Walmart's Big Shift in Employee Compensation
America's largest private employer, Walmart (WMT), has been dishing out bonuses to its 1.2 million hourly store associates since time immemorial. This long-standing practice is set to change, though it doesn't necessarily mean a downward spiral in pay for many employees. Walmart announced these adjustments last week.
The company clarified that abolishing the quarterly bonuses would not fully offset the wage increases. The bonuses form part of the wage increases and will contribute to the employees' higher hourly wages. During the pandemic, Walmart also extended special bonuses to its staff members.
"Majority of our employees indicate that their hourly wage is the most significant part of their paycheck, and incorporating bonuses within their total wage increase results in a consistent, predictable compensation."
For the first time, the Wall Street Journal reported on Walmart's decision to end quarterly bonuses.
Walmart revealed that the minimum wage will rise to $12 an hour as of September 25. This minimum wage is lower than Amazon's ($15 an hour) and Target's ($15 an hour) rates for their hourly workers.
The average hourly wage for Walmart employees is $16.40.
Major retail chains have elevated wages, expanded benefits, and offered contract premiums to attract laborers in a tight labor market.
On Thursday, Amazon announced its plans to cover most of its US-based 750,000 hourly workers' tuition fees for the next four years, following similar moves taken by Walmart and Target.
Walmart and other prominent retail chains have been boosting wages, expanding benefits, and offering contract premiums to attract labor in a tight labor market.
Walmart is not necessarily ending quarterly bonuses for store associates as previously reported. Instead, the company is making substantial changes to the compensation packages for store managers and market managers.
Insights: Walmart is revamping the compensation packages for both store managers and market managers without affecting quarterly bonuses for store associates. Market managers will be receiving a base pay hike from $130,000 to $160,000, with their annual stock grant increasing from $75,000 to $100,000. The bonus potential for market managers has also escalated to up to 100% of their base salary, bringing their total annual compensation to over $600,000.
For store managers, while specific bonuses details are not provided, there's no indication that quarterly bonuses are being eliminated. Store managers can now earn a bonus of up to 200% of their base salary, with the new bonus program, and they started receiving stock grants last year.
Over 100,000 frontline associates are set to receive a pay hike over $19 per hour, with the potential to bags thousands of dollars annually in bonuses.
