Corporate Culture: Inheritance and Change

Walmart is a popular brain game. The central question in this game is: "What would Mr. Sam think?" Now there is a way to ask: Would Sam Walton be happy with today's Wal-Mart culture?

The answer is definitely: yes. Dan Soderquist, Wal-Mart's former senior vice chairman, said, "He's very pleased that the company's culture can be passed on."

The new leadership team, who took over from Walton People business concept. However, they differed from the founders in one very important way: They knew that for Walmart to grow as fast as they wanted, they had to strengthen the organization of the company, something the founders had been vehemently opposed to. The team is as cautious and thrifty as Walton, but they are far more foresighted about Walmart's future, and they also understand that to achieve the growth goals everyone wants, they must build the kind of multi-layered structure that the founders can't stand. company organization. Walton's successor took a proactive approach to growth, recognizing that the company would inevitably have to become more complex and add more functions. This situation takes them out of the founder's management style and business philosophy.

Walton spent his life preventing Wal-Mart from becoming a huge bureaucracy. Bob Martin, who chairs the international division, said Walton firmly believed that executive functions had little value. "He didn't plan to develop these things at all. Sam felt that if there was a human resources department, people in this department would just chat and do nothing. He was worried that the lower-level employees would not find managers if they had problems, and a lot of opinions would flood in. Human resources, and companies will no longer have leaders close to store employees," Martin said. The creation of these functions was driven by David Glass and Soderquis, who succeeded Walton as CEO in 1988. "If we didn't have these functions, the company would grow beyond what the organization could afford. You couldn't grow and make creative or informed decisions about how to stay competitive in this situation."

Redesigning the Organization

Today's leaders worry that as the company's organizational structure grows more complex, it will be more difficult to manage Wal-Mart, which has many stores scattered across a wide area. Glass found that he was separated by five layers of management from the store manager, so he pointed out that managing a retail company the size of Wal-Mart was simply impossible. He told other supervisors not to waste energy. They can't expect to cover everything, they should reduce the complexity and try to manage one store at a time. "How can you possibly manage a retail business with $240 billion in revenue a year? I don't have a clue," Glass said. "But I know how to manage retail stores, and as long as I can keep many stores running smoothly, it can be $240 billion." sales."

Tom Coughlin, president of Walmart and Sam's Club in 2002, also agreed that managing one store at a time was the best strategy, although he acknowledged that the company's organization was too large. , can not be divided into classes. "We try to run the business as small as possible," he said. "But it's really hard to do. I get emails from stores all over the place all day. You have to act like a small business, so I will respond to these emails. However, we have had to keep a number of functions that some see as unnecessary bureaucracy. But we control them fairly well and allow them to grow in moderation."

In Wal-Mart started with only store managers and Walton; later Walton hired several executives to help him manage the store. But by the 1990s, the organizational structure continued to expand, and managers were repeatedly added to cope with the company's continued growth. By 2002, the company had approximately 4,000 store managers reporting to 350 regional managers. Each regional manager manages 6 to 8 stores and reports to 35 regional vice presidents. Each "region" manages 30 to 40 stores and has 8 to 10 regional managers. Regional vice presidents report to six business unit executives who report to Colin, president of Walmart stores in the United States and Sam's Club. The company has 50 senior vice presidents reporting to 20 executive vice presidents. These EVPs report to other EVPs or to the company's CEO, Lee Scott (who succeeded Glass as Walmart's third CEO in January 2000).

Depending on how the system works, store managers, regional managers and regional vice presidents must be in constant close contact. Store managers know what they need or want and have to find a regional manager. They are likely to meet with the regional manager at least once a week, or even more frequently. When a regional manager encounters a problem that cannot be solved by himself, he will turn to the regional director. The latter have three days a week to inspect operations in their jurisdictions, so they can be easily found by regional managers.

Regional VPs typically fly each Monday on one of the company's 20 planes to visit stores and managers across the United States, returning home Thursday for the weekend's wrap-up meeting. Despite the convenience of cell phones, high-speed computers and videoconferencing, Walmart wants senior executives to meet in person at headquarters every week.

As soon as the regional director arrives in the precinct on Monday, he will contact the regional manager to review the operation of each store one by one and decide which problems must be solved. Regional VPs are often the first to spot potential problems, like a bakery department running out of stock, or too many container trucks behind a store, causing traffic jams.

Because of Walmart's size, it had to delegate power to regional vice presidents and regional managers, who also had to make quick decisions. "You can't tolerate people who can't accept this corporate culture," said Lee. "You can't just let a problem exist and not deal with it, it's not good for the store, it's not good for the employees. So regional managers and regional vice presidents have to be actively involved in solving it. Question." The regional vice president returned to headquarters Thursday morning for a meeting hosted by Cowling, while the regional manager sat in on the phone.

Decentralization to promote corporate culture

Walton wants customers to feel valued. He wants to give customers a different experience and find shopping at Walmart more satisfying and more fun than other similar stores. In order to make customers feel that Wal-Mart's people really care about them, the company has worked tirelessly and made it the most important feature of Wal-Mart's corporate culture. This culture also sets Walmart apart from other businesses. This feature is still very prominent and strong in Walmart stores. The store is still called for everyday cheap prices, and the employees still come and go in the store with a smile.

When Glass and other senior leaders took over, they insisted on never changing the culture of a company that had worked so well in the past. They have also been sticking to their principles. But the new management team encountered a fundamental problem as it began to implement the culture: the company was simply too large, too complex, and too fragmented. They really can't follow Walton's personal introspection and direct promotion of corporate culture.

The new leadership team empowers front-line managers to become key communicators of corporate culture. As the number of functional departments at headquarters increased, some of the authority that once belonged to the top leadership was gradually transferred to the supervisors closest to the store, including department managers, regional managers and store managers. However, such a significant decentralization inevitably creates some risks. Lower-level executives may not understand the importance of this new responsibility, they may not know how to implement a corporate culture, and they may feel that their time should be spent on more important things. It becomes more difficult to maintain a consistent corporate culture across the organization. Walton's successor is ready to accept this risk, because it is the only practical way for everyone to divide the labor and provoke the responsibility that Walton alone shouldered and jointly promote the corporate culture.

This power shift seems reasonable. After all, regional vice presidents run multibillion-dollar units, and in the new Walmart, their responsibilities are closest to Walton's original role. They often visit stores, spread corporate culture, and try to gather up-to-date market intelligence -- something Walton used to jot down on a yellow pad.

"A regional vice president has to be a lot more similar to Walton than it was ten to fifteen years ago," said Lisko. "It's impossible for a CEO today to solve all the problems for the company's 1.3 million employees. Problems. If there were so many problems with top management when the company started, you'd have to do it now. You'd have to have 40 or 50 people to deal with those problems.

Many issues that previously had to be dealt with by senior management are now addressed at lower levels. The management team felt that with the company's current situation, there was no other way to deal with these things. Moreover, given Wal-Mart's sheer size, not only must it be delegated to lower-level managers, those managers must also be able to respond quickly and decisively to problems.

Delegating authority to lower-level managers does not mean that the senior management team is relinquishing its responsibility to communicate the company's corporate culture. Glass and Soderquis, and later Lisko and Cowling, remained the main communicators of this culture. However, they mainly spread the message in places where many employees gather, such as the biannual managers' meeting and the annual shareholder meeting.

Three moves to boost culture

The new post-Walton leadership team does play an important role in spreading corporate culture, but they wisely spend their time strengthening the company Instead of trying to spread that culture directly to every employee around the world.

The first, and perhaps most important, driver chosen by the senior management team was employee retention. It's obviously important to Walmart to avoid as much as possible newcomers entering the company and leaving soon. At the very least, if employees come and go, it will be difficult to instill a corporate culture.

In the mid-1990s, Walmart's annual turnover rate of full-time and part-time employees was between 47% and 50%. By the late 1990s, the rate was a staggering 70 percent, 40 percent higher than in previous years. Coleman Peterson, senior vice president of human resources, decided to tackle the problem aggressively and set a goal of halving attrition to 35 percent. He said: "I probably got water in my head to set such a target. It's very difficult to reduce employee turnover by just a little bit, because the labor market is in a serious shortage of supply and the unemployment rate is greatly reduced. This is a labor market, not a capital market. ."

When Peterson investigated the problem of high turnover, he found another serious problem: Nearly half (47%) of people who left after less than a year of service at the company did not do so within 90 days. This leaves the company wasting training costs and increases the cost of recruiting staff. Peterson and his team struggled to find the source of the problem and try to fix it. They went straight to the employees and asked them why they didn't keep doing it at the company. They rely primarily on two methods of feedback: from the company's annual grassroots survey, which collects the thoughts of more than 700,000 employees; and in-depth interviews with 100 employees in various roles.

Some employees noted that hiring standards at their stores have dropped significantly over the past three to five years. As a result, companies are recalibrating selection criteria, developing interview guidelines, and retraining managers to strengthen their interviewing and selection skills. Another finding was that 80 percent of new employee training focused on their first five days in the company. This procedure obviously needs to be revised, because the first few days of the employee entering the new work environment, the most important thing is for them to establish a stable and harmonious relationship with the management, and not to feed them too much technical information.

Peterson changed priorities, made new hire orientation more focused on building relationships, and adjusted learning sequences. The entire training activity is spread evenly over the first ninety days after the newcomer starts work. These efforts have reduced rookie attrition to 25% in some stores, and the company-wide attrition rate for hourly paid employees has dropped from 70% to just under 50%.

The second way to promote corporate culture is to turn lower-level executives into corporate culture agents, so that they understand the essence of the culture and how to spread it to other employees. In the mid-1990s, this became a major task for Cowling. In late 1995, Cowling, newly appointed executive vice president of operations and chief operating officer of Wal-Mart, felt that the practice of presiding over five senior vice presidents in different parts of the company strayed from the requirement of consistency. They disseminated corporate culture information to their subordinates, but the content disseminated by the five people was different.

Cowling searched for a weekend, called the division heads for a series of emergency meetings, insisting that they focus their work on spreading the corporate culture on the five most important principles, which Walton always talks about Five key points: prepare enough inventory, price correctly, show value, collect money, teach them.

Here's Cowling's succinct statement, specifically: The best way to do business is to make sure the product is in sufficient supply; to price it properly; to explain to customers why they should buy the product; to make sure the cashier is Qian Shi is hospitable to customers, so that customers are willing to continue to come. "Teach them" means that the company provides store and area managers with clear guidelines to assist them in training store employees and department managers. This kind of indoctrination takes time, but Cowling is pleased to find that these executives have since developed measures to promote corporate culture based on these five key points.

The third step Walton's successors took to implement the corporate culture was to decide that the organization would continue to be centered around the town of Bentonville. If one were to ask any senior executive at the company, how would it be possible to manage a Walmart company with thousands of stores scattered across the United States and around the world? The answer is surprising: it's simply not possible. However, the executives will go on to explain that they are not managing thousands of stores, they are only managing one store at a time. That's Walmart's secret sauce. Practically speaking, this means that most of Walmart's senior executives live in or near Bentonville, and they have a set weekly schedule: Monday mornings to travel to out-of-town areas to inspect the stores and evaluate them. If you have any questions, go back to Bentonville Town Headquarters over the weekend for Friday and Saturday meetings to report the business situation to your boss. It's not uncommon to have a discussion about a store's problems during these weekend business wrap-up meetings. This is what company executives mean by managing one store at a time.

It's the kind of quick-response market intelligence that makes Walmart famous. Few major U.S. companies can get feedback so quickly from divisions and units as Walmart. Glass and later Li Sige knew very well that at the beginning and end of each week, it was very helpful for the company to have senior executives gather in the headquarters office to conduct business research. This system allows senior management to have a good grasp of which cultural messages should be emphasized and communicated at a certain time.

Original text excerpted with permission from The Wal-Mart Decade: How a New Generation of Leaders Turned Sam Walton's Legacy in to the World's #1 Company by Robert Slater. CITIC Publishing House registered the copyright of the simplified Chinese version in 2003. Translated by Huang Xiuyuan.

The English version of the book is published by Portfolio, a subsidiary of The Penguin Group. Robert Slater is a bestselling author of books such as Jack Welch and GE Way.

Corporate Culture: Inheritance and Change

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