Joe Fuller: Frontline, low-wage workers have gained a measure of recognition for their steadfast efforts through the pandemic. Some are seeing wage increases in the tight labor market. But the long-term wage trend has been one of stagnation, with marginal opportunities for advancement. The low-wage, high-turnover status quo hurts both workers and employers. But by investing in workers’ prospects, employers can reduce costly churn and boost their performance.

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Harvard Business School professor and visiting fellow at the American Enterprise Institute, Joe Fuller. I’m joined today by Lorraine Stomski, Senior Vice President of Enterprise Leadership and Learning at Walmart. The retail giant’s Live Better U [LBU] program covers the costs of employees’ education and training. The company has pledged $1 billion over the next five years toward upskilling its workforce. The idea is to improve retention and performance simultaneously, bolstering career prospects and promoting from within. The potential payoff is significant, as Walmart pursues its digital transformation. We’ll talk about the program’s results since its launch in 2018 in partnership with Guild Education. How can the company leverage its education benefits to create an internal talent marketplace? And why is it important that the program supports more than just degree attainment, but also the development of skills? Welcome to the podcast, Lo.

Lorraine Stomski: Thank you, Joe. Really happy to be here.

Fuller: Lo, you find yourself in the last five years or so in Bentonville, really changing the way one of America’s iconic companies thinks about workforce development. Tell us about that journey.

Stomski: I’d be happy to. Most of my professional career has been in consulting. And at Aon Hewitt, I led our leadership and assessment practice globally. One of my former colleagues reached out to me and just asked, would I be willing to come to Walmart? And I immediately said, no, to be honest, because I had a great career. But I just really fell in love with the company pretty quickly about the purpose and mission.

Fuller: When I talk to people and am asked about pioneers in changing the way they approach developing their workforce, recruiting workers, thinking about how to deploy human assets, I frequently mention Walmart. I think of that as being in this wrapper of the Live Better U program. Could you tell us about what’s been going on at Walmart and what you’re trying to accomplish down there?

Stomski: We are going through a tremendous digital transformation, like many others are. And if you think about our footprint, we have over 4,700 stores in the United States alone. We’ve got 2.2 million associates around the globe. It’s not just about the business of Walmart, but we’re actually a regenerative company. We are thinking about how we service our communities better because of such a large footprint. It started in 2018, where we said, we looked at our associates, particularly our hourly workforce, and we said, how can we really help our associates open up opportunities for them? Because you know better than anyone, Joe, right? Education is a door opener to opportunity, to the ability to make more money for your families, to have a better way of living, right? And so that’s how it started. And we know that, traditionally, adult learners, they have a difficult time finishing their degree. So that’s really the genesis of the problem that we were trying to solve for LBU. We said, “Look, for a dollar a day, you can get a college degree.” And it was, people were very intrigued by that. And we offered sort of three different kinds of offerings. We have foundational programs—so this is about ESL, right? English as a second language, high school completions. So it wasn’t just about college degrees. It’s like, how can we collectively upskill our associates? Then we also, a second program that we offer is around short-form programs. You’re starting to see this trend in education, where we’re looking at skills-based hiring. What are the skills that we really need? And do we need a four-year program for that or a two-year program? So we have short-form programs within LBU, in business management, project management, supply chain operations, et cetera. And then the third area, of course, is around degree and career diploma programs in supply chain tech, health and wellness, and skill traits. In 2021, we realized that that dollar-a-day program, that even a dollar is an obstacle to some of our associates in the front line. And we removed that. And that was incredibly significant, because we actually led the way. So we are not a reimbursement program; we actually pay 100 percent of the tuition and books for LBU. And we are in service to our 1.5, 1.6 million frontline associates.

Fuller: The company is undergoing a digital transformation, is integral to the community it lives in, and wants to do what it can to advance the interests and the prospects of associates at all levels. That requires going beyond just providing a decent paycheck with traditional benefits. Can you talk a little bit about how those three set your priorities and how they interacted? How did you balance those considerations to get a program in place that gave them each real weighting in the way you went about things?

Stomski: So first I would say, let’s talk about the digital transformation and as it relates to jobs. As I said, we are in the process, like many other companies, of automation. We’ve got new businesses that we are trying to activate. And one of those things that we have had tremendous success with, with respect to the past, since the pandemic, candidly, has been online grocery, grocery pickup. Think about how Covid has just accelerated the digital transformation for all companies. That produces new jobs, new roles. So we have to upskill our associates. We want our associates to build careers at Walmart. Everybody wants to build a talent marketplace, but when you’ve got 1.5, 1.6 million associates in the field, that’s a pretty big talent marketplace. So we’re upskilling, we’re preparing for the future of work, we are helping provide access to opportunity. So they all work very holistically together. Did we start that way? Absolutely not. When I stepped into my role, in particular, in taking on LBU, and I started to look at our portfolio of educational programs, it was a lot. And my question was, how do we take these 100 programs, and how does it relate to our upskilling strategy? It was an opportunity for us to say, as we look at our business strategy, what are the skills, capabilities, roles, et cetera, that we really need and lean into that and provide access to our associates within that talent marketplace to have an opportunity to, like, as I said, to build careers.

Fuller: Developing that clear line of sight from what’s available through the corporate learning system, what’s available through benefits, to career paths for people across the organization—that’s a fairly unusual approach. Most companies haven’t gotten that far in their thinking. And it’s a powerful one. How does this all factor into the way you are viewing the labor market today, the tightness of the labor market, the difficulty in finding skills? And how does it also factor into your actual recruiting?

Stomski: What is the statistic—88 million adults need to be upskilled. It’s a very daunting number. I couldn’t name one company off the top of my head that is not looking at upskilling or creating their own talent marketplace, et cetera. We really want to build within. And not everybody’s going to take that path, but that’s our intention. That’s sort of the way that we approach it. From a recruiting perspective, it’s actually, LBU in particular, has been quite powerful for us in that it’s a great attraction and retention strategy. An associate, an hourly associate, can walk into Walmart on day one, whether you’re full time or part time, and actually be qualified to sign up for LBU, to get a college degree. Imagine as an hourly worker in this company—and I know you’ve written some really great research on the hidden workforce—this is life changing to people. We’ve got almost 12,000 who’ve graduated from the program who have actually really changed their lives in getting into bigger jobs—going from an hourly cashier to being a cybersecurity analyst—through our short-form programs. To watch an associate who has graduated to walk with a cap and gown in front of their families—who many of them have never had the opportunity–it’s just very meaningful.

Fuller: Well, it’s also of course, very meaningful to workers to see colleagues, associates, advancing, taking advantage of the opportunities that are being presented to them and more motivating for them to go ahead and pursue it. A lot of us were happy to see the back of school or to put it behind us, and we don’t really want to go back. How do you blend this into generally the way you position the culture of the company and how the company talks about itself and the stories you’re trying to get repeated inside the company?

Stomski: You’ve nailed a really important point. And it’s the reason why we partnered with Guild, which is our educational partner. We partnered with Guild because they understood how to help that adult learner get through. And I have to say, on the community side, it’s a work in progress. I don’t want to give you any illusion that everybody in the store knows about LBU. You just can’t understand the scale of Walmart until you’re in it. So imagine trying to get such a great educational benefit out to the field and getting them excited about it. We’re really reliant upon, certainly, our people function. We’re reliant upon the store managers getting that excitement. Our academies, we have over 200 physical assets attached to our supercenter stores—for those of you who are familiar with our supercenters—and they serve as sort of our learning base. And we rely on those learning facilitators to generate that interest and excitement, too. We’ve got almost 34,000 active LBU students, and we have 2,700 associates that sign up, that express interest, a week. But I know we can do more.

Fuller: You talked about Guild. We’ve had Rachel Carlson, the founder and CEO, as a guest on our podcast. And they’re primarily matching learners through the Guild platform and with assistance of Guild personnel to get enrolled in college credits. What’s the role of [Walmart] Academy? And how do you reach those learners and those associates who are either not interested or not college-ready, but who want to enhance their skills and want to enhance their prospects within the company?

Stomski: So the academy serve a really important function in that you are practicing or transferring that skill set right beyond the door. You learn something, you can practice it on the floor. We’re moving much more to learning in the flow of work. What’s really interesting that’s happening to us within LBU, within our academies, is that we are starting to see, we’re actually getting credits, college credits, for actual work. And that’s really differentiating for us. And we’re going to continue to push on that, because we’ve got some really talented folks that have a lot of technical skills. And we are partnering with Guild and our educational partners to say, “You know what? This is worth some credit.”

Fuller: Walmart’s been a leader in trying to set aside historical requirements for applicants and trying to shift more toward a phrase a lot of people use, “skills-based hiring.” Could you talk a little bit about the way you’re thinking about that trade-off and moving away from proxies to qualified people—either to get hired or to be considered for promotion—and rooting it more in what people have demonstrated they can do?

Stomski: I spent probably three hours today talking about this very notion. I fully believe in it—that we should be looking at the skills, but more than skills, the traits, the attributes. I’m a psychologist by training, industrial organizational psychologist. When you really deconstruct what we’re talking about, take a look at that role. If we take a look at a cybersecurity analyst, as an example, and really deconstruct what are the capabilities and skills you need, that’s going to look very different than what I need from a cashier. If an individual has those kinds of traits, then I can upskill them in other areas.

Fuller: If we can understand those attributes and reinforce them in some people, augment them with some technical skills, you’re much more likely to get someone who’s both great in a role and excited to be in it. We see so many people who end up in roles where they’re really not very comfortable with it, but it’s the job they’ve got, and the organization doesn’t have the wherewithal or the insight to know that plant needs to be repotted. And that, of course, is a big driver of turnover, which is one of the real hidden costs of individual positional mismatches that we see.

Stomski: In many organizations that I’ve worked with, where you have somebody that has the inherent capabilities and skills and the job fit, like simple job fit, it just wasn’t that great. And I’ve seen people fail in a job and then go to another one and just absolutely thrive. And I think in our marketplace, the way that it is right now, it’s so hot, we can’t afford to just churn through people like that. It just seems fundamentally wrong on all counts.

Fuller: What are you seeing in terms of upward mobility and retention changes? Do you have some body of evidence—now that this is articulating itself—in metrics like that are so important to firm economics?

Stomski: We’ve done a lot of data and analytics around our talent that has gone through LBU. Our participants in LBU have lower absenteeism. Think about the impact as we start to scale this out, it’s very significant. It impacts store performance. It impacts your colleagues’ day if somebody doesn’t show up. Our LBU participants are promoting at a 2X rate than nonparticipants. So they’re actually seeing quite quickly their career trajectory go up compared to the nonparticipants and they’re four times less likely to leave the company. So these are really, to me, very compelling statistics. And then the final one is around performance. So for their performance ratings, the LBU participants are getting higher performance ratings, which opens up to promotion opportunities.

Fuller: That is compelling and exciting. Are there other things you’ve learned about, at any level of the organization? What kind of support or surround makes this work? We know, for example, with working learners in places like community college, if there are some surround services, that they’re much more likely to complete their program, and just two or three little incremental services has a big statistical impact. Are there things you’re seeing within the four walls of Walmart that you can share that have proven to advance your goals?

Stomski: Let me start with the foundation, which is, it’s always the good manager, right? Or the person that believes in you that sees you can do more than what you’re doing. The second thing is having the coaches, the Guild coaches, really help people sort through what is the right path, what is the right program, et cetera. And then our people function, candidly, our regional HR folks, our Academy facilitators—these are all in our ecosystem of support for our associates that help them chart their course.

Fuller: Something that our research certainly demonstrates is what you just mentioned, that having a manager or a mentor that’s rooting for you, that’s saying to you, “you could do more. Have you thought about doing this program?” is absolutely central to the actual statistical likelihood of someone getting a better role. How do you get more managers in that mindset? And what’s done to encourage them to get people in these programs and also to, when necessary, allow them the time, let’s say at the academy, to advance, even though it might make their job up a little harder?

Stomski: We have spent the last year and a half building what we’re calling the “leadership expectations.” And believe it or not, for a company that is of our size, you may not believe that we never had a leadership model that was consistent across the enterprise. It’s really important that we have a consistent framework model, et cetera, that we’re teaching from. So imagine going into the academies, as an example, and teaching our leadership expectations. Your role as a manager, as a supervisor, is in service to your associates. It’s to coach them, it’s to grow them, it’s to build their talent. That translates to how the store operates. So there’s a huge benefit on our store managers and leaders in the region to really encourage. And I would say that, for the participants that go through LBU, it’s going to produce even stronger associates. So I think it’s a self-, it’s a reinforcing cycle, if you will.

Fuller: Another topic, we’re in the early spring now of 2022. And I’ll say that I have never seen a more sustained and sincere commitment by corporate leaders across industries, across regions of the United States, to make more progress on diversity and inclusion. How does that factor in your thinking about Live Better U, other programs at Walmart? And what are your goals and aspirations in that dimension?

Stomski: You can imagine the representation of our workforce provides us a very rich, robust talent pipeline of diverse talent. So we are 50 percent Caucasian and 50 percent people of color. We’ve got 18 percent of our Live Better U participants are African American or Black—so higher and better than you would see in the college data. And the Black participants in the program are 88 percent more likely to receive a promotion than nonparticipants. So right there, you’re starting to see that upward mobility. Our Hispanic and Latino participants, 16 percent are Live Better U participants, and they are 71 percent more likely to get a promotion. And then the final thing that we did in 2021 last year was we introduced three historically Black colleges to the Guild partnership. So we have Spelman, Morehouse, and North Carolina A&T State University. So there are degrees that are offered from those three schools. We’ve got the pipeline; now we need to pull them through.

Fuller: Well, let’s talk about the innovation, entrepreneurship, new solutions to get even more effective in delivering these opportunities to create pathways for people to advance, improve their lives.

Stomski: We’re seeing a lot of engagement and movement through short-form programs and certificates—six to nine months. We have those in cybersecurity, health and wellness. Those two are our most popular short form. The notion as an adult learner, who’s working full time, or even part time, having to take care of a family, having that big responsibility, two to four years can seem really daunting. So I think we’re going to see more of those short-form stacked certificates and diplomas. And then the other is, I think you’re going to start to see a lot more credentialing on the job. We’re still experimenting in that space. It’s very important to Walmart that we produce value to our communities and to society. And I think LBU is a huge pillar in our regenerative approach. But we want people to stay, but they’re going to come out of Walmart, if they choose to, and they’re going to be upskilled, they’re going to be prepared for the future of work. And if they want to stay with us and they want to come back to us, I think you’re going to start to see more of that boomeranging as well.

Fuller: You’ve mentioned a couple of times studying in domains like cyber or the importance of digital skills. When you look at what people are actually studying through LBU or other programs, what are the patterns? What’s popular?

Stomski: There’s four areas that are the most popular. Number one is what I refer to as the “foundational pieces”: helping people whose English is not their first language, high school completion, college preparation. We even offer SAT prep. So that’s very, very compelling, particularly for our high school associates. So the foundational is very popular. The second is business degrees. So business leadership is our most popular credential degree, so a diploma. And then the two certificate kind of programs are in technology. So IT, cybersecurity. And the other is health and wellness, like pharmacy tech, opticians. These are the degrees and diplomas that we actually need in our stores.

Fuller: Those foundational programs are critical, because it’s the workers that benefit from those who are most reluctant to raise it, have the lowest expectations of it, often lack the self-confidence to want to pursue it, often lack a good sense about how to navigate what might be on offer from local community colleges or high school equivalent online programs. And having that be both endorsed by, encouraged by, provided by an employer is hugely important, because it builds that foundation for continuing access to basic employment and the prospect, if not the certainty, of some additional advancement in either wages or positioning. It’s as if in some ways companies are saying, “We’re going to take more ownership over the basic aptitudes and skill set of our associates,” and through doing that, augment what happens through the K–12 system, augment what happens in post-secondary education and training, both in the service of making the communities that we serve better and healthier and more economically vibrant, but also to some extent, maybe set some new standards and to indicate these are the skills we need, and if we’re not going to get them in recent graduates, we’re going to instill them and hope that people follow our lead.

Stomski: It’s one of the things that I share with our team that manages LBU. We have a very big vision, which is, we want to really change the education ecosystem. We want to redefine, candidly, what education means in this country. And I think we’ve really not paid enough attention to our adult learners who have so much more capacity. Learning does not stop once you graduate high school. And even if you didn’t go to high school, learning is always, should be there. We can take a lead and have a strong voice in what education should look like, help our associates achieve their dreams that they probably, for many of them, never thought could happen. With all of the incredible transformation that we’re going through, imagine having a credential from Walmart in data automation, whatever it may be? I think that’s the future.

Fuller: We are seeing more and more companies acknowledging that the magnitude of the shared challenges they face is such that they’re better off sharing data, sharing insights, collaborating. You’ll be familiar, of course, with the growth of things like the Open Skills Network, where companies are talking much more about common taxonomy of skills, cross registration, cross recognition of skills. You mentioned the articulation of work experience into course credit.

Stomski: Doug McMillan, our phenomenal CEO, was the president of the Business Roundtable. And so we actually were active and are active participants in exactly what you’ve talked about—how do we credential, badge, upskill, develop our talent. And we’re sharing that with other businesses. We’ve done badging and credentialing projects for the White House. We’re partnered with OneTen. It’s not about hoarding our ideas. We want to benefit society in general and not just keep it to Walmart—though, we’re going to certainly double down with Walmart and our associates.

Fuller: Well, we’re excited by things like project OneTen, you just referred to, which is a commitment by large US companies to greatly increase the hiring and development of primarily African American young men to get them on pathways, into successful job placements and earnings capacity. As you think, when you think about your priorities for advancing workforce development, what are the three or four things we ought be looking forward to see out of Walmart in coming years?

Stomski: I think you’re going to see a tremendous lean into the future around digital. I think it’s about growing and attracting our talents and continuing to build out our own, as I said, internal talent marketplace and building that robust, diverse talent pool and prepare them for all the cool jobs that we’re going to have for the future—and just orienting our associates around moving away from that credential and really focused on the skills. But I would add one more thing, and this has emerged quite a lot from the pandemic. People want meaning and purpose, and they want meaning and purpose in their jobs, too. And they expect that. And for me, it’s about how do we really showcase the deep meaning and purpose that we have at Walmart and our service orientation that would compel people to say, “I want to work at Walmart.” That’s meaningful. Like, “I am impacting the world. I am impacting how communities eat, how they have what they need to live better.”

Fuller: Well, Lorraine Stomski, Senior Vice President of Enterprise Leadership and Learning at Walmart, Walmart revolutionized the retail industry and revolutionized supply chain logistics in the United States. So why not aspire to revolutionize adult learning and the K–12 experience and preparing people for economically vibrant and successful careers? It’s a great inspiring note to end our conversation on.

Stomski: Thank you, Joe. It was a delight and a pleasure to be with you today.

Fuller: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.