A Blog by Jonathan Low

 

Aug 11, 2017

Walmart's Is Training Employees To Better Compete With Amazon - But What's the Future?

At least Walmart is trying to train its employees, unlike many US companies which think the cost is too great and shift responsibility to the individual.

Critics argue that what warehouse and retail employees really need is a better wage. JL 

Michael Corkery reports in the New York Times:

60% of retail workers are not proficient in reading and 70% have difficulty working with numbers. Fighting Amazon for sales, Walmart is trying to make its stores more pleasant places to shop. That requires a well-trained work force with a sense of purpose and self-worth. American companies spend $170 billion a year on employee training, but most instruction focuses on workers with college degrees. Since the start of the year, 71,000 jobs have been lost in the retail sector nationwide.
The procession started in toys, marched through electronics, down into grocery and past the registers at the front end.
Fifty-one men and women, dressed in shimmering blue and yellow caps and gowns, walked through the Walmart to receive certificates on a stage set up in the store’s lawn and garden department. A bagpiper, wearing a kilt, led the graduates through the aisles.
For Roy Walts, it was the first time he had ever graduated from anything.
He dropped out of school in the ninth grade after his father died of cancer and his stepmother told him to leave the house. At 15, he lived in a Salvation Army clothing collection box. One Christmas night he ate cookies from a Dumpster.
So as Mr. Walts, 53, crossed the stage that April morning in front of the local mayor; Walmart’s regional manager for upstate New York; and his son, who had worked overnight stocking freezers, he had butterflies in his stomach.
“I thought for sure I would trip walking up on that stage,” recalled Mr. Walts, the automotive department manager.Mr. Walts is a graduate of Walmart Academy, one of the largest employer training programs in the country. Since March 2016, Walmart has put more than 150,000 of its store supervisors and department managers through the training, which, over several weeks, teaches skills like merchandising and how to motivate employees.
An additional 380,000 entry-level workers have taken part in a separate training program called Pathways. Most of these workers receive a $1-an-hour raise for completing the course.
American companies spend about $170 billion a year on formal employee training, but most of that instruction focuses on workers with college degrees.
Walmart has spent $2.7 billion on training and raising wages for 1.2 million of its store workers over the past two years — an investment that reflects the pressures the company faces in the retail industry.
Fighting Amazon for sales, Walmart is trying to make its stores more pleasant places to shop. That requires a well-trained work force with a sense of purpose and self-worth, qualities that can be difficult to nurture in lower-wage workers.
But it’s not clear whether all this training is teaching workers valuable skills that could enable them to move into the middle class, or whether it is mostly making them better Walmart employees.
And even with more skills, many retail workers may never be able to earn what factory workers made in places like Fulton, a faded manufacturing hub near Syracuse.
“It is going to be very hard to replace what we’ve lost,” said Fulton’s mayor, Ronald Woodward. “Retail jobs don’t compare to manufacturing.”
In a study funded by Walmart, researchers at the National Skills Coalition, a nonprofit group that promotes investment in training, found that 60 percent of retail workers are not proficient in reading and 70 percent have difficulty working with numbers.
The Pathways program addresses some of these issues by teaching “retail” math, or basic numerical skills a worker might need at the register or stocking shelves.
The academy is geared to more-experienced supervisors and department managers. Working in classrooms set up in 150 Walmarts around the country, employees learn how to calculate profit and loss statements and how to run their department like a small business.
Managers are also taught to get to know their employees and understand their home life.
Walmart was once considered to be a pariah of rural America, vilified by some — especially people who shopped elsewhere — for wiping out local businesses by selling cheap goods made in China. Now, Walmart is rebranding itself as a company focused on the needs of its workers and the fate of small towns and hardscrabble cities.
In the past year, Walmart has spent about $650,000 running television ads about Walmart Academy, according to Alphonso, a TV data company. It has spent $17.6 million on an ad highlighting the company’s commitment to buy $250 billion in goods made or grown in America. That ad features scenes of factory workers and their families set to the squeals of Aerosmith’s “Dream On.”
The caps and gowns, the symbolism, these are not trivial things,” said Anthony Carnevale, director of the Georgetown University Center on Education and the Workforce.
“They are trying to create this feeling among employees that ‘we are the store.’ They are taking small-town America and putting it into Walmart. Is that a bad thing? No.”
Other researchers say what many Walmart workers need most is not training, but higher wages. The training programs, they say, may be helpful in enhancing employee loyalty and performance, but increasing pay would benefit the workers most.
Two years ago, the company raised its starting wage to $9 an hour, a $1.75 increase from the federal minimum wage.
“If Walmart really wanted to invest in its workers, it would start people at $15 companywide and adequately staff its stores so they can service customers,” said Judy Conti, federal advocacy coordinator for the National Employment Law Project, which lobbies for low-wage workers.
Fulton, a city of about 11,400 people, was once known for producing one very important thing: chocolate.
Specifically, Fulton was home to a factory that made Nestlé Crunch bars. On humid days, before a summer rain, the smell of chocolate wafted through the city.
The company shut the factory and moved operations to Wisconsin in 2003 to consolidate its production facilities and “increase the utilization of assets,” a Nestlé spokeswoman said in an email.
“I think what everyone misses most,” said Geoff Raponi, manager of the Fulton Walmart Supercenter, “is the smell.”
They also miss the jobs — more than 1,500 of them when the factory was booming in the mid-1980s, according to Mayor Woodward. The local Walmart has about 300 employees.
Mac Guile, 24, was not quite 6 years old when the chocolate works closed. He was living with his grandmother, who poured molten chocolate into bars, and his grandfather, who delivered supplies to the factory. They lived in a spacious house across from a McDonald’s, where Mr. Guile was known as the store’s mascot because of his name — Mac — and the fact that he ate breakfast there almost every day.
After Nestlé left town, Mr. Guile moved with his grandparents into a trailer. There were no more daily McDonald’s breakfasts, and often there was little food at all. Mr. Guile and his younger brother took baths with water warmed on the stove.
At 19, Mr. Guile got a job at the Fulton Walmart Supercenter as a part-time janitor, earning $7.50 an hour. He didn’t have enough money to pay for utilities in his apartment for the first few months, so he showered at a relative’s house.
He now runs the meat department, a wall of refrigerated shelves, spanning from chicken thighs to Hofmann’s hot dogs, a Syracuse-area favorite.
He likes meat because of the fast pace and customer demands. He has memorized the internal temperature that pork, chicken and beef need to reach for safety, and recommends a variety of sauces and rubs.
The Walmart Academy classes appealed to Mr. Guile because they were more like discussions than lectures. Instead of being scolded for using their phones, students were encouraged to look things up. He was impressed that the program was held in a real classroom equipped with tablets.
The most useful lesson Mr. Guile learned at the academy was how to motivate his workers. “Have more one-on-one conversations, that is key,” said Mr. Guile, who has a brown beard and a tattoo that proclaims, “It is what it is.”
He now earns about $15 an hour, has a 401(k) retirement account with matching contributions from Walmart, and receives bonuses.
His former supervisor recommended him for the assistant store manager program, which could put him on track to manage a store one day — a job that pays an average of $170,000 a year.
Many of Mr. Guile’s family members also work in the store. His sister works in the deli, his cousin’s mother works at the front end and his girlfriend is a cake decorator in the bakery.
Some of his relatives who don’t work at the store ask him for help. He buys some family members new shoes and clothing for school.
“The whole town can’t work at Walmart,” Mr. Guile said.
When Fulton’s Walmart Academy graduated its first class, the store presented the mayor with a gift. It was a brick pulled from the rubble of the Nestlé factory, which is being demolished 14 years after Nestlé left.
“A piece of Nestle History,” read the inscription on the brick. “Presented this day 25th of April 2017.”
Mr. Woodward, who is serving his third four-year term as mayor, appreciates Walmart’s training program but says it will take more to save his city’s economy.
“Anytime a company offers training, that is good,” Mr. Woodward said. “But they aren’t all going to run the store.”
Mr. Woodward, a former maintenance supervisor at Nestlé who made $89,000 a year, says he was one of the last two workers to leave the plant when it closed. His second-floor office in City Hall is like a time capsule, frozen in Fulton’s glorious industrial past.
There are black-and-white photos of a campaign banner for Theodore Roosevelt hanging over a downtown street, and of a long-gone horse racing track teeming with spectators in suits and bowler hats.
A few years ago, Fulton tried to restart chocolate production. A confectionery company, owned partly by a consortium of cocoa suppliers from Ivory Coast, revived the Nestlé property with help from the state. But the venture failed.
The site’s most recent owner stripped the factory of wiring to sell for scrap and walked away, the mayor said, leaving empty brick buildings behind.
From his office, Mr. Woodward, 68, talks on a flip phone and peers out over his glasses with eyes like an owl’s.
He is busy working to dredge a public lake that is choked by algae and closed to swimming at the height of another summer.
“I love this town,” Mr. Woodward said. “I will do anything to help it.”
That includes showing up one morning at the Walmart to attend the academy graduation.
Mr. Woodward didn’t have the heart to tell the store employees that the Walmart was not technically in his city.
The store lists a Fulton mailing address but is actually in the neighboring town of Granby. That means Fulton misses out on the property tax revenue the store generates.
The retailer does pay Fulton for water and sewage, an average of $11,703 a year, according to the city. But that pales next to the $364,218 the Nestlé plant spent on those services in 2002. The chocolate company was also paying Fulton $166,253 in annual property taxes.
Mr. Woodward appreciates that the supercenter provides steady jobs during a tough economic time. But in his mind, these are not the kind of jobs that earned Fulton the nickname “the largest small city in the state.” In the past few decades, Birds Eye foods and Miller Brewing also closed plants in the Fulton area that once employed hundreds of people.
“You could graduate from high school, work at a place like Nestlé, buy a car and send your kids to college,” Mr. Woodward said.
When the Nestlé plant was roaring in 1985, the average wage in Oswego County, which includes Fulton, was about $51,000. Today, the average pay is 18 percent less, according to the Bureau of Labor Statistics, a federal agency.
Walmart declined to disclose the wages at the Fulton store. But the company said that at its stores in New York State, full-time workers earned an average of $14.10 an hour. Part-time workers make an average of $11.10 an hour.
The company says its training programs are intended to help employees advance into higher-paying jobs at Walmart or in other industries.
“Whether they are coming to us for two years or 20 years, we want them to have the skills that allow them to create opportunities,” said Kathleen McLaughlin, who runs the Walmart Foundation and also holds the title chief sustainability officer.
Walmart has been working with the National Retail Federation, a trade association, to help devise standards for a certificate that retail workers could earn for gaining certain interpersonal skills like how to deal with angry customers. The hope is that certificate holders will have an easier time finding a job or getting promoted.
The challenge is that there are only so many jobs that a retail worker can be promoted to — which means many workers may not be able to move up. Since the start of the year, about 71,000 jobs have been lost in the retail sector nationwide.
Walmart points out that more than a quarter of its 1.2 million store workers are in supervisory and manager positions and that there are frequently openings for managerial jobs.
And Walmart workers who stay in entry-level jobs over many years can earn up to $17 an hour nationwide.
Activists and unions say the starting wage should be higher. But Ms. McLaughlin, who worked for two decades at McKinsey, the global consulting company, said increasing entry-level wages could do more harm than good. If the starting wage is too high, she said, employers will be less likely to hire unskilled, inexperienced workers.
“In contrast to only increasing wages,” Ms. McLaughlin said in an email, “we believe investing in people and developing their skills gives them access to more choice of jobs that reflect their particular talents and passions.”
About a month ago, Ashley VanHorn was stocking shelves in the Fulton store when she overheard two little girls tell their father they wanted to work at Walmart one day.
“You can do better than this,” Ms. VanHorn recalled the man telling them.
Working at Walmart was never part of Ms. VanHorn’s plan, either. She remembers going with her father to register at Cayuga Community College in Fulton. They rode their bikes to the campus because they didn’t have a car.
Ms. VanHorn, 27, described her father as someone “who could build a house with his bare hands” but had faced some financial challenges. He was so insistent on enrolling his daughter in college that he filled out most of the paperwork himself.
Ms. VanHorn wanted to be a social worker, but a few credits shy of getting her degree, she became pregnant and dropped out of college. Soon after, she got a job at Walmart.
“I know I let my dad down,” she said.
She started out in the health and beauty department and eventually moved to grocery, where she now manages dry goods. Her manager says Ms. VanHorn, who earns about $15 an hour, has what it takes to be a salaried assistant manager overseeing several departments and making nearly $20,000 more a year.
But Ms. VanHorn worries that the longer hours as an assistant manager would mean less time with her two children. She also hopes to go back to college someday.
On graduation day, Ms. VanHorn didn’t know what to expect. Like many of the graduates in her Walmart Academy class, she had never taken part in a graduation ceremony because she didn’t finish high school.
As the procession made its way through the aisles and the bagpiper played, Ms. VanHorn spotted her father, sitting on a folding chair in the lawn and garden section.
After the ceremony, he told Ms. VanHorn he was proud of her.
“This was not the dream,” she said. “But the dream does change.”


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