Walmart, the largest private employer in the US with approximately 1.6 million workers across 4,600 stores, is implementing a new performance-based pay structure for its frontline hourly employees, as announced by EVP of Store Operations Cedric Clark in a memo to managers. This change affects over 500,000 non-supervisory hourly workers and shifts away from the previous system of uniform raises based solely on years of service.
Key Changes in the Pay Plan
The new system emphasizes recognition, accountability, and growth, responding to workers' requests for greater control over earnings and clearer performance expectations. While years of service remain the primary factor for raises, individual and store performance can adjust the raise by up to one percentage point, according to internal documents.
Baseline Raises by Years of Service
- 0–6 months: 1% baseline raise
- 6 months–5 years: 2% baseline raise
- 5–10 years: 2.5% baseline raise
- 10+ years: 4% baseline raise
Performance Factors
Three equally weighted factors determine the performance adjustment:
- Attendance: Completion of scheduled shifts.
- Teamwork: Behavioral contributions to the team.
- Store Performance: Sales and customer satisfaction ratings.
Employees are rated as "exemplary," "successful," or "opportunity" in each category, with real-time feedback provided through a new dashboard. The performance adjustment ranges from +1% for exemplary ratings in all three areas to -1% for opportunity ratings across the board, as outlined below:
| Performance Adjustment | Rating 1 (Attendance) | Rating 2 (Teamwork) | Rating 3 (Store Performance) |
|---|---|---|---|
| +1.00% | Exemplary | Exemplary | Exemplary |
| +0.83% | Successful | Exemplary | Exemplary |
| +0.67% | Successful | Successful | Exemplary |
| +0.50% | Successful | Successful | Successful |
| +0.33% | Exemplary | Exemplary | Opportunity |
| +0.17% | Successful | Exemplary | Opportunity |
| 0.00% | Successful | Successful | Opportunity |
| -0.33% | Exemplary | Opportunity | Opportunity |
| -0.50% | Successful | Opportunity | Opportunity |
| -1.00% | Opportunity | Opportunity | Opportunity |
Walmart estimates that in a typical store, approximately 5% of employees will receive an "opportunity" rating for teamwork, 10% will be rated "exemplary," and the majority will be "successful." The system has no quotas or caps for ratings, according to a company spokesperson.
Implementation and Impact
The new pay structure is fully active, with data collection for the fiscal year running from November 1 to January 20. Raises calculated during this period will apply to the following year. The system affects only base pay, not bonuses or other compensation.
Clark emphasized that the structure allows team leaders and coaches to provide clearer feedback, linking workers' pay more directly to their daily performance. This aligns with broader industry trends prioritizing performance and efficiency, as well as workers' expectations for stronger employer recognition beyond wages.