Wal-Mart to Cut Management Role to Simplify Store Operations

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Wal-Mart is raising wages this month, aiming to retain workers in an increasingly tight labor market. Half a million of its employees will see a bump in pay, with hourly rates going to $9 an hour now and $10 by next year. Photographer: Patrick T. Fallon/Bloomberg

Wal-Mart Stores Inc. is eliminating a layer of in-store management, part of efforts to simplify operations at the world’s largest retailer.

The company will cut the role of zone manager and transfer the duties to other managers, Wal-Mart spokesman Kory Lundberg said. The change, affecting about 14,000 employees, is meant to reduce bureaucracy and put more power in the hands of people running Wal-Mart’s 4,500 U.S. stores. The company began notifying employees of the decision this month, Lundberg said.

Until now, employees in zone-manager positions -- generally about six workers per store -- had responsibility over several departments. One of them, for instance, might oversee the pharmacy, health and beauty-product sections. In recent years, Wal-Mart has had zone managers in addition to individual department managers.

Greg Foran, Wal-Mart’s U.S. chief executive officer, has been working to improve customer service at stores. “How stores serve customers in a simple, repeatable and sustainable way” was among the priorities he outlined in a recent meeting of U.S. executives, according to an internal document.

“We’ve recently undertaken some important activities to simplify our organization and empower our stores, our associates in our stores to make decisions,” Foran told analysts on a conference call earlier this month.

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Former zone managers will move to salaried assistant manager or department manager roles, and their pay won’t be decreased, Lundberg said. After those shifts, the company still will need to hire up to 8,000 new department managers, Lundberg said.

Department managers better “understand what customers are buying,” Lundberg said. “We think this is going to be something that allows them to focus on customers more.”

The Bentonville, Arkansas-based company is expected to complete the changes by mid-June.

The retailer is undergoing a costly turnaround plan under CEO Doug McMillon, who took the reins more than a year ago. As part of the shake-up, Wal-Mart is raising wages this month, aiming to retain workers in an increasingly tight labor market. About 500,000 of its 1.3 million employees are getting a bump in pay, with hourly rates going to $9 an hour now and $10 by next year.

In an open letter to employees in February, McMillon said that the company would be “strengthening our department manager roles” and would raise the starting wage for some of those jobs to at least $13 an hour this summer and at least $15 an hour early next year.

Plumbing Controversy

Even as it hands out raises this month, the company irked workers with the temporary shutdown of a store in Pico Rivera, California. Wal-Mart blamed plumbing problems for the abrupt move, which was decried by labor activists. The location was one of five stores closed for that reason.

“Due to ongoing plumbing issues that will likely require extensive repairs, we are temporarily closing the store,” Wal-Mart said in a memo to affected employees in Pico Rivera. The problems stemmed from clogs and water leaks, which “impact the availability of water and create drainage issues for critical areas of the store.”

Activists at the labor-backed group Organization United for Respect at Walmart said the shutdowns were “retaliatory.” The Pico Rivera store, located near Los Angeles, was a focal point for union organizing, they said.

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