Lessons in leadership: What CEOs can learn from Walmart

Ruth Macapagal

Walmart, one of the world’s largest and most successful family-owned businesses, provides invaluable lessons for CEOs and business owners grappling with the intricacies of leadership transition and leadership planning. By following Walmart’s four-step approach, business leaders can navigate this complex process more effectively, ensuring a seamless transition that upholds core values and sustains success.

Step 1: Establishing a merit-based leadership culture

Promoting on merit: Walmart has consistently emphasized that leadership roles, including top executive positions, are based on merit and performance, not just family lineage. This approach ensures that the most capable individuals lead the company, whether they are family members or not. For CEOs and business owners, this highlights the importance of rewarding talent and excellence rather than simply relying on familial ties.

Professional development: The Walton family members involved in the business have been encouraged to gain experience and skills both within and outside of Walmart, ensuring they are equipped for their roles. Business leaders can take this as a lesson to invest in continuous learning and development, fostering a culture of growth and adaptability within their organizations.

Step 2: Blending family and professional leadership

Strategic role allocation: While family members have held key positions (e.g., Rob Walton as chair), Walmart has often looked outside the family for its CEO and other executive roles. This ensures a balance of family values with professional management expertise.

Board composition: Walmart’s board includes both family members and independent directors, ensuring a diversity of perspectives in governance. Business owners can apply this lesson by forming a board that combines family interests with broader business acumen, fostering well-rounded decision-making.

Step 3: Fostering a shared vision

Communicating core values: Even with a blend of family and external leadership, Walmart has maintained a strong emphasis on the core values established by Sam Walton, such as customer service, respect for the individual, and striving for excellence. CEOs and business owners should make it a priority to communicate and uphold their company’s core values, ensuring continuity in the organization’s culture and identity.

Aligning goals: Ensuring that both family and nonfamily executives are aligned in their goals for the company’s growth and sustainability is crucial. Business leaders can learn from Walmart’s approach by fostering a shared vision among all stakeholders, promoting unity and a sense of purpose.

Step 4: Succession planning and transition

Early planning: Walmart’s succession planning is an ongoing process, with potential leaders being identified and groomed years in advance. CEOs and business owners should adopt a proactive approach to succession planning, identifying and nurturing future leaders well before the need arises.Smooth transitions: The transitions in leadership roles, both at the board and executive levels, have been made with careful planning to ensure stability and continuity. Business leaders can implement structured transition plans, minimizing disruptions during leadership changes and maintaining the business’s trajectory.

Lesson 1: The power of meritocracy

Practical steps for CEOs:

a. Implement performance-based promotions: To emulate Walmart’s commitment to merit-based leadership, CEOs should establish clear performance criteria for promotions. Leaders at all levels, especially family members, should be evaluated based on their achievements, skills and contributions to the company.

b. Objective evaluation processes: Develop objective evaluation processes, such as 360-degree feedback, peer reviews, and key performance indicators (KPIs), to ensure fair and unbiased assessments of leadership potential.

c. Leadership training and development: Invest in leadership training and development programs for all employees, including family members, to nurture their skills and competencies. Encourage continuous learning and growth.

Lesson 2: The balance of tradition and innovation

Practical steps for CEOs:

a. Create a culture of openness: Encourage a culture where all ideas are welcome, regardless of the source. Implement regular brainstorming sessions and innovation workshops to foster creativity and fresh perspectives.

b. External advisors and consultants: Seek input from external advisors, consultants and industry experts who can provide valuable insights and challenge traditional thinking. Leverage their expertise to identify opportunities for innovation.

c. Innovation committees: Form innovation committees or task forces comprising both internal and external members to explore new strategies, technologies and markets. Ensure that these committees have the autonomy to drive innovation initiatives.

Lesson 3: The importance of early and continuous planning

Practical steps for CEOs:

a. Identify high-potential leaders: Identify and nurture high-potential leaders within your organization early on. Create personalized development plans to groom them for future leadership roles.

b. Regular talent reviews: Conduct regular talent reviews to assess the readiness of potential successors. This involves evaluating their skills, competencies and readiness to take on greater responsibilities.

c. Mentorship and coaching: Implement mentorship and coaching programs to facilitate the growth and development of future leaders. Pair them with experienced mentors who can provide guidance and support.

Lesson 4: The role of effective governance

Practical steps for CEOs:

a. Diverse board composition: Ensure that your company’s board of directors consists of a diverse group of individuals, including family members, industry experts and independent directors. This diversity will bring varied perspectives to the decision-making process.

b. Robust governance structures: Strengthen your governance structures by establishing clear policies and procedures. Define roles, responsibilities and decision-making processes to avoid conflicts and ensure transparency.

c. Regular board evaluations: Conduct regular evaluations of the board’s performance and effectiveness. Use feedback to make necessary improvements and adjustments to the governance framework.

Lesson 5: Keeping the founder’s spirit alive

Practical steps for CEOs:

a. Core values integration: Continuously reinforce the core values and principles that define your company’s culture. Incorporate them into daily operations, decision-making and employee engagement initiatives.

b. Founder’s legacy events: Organize events and activities that celebrate the founder’s legacy and contributions to the business. Share stories and anecdotes to keep the founder’s spirit alive in the organization.

c. Employee recognition: Recognize and reward employees who embody the founder’s values and principles. Highlight their contributions as examples for others to follow.

Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email Tom.Oliver@inquirer.com.ph.