The New York Times reported today on an internal memo written by Wal-Mart’s executive vice president for benefits.
I found quite a difference between the way the Times reported the substance of the memo, and, having read it, the actual contents.
The memo proposes ways to lower Wal-Mart’s total benefits costs by focusing on life insurance, retirement and health care.
In my opinion as a former benefits manager, the memo is a craftsmanly piece of work and does a good job of balancing corporate and employee concerns.
Reading the memo in full, I was impressed by a number of suggestions that made perfect sense to me, like increasing the employees’ share of spousal health insurance benefits. Per the memo, “Spouses are by far the most expensive plan members to cover, and Wal-Mart pays more per spouse than per Associate.”
Let that sink in for a moment: Wal-Mart pays MORE for the health insurance benefits of adults who DON’T EVEN WORK THERE than they do for their own employees. Does that make sense?
Years ago, I decided that the whole philosophy of an employer’s contributing more for family versus single health insurance is inequitable and unjustified from a total compensation (labor cost) perspective.
Throwing out some rough numbers, family medical costs at least $500 month more than one-person coverage. That means that unless the company is contributing a flat amount for all employees, the TOTAL COMPENSATION of an employee who happens to have dependents could be $6,000 higher than an employee who is single, regardless of actual job performance. It makes absolutely no sense.
There are two portions of the memo which the newspaper seems to find controversial: one, a suggestion that Wal-Mart could attract healthier people by including some type of physical exercise in every job and two, that as employees gain tenure at Wal-Mart, their productivity remains flat while their labor costs increase.
I like the first suggestion VERY much. One reason is that the memo does NOT suggest that the company pass judgment on employees’ lifestyles or adopt other intrusive policies, like weigh-ins.
Rather, it recommends something I’ve advocated for years and find very sensible: a kind of internal job-sharing, in which physical labor is made a part of every job. If I were a Wal-Mart cashier, for example, I’d welcome the opportunity to take a break outside, in almost any weather conditions, to collect shopping carts. This hardly seems punitive; if anything, it sounds like a perk to help current employees get more exercise, even more so than a way to exclude the “less healthy” from applying for work.
The second comment, about productivity, is in my mind more subject to challenge: as Wal-Mart staff becomes more experienced, productivity (sales per labor hour per store) fails to increase.
Seems to me this shouldn’t be a big surprise to anyone who’s ever shoppped at Wal-Mart, and it has got to be consistent with the discount retail industry overall: since when is SELLING or UPSELLING part of the job description for ANY employee at a Wal-Mart or a Target (or failed discounters like Zayre and Bradlees)?
In other words, this seems the wrong measure for employee productivity. Wal-Mart employeees don’t sell, they stock shelves, give directions, ring up sales, process returns, serve hotdogs, etc.
So, Wal-Mart should be looking at PROFIT per labor hour per store, or some other metric that’s tied to actual job duties and to efficiencies which employees can actually influence.
Either that, or Wal-Mart should change their business model to include sales training, quotas, and performance bonuses in their Associate’s job descriptions.
Like any other employer in the United States, Wal-Mart is monitoring and reacting to increases in employee benefits costs, especially in the area of health care.
This has been a business concern for at least twenty years and in spite of numerous attempts, no individual business, to my knowledge, even one as large as Wal-Mart, has been able to stop the bleeding.
It seems, unfortunately, that any effective initiative to control health care costs will have to be national, and it will have to be administered by the federal government, heaven help us.
It wouldn’t surprise me if Wal-Mart and other huge companies were lobbying for this very thing. If they aren’t, they should be.
But back to the memo: one is inclined to believe from the way that the Times reported it, the memo confirms Wal-Mart’s reputation for ill treatment of its employees.
Reading the memo itself, though, one comes away with a very different impression.
So, all the smart people are right: believe none of what you hear, and half of what you read, which does put quite a burden on most of us, who are information-overloaded as it is.