WMT Walmart Inc

By Sarah Nassauer 

Two years after raising minimum wages for store employees to $9 per hour, Wal-Mart Stores Inc. is making adjustments to the way it hands out pay increases and trains store employees.

The retailer will abbreviate a training program that new employees must complete to earn $10 per hour. The six-month program introduced last year will now take three months to complete, said company executives.

Wal-Mart will stick with an annual raise system it first implemented last year, in which most store employees get their raise on a single day. That changes a longtime practice of linking store employees' annual raises to performance, doling them out on each employee's hire-date anniversary.

This year employees hired on or before Oct. 31, 2016 will get a 2% raise on Feb. 18th. Longtime workers who make the most their job title allows get a onetime lump sum of 2% of their annual pay, as they did last year.

Wal-Mart says its average salary is $13.69 per hour, or about $25,000 a year for a full-time employee, a pool the company says makes up just over half of its store workers.

Wal-Mart employs 1.5 million people, both in its stores and in corporate positions, making it the largest private employer in the U.S. The evolution of its compensation plan shows what it has learned about implementing a minimum wage increase on a large scale.

The moves are an effort to help employees advance faster and feel more confident in job skills, as well as mollify longtime employees who see new hires earning wages closer to their own, said Judith McKenna, chief operating officer of Wal-Mart U.S. Those improvements will translate into better customer service and store operations, she said.

Ms. McKenna acknowledged not all longtime employees will be happy watching pay rise for new workers. "I think it's going to be an inevitability of businesses," she said. Wal-Mart has worked to give longtime employees benefits beyond pay, like more paid time off and encouragement towards promotions to earn more money.

The changes also reflect the difficulty of solving the retail industry's widespread employee turnover problem in a tightening labor market. The Bureau of Labor Statistics tracks how many people leave their job voluntarily monthly. Those numbers have risen steadily since 2010. The share of retail employees who leave their job each year hovers around 60%, say industry consultants.

At the same time, service-industry companies, including Wal-Mart, are fighting for workers. Retail-wage growth has risen faster than the U.S. average, driven by large retailers' wage increases and a web of local laws that mandate higher minimum wages.

"If anything we have seen acceleration in the pace of wage growth over the last few months," said Andrew Chamberlain, chief economist at Glassdoor, a jobs and recruiting site.

Last year, Ms. McKenna hosted 59 "listen sessions" with Wal-Mart store employees around the U.S. to solicit feedback about wages and training. Managers told her the six-month "Pathways" training program for new hires needed to be shorter to keep workers engaged. And employees often said they didn't ask for promotions because they didn't feel they had been trained well to succeed, says Ms. McKenna.

Beginning this week, Wal-Mart eliminated a 42-day window between sessions where workers learn skills on a computer in the back the room and train with managers on the sales floor.

Retailers will have to continue to find ways to pay for higher wages to compete for workers, said Pete Madden, a director of retail at AlixPartners LLP, a consulting firm. "It's going to be an ever-tricky balancing act," said Mr. Madden. "Passing through wage increases to customers is the last alternative."

Write to Sarah Nassauer at sarah.nassauer@wsj.com

(END) Dow Jones Newswires

January 26, 2017 17:34 ET (22:34 GMT)

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