As retail competition intensifies, Amazon, Wal-Mart, other competitors investing in workforce 

Posted October 6th, 2017

Part of what’s made Amazon successful, analysts say, is that the company is consistently forward thinking about its customers -- creating products and programs people didn’t know they wanted before having them.

The future of Amazon, though, could be largely based on the company’s forward thinking about its workforce, says Juan Garcia, Amazon’s global leader for career advancement.

Garcia, along with representatives of other retail industry leaders like Wal-Mart, spoke this week at a Federal Reserve Bank of Dallas conference in Austin, where they discussed how retailers are addressing the increasingly important role of employer-employee relationships as the industry has digitized and competition has become more fierce. 

“We believe at the core that growing fast and exponentially means maximizing engagement (with the workforce),” Garcia said. “(Workers) got to truly feel like they are an owner (of Amazon), that they are truly paddling in the same direction as us.”

One way Amazon has done that, Garcia said, is by asking each of its fulfillment center workers every year if they would like to continue working for the company or leave. If they choose to leave, Amazon offers them a buyout worth a few thousand dollars but tells them they can’t be rehired. 

The system allows workers to be compensated when they move on, while Amazon benefits from getting an honest pulse of its workforce and retaining its happiest employees, which can maximize productivity, Garcia said. 

Amazon also pays 95 percent of tuition for its low-skill workers to train for jobs that are more in-demand. 

This allows Amazon’s workers to continuously stay ahead of the curve as jobs change due to automation or other reasons, Garcia said. 

While Amazon’s fast-paced and competitive workforce culture has been publicly scrutinized in the past, Garcia said the company is working toward a future where Amazon is seen as a leader in higher learning, especially for low-skill workers. He said the company wants young adults to consider Amazon as a training option if they can’t -- or choose not to -- attend college. 

Sebastian Herrera/American-StatesmanFrom left are Juan Garcia, global leader for career advancement at Amazon, Gayatri Agnew, director of career opportunity at the Wal-Mart Foundation, Tod Loofbourrow, CEO of ViralGains and Barb Dyer, executive director of the Good Companies, Good Jobs Initiative. The group discussed the current and future experience of workers at companies like Amazon and Wal-Mart at a conference in Austin hosted by the Federal Reserve Bank of Dallas.

“We want to be a part of that breakfast conversation” between parents and their children when deciding on education options after high school, Garcia said. “We want to remove every barrier.”

But Amazon is not alone in this effort. Its retail rivals are also prioritizing in-house training and a better worker pipeline because of the industry’s increasingly competitive landscape, said Gayatri Agnew, the Wal-Mart Foundation’s director of career opportunity.

In 2016, Wal-Mart launched the Wal-Mart Academy, which has since trained hundreds of thousands of supervisors and store managers with leadership and technical skills to improve their roles within the company. Graduates of the weeks-long training program receive caps, gowns and a reception. Thousand of lower-skilled workers have also been trained in a separate program.

In 2015, Wal-Mart raised the pay for entry-level workers to $9 per hour, $1.75 per hour above the federal minimum wage. Entry-level workers who complete one of the training programs can now earn $10 per hour. 

Because consumers now have more options than ever, Agnew said, retail companies have to cover more ground to stay competitive, and that means thinking more about how they’re cultivating a strong workforce ecosystem and better-skilled employees. 

While “10 to 15 years ago, companies could recycle their workforce and get away with it,” that’s no longer possible, Agnew said. “If I ask you, ‘how can you get a banana or milk today?’ If you answer that question 10 years ago and you answer that question today, you have a lot more options today, which means retailers have to be a lot more competitive and strategic to make sure you come buy your milk from us.” 

Wal-Mart has spent $2.7 billion on training store workers and raising wages during the past two years. Agnew said Wal-Mart plans to continue to improve its in-house training, even for its short-time workers.

The challenge for Amazon, Wal-Mart and others is to get the most out of employees as their jobs continue to change as retail evolves, though it’s also become easier for companies to track and improve the workforce environment as they have become more digital.

Using tech and innovation to help workers “do more jobs efficiently,” and not to replace jobs, is what companies like Amazon are focusing on, Garcia said. 

Besides that, it’s also about not taking the easy ways out, Agnew said.

She discussed the example of ride-hailing company Uber, which has drivers that work as contractors and are not employees. 

While it’s more convenient for Uber to have that system, Agnew said doing so has hurt the company long-term as many drivers have complained that they do not feel supported by Uber.

It’s the kind of workforce relationship retail companies cannot afford to have, Agnew said. 

“For us, this approach to investing in people is not just a competitive advantage for Wal-Mart. It’s something  we hope will shift business practice across the board,” she said. “It’s both the right thing to do and the strategic business choice.”