Bob's Gutsy Leadership Blog

Sam Walton Would Be in a Rage!

There are many famous statements made by Sam Walton over the years, and one that gets quoted very often is as follows:

“There is only one boss: the customer.  And he can fire everybody from the chairman on down, simply by spending his money somewhere else.”

In a recent Businessweek article about Walmart titled “What Good are Low Prices If the Shelves are Empty,” it describes all the complaints emerging because customers are finding Wal-Mart out of stock on many of the kinds of products that people buy regularly.  The article cites the core problem as being the fact that “Walmart has been cutting staff since the recession and pallets of merchandise are piling up in its stockrooms as shelves go unfilled” due to inadequate staffing.

It is a fact that in the U.S., Walmart has added 455 stores over the past five years but during that period its total workforce has decreased by 1.4%.  In 2008 there were averagely 343 employees per store and in 2013 that number is down to 301.  Last month, Walmart placed last among department and discount stores in the American Customer Satisfaction Index.

What seems to have taken over at Walmart as the number one priority is financial performance.  Specifically, via tight cost management, 2012 earnings per share increased 11.2%, while revenue increased 5%.  The strong profit performance drove the stock price from $62 per share a year ago to $79 today, a 27% increase.  There is no doubt you can improve profitability, for a while, by cutting cost and ignoring the resulting impact on your business, but that is flawed, short-term thinking.

The job of the leader is to keep the organization focused on the right things, and serving your customer should be right at the top of the list.  Here are the key points from this sad tale about Walmart:

1.) Nail Down Who is Your Customer – You may have a job where those customers are internal to you company, or they may be the people who are buying your products; whatever the case, make it clear to the folks you are leading.

2.)Develop Robust Customer Satisfaction Measures – Make these measures very visible to all the people in your organization and set goals and publish results versus those goals regularly to all of your people.

3.) Take Immediate Action If the Performance is Unsatisfactory – You may need to move some people out, or reorganize, or change certain processes.  Most importantly, show a sincere sense of urgency to consistently excel regarding customer satisfaction.

Another great Sam Walton quote he often used with his people was: “Our goal as a company is to have customer service that is not just the best, but legendary.”  No doubt; Sam would be in a rage today if he read this blog!

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