فصل 09

9

Building the Partnership

“What you’ve created here is better than communism, better than socialism could ever be, better even than capitalism. I like to call what you’ve got here ‘enlightened consumerism,’ where everybody works together as a team and the customer is finally king again.”

—-PAUL HARVEY, radio commentator and guest at a Wal-Mart year-end meeting

As much as we love to talk about all the elements that have gone into Wal-Mart’s success—merchandising, distribution, technology, market saturation, real estate strategy—the truth is that none of that is the real secret to our unbelievable prosperity. What has carried this company so far so fast is the relationship that we, the managers, have been able to enjoy with our associates. By “associates” we mean those employees out in the stores and in the distribution centers and on the trucks who generally earn an hourly wage for all their hard work. Our relationship with the associates is a partnership in the truest sense. It’s the only reason our company has been able to consistently outperform the competition—and even our own expectations.

Now, I would love to tell you that this partnership was all part of my master plan from the beginning, that as a young man I had some sort of vision of a great retailing company in which all the employees would be awarded a stake in the business. That I saw them having the opportunity to participate in many of the decisions that would determine the profitability of that business. I would love to tell you that from the very beginning we always paid our employees better than anyone else paid theirs, and treated them as equals. I would love to tell you all that, but unfortunately none of it would be true.

In the beginning, I was so chintzy I really didn’t pay my employees very well. The managers were fine. From the time we started branching out into more stores, we always had a partnership with the store managers. Those guys I’ve already told you about, like Willard Walker and Charlie Baum and Charlie Cate, all had a piece of their stores’ profits from the beginning. But we really didn’t do much for the clerks except pay them an hourly wage, and I guess that wage was as little as we could get by with at the time. In fairness to myself, though, that was pretty much the way retail was in those days, especially in the independent variety store part of the business.

CHARLIE BAUM:

“When I took over the store in Fayetteville, which would have been May of 1955, Sam was paying the girls fifty cents an hour. After that first paycheck went out, I thought about it and decided, This is for the birds.’ So the next week I raised them to seventy-five cents an hour, and I got a telephone call from Sam. He said, ‘Charlie, we don’t give raises of a quarter an hour. We give them a nickel an hour.’ But I didn’t cut back. I stayed with the seventy-five cents because those girls were earning it. We were a high-volume store for those days, making pretty good money.”

I don’t remember being that tight, but I guess Charlie’s got it about right. We didn’t pay much. It wasn’t that I was intentionally heartless. I wanted everybody to do well for themselves. It’s just that in my very early days in the business, I was so doggoned competitive, and so determined to do well, that I was blinded to the most basic truth, really the principle that later became the foundation of Wal-Mart’s success. You see, no matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margin. That was true then, and it’s still true today. Back then, though, I was so obsessed with turning in a profit margin of 6 percent or higher that I ignored some of the basic needs of our people, and I feel bad about it.

The larger truth that I failed to see turned out to be another of those paradoxes—like the discounters’ principle of the less you charge, the more you’ll earn. And here it is: the more you share profits with your associates—whether it’s in salaries or incentives or bonuses or stock discounts—the more profit will accrue to the company. Why? Because the way management treats the associates is exactly how the associates will then treat the customers. And if the associates treat the customers well, the customers will return again and again, and that is where the real profit in this business lies, not in trying to drag strangers into your stores for one-time purchases based on splashy sales or expensive advertising. Satisfied, loyal, repeat customers are at the heart of Wal-Mart’s spectacular profit margins, and those customers are loyal to us because our associates treat them better than salespeople in other stores do. So, in the whole Wal-Mart scheme of things, the most important contact ever made is between the associate in the store and the customer.

I didn’t catch on to that idea for quite a while. In fact, the biggest single regret in my whole business career is that we didn’t include our associates in the initial, managers-only profit-sharing plan when we took the company public in 1970. But there was nobody around preaching that philosophy in those days, and I guess I was just too worried about my own debt, and in too big a hurry to get somewhere fast. Today, some of our company’s critics would like everybody to believe we started our profit-sharing program and other benefits merely as a way to stave off union organizing. The traditional version of what happened is that the Retail Clerks Union organized a strike against us when we opened store number 20 in Clinton, Missouri, and another one when we opened store number 25 in Mexico, Missouri, and that in response to those troubles we started all these programs to keep the unions out.

That story is only partly true. We did have labor trouble in those two stores, and we did fight the unions —legally and aboveboard—and we won. In fact, we’ve never lost a union organizing election. But the idea for sharing profits and benefits had come up even before we went public, not from me, but from Helen.

HELEN WALTON:

“We were on a trip, driving someplace, and we were talking about the high salary that Sam was earning, and about all the money and benefits that he was paying the officers of the company in order to keep his top people. He explained that the people in the stores didn’t get any of those benefits, and I think it was the first time I realized how little the company was doing for them. I suggested to him that unless those people were on board, the top people might not last long either. I remember it because he didn’t really appreciate my point of view at that time. Later on, I could tell he was thinking about it, and when he bought it, he really bought it.”

It may be true that our skirmishes with the Retail Clerks and some other unions along the way—construction unions at our building sites, and the Teamsters at our distribution centers—helped hurry along our thinking in this direction. The unions, who don’t seem to like our company much—maybe because they’ve never had any luck organizing us—want everyone to believe they’re the only reason we’ve ever done anything good for any of our associates. The truth is, once we started experimenting with this idea of treating our associates as partners, it didn’t take long to realize the enormous potential it had for improving our business. And it didn’t take the associates long to figure out how much better off they would be as the company did better.

I have always believed strongly that we don’t need unions at Wal-Mart. Theoretically, I understand the argument that unions try to make, that the associates need someone to represent them and so on. But historically, as unions have developed in this country, they have mostly just been divisive. They have put management on one side of the fence, employees on the other, and themselves in the middle as almost a separate business, one that depends on division between the other two camps. And divisiveness, by breaking down direct communication, makes it harder to take care of customers, to be competitive, and to gain market share. The partnership we have at Wal-Mart—which includes profit sharing, incentive bonuses, discount stock purchase plans, and a genuine effort to involve the associates in the business so we can all pull together—works better for both sides than any situation I know of involving unions. I’m not saying we pay better than anybody, though we’re certainly competitive in our industry and in the regions where we’re operating; we have to be if we want to attract and keep good people. But over the long haul, our associates build value for themselves—financially and otherwise—by believing in the company and keeping it headed in the right direction. Together, we have ridden this thing pretty darned far.

On the other hand, let me say this: anytime we have ever had real trouble, or the serious possibility of a union coming into the company, it has been because management has failed, because we have not listened to our associates, or because we have mistreated them.

I think anytime the employees at a company say they need a union, it’s because management has done a lousy job of managing and working with their people. Usually, it’s directly traceable to what’s going on at the line supervisor level—something stupid that some supervisor does, or something good he or she doesn’t do. That was our problem at Clinton and at Mexico. Our managers didn’t listen. They weren’t as open with their folks as they should have been. They didn’t communicate with them, they didn’t share with them, and consequently, we got in trouble.

We fought those situations using pretty traditional methods. We hired a good labor lawyer, John Tate, who has won a lot of organizing battles over the years, and who has since joined our company. His advice helped me become even more determined to change the relationship between management and the associates at Wal-Mart: take care of your people, treat them well, involve them, and you won’t spend all your time and money hiring labor lawyers to fight the unions. Right after those confrontations, John helped us conduct a management seminar down at Tan-Tar-A resort in Missouri, and soon thereafter we launched a program called “We Care” designed to let the associates know that when they had problems, we wanted them to come to management and give us a chance to solve them. Our message became “Sure, we are a nonunion company, but we think we are stronger because of it. And because you are our partner, we have an open door, and we listen to you, and together we can work out our problems.” The union, of course, would argue more along the line of “Hey, we can get you a $3.00-an-hour raise. Why don’t you strike?”

There’s been all sorts of debate over why we chose to call our employees “associates,” and everybody and his brother takes credit for it. I don’t know. Maybe they’re right. But the way I remember it is pretty simple. First of all, in my day, James Cash Penney had called his hourly employees “associates,” and I guess I always had that idea in the back of my head. But the idea to try it at Wal-Mart actually occurred to me on a trip to England.

HELEN WALTON:

“We were on a tennis vacation to England. We were there to see Wimbledon. One day, we were walking down a street in London, and Sam, of course, stopped to look at a store—he always stopped to look in stores wherever we went—anywhere in the world, it didn’t matter. On that same trip, we lost a lot of our things in Italy when thieves broke into the car while he was looking at a big discount store. Anyway, he stopped at this one English retailing company, and I remember him saying, ‘Look at that sign. That is great. That’s what we should do.’ “

It was Lewis Company, J. M. Lewis Partnership. They had a partnership with all their associates listed up on the sign. For some reason that whole idea really excited me: a partnership with all our associates. As soon as we got home, we started calling our store workers “associates” instead of employees. That may not sound like any big deal to some folks, and they’re right. It wouldn’t have meant a thing if we hadn’t taken other actions to make it real, to make it something other than window dressing. The decision we reached around that time, to commit ourselves to giving the associates more equitable treatment in the company, was without a doubt the single smartest move we ever made at Wal-Mart.

In 1971, we took our first big step: we corrected my big error of the year before, and started a profit-sharing plan for all the associates. I guess it’s the move we made that I’m proudest of, for a number of reasons. Profit sharing has pretty much been the carrot that’s kept Wal-Mart headed forward. Every associate of the company who has been with us at least a year, and who works at least 1,000 hours a year, is eligible for it. Using a formula based on profit growth, we contribute a percentage of every eligible associate’s wages to his or her plan, which the associate can take when they leave the company—either in cash or Wal-Mart stock. There’s nothing that unusual about the structure of the plan. It’s the performance I’m so proud of. For the last ten years, the company contributed an average of 6 percent of wages to the plan. Last year, for example, Wal-Mart’s contribution was $125 million. Now, the folks who administer profit sharing—and this includes a committee of associates—have chosen year after year to keep the plan invested mostly in Wal-Mart stock, so the thing has grown beyond belief, collectively, and in the individual accounts of a lot of associates. Today, as I write this, profit sharing has around $1.8 billion in it—equity in the company that belongs to our associate partners.

BOB CLARK, WAL-MART TRUCK DRIVER, BENTONVILLE, ARKANSAS:

“I went to work for Mr. Walton in 1972, when he only had sixteen tractors on the road. The first month, I went to a drivers’ safety meeting, and he always came to those. There were about fifteen of us there, and I’ll never forget, he said, ‘If you’ll just stay with me for twenty years, I guarantee you’ll have $100,000 in profit sharing.’ I thought, ‘Big deal. Bob Clark never will see that kind of money in his life.’ I was worrying about what I was making right then. Well, last time I checked, I had $707,000 in profit sharing, and I see no reason why it won’t go up again. I’ve bought and sold stock over the years, and used it to build on to my home and buy a whole bunch of things. When folks ask me how I like working for Wal-Mart, I tell them I drove for another big company for thirteen years—one they’ve all heard of—and left with $700. Then I tell them about my profit sharing and ask them, ‘How do you think I feel about Wal-Mart?’”

GEORGIA SANDERS, RETIRED HOURLY ASSOCIATE, WAL-MART NO. 12, CLAREMORE, OKLAHOMA:

“I started out in April 1968, and worked as a department head in cameras, electronics, and small appliances. In the beginning, I made $1.65 an hour, minimum wage. In 1989, when I retired, I was making $8.25 an hour. I took $200,000 in profit sharing when I left, and we invested it pretty well, I think. We’ve done a lot of traveling, bought a new car, and we still have more money than we started with. Over the years, I bought and sold some Wal-Mart stock, and it split a lot. I bought my mom a house off some of that money. For me, Wal-Mart was just a great place to work.”

JOYCE MCMURRAY, DISTRICT OFFICE TRAINER AT WAL-MART STORE NO. 54 IN SPRINGDALE, ARKANSAS:

“I live and breathe Wal-Mart. Sam always gives so much to the associates, I want to give as much as I can back in return. I got my fifteen-year pin from him personally. I’ve had the maximum taken out of my check for stock purchases, and I’ve bought some on the outside too. You cannot imagine how my profit sharing has increased. This year my profit sharing amounts to $475,000. I had originally planned to retire this year, take my bundle and bail out. But I’m only forty, and I’ve decided to hang in here for a while. I’m not sure what we’ll do with the money. It’s for retirement, of course. But I think we’ll also buy a piano and maybe someday build our dream house. But I’m keeping this stock a long time.”

JEAN KELLEY, ASSOCIATE IN THE GENERAL OFFICE, WHERE SHE SUPERVISES CARGO CLAIMS:

“I grew up on a farm in Mexico, Missouri, and went to work in store number 25 there when I was twenty years old. When I came to Bentonville, there were nine people in the traffic department, and now there are sixty-one of us. My brother tried to talk me into quitting back in the beginning. He said I could go anywhere other than Wal-Mart and make more an hour. Well, in 1981 I had $8,000 in profit sharing. In 1991, I had $228,000. I told my brother to show me anywhere else I could go and do that, and I would change jobs. If you have faith in this company, it’s amazing how your loyalty pays off. I’m so glad I stuck to it. My money is going to send my daughter, Ashley, to college.”

Those are some of my partners, and we’ve come a long way together. About the same time we started profit sharing, we cranked up a lot of other financial partnership programs. We’ve got an employee stock purchase plan so associates can buy stock through payroll deductions at a discount of 15 percent off market value. Today, more than 80 percent of our associates own Wal-Mart stock, either through profit sharing or on their own, and personally I figure most of the other 20 percent either haven’t qualified for profit sharing yet, or haven’t been with us long enough to catch on. Over the years, we’ve also had a variety of incentive and bonus plans to keep every associate involved in the business as partners.

One of the most successful bonuses has been our shrink incentive plan, which demonstrates the partnership principle as well as any I know beyond just straight profit sharing. As you may know, shrinkage, or unaccounted-for inventory loss—theft, in other words —is one of the biggest enemies of profitability in the retail business. So in 1980, we decided the best way to control the problem was to share with the associates any profitability the company gained by reducing it. If a store holds shrinkage below the company’s goal, every associate in that store gets a bonus that could be as much as $200. This is sort of competitive information, but I can tell you that our shrinkage percentage is about half the industry average. Not only that, it helps our associates feel better about each other, and themselves. Most people don’t enjoy stealing, even the ones who will do it if given the opportunity. And most associates don’t want to think that they’re working alongside anyone who does enjoy stealing. So under a plan like this, where you’re directly rewarded for honesty, there’s a real incentive to keep from ignoring any customers who might want to walk off with something, or, worse, to allow any of your fellow associates to fall into that trap. Everybody working in that store becomes a partner in trying to stop shrinkage, and when they succeed, they—along with the company in which they already hold stock—share in the reward.

It all sounds simple enough. And the theories really are pretty basic. None of this leads to a true partnership unless your managers understand the importance of the associates to the whole process and execute it sincerely. Lip service won’t make a real partnership—not even with profit sharing. Plenty of companies offer some kind of profit sharing but share absolutely no sense of partnership with their employees because they don’t really believe those employees are important, and they don’t work to lead them. These days, the real challenge for managers in a business like ours is to become what we call servant leaders. And when they do, the team—the manager and the associates—can accomplish anything.

Many people have predicted for years that Wal-Mart would lose its way once we got to the tough challenges of real urban environments. Supposedly, our approach just won’t work in neighborhoods with disenfranchised citizens and underprivileged people who have never been winners. The Wal-Mart way can’t reach folks who have been thieves, and who for the most part haven’t felt much pride in their lives. But I want to tell you about a visit I made to a store near Dallas a couple of years ago: store number 880 in Irving, Texas. The store has a very young and very ethnic work force and customer base. And our manager there was doing a terrible job with his people. I think maybe he just said to himself, “Well, they’re young and they’re poor whites and blacks and Mexicans, and they’re just going to steal, and I can’t do anything about it.” So he was not, very definitely not, being a servant leader.

This store was as bad off as any Wal-Mart I’ve ever seen. It had the highest shrinkage of any Wal-Mart ever—around 6 percent, which for us is unheard of. The store was losing more than a half-million dollars a year, and we thought we ought to close it. But we had a real maverick named Ed Nagy, who was then a district manager. Ed’s a fella who’s always stepping on toes or breaking one rule or another. He’s constantly in trouble, and he likes to try new things, and, I have to admit, he reminds me a bit of myself as a youngster. He goes into that store, and he has a talk with the store manager, and he starts training the department heads. And he sets some realistic goals for these folks. And he starts giving them some motivational talks, explaining how we’re different from other companies and they’re really missing out on something by not participating.

Then he finds out that the associates are just stealing rampant throughout the store, and letting the customers steal too because no one has set any controls. No one was checking on the refunds. No one was checking on the layaways. No one was even checking on the cash registers. If you wanted to steal, you knew you wouldn’t get caught. So they started checking on all those things, and they started talking about integrity, and they talked about improving sales. Within a year and a half, this store was turned around completely. The shrink was down to 2 percent. It started turning a profit, and when I went in there to visit I think it was one of the proudest moments I’ve had in forty years of visiting almost two thousand stores. It was just an unbelievable job of an action-oriented, right-thinking motivator stepping in and saving a horrible situation.

Now, why did it work? Well, for one thing, Nagy —the district manager—took a lot of the department managers out of that store, out of that losing environment, and got them to rubbing shoulders with some of the folks from the successful stores in his district. They had a weekend meeting, and they talked about their departments, and he made these folks participate. Then he had them set their own goals. And maybe while they were having lunch with these winners from the other stores, maybe they started to dream a little and think a little about how they could improve the mess they were in. He and the other managers talked about the numbers with them and began to show them how their jobs and decisions related to those numbers, so they would care about whether their sales were up and not just stand there going through the motions. They began to learn a little about merchandising.

But here’s the best part. When they put in their controls to try and stop the stealing, they started checking every empty box that left the back door. Well, one day they found a big box—a baby buggy box—that had $400 worth of tapes in it, and they caught the guy at the door with it. So they had a meeting the next morning, and the manager talked about the woman who discovered the box and caught the thief, and she was a hero. Everybody gave her a big round of applause. The culture was turning around there, in a short period of time. I learned this early on in the variety store business: you’ve got to give folks responsibility, you’ve got to trust them, and then you’ve got to check on them.

It’s true that we have more difficulty in the cities with our approach. We have more trouble coming up with educated people who want to work in our industry, or with people of the right moral character and integrity. Folks in small towns in Iowa and Mississippi are more likely to want to work for what we can pay than folks in Houston or Dallas or St. Louis. And, yes, they’re probably more likely to buy our philosophy in the country than they are in the city. But let me tell you this: a smart, motivational, good manager can work what some outsiders call Wal-Mart magic with folks anywhere. It may take more time. You may have to sift through more people, and you may have to become more skilled with your hiring practices. But I truly believe that people anywhere will eventually respond to the same sorts of motivational techniques we use—if they are treated right and are given the opportunities to be properly trained. If you’re good to people, and fair with them, and demanding of them, they will eventually decide you’re on their side.

And I want to tell you something else: Wal-Mart is not a big success merely because we grew up out here in the country, where people are just naturally friendly and therefore make great retail employees. It’s true that we have many fine associates from the country, but they have had to enter our culture and learn retailing just like anybody else, and we have spent a good deal of time teaching many of them to overcome their natural shyness and learn to speak up and help our customers. So I think some folks outside our company may be putting a little too much emphasis on the supposed low quality of workers in the city, and not enough emphasis on the failure of some managers to do their jobs in getting those workers going in the right direction. Years ago, if we hadn’t done so well, some of these folks might have said you could never build a retailing empire in small-town America because you wouldn’t be able to attract a work force that was sophisticated enough.

Another important ingredient that has been in the Wal-Mart partnership from the very beginning has been our very unusual willingness to share most of the numbers of our business with all the associates. It’s the only way they can possibly do their jobs to the best of their abilities—to know what’s going on in their business. If I was a little slow to pick up on sharing the profits, we were among the first in our industry—and are still way out front of almost everybody—with the idea of empowering our associates by running the business practically as an open book. I’ve always told people in the stores what was going on with the numbers. But after we decided to act like a partnership, we formalized the sharing of information to a much greater degree.

Sharing information and responsibility is a key to any partnership. It makes people feel responsible and involved, and as we’ve gotten bigger we’ve really had to accept sharing a lot of our numbers with the rest of the world as a consequence of sticking by our philosophy. Everything about us gets to the outside. In our individual stores, we show them their store’s profits, their store’s purchases, their store’s sales, and their store’s markdowns. We show them all that on a regular basis, and I’m not talking about just the managers and the assistant managers. We share that information with every associate, every hourly, every part-time employee in the stores. Obviously, some of that information flows to the street. But I just believe the value of sharing it with our associates is much greater than any downside there may be to sharing it with folks on the outside. It doesn’t seem to have hurt us much so far. And, in fact, I’ve been reading lately that what we’ve been doing all along is part of one of the latest big trends in business these days: sharing, rather than hoarding, information.

All I know is that nothing ever makes me feel better than when I visit a store and some department head comes up to me with pride and shows me all her numbers and tells me she’s number five in the company but she plans to be number one next year. I love meeting all these merchants we’ve got on our team out there. When they show me an endcap display they’ve got loaded up with charcoal or baby oil or lunch boxes and then tell me they chose that item because of its high profit margin, and then go on to brag about all the volume they’ve done with that item, I get so proud for them I can hardly stand it. I really mean that. It is just the proudest I get. Because if we, as managers, truly dedicate ourselves to instilling that thrill of merchandising—the thrill of buying and selling something at a profit—into every single one of our associate-partners, nothing can ever stop us.

Bernie marcus, chairman and co-founder, home depot:

“We feel a great affinity for Sam and Wal-Mart because of the way they treat their people. He’s such a great motivator. But the financial incentives have made a big difference too. We modeled our employee stock ownership plan after Sam’s, and it worked for us as well.

“We look at his operation—with what, almost 400,000 people—and you walk in there, and they’re all smiles. He proved that people can be motivated. The mountain is there, but somebody else has already climbed it.

“But if you ask Sam how’s business, he’s never satisfied. He says, ‘Bernie, things are really lousy. Our lines are too long at the cash registers. Our people aren’t being helpful enough. I don’t know what we’re gonna do to get them motivated.’ Then you ask some of these CEOs from other retail organizations who you know are on the verge of going out of business, and they brag and tell you how great everything is. Really putting on airs. Not Sam. He is down to earth and knows who he is.

“Without question, Sam Walton is one of the great all-time merchants. Period.”

Keeping so many people motivated to do the best job possible involves a lot of the different programs and approaches we’ve developed at Wal-Mart over the years, but none of them would work at all without one simple thing that puts it all together: appreciation. All of us like praise. So what we try to practice in our company is to look for things to praise. Look for things that are going right. We want to let our folks know when they are doing something outstanding, and let them know they are important to us.

You can’t praise something that’s not done well. You can’t be insincere. You have to follow up on things that aren’t done well. There is no substitute for being honest with someone and letting them know they didn’t do a good job. All of us profit from being corrected—if we’re corrected in a positive way. But there’s no better way to keep someone doing things the right way than by letting him or her know how much you appreciate their performance. If you do that one simple thing, human nature will take it from there.

ANDY SIMS, MANAGER, WAL-MART NO. 1, ROGERS, ARKANSAS:

“When I started working at Wal-Mart in West Texas, we would anticipate a store visit by the chairman with the same sense you get when you’re going to meet a great athlete, or a movie star, or a head of state. But once he comes in the store, that feeling of awe is overcome by a sort of kinship. He is a master at erasing that ‘larger-than-life’ feeling that people have for him. How many heads of state always start the conversation by wanting to know what you think? What’s on your mind?

“After a visit, everyone in the store has no doubt that he genuinely appreciates our contributions, no matter how insignificant. Every associate feels like he or she does make a difference. It’s almost like having your oldest friend come just to see if you’re okay. He never lets us down.”

There is one more aspect to a true partnership that’s worth mentioning: executives who hold themselves aloof from their associates, who won’t listen to their associates when they have a problem, can never be true partners with them. Often, this is an exhausting and sometimes frustrating part of the management process, but folks who stand on their feet all day stocking shelves or pushing carts of merchandise out of the back room get exhausted and frustrated too, and occasionally they dwell on problems that they just can’t let go of until they’ve shared it with somebody who they feel is in a position to find a solution. So, as big as we are, we have really tried to maintain an open-door policy at Wal-Mart.

DAVID GLASS:

“If you’ve ever spent any time around Wal-Mart, you may have noticed that it’s not unusual for somebody in Philadelphia, Mississippi, to get in his pickup on the spur of the moment and drive to Bentonville, where you can find him sitting in the lobby waiting patiently to see the chairman. Now, really, how many chairmen of $50 billion companies do you know who are totally, 100 percent accessible to their hourly associates? I know lots of people in big companies who have never even seen their chairman, much less visited with him.”

That’s not to suggest that they always like what I have to say. I don’t always solve their problems, and I can’t always side with them just because they bring their situation to my attention. But if the associate happens to be right, it’s important to overrule their manager, or whoever they’re having the problem with because otherwise the open-door policy isn’t any good to anybody. The associates would know pretty soon that it was just something we paid lip service to, but didn’t really believe. If I’m going to fly around all over the country telling these folks they’re my partners, I sure owe it to them to at least hear them out when they’re upset about something.

DEAN SANDERS, EXECUTIVE VICE PRESIDENT OPERATIONS, WAL-MART:

“I’ve always felt that to Sam, the people in the stores—the managers and the associates—are the kings. He loves them. And there’s no doubt they feel they have an open door to him. He’ll go out on store visits, and when he gets back he’ll call me and say, ‘Give this boy a store to manage. He’s ready.’ Then I’ll express some concern about the person’s experience level or whatever, and he’ll say, ‘Give him one anyway. Let’s see how he does.’ The other thing, of course, is that he has absolutely no tolerance for managers mistreating the associates in the stores. When he finds something like that going on, he gets on us about it instantly.”

So you see, when we say Wal-Mart is a partnership, we really believe it. Partnership involves money—which is crucial to any business relationship—but it also involves basic human considerations, such as respect. Wal-Mart is a spectacular example of what happens when 400,000 people come together as a group, with a real feeling of partnership, and are able, for the most part, to put the needs of their individual egos behind the needs of their team.