Chief executive officers (CEOs) are among the most important members of any business organization. CEOs plan and direct company policies to make a company more profitable for its shareholders. Their personality traits can directly influence the potential of the business, and affect how people working for the CEO interact with him/her to complete their jobs. Indeed, the leadership attributes of those at the top set the business culture that is projected to the world. Therefore, it is the duty of the CEO to maintain high standards of ethics, thought, and leadership; Wal-Mart’s CEO, Douglas McMillon, has done just that. McMillon helped change the nature of Wal-Mart, and reinvented the organization’s goals.
McMillon has continued the traditional goals of Wal-Mart, which are low prices and reliability. McMillon has lead Wal-Mart to become one of the highest grossing companies in the world. Wal-Mart attempts to achieve its goals of market expansion specifically through maintaining the lowest prices on the market. Unfortunately, this can mean forcing the company to purchase materials from cheap labor sources abroad. Wal-Mart under McMillon has continued these practices, and the savings are generally passed on to the consumer (Sethi, 2014). In addition, Wal-Mart’s senior staff has been plagued with scandals, notably bribery, which is seen as a requirement in some international markets, such as Russia, to remain in business. Wal-Mart’s official ethics do not always match up with their actual business model, making understanding the true nature of the corporation a little difficult. This being said, McMillon has merely continued on a tradition that has been consistent since Wal-Mart’s founding: ensure that the goods and services provided are as cheap as possible, while retaining reliable, good products for the everyday consumer.
McMillon has overseen Wal-Mart’s expansion into international markets. This is an impressive feat, as many parts of the world is still reeling from the economic devastation of the world financial crisis, and foreign competition severely limits the expansionary goals of Wal-Mart. Other cultures, like the Europeans, rarely use large retailers; when they do, there are several more local stores to choose from, like Kaufland. McMillon oversaw the expansion of Wal-Mart owned companies into Japan, Russia, India, and Chile (Boyle, 2009). In each of these countries, Wal-Mart chose to purchase local retail chains rather than to expand into the individual countries with Wal-Mart’s brand name. There are several reasons for this, but the biggest one is the assumption that locals prefer brands they know well and ones that they believe to be owned locally. McMillon said “you can’t run the world from one place” (Boyle, 2009), and his policies have been evident of the innovation he has brought to the table. McMillon has worked to take Wal-Mart beyond just that of a retail brand, and has implemented financial services in foreign owned retail chains, as most sales in these countries are purchased via a company credit card.
Wal-Mart employees and consumers alike have faced significant challenges affecting their income. Food stamp and welfare benefits have been on the decline since the year 2013, and as most of Wal-Mart’s consumer base is on the poorer side of the wealth spectrum, these cuts have meant a decrease in the overall consumption trends among these consumers. In addition, increased pay roll taxes have made it difficult to employ as many workers. Wal-Mart has felt the pinch, as revenues and stock price declined in 2014. McMillon solved this issue by radically changing the face of the way Wal-Mart does business: rather than maintain a series of large stores in which customers buy a massive amount once per week, Wal-Mart will begin opening smaller “Neighborhood Markets” that will attempt to reach new types of customers (Sellers et al., 2014). These customers usually drop in at different times from the normal customer base, and have helped provide Wal-Mart with a steady stream of income since the program’s inception. This clearly shows the importance of a CEOs ingenuity, and also his/her ability to understand the root of the actual problems at hand.
Wal-Mart faces stiff competition from many different domestic companies in the US. Families living from pay check to pay check typically prefer to shop at cheap places like dollar stores. Higher income families can afford to shop at places like Target, which typically sell higher quality goods, but for a higher price. In major cities, chains like Fry’s and Sprouts give Wal-Mart a run for its money. In addition, Wal-Mart faces competition from its runoff subsidiary, Sam’s Club, which is currently losing in terms of innovation and pricing to the retail giant Costco. McMillon has reacted to this by changing the way Wal-Mart would do business. McMillon continued the process of innovation by using his resources to boost ecommerce sales, which helped put Wal-Mart ahead of the pack, and helping them maintain competitiveness in comparison to other retailers. McMillon’s innovation has led to the continued success of the company at large. The corporation has also made sustainability an important issue to tackle, meaning they are focused on not only securing the efficiency of their supply chain, but also developing relationships with employees for the long-term, and also the everyday customers that shop at Wal-Mart.
McMillon also helped change the way the corporation treats its employees. From its inception, Wal-Mart has always been accused of mistreating its employees. The company does not allow unionization, and its health benefits are scarce. The vast majority of the employees have traditionally received minimum wages, which can be problematic, as Wal-Mart employs roughly 2.2 million people worldwide. McMillon changed the culture of the company by increasing the wages of hundreds of thousands of workers. McMillon understands that caring for employees is not enough; you have to show that you care and that you are serious. McMillon’s acts helped increase the income of a huge segment of the population, directly making a change in people’s lives (O’Keefe, 2015). McMillon’s decision to work toward a $10 minimum wage helped decrease the stock price of Wal-Mart, but McMillon considered it well worth it.
McMillon is one of the highest paid CEOs in the world. In 2015, he made nearly $20 million, despite the fact that sales revenue fell (Reuters, 2016). McMillon presides over Wal-Mart during a time where the company has reached a plateau, meaning it is very difficult for it to increase its revenue and sales, as it is already the largest retailer in the world, and most markets are already saturated with competition. McMillon decided to take Wal-Mart in a new direction, by innovating the sales process by providing new methods of commerce and by expanding into new markets smartly and efficiently. Wal-Mart was hurt by its decisions to invest in its employees in the short run, as stock prices fell and company revenue substantially decreased. However, this decision will drastically increase customer satisfaction in the long run, as higher wages traditionally mean better customer service and corresponding customer loyalty. McMillon made the issue of wages a central theme to his tenure as CEO, but he also attempted to make Wal-Mart much more sustainable, in an era where the most competitive businesses have adopted sustainability as their mantra (Stores, 2016). Thus, McMillon is not just a CEO who cares about his employees. He is an innovator, and his ingenuity and confidence as reverberated throughout the entire organization, helping to ensure that employees are motivated and looking towards the future.
References
Sethi, P. (2014). The Wal-Mart affair – where implausible deniability is the coin of the realm.Corporate Governance: The international journal of business in society, 14(3), 424–451. doi:10.1108/cg-10-2013-0112
Boyle, M. (2009, October 13). Wal-Mart’s Painful Lessons. Retrieved June 20, 2016, from Business Week, http://old.dii.uchile.cl/_contenido/prensa/_contenido/43/13_BUSINESS_WEEK_WalMart’s_Painful_Lessons.pdf
Sellers, L., Cori, Georgia, N., Reach, A., Millard, D., & Hummel, R. (2014). Nighthawks open institutional repository - university of north Georgia annual research conference: Wal-Mart as a small store retailer. Retrieved June 20, 2016, from University of North Georgia, http://digitalcommons.northgeorgia.edu/ngresearchconf/2014/Business/3/
O’Keefe, B. (2015, June 4). The man who’s reinventing Walmart. Retrieved June 20, 2016, from Features, http://fortune.com/2015/06/04/walmart-ceo-doug-mcmillon/
Reuters. (2016, April 21). Here’s how much Walmart’s CEO got paid last year. Retrieved June 20, 2016, from Leadership, http://fortune.com/2016/04/21/walmart-ceo-mcmillon-pay/
Stores, W.-M. (2016). 5 insights into Walmart’s business from Doug McMillon. Retrieved June 20, 2016, from Walmart, http://corporate.walmart.com/_news_/executive-viewpoints/5-insights-into-walmarts-business-from-doug-mcmillon
