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Wal-Mart Sheds Another Tradition: Saturday Morning Meetings Cancelled

Jim Prevor’s Perishable Pundit, January 23, 2008

It is said you can’t go home again, often because the home you knew doesn’t really exist anymore. In much the same spirit, the Pundit is glad he had the opportunity to attend Wal-Mart’s famed Saturday Morning Meeting, as we wrote about here.

Wal-Mart is canceling the meetings, which were originated by Sam Walton himself. Oh, that is not the way they spin it… they just are altering the format down to once a month and moving it off-site:

The legendary Saturday morning meetings that have long been at the heart of the Wal-Mart culture will dwindle to just one meeting per month.

And executives won’t be funneling into the home office for the soon-to-be monthly meetings, but will gather down the road at Bentonville High School where a larger auditorium can house the growing crowd of department managers required to attend.

Wal-Mart confirmed the news, announced Saturday at the meeting, but declined to make further comments as “details have not been worked out,” a company spokeswoman said.

No further comments are required. It is a symbol, a flashing light to draw attention for all those who missed it, that the old Wal-Mart, the one built and enriched by a culture that represented the Sam Walton ethos, is now dead and buried:

Wal-Mart on its Web site describes the meetings as “the pulse of our culture.”

The meetings are part entertainment and part hard-core business, according to a description found on the Wal-Mart Web site. The meetings are as famous for their celebrity cameos and Wal-Mart cheer as they are for hatching and implementing new ideas while competitors lined up the first tee on the golf course.

“I believe if you want to understand Wal-Mart, the Saturday morning meeting is the culture personified,” said Michael Bergdahl, international speaker and author on Wal-Mart culture, in a phone interview. “It’s really larger than life. The Saturday morning meeting equals competitive advantage.”

While most corporations meet quarterly, Wal-Mart devoted 52 Saturdays per year to critique the business, debate management philosophy and strategy, correct weaknesses and share ideas.

“Sam Walton used to say, ‘What makes us different is what makes us great,’ and I think that’s what the Saturday morning meeting was all about,” said Bergdahl, who worked under Sam Walton as director of people. “It fundamentally changes the culture and makes them more like everybody else.”

The Saturday morning meeting grew out of Sam Walton’s belief that everyone should work Monday to Friday in the stores and then on Saturday, when executives at competitors were off, the executives at Wal-Mart would work more and figure out how to do a better job the following week.

The meeting elicited much interest in the business press as a management tool as in this piece from Fortune:

THIS WEEKLY GET-TOGETHER is called, plainly enough, the Saturday Morning Meeting, and it is, perhaps more than anything else in founder Sam Walton’s copious bag of tricks, the management tool that has enabled Wal-Mart to metamorphose from a single small-town variety store in 1962 into the world’s largest and, for a time, most admired company — and lately the most controversial one too. Equal parts talk show, financial update, encounter group, merchandising workshop, town-hall forum, talent revue, gripe session, and, of course, pep rally — imagine a corporatized version of A Prairie Home Companion — the weekly confab is like watching the metabolism of Wal-Mart in action.

The meeting is the soul of this behemoth, which produced $288 billion in sales in its last fiscal year. It is the template for other vital gatherings that have evolved throughout the company, ranging from the daily shift-change meetings at the stores to the weekly management, merchandising, and operations meetings at the home office to the five companywide mega-meetings each year that draw more than 10,000 participants apiece. Not only do these assemblies reinforce and personalize Wal-Mart’s almost evangelical culture among its 1.5 million “associates” worldwide, but they also are largely responsible for the retailing giant’s amazing agility in the aisles. The meetings enable the company to continue to operate its entire business on a weekly and sometimes daily basis, just as the founder managed his first five-and-dime, moving quickly to outflank competition and growing almost as a matter of routine.

… As we’ll see, the gatherings really do make the company tick. And for all the down-home antics, the Saturday Morning Meeting remains the heart of the heart of Wal-Mart.

The first order of business of the Saturday Morning Meeting is discussing the past week’s sales numbers. [Lee] Scott [Wal-Mart’s CEO] swings his legs in the air as he sits on the table at the front and asks Wal-Mart Stores president Mike Duke and each of the divisional vice presidents to give brief interpretations of the week’s performance, as slides showing sales figures and year-to-year comparisons (as of midnight Friday) are projected on a large video screen behind them.

Each executive singles out a store or two for doing especially well or poorly and calls attention to weather anomalies or merchandising surprises, both good and bad, that might have affected business. Then Scott singles out a couple of specialty-department executives — say, the person in charge of one-hour photo processing, or jewelry, or vision centers companywide — to explain how their businesses did the past week.

Today Scott notices that a regional vice president isn’t present and asks his stand-in to explain. The underling relates that his boss had accidentally shot himself a few nights before while stalking a skunk in his backyard. Scott rolls his eyes and shakes his head and says, “Only at Wal-Mart would an executive shoot himself hunting a skunk. If he worked for Target, he’d have been hunting a mink.”

That is called corporate culture, and in so many ways the Saturday Morning Meeting epitomized what Wal-Mart was about. Part of it was about making the associates feel that management was working on Saturday just as they were:

HERE’S HOW the Saturday Morning Meeting was born. Back in 1962, Sam Walton didn’t think it was fair for him to take Saturday off when clerks at Walton’s Five & Dime in Bentonville faced their busiest day of the week. As he put it in his autobiography, “If you don’t want to work weekends, you shouldn’t be in retail.”

So he would show up in his shabby office in the back of the store at 2 or 3 A.M. and go through the ledgers to see which merchandise was moving and how the numbers compared with previous weeks. Then, when his associates arrived, he’d hold a meeting before the open sign was hung out and share his observations with the whole crew, ask their opinions, and decide what items to put on sale and display more prominently.

Not only did it endear the founder to employees, but it clued them in to how the company was doing financially and gave them all a weekly lesson in merchandising. As the company opened more stores and built up a staff, he continued the tradition, requiring all salaried associates — managers — to attend each week. He did so over the objections of his wife, Helen, who thought the meeting cut into time he and his associates should spend with family.

What actually impressed the Pundit most about the meeting was two things:

First, they actually reached out to associates with respect. The CEO would highlight an individual cashier in an individual store and grill her on video link for the techniques she used selling key chains or Pez dispensers at the checkout — pointing out that if every Wal-Mart cashier had achieved the same sales per hour, sales would have been up $3 million that week.

They would find out from the hosiery manager in another store that sales were depressed because they ran out of Christmas-themed socks. The meeting reflected two propositions: A) That at Wal-Mart, they were merchants and by improving merchandising, they would do a better job, and B) It also reflected a notion that the associates were the key to the company’s success and they have valuable lessons to impart to senior management.

Second, we were impressed by the drive to corrective action. As a problem was mentioned, the Blackberry’s started whirling and, very typically, a solution would be announced right at the meeting.

Visiting CEOs who had attending the meeting were often big fans:

“I think they’ve got a tool that’s amazing,” says Microsoft CEO Steve Ballmer. “The Saturday meeting is all about sharing best practices and about being accountable. It’s about a culture of performance, and it’s about reminding people that business has got to be executed every day. Those are disciplines every company needs.”

Lee Scott, Wal-Mart’s current CEO, adapted the meeting to new circumstances:

IN HIS FIVE YEARS AS CEO, Scott has put his own imprint on the Saturday Morning Meeting, just as Sam Walton and David Glass did before him. The main difference in Scott’s approach stems from the fact that Wal-Mart is now often viewed as a corporate villain. Rarely a week goes by without a splashy news report or public controversy over Wal-Mart’s anti-union stance, its promotion practices, or the impact of its stores on local communities. All that bad press takes its toll on morale, and it has prompted Scott to engage in some public soul-searching every time he runs the meeting.

“Over the last couple of years I’ve been spending much of the time talking about all the negative publicity we’ve been getting, not from the standpoint that we hate the press, but by asking our people what we are doing that allows people to perpetuate these kinds of negative discussions about Wal-Mart,” says Scott, sitting at the same scratched-up desk in the same dowdy office that belonged to the founder 20 years ago. “We can’t just fall back on the idea that we should have some leeway because we don’t mean to do any harm. We’re going to be judged on how we react to racism, or sexism, or these other issues when we find them going on, and I tell everyone we have to react more dramatically and in a less forgiving, harsher way to behaviors that don’t measure up.”

At one of the meetings I attended, for example, Scott explained the firings of two Wal-Mart managers in Florida for a breach of company policy that involved how a store helped in the distribution of emergency hurricane assistance. It wasn’t a public hanging, and he didn’t name names. “These were good people,” Scott told the hushed crowd. “But they made a judgment error. We had no choice because if you’re going to hold the associates to a standard in the store, then you can’t hold management to a different standard.” The net effect of Scott’s efforts to keep the meeting so open, educational, and spontaneous is that he is able to preserve the feeling that Wal-Mart, despite being the world’s largest company, is still a small-town retailer with an inferiority complex and a strong work ethic. Those are traits that he believes are more important than ever now.

It’s approaching 9 A.M., and today’s Saturday Morning Meeting is winding down. Scott launches into what can only be described as his benediction. ”Perfection is an awfully high standard for our people, but that’s pretty much what we have to shoot for now. We have to remember that any bad incident that occurs is not only a reflection on the individual who did it but on all of us here. Every decision you make is critically important to this company. If one person comes up to you and says, ‘I’m being sexually harassed,’ and you walk away without dealing with it because it’s uncomfortable or because it’s your manager involved, you expose the entire company to bad publicity. If you’re a buyer and you’re dealing with a supplier — particularly if it’s, say, a small Hispanic supplier and we represent 70% of their business — and you decide you’re going to rough them up, you are getting ready to take out the paint brush and put a big black mark across Wal-Mart Stores.”

The Saturday Morning Meeting schedule and — put another way — memory of Sam’s strict demands have been fading for decades. Sam demanded attendance every Saturday, and then it went to a requirement for attendance three out of four or four out of five Saturdays in a month. Later it changed to two out of four or three out of five Saturdays in a month. Now it will be once a month and the large scale of the meeting means it can’t be particularly interactive.

Now the meeting is sort of inside baseball and, perhaps, the supplier community won’t care one way or another. But the culture that produced the meeting is the same one that produced the injunction against roughing up that supplier — it is not likely one will survive without the other.

We’ve written about Wal-Mart’s loss of Bob DiPiazza, Bruce Peterson and Wayne McKnight. Now Wal-Mart’s Vice-Chairman John Menzer is retiring.

John Menzer is widely seen as a financial whiz, although his involvement with Wal-Mart’s international efforts have had mixed results.

Every departure has its own story and, seen individually, one can explain any of them as a product of individual circumstances.

Taken together, though, they are best seen as a clearing of the decks. They are a way for Eduardo Castro-Wright, President and CEO of Wal-Mart Stores USA, to consolidate power and install executives who were not influenced by the legacy of Sam Walton.

Only time will tell if Eduardo Castro-Wright and, by extension, Lee Scott are on the right course for Wal-Mart. It does strike us a terrible loss to allow the culture Sam Walton built to collapse, when there has been no clearly defined ethos to take its place.

One thing is for certain: Any suppliers who were ever told of any philosophy during the last two decades as Wal-Mart build supercenters, should probably forget what they heard. It came from executives who worked for a company that no longer exists.

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