Walmart and Network Theory
This piece discusses the causes and effects of Walmart’s recent initiative to increase employee wages and strengthen its training methods. After noticing low worker productivity, a startling 16% store satisfaction rate, receiving complaints from investors, and dealing with worries surrounding retail competitors, America’s largest employer reevaluated and remodeled its ineffective policies. The average non-managerial employee now earns a little over $13, a 16% increase since 2014. Customer service satisfaction rates have reached around 75% and in-store spending has also increased amongst Walmart’s own employees.
While reading this article, I was reminded of our lessons on auctions. You could imagine this as a first-price bid auction, where the potential employee is the seller (selling labor), and corporations/employers are the buyers (buying labor). The employee receives the bids and chooses the highest value and goes from there. Market clearing prices could be the higher costs of better trained, harder-working, more experienced and efficient workers. As Walmart becomes more aware of the downfalls that come with mistreating and underpaying employees, and raises the bar (or essentially, increases its bid and stays in the game even after applications of market clearing prices), the quality of their service improved. As noted in the article, a Walmart manager states that after the higher wages and benefits, “[Walmart is] attracting a different type of associate — people coming in who want a career instead of a job.”
The article also reminded me of power in networks, and network exchange — specifically the concept that claims that power is determined by your outside options and how powerful your competitors are. While Walmart may have possessed greater influence in past years, the growing popularity of online shopping has created a hugely competitive force out of businesses like Amazon.com. In a hypothetical network, new nodes have been added with the growth of technology and the rise in internet purchasing. As these nodes grow stronger, the Walmart node grows weaker.
The author states that “prime working-age Americans are staying out of the workforce in droves. This implies that plenty of people don’t see jobs out there that offer sufficient pay or opportunity to make the jobs worth doing.” This observation reminded me of the lesson we learned in class that suggested humans will choose nothing over a little bit of something that makes them feel exploited. Corporations like Walmart must begin strategizing about what types of basic necessities, benefits, and appealing perks they must offer in order to make joining the workforce a desirable option for Americans.