Wal-Mart Stimulus Package
Sometimes the world seems simple.
Last week, Walmart said it would cut a check for $2 billion payable to its hourly wage employees. How’s that for a stimulus package?
As reported by Andria Cheng at MarketWatch, the Walmart incentive plan will comprise more than $900 million in bonus payments – about double the prior-year amount – plus a bundle of 401(k) benefits and discounts on merchandise.
Remind anyone of Henry Ford?
Here’s a tip from Wikipedia:
Ford astonished the world in 1914 by offering a $5 per day wage, which more than doubled the rate of most of his workers. (Using the Consumer Price Index, this was equivalent to $106 per day in 2008 dollars.) The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing in their human capital and expertise, raising productivity, and lowering training costs. Ford called it "wage motive."
Henry Ford, an industrial titan, had more than his share of character flaws. But as a competitive advantage, he was determined to build a stronger, long-term workforce. He wanted his employees to be productive and loyal, but also capable of raising the level of economic stability in their households and beyond. Seems to have worked pretty well for Ford Motor Co. With their higher wages, many of those workers were better able to afford to buy themselves Model T Fords.
Meanwhile at Wal-Mart, ceo Mike Duke is probably enjoying his role as a contrarian. Everywhere businesses are cutting back, slashing headcounts, freezing pay and reducing benefits – and here’s the supposed low-cost leader, throwing fresh money at employees!
No doubt there is political calculation in this action. There certainly is competitive calculation. But that’s the job of the board of directors and the executive officers of any company, frankly.
Well, the board and execs of the biggest retailer in this case deserve a tip of the hat.
And a honk from an old Model T.
Furniture Packs Spain commented:
There certainly is competitive calculation. But that’s the job of the board of directors and the executive officers of any company, frankly.
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