to the whole thing. One I don’t even have on my list is “work hard.” If you don’t know that already, or you’re not willing to do it, you probably won’t be going far enough to need my list anyway.