Despite Ruling, Wal-Mart Still Has Labor Issues

Wal-Mart was quick to declare victory with last week's Supreme Court decision not to allow a class-action gender-discrimination lawsuit against the retailer to proceed. (See story Wal-Mart Wins Gender-Suit Fight.)

Despite the end of that 10-year battle, however, Wal-Mart has a long fight ahead in its war to improve its employment practices, from top to bottom.

Notwithstanding the challenges of avoiding more employment lawsuits — and settling the individual lawsuits that could still proceed after the gender class-action was denied — Wal-Mart also faces ongoing challenges recruiting talent in its executive ranks, observers say.

“There's a lot more to the recruiting process than carrying the title of the largest retailer in the world, especially when they are going after top performers like they are,” noted Jose Tamez, managing director in the Denver office of executive search firm Austin-Michael.

Tamez noted that while the Bentonville, Ark.-based retailer has strengthened its corporate human resources and recruiting efforts, especially in the past five years or so, it still lacks some finesse in that area, and often comes off as cold and distant to its potential recruits. In addition, some new hires find the culture at the world's largest retailer stifling, he said — especially when they come from more entrepreneurial firms or companies driven by creativity. (See story Wal-Mart Faces Recruiting Challenges.)

“They have a limited amount of plays in their playbook, and as long as it continues to keep costs down, and move the needle at retail, they keep running those same plays,” Tamez explained.

For many people, of course, Wal-Mart remains an attractive place to work, and relocating to Bentonville is not as much of a hindrance to recruiting as it once was, Tamez pointed out.

In addition, the company offers attractive stock options and grants that serve as an effective tool for retention.

“It makes it difficult to leave, because employees would leave a lot of money on the table if they go somewhere else,” Tamez said.

In recent years Wal-Mart has demonstrated its ability to attract top food-industry executives to its leadership ranks, including Brian Cornell, the former head of marketing at Safeway who is now the chief executive officer at Sam's Club; Duncan Mac Naughton, the former head of marketing and merchandising at Supervalu who is now chief merchandising officer at Walmart U.S.; and Stephen Quinn, the former Frito-Lay executive who is now chief marketing officer at Wal-Mart Stores.

Still, Wal-Mart's reputation as a massive, emotionless machine should provide some guidance for traditional supermarket retailers and CPG companies seeking to recruit and retain their best people against Wal-Mart's efforts.

Many supermarket companies already have the edge over Wal-Mart at the store level in recruiting by dint of their more attractive salaries and benefits. They can maintain an edge at the corporate level as well by doing a better job than Wal-Mart at developing close relationships with potential recruits, and emphasizing the opportunities for more creative thinking and entrepreneurial-style management.