Walmart is shaking up its approach to reviews and raises for frontline hourly workers at its US stores.
The retail giant is moving to a new performance-based plan that accounts for factors like attendance, teamwork, and overall store performance, EVP of store operations Cedric Clark said in a memo to managers last week that was shared with Business Insider.
The new approach marks a shift from the across-the-board raises that were based on years of service with the company, which Clark said rewarded loyalty but not other individual factors.
“It’s about recognition, accountability, and growth,” Clark wrote. “Associates asked for more control over their earnings, more recognition for great work, and clearer expectations.”
Walmart is the largest private employer in the US, with a workforce of about 1.6 million and 4,600 stores. More than half a million of those people are in non-supervisory hourly roles, making this one of the largest-scale changes for worker pay in the country.
The changes also come as companies across the economy increasingly emphasize worker performance and efficiency, and workers look for a stronger sense of loyalty from employers, in addition to a paycheck.
Here’s how Walmart’s new plan works
Years of service are still the most significant factor in determining raises, but now worker and store performance can nudge that number up or down by as much as one percentage point, according to additional internal documents obtained by Business Insider.
Workers who joined in the last six months are eligible for a 1% baseline raise, while those who have been at the company for five years see a baseline of 2%, followed by 2.5% for up to 10 years. Workers with 10 or more years of service have a baseline raise of 4%, the documents said.
From there, three factors are equally weighted to account for an employee’s attendance and completion of scheduled shifts, their behavioral contributions to the team, and the overall store performance in both sales and customer satisfaction ratings.
In each of these three areas, employees receive a rating of “exemplary,” “successful,” or “opportunity,” and a new dashboard shows how they are tracking in real time. An employee who scores the highest rating — exemplary — in all three factors would receive the highest performance-related adjustment of one percentage point, according to a chart included in the documents.
Walmart estimated in its guidance to managers that about one in 20 employees in a typical store would likely get the lowest teamwork rating, “opportunity,” two would likely be “exemplary,” and most would default to “successful.” A spokesperson said the system does not have any quotas or caps for each rating.
The spokesperson also said the final raise percentage only affects employees’ base pay, not any bonuses or other compensation.
Walmart said the system is now fully active and will gather data for the fiscal year from November 1 until January 20, after which raises will be calculated for the following year.
Clark’s memo also says the new structure enables team leaders and coaches to provide clearer feedback to workers. For workers, this means their pay will now be linked more closely to their day-to-day performance.
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