Are Bonuses a Morale Booster for Walmart’s Hourly Associates?

Walmart announced that its full- and part-time hourly workers will now be eligible for annual bonuses based on store performance and tenure as the chain seeks to bolster retention and recruitment in a tight labor market.

About 700,000 U.S. store associates will be eligible for annual bonuses up to $1,000 for those who have been with the company for 20 years or more. For full-time employees with at least a year but less than five years at Walmart, the annual bonus is capped at $350.

“It’s important that we are competitive on base wages,” Walmart U.S. CEO John Furner said on a media call.

Furner noted that Walmart has hiked base wages by about 30% over the last five years, with the average U.S. wage about $18 an hour. Its minimum hourly wage starts from $14, less than the $15 starting wage at Amazon.com and Target as well as $16 at Costco. However, starting pay for a Walmart associate can be as high as $19 an hour, depending on the store location.

Beyond pay, Walmart has invested in employee benefits supporting healthcare, career development, and family planning in recent years.

“Everything’s better when turnover goes down and tenure goes up,” Furner said on the call. “We’re really pleased that our turnover has gone down over the last year.”

The unemployment rate has risen slightly in recent months but remains low, at 4% for May, according to the Labor Department’s report released Friday.

“This is a big move from Walmart, which is allowing more people in the business to share in success,” Neil Saunders, managing director of GlobalData and a RetailWire BrainTrust panelist, told the Washington Post. “The new bonuses may not address all the complaints about employee compensation, but they do blunt them somewhat.”

The move to offer bonuses to hourly associates was announced just ahead of Walmart’s annual shareholders’ meeting. Walmart also introduced new training programs and certifications to fill high-demand roles across its business, such as HVAC technicians, opticians, and software engineers.

In January, Walmart announced plans to raise wages for Walmart U.S. store managers for the first time in a decade. Average store manager salaries increased 9.4% to $128,000 a year. The store manager bonus program was also reworked to have the individual store’s profit hold a larger influence, in addition to sales. If all targets are met, the manager’s annual bonus could reach up to 200% of their base salary.

Base pay, flexible hours, and benefits are more emphasized than bonuses in retail recruiting, but many other retailers, including rival Target, have performance bonus programs for hourly associates. Among better-known bonus perks, Home Depot offers a “Success Sharing” program that provides semi-annual cash awards for performance to hourly associates against its business plan, including sales and productivity goals. Costco offers twice-year “Extra Checks” when an hourly associate reaches about five years of service, with the bonus ranging from $2,500 to $3,500.