Wal-Mart's New CEO Just Made His Most Radical Move Yet

Wal-Mart's wage hike looks like good business and good branding

Wal-Mart Boosting Wages for 500,000 U.S. Workers

Wal-Mart Stores' Doug McMillon, a home-grown chief executive who got his start as a store employee, has made his most radical change yet at the world's biggest retailer.

He's raising wages for 500,000 employees—both full-time and part-time. They'll get at least $9 an hour starting this April, and at least $10 an hour starting next February. Wal-Mart is also responding to labor critics by telling employees they'll have their schedules at least 2½ weeks in advance, and some workers will get fixed shifts.

Wal-Mart has long been viewed as the Evil Empire of retail, and that image has only deepened in the past several years. There have been reports of stores in disarray and crummy customer service. A fledgling employee union, Our Walmart, has held strikes and demonstrations and kept up a drumbeat of sad tales of workers who fell victim to low pay, irregular hours, and an uncaring bureaucracy. This has all taken a toll on the company's numbers. Prior to a rebound the past two quarters, Wal-Mart's U.S. comparable sales were flat or down for six straight quarters.

The move to raise wages feels like a masterstroke by McMillon. Better-paid employees are better-performing employees, at least in theory. And a big, dramatic announcement like this works toward repairing Wal-Mart's public image.

McMillon joined Wal-Mart in the 1980s as a stock boy, rising through the ranks to become CEO in February 2014. He has shuffled management, increased investments in e-commerce, and emphasized Wal-Mart's small-store strategy. He explains the latest changes to employees in an open letter, striking a down-home, man-of-the-people tone:

"When I’m out in stores today, one thing I hear from associates at all levels is that you want to be freed up and empowered to serve your customers better. You also want to know that there’s opportunity here and that your hard work will be recognized and rewarded. Our business is pretty simple when we boil it all down; sometimes we make it too complicated."

Still, the labor advocates likely won't be satisfied. Our Walmart had called for the company to raise hourly pay to $15. And Wal-Mart itself has said very few of its employees were making minimum wage. It's unclear how much of an increase this actually represents. 

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