Wal-Mart's (WMT) employee woes -- Can they be fixed?


It's never been any secret that Wal-Mart (NYSE: WMT) has serious problems with employee morale, employee retention, and customer service. A new piece in BusinessWeek sheds some light on just how bad things are at the world's largest retailer, which has been suffering from stagnating same-store sales and a sagging share price.

The most important observation in the piece is this:

The most significant finding is what appears to be an enormous problem with customer service. As the experience with the cashier in Uniondale illustrates, many of Wal-Mart's workers feel outright hostility toward the company, and, by extension, they often treat customers with indifference or worse. That puts Wal-Mart in a box. Without reasonable service, the company is forced to compete almost solely on price. That in turn squeezes margins and makes it difficult to pay employees the better wages and benefits that could boost morale. It's a vicious cycle...

This raises an interesting question: Can Wal-Mart right the ship without taking a big bath? In the past, some have suggested that Wal-Mart take a one year break from attempting to grow earnings to focus on treating its employees better.

Given that better employee morale could be the only way for Wal-Mart to move toward competing on something other than price, that's looking like a really good idea. I somehow doubt it will happen though.

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