Why Do Large Corporations Like Dollar General Treat Their Baseline Employees Like Disposable Folks?
The answer is both more complex and simpler than one might expect. The treatment of employees within large corporations, particularly those in the retail sector, often reflects a combination of corporate strategy, cultural values, and economic pressures.
Sam Walton's Dilemma at Walmart
A good friend of mine was hired by Walmart a few years back. On the Friday before he started, he found out his wife had terminal cancer. His boss, likely aware of this situation, called to offer him the opportunity for four weeks of paid leave and expedited medical insurance, although he did not have to. Despite this, the company's internal culture under Sam Walton's leadership created a contradictory environment where employees, particularly at the storefront level, were treated as disposable.
Cost Reduction and Overhead
Cost Reduction: In Walmart's early days under Sam Walton, the impact of cost reduction was seen as equal to a 10% increase in revenue to the company's profits. Any activity not directly related to the retail front was considered overhead and subject to potential cuts. Walton himself would often walk around headquarters, expressing frustration with the number of overhead jobs and periodically declaring that 30% of the people in a meeting could be cut.
Annual Layoffs: About once a year, 1/3rd of the people at Walmart headquarters expected termination papers, with roughly half being rehired in other departments within a few weeks. This demonstrates the company's pragmatic approach to maintaining a cost-effective workforce while still retaining some level of loyalty.
Loyalty to Employees: Storefront First, Back Office Last
Loyalty to Storefront Employees: Sam Walton placed extraordinary loyalty on his storefront employees, who were the foundation of his stores' success. These employees, often minimum-wage workers, would be largely responsible for stocking shelves and responding to customers, requiring only "common" knowledge of the products. Storefront operations were not highly technical, and the skill set could be acquired for minimum wage. Moreover, since store traffic was intermittent, part-time workers were often needed, particularly during hours when other businesses were closed.
Employee Benefits: While employees were subject to termination without notice, their benefits included stock options that could make them millionaires. Today, these options are not as valuable because Walmart has reached a growth plateau. However, the company demonstrated its loyalty by using its private jet as an air ambulance to get an employee or their family member to specialized hospitals.
Storefront Versus IT: Plug-and-Play vs. Specialized Skills
Storefront Clerks: Storefront clerks were largely "plug and play" – you could replace 1/3rd of your storefront clerks with any warm body, and the store would still be profitable. However, this contrasted sharply with IT professionals, whose specialized skills and "replacements" were more complex.
IT Department: IT professionals, who charge premium prices due to their specialized skill set, could not simply be replaced. Walmart had to replace them with more network router engineers, ideally specialists in the type of equipment they had. Even after getting these replacements, they had to be taught the company’s particular setup and standards before they became productive.
Once word got out that Walmart made a habit of dumping 1/3rd of its people annually, IT professionals could and did demand premium salaries. This scenario highlights the stark contrast between the treatment of frontline and IT staff, reflecting the broader corporate culture and strategic focus.
Conclusion: A Contrast in Corporate Cultures
Large Corporations: Large corporations like Dollar General and Walmart have complex labor practices that reflect broader economic realities and strategic decisions. While the treatment of frontline employees may appear dubious, these practices are often a result of cost management, changing market dynamics, and the specific needs of different departments.
Understanding the underlying factors can help us better evaluate corporate policies and employee experiences. While some practices may seem exploitative, recognizing the multi-layered nature of corporate decision-making can offer new perspectives on these issues.