Wal-Mart’s C-suite Shuffle Continues, CEO Says Worker Pay To Move Above Minimum Wage

Know who is probably busier than Santa’s elves? The office movers at the corporate headquarters of Wal-Mart Stores.

Wal-Mart Stores announced that Judith McKenna will replace Gisel Ruiz as chief operating officer for Walmart U.S. reporting directly to CEO Greg Foran. Ruiz has been reassigned as executive vice president of Wal-Mart’s International People Division.

The moves come as no surprise to analysts given the previous turnover at the top since new CEO Doug McMillion took the helm earlier this year. His choice of Foran to replace Bill Simon as head of the retailer’s flagship U.S. division did come as a surprise and has since fostered the exit of Duncan Mac Naughton, the chief merchandising officer for U.S. stores.

Ruiz worked in tandem with MacNaughton, but it looks as if the U.S. team will now be overseen directly by Foran and McKenna. Both are new the U.S. team after serving in similar roles abroad.

“One of the great things about Wal-Mart is the depth and breadth of talent at all levels of our organization. Around the globe, we have some of the best leaders in retail because of our focus on developing talent and our commitment to creating opportunities for diverse experiences,” Foran said in a statement. “The announcements we’re making today are examples of just that.”

McKenna joined Wal-Mart nearly 20 years ago as part of its Asda (United Kingdom) leadership team where she served as the chief financial officer and chief operating officer. She moved to Walmart International as executive vice president of strategy and international development, and most recently served as chief development officer for Walmart U.S.

She and Foran previously worked together on Wal-Mart’s international stage, but in this new role McKenna will lead a team of 1.3 million employees. The retailer said she will also continue to lead Wal-Mart’s small format stores, development of new formats, expansion of Walmart services and the integration of digital commerce into the retailer’s existing U.S. stores.

“At her core and by experience, Judith is a retailer who has made major contributions to our business throughout her career,” Foran said. “It’s exciting to bring her skills in managing store operations, small format growth, logistics and e-commerce to an expanded role in our U.S. operations. Her knowledge of global best practices and her success in leading our associates around the world will help drive our Walmart U.S. business forward.”

Foran, under the direct instruction of McMillion, has vowed to grow U.S. sales with more attention to underperforming supercenters, expanding fresh categories, adding private label brands where their are niche opportunities and reining in inventories and operational costs where possible.

“McKenna clearly has the experience to hit the ground running as chief operating officer and it’s great to see that Wal-Mart has executed another well-deserved promotion of a female retail leader. The move also underscores the value that Wal-Mart continues to place on international experience and the multi-format focus that is inherent with it,” said Carol Spieckerman, CEO of newmarketbuilders.

“Walmart made a smart move by elevating McKenna. She has proved her loyalty and leadership and stayed ahead of change through multiple transitions, acquisitions and during a time of unprecedented retail change. Greg Foran, Doug McMillon and Judith McKenna exemplify the type of straightforward, bluster-free leadership that Wal-Mart, and all of retail, needs right now. I’m expecting great things,” Spieckerman added.

McKenna and Foran are each experienced merchants and operators by trade and having worked across international platforms will no doubt bring different ideas to the table.

“Wal-Mart knows it needs to make some changes in its U.S. division because the era of the supercenter growth has slowed. These changes require increased flexibility. I think this new blood and leaner management team facilitate Wal-Mart’s experimentation with more formats and new shopping channels,” said Alan Ellstrand, corporate management expert and professor at the University of Arkansas.

He said Wal-Mart’s corporate flowchart is more complicated than most other companies having become somewhat bloated in recent years. Ellstrand gives McMillon a nod of approval in trying to simplify the management tree. Ellstrand also said the recent management promotions could have long-term significance given that McMillion is the youngest CEO to run Wal-Mart since Sam Walton.

Given that McMillon’s directive is to turn the U.S. ship around to higher profits, he’s put together his chosen team for this task. Ellstrand said if this blended international team of U.S. executives is successful in that endeavor there will likely be CEO jobs waiting for them somewhere in the world of retail if they want to move up the career ladder.

PEOPLE DIVISION
McKenna is replacing chief operating officer Gisel Ruiz who helped open 400 new U.S. stores since February 2012. Ruiz was sent back to the retailer’s human resource division retaining her title of executive vice president.

Ruiz began her career out of college in the retailer’s management trainee program. She is daughter of uneducated immigrant parents who were each business entrepreneurs. Before being appointed chief operating officer in early 2012, Ruiz served as executive vice president of Walmart’s U.S.People Division. This time around she will head up the retailer’s international people leadership team reporting directly to international CEO David Cheesewright.

“Gisel is an inspirational leader who has consistently contributed to Wal-Mart’s growth and success throughout her 22 years with the company. Her proven track record and unwavering commitment to our associates make her the perfect choice for this new role,” said Cheesewright.

MINIMUM WAGE DEBATE
Speaking of people, one of the more common complaints against Wal-Mart is that the retail giant owned by the world’s richest family (Sam Walton’s heirs) pays its store workers too little.

Wal-Mart said that of its 1.3 million U.S. workers, roughly 6,000 earn the federal minimum wage. In a recent interview with CBS’s Charlie Rose, Wal-Mart CEO Doug McMillon said he’s going to fix that.

“We’re gonna make some changes in a few months that will create a situation where no Wal-Mart associate in the United States makes federal minimum wage. We’ll be ahead of that with our starting wage,” he said.

Rose asked McMillon if there was a difference between the public perception of Wal-Mart and the reality of Wal-Mart.

“In the world there is a debate over inequity, and sometimes we get caught up in that and retail does in general. But we couldn’t run a good business if we don’t take care of people and have compensation plans that work,” McMillon answered in the interview.