Lesson #1: Motivate Your Workers

“Individuals don’t win, teams do,” Walton once said. If you worked for Wal-Mart, Sam Walton was your partner, not your boss.

After taking Wal-Mart public in 1970, Walton was one of the first ever to introduce a profit-sharing plan whereby employees could benefit from the profitability of the store. By offering them stock options as well as store discounts, Walton was attempting to demonstrate the respect he had for his workers and encourage them in their efforts. “In turn, they will treat you as a partner, and together you will all perform beyond your wildest expectations,” he predicted. “Remain a corporation and retain control if you like, but behave as a servant leader in a partnership.” While profit sharing has now become a common business practice today, at the time Walton was breaking new ground. In retrospect, Walton said, “It’s the single best thing we ever did.”



In addition to sharing profits, Walton wanted to do more to motivate his associates. “Money and ownership alone aren’t enough,” he said. “Set high goals, encourage competition, and then keep score.” Walton encouraged competition amongst his workers in order to keep them on their toes and working hard. He would often create bets and challenges for his staff to meet, offering outrageous payoffs for the winners. He also advocated ‘cross-pollination’, whereby managers from different departments would switch jobs with each other in order to stay challenged. “Keep everybody guessing as to what your next trick is going to be,” he said. “Don’t become too predictable.”

Walton also believed in the importance of having a clear flow of communication with his workers, claiming that the more information they received the harder they would work for him. “The more they know, the more they’ll understand,” he said. “The more they understand, the more they’ll care. Once they care, there’s no stopping them.” To Walton, the free flow of information between him and his workers demonstrated the trust and respect he had for them. Without that trust, Walton felt he could not succeed. “Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitor,” he said.

For Walton, the bottom line was to appreciate his workers and to make them feel valued. He knew that a paycheck and stock options alone would not guarantee loyalty or hard work. Instead, he realized the importance of making sure his workers knew they were appreciated. “Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise,” he said. “They’re absolutely free – and worth a fortune.”

By having motivated and loyal employees, Walton could then use them as his secret weapon. “The folks on the front lines – the ones who actually talk to the customer – are the only ones who really know what’s going on out there,” he said. By listening to his workers and their ideas, Walton could stay on top of his game; “This really is what total quality is about.”



Lesson #1: Motivate Your Workers

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