The retail landscape has never been more competitive even for the almost half-trillion dollars in sales Wal-Mart Stores will report this year. A difference maker in terms of remaining competitive is ongoing investment in corporate culture, according to Celia Swanson, senior vice president of change management at Wal-Mart.
Swanson, a self-proclaimed culture junkie, shared her insights on the unique corporate culture at Wal-Mart as the keynote speaker at Cross Church Summit Luncheon on Thursday (Sept. 25) in Rogers.
Andy Wilson, a former Wal-Mart executive, said Swanson has been the ambassador for Wal-Mart’s culture during her 20-years at the company working in high profile positions in training and team development in Wal-Mart’s People division.
“She is one that always does the right thing. She lives the culture day in and day out,” Wison said.
Swanson characterized her culture platform as a journey she has traveled for more than two decades noting that it was the Wal-Mart culture that has kept there all these years.
“I came to Wal-Mart with the Pace acquisition in 1994. I was a big city girl who had been competing with Wal-Mart and I didn’t think that I would want to live in Bentonville. Denver was nirvana for me at the time,” she said.
Swanson shared that corporate culture is tied to the bottom line. She quoted from “The Culture Cycle,” by Harvard professor James Heskett, that as much as half of the difference in operating profits between organizations can be attributed to effective corporate culture.
Heskett qualifies that statement saying that engaged managers and employees remain at a company longer and that reduces recruitment and new employee training costs resulting in a higher productivity per employee. He writes that employee continuity leads to better customer relationships and loyalty, which in turn can lower marketing costs and enhance sales.
Swanson shared that one of the first things the new Wal-Mart CEO Doug McMillon did after his promotion was to create a video on the importance of corporate culture. He also made the traditional Saturday morning meeting optional for the first time in the company’s history.
Swanson said McMillon understands the importance of refreshing a rich corporate culture to make it relevant and exciting for today.
“To his credit he made the meeting optional, but then put the pressure on himself to make the meetings so great that everyone would want to attend,” she added.
Swanson said Wal-Mart’s culture, though quirky at times, is grounded in the core principles set by founder Sam Walton which at the rudimentary level is making the customer No. 1, working together to lower prices so people can save money and have a better life. Both ideas were part of Walton’s acceptance speech when he received the Presidential Medal of Freedom by then President George Herbert Walker Bush in 1992, shortly before his death. Walton said the company growth up to that point was attributed to the contributions and ideas from retailer’s 384,000 employees.
Today, at more than 2 million workers across the globe, Wal-Mart continues to refine and and refresh its corporate culture which Swanson said every company should do periodically regardless of its size.
Swanson shared four steps she encourages every company to adopt if they want an enduring corporate culture that promotes profits.
Make sure it’s noble and a culture that instills pride and purpose among the staff who want to be there adding to not trying to change the company’s core mission.
Make sure key officers and managers understand it’s their responsibility to uphold the culture everyday. She said former CEO Mike Duke urged all the management to take a business card and scratch out their title and write in Culture Role Model and place next to their office phone.
Make sure to access progress along the way. Swanson said when she was in charge of Sam’s Club marketing she was under the gun to reconnect the Sam’s Club brand. She said after a rough go of it they found a leader who on the surface turned things around with brilliant results. The problem was that no one wanted to work with this person and the talent exodus began. Swanson said she let it go for two years before removing the person because her eye was on the prize at hand. She noted it was one of the hardest decisions she has had to make as a manager. No matter how great the results might be, they cannot make up for a deterioration in corporate culture and value systems, she said. Swanson added that it took a year for her to rebuild the connection she once had in that division.
The desire to update and refresh corporate culture is perhaps the most important of all four steps because of the distractions in today’s world, she said. One thing she credits CEO Doug McMillon with doing is understanding the difference between culture and traditions. Swanson said the Saturday morning meeting is a tradition that could be tweaked. She said the Wal-Mart cheer is part of the culture, though not an original idea. Swanson said Sam adopted it after he and Helen returned from a trip to Korea and saw a supplier doing a similar cheer. It’s been part of the Wal-Mart culture for decades, though quirky to outsiders.
Swanson concluded her speech by acknowledging that Wal-Mart does not always initially do the right thing.
“We know from media accounts that sometimes it may take a while for Wal-Mart to course correct, but Wal-Mart is committed to doing the right thing,” she concluded.
The biggest “course correct” story remains the ongoing investigation into alleged violations by Wal-Mart executives of the Foreign Corrupt Practices Act.
Several large institutional investors have pursued lawsuits against Wal-Mart executives and board members implicated in the alleged bribery scandal. Information that has become part of the public domain include files released by U.S. Reps. Henry Waxman of California and Elijah Cummings of Maryland. The Congressional tandem found Wal-Mart’s Mexican unit used a state governor in Mexico to facilitate $156,000 in bribes.
The New York Times first reported that Wal-Mart executives were alerted to the alleged bribery in Mexico as early as 2005. The alleged bribes were used to hasten the retailer’s building of new stores and avoid permit hurdles that were holding up some of its competitors. Wal-Mart self-reported alleged FCPA violations in December 2011, which was nearly six years after dated internal executive emails.
Wal-Mart does not comment on pending litigation, but the retailer did release a compliance report earlier this year that stated the company has spent $439 million in legal fees over the past two years to investigate potential violation of the Foreign Corrupt Practice Act.