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MW10 THEEDGE MALAYSIA

| MANAGER@WORK | AUGUST 28, 2006

BOOKS
The 10 Rules of Sam Walton: Success Secrets for Remarkable Results
By Michael Bergdahl
ISBN: 0-4717-4812-9 PUBLISHER & YEAR: JOHN WILEY & SONS, JUNE 2006

10 rules for entrepreneurial success


Sam Waltons
COMMIT to achieving success and always be passionate SHARE SUCCESS with those who have helped you MOTIVATE yourself and others to achieve your dreams COMMUNICATE with people and show you care APPRECIATE and recognise people for their efforts and results CELEBRATE your own and others accomplishments LISTEN to others and learn from their ideas EXCEED EXPECTATIONS of customers and others CONTROL EXPENSES and save your way to prosperity SWIM UPSTREAM, be different and challenge the status quo

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S-based Wal-Mart is the most successful retail chain in history. In Wal-Mart in Asia, an INSEAD case study, authors Philippe Lasserre and Neil Jones say that if Wal-Mart were a country, itd be Chinas eighth largest trading partner, ahead even of the UK. But with success has come erce criticism. Michael Bergdahl is the former director of people at WalMarts headquarters in Bentonville, Arkansas. His rst book, What I Learned from Sam Walton: How to Compete and Thrive in a Wal-Mart World, was published by John Wiley and Sons in August 2004. In an e-mail interview with Dorothy Teoh, he delves into Wal-Marts past when Sam Waltons rules were paramount and present, and why the retailing behemoth is under re in particular, for its people practices. Waltons 10 Rules must have had strong implications on your role as director of people at Wal-Marts corporate headquarters. How did they guide you personally during your tenure with the company? Waltons high regard for people put a great deal of additional pressure on my role as director of people. At Wal-Mart, Walton called his human resources department the People Division. In actuality, Mr Sam (we all called him Mr Sam out of respect) felt that managing human resources was the responsibility of every manager and supervisor in the company. He told me that he wouldnt need a People Division if the management team would use golden rule values by always treating the employees as business partners or associates. To this day, Wal-Mart leaders refer to their employees as associates. While I was there, Walton focused the People Division on stafng, training and associate relations. Because he held people in such high regard, it placed a great deal of pressure on everyone in the division to live up to his expectations. We focused on three areas: Hiring the best, providing the best training and being the best place to work. The cultural mantra at Wal-Mart is Our People Make the Difference. This saying was emblazoned across the sides of trucks and posted in the break rooms in the distribution centres and stores. Mr Sam once said, If you take care of the associates [employees], the associates [employees] will take care of the customers and the business will take care of itself. Why do you think Wal-Mart is under so much re these days? Is it because the current WalMart leadership has strayed from Mr Sams 10 Rules? With almost 7,000 stores, 120 distribution centres and close to two million employees around the world, maintaining its culture is a big challenge. The company will open over 500 new stores in 14 countries this year. It is estimated that 75% of management positions today are lled via internal promotions, which leaves 25% of them lled with leaders hired from outside the company. Many of the negative stories in the news media are true. However, the negative story reported typically represents a single incident in a single store. In these cases, an individual site manager is responsible for a poor decision that has led to company-wide media scrutiny. The way the news is reported, you would think the issue reported in the negative story is systemic across Wal-Mart. Nothing could be further from the truth. One criticism of Wal-Mart is that its so powerful it forces suppliers to bend to its will or suffer. What would Walton have said to this? Walton was a proponent of the free enterprise system. The pressure placed upon manufacturers and suppliers today is no different than the pressure Walton himself placed on his early suppliers. WalMarts merchandise buyers expect suppliers and manufacturers to earn a fair prot on the

goods they sell to Wal-Mart and no more. If a supplier cant earn a prot supplying Wal-Mart, they should either lower their manufacturing costs to become protable or make the decision to stop supplying the giant retailer. Supplying Wal-Mart can be a manufacturers dream come true or its worst nightmare. There are many companies that choose not to supply products to Wal-Mart because they cannot achieve their prot goals. Other companies are too small to supply the insatiable product needs of Wal-Mart. There are companies who choose to supply Wal-Mart whether they make a large prot or not simply to enhance the visibility of their brand. For those who do supply Wal-Mart, the expectation is that they need to partner with Wal-Mart to ALWAYS deliver value to the retail customer. In reality, there are three types of companies that supply products to Wal-Mart: those who make a prot, those who break even and those who lose money. Six of the 10 Rules are about how to treat people but among the harshest criticisms that Wal-Mart faces today is that it exploits employees. Why do you think this has happened? In the US, much of the criticism is brought to the forefront by labour unions and other special interest groups. In the US, union membership has declined from almost 30% of the workforce 30 years ago to 12% today. The labour unions are desperately trying to organise the worlds largest retailer and failing miserably. In truth, Wal-Mart pays its employees a competitive compensation package in retailing, which includes an above-average retail salary, benets, annual prot-sharing, 401K and store bonus. When an employee relations issue arises, the unions jump onboard and make a mountain out of a mole hill! Wal-Marts leaders still embrace Mr Sams 6 Rules about how people should be treated. Why do you think Wal-Mart is so reviled? Do you think the criticisms are fair? In the US, I think much of the criticism stems from the im-

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pact Wal-Mart has had on small towns. Adding to the criticism is every retailing sector negatively impacted by Wal-Marts competition. Grocery stores have been unable to compete in direct competition. Convenience stores have suffered as WalMart began selling gasoline: Even banks are up in arms over Wal-Marts announcement that they intend to go into banking. Wal-Mart has raised the standard of living for consumers around the globe but in the process, its Every day low prices (EDLP) strategy has had a devastating impact on high-priced main-street merchants. For most competitors, competition with Wal-Mart is like an ant ghting an elephant! The world is a very different place today from when Walton came up with these rules. How applicable are they still? A company could follow all these rules but still not be as successful as Wal-Mart. In fact, we havent seen another Wal-Mart. What could be the missing ingredients? Rob Walton, who is chairman of the board of Wal-Mart and the son of Sam Walton, wrote the foreword for my book The 10 Rules of Sam Walton. He stated, As large as Wal-Mart has become, we still nd ourselves referring to Dads Rules for a Successful Business, embodied in this book. The 10 Rules are timeless because they are for the most part simple, common sense notions. Walton would be the rst to tell you that simple ideas have the best chance of being understood, followed and executed. Waltons goal was to make Wal-Mart the best retailer around, not the biggest. His idea of success was providing the right products at the lowest price and providing great service. If the leaders at other companies are willing to focus on running an excellent operation, treating their people right and serving their customers, they can be just as successful. If an ordinary man like Walton can achieve the extraordinary, it is possible E someone else can too.

Bergdahl is holding a baseball bat engraved with his nickname given to him by Sam Walton

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