Walmart 1998 Annual Report Download - page 9

ong before “empowerment”
became a corporate buzz-
word, Wal-Mart associates
were empowered, not just
allowed, but encouraged to make
decisions, take risks and, yes, even
make mistakes in the cause of cus-
tomer service.
Who makes the customer
Number One? “Our People Make
the Difference!”
At Wal-Mart, our people make
the difference for each other, too.
“Our division’s mission for our
associates is to ‘Get’ them, ‘Keep’
them and ‘Grow’ them,” said
Coleman Peterson, Senior Vice
President of the People Division.
“Everything we do comes out of
our basic Wal-Mart principle of
‘Respect for the individual.’
“And when we put all that
together, it translates into great ser-
vice to the customer.”
In addition to an industry-lead-
ing array of health and other
benefits, Wal-Mart offers associ-
ates a variety of incentive pro-
grams. Most of these incentives are
based directly on the performance
of an associate’s store or division -
improvement in profits, reduction
in shrink, etc. Virtually all Wal-
Mart associates are eligible for
some type of performance-based
incentive plan.
From an associate’s point of
view, the equation is obvious:
Better service to the customer
means better profits, which means
higher incentives and increased
shareholder value. And yes, Wal-
Mart associates care deeply about
shareholder value, because so
many are shareholders themselves.
Our associates are kept informed
about the stock price, so everyone
understands the connection
between Wal-Mart’s performance
and their own financial success.
Last year, the total company and
every division but one met or
exceeded its maximum profit
improvement goals. As a result, a
record level of payout was award-
ed to associates. We believe there is
a direct correlation between record
incentive award levels and the
company’s record-setting perfor-
mance last year.
Even traditional associate bene-
fits also show the Wal-Mart touch.
They provide the best available ser-
vice at the lowest possible price.
“We have health plans to fit any-
one’s budget,” said Tom Emerick,
Vice President of Benefits. “I’m
proud to say that we have a health
plan, with no lifetime caps. Very few
benefit plans will cover a major
health problem as well as ours.
“And yet, thanks to diligent nego-
tiations with providers and the great
work our associates do in control-
ling costs, our total cost of benefits is
below industry averages.”
Perhaps the biggest benefit
news in fiscal 1998 came when we
rolled out our 401(k) savings plan,
which has been so well received
that we expect it to become the
largest such plan, in number of
participants, in the United States.
The 401(k) plan, which provides
a tax-deferred opportunity to save
for retirement, came about after
associates suggested it in Wal-Mart’s
“Grass Roots” communications pro-
gram. This year, Wal-Mart divided
the company’s annual contribution
equally between the Profit Sharing
and 401(k) plans.
Nowhere is the link between
associates’ interests and the suc-
cess of the shareholders more visi-
ble than in the Profit Sharing pro-
gram, which has 70 percent of its
assets invested in Wal-Mart stock.
“Thanks to the 73 percent increase
in the stock price, the Profit
Sharing plan’s assets increased 57
percent in the last year,” said Chief
Financial Officer John Menzer.
That’s what can happen when
Wal-Mart people, the best in the
retail industry, focus on creating
value for customers, shareholders
and the company as a whole.
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Coleman Peterson (foreground), Senior Vice President, People Division, with the people he serves.
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