Organizational Structure of Wal-Mart - Case Study Example

Organizational Structure of Wal-Mart Abstract Human resource management has been widely acknowledged as a critical pillar in determining the competitiveness of an organization. To underscore this fact, this paper analyses Wal-Mart, an international chain of warehouse and discount stores, describing how its human resource fosters its mission and the challenges faced in this course. Recommendations would be given on making Wal-Mart more competitive, borrowing from various sources. Introduction to the Organization Wal-Mart is an American global retail corporation founded in 1962 by Sam Walton and incorporated in 1969. Branded as Walmart, it has its headquarters in Bentonville, Arkansas and publicly trades at the New York Stock Exchange. In size, the multinational chain of discount warehouse and department stores has been described by Amendola (2012) as the largest retailer in the US and ranks third as a public corporation worldwide. As of 2012, the company’s assets stood at over $205.8 billion (Walmart, 2013). The company’s operations take place through its three business segments, namely; the Sam’s Club, the Walmart International and the Walmart US segments. In the fiscal year ending January 2012, the US Walmart segment operating in the 50 states of the US with its 60% contribution to net sales contributed the greatest to the company. Sam’s Club contributed 12% of the net sales in the same period. The company operates its 8,500 stores in over 15 countries worldwide trading under different names. In Mexico, UK, Japan and India, it trades as Walmex, Asda, Seiyu and Best Price respectively. As of 2012, the company employed over 2.2 million employees. The company has adopted a business model where it sells varied general merchandise at low prices. Walmart US segment trades in six merchandise units: entertainment, grocery, health and wellness, home and apparel across a variety of its store formats including discount stores and supercenters among other store formats with grocery being the greatest contributor to its sales. It also offers financial services including bill payments, wire transfers and money orders. Sam’s Club offers its members online access to merchandise such as hardgoods, softgoods and some private-label items. Referred to as associates by Wal-Mart, the organization has customers from around the globe seeking price competitive products. Approximately 200 million customers from the US visit the store particularly attributed to its low prices on items (Walmart, 2013). The major rivals of Wal-Mart include department stores such as Meijer, ShopKo, Target and Kmart from North America, Real Canadian Superstore, Hart and Zellers from Canada and Soriana and Comercial Mexicana from Mexico. Wal-Mart’s Mission and the Role of HR Also used as its advertising slogan, Wal-Mart’s mission statement is “we save people money so they can live better” (Walmart, 2013). This has been derived from the founder’s vision of the purpose of the company. Referring to its employees as “associates,” Wal-Mart motivates its employees to maintain low expenses so as to ensure that it delivers low cost products to its customers in line with its mission (Crofoot, 2011). To achieve its mission, the Wal-Mart HR plays a critical role, having developed unique principles, rules, policies, procedures and processes, making up its corporate culture supporting the company’s mission. The open door policy allows employees at all levels to access their managers. The sundown rule dictates that customers, suppliers and employees receive answers to their questions on the same day the questions would be received. Ideas and suggestions would be captured from the front office lines and sales floor through what the company refers to as grass roots process. Borrowing from the founder’s belief in customer being the priority so as to ensure the satisfaction of shareholders, associates, communities and all the other stakeholders, Wal-Mart reinforces three basic values: service to customers, respect for individuals and striving for excellence. The emphasis on the importance of the customer necessitated the adoption of the 10-foot rule which requires making of eye contact, then greeting and offering help to any customer coming within 10 feet. Leaders would be required to appreciate that they would be in service to their respective teams. The company has never dropped the Wal-Mart cheer developed by Walton as a structured chant meant to boost employees’ morale every morning. Further, Wal-Mart appreciates the important role that technology plays in positively transforming business. In fact, Crofoot (2011) reckons that Wal-Mart’s IT infrastructure seconds only that of Pentagon and none other globally in vastness. Even so, the firm lays much emphasis on its employees as even with the high levels of technology, nothing would be accomplished successfully without the input of people. The human resource would work with managers to come up with scorecards and performance standards and offers its employees the needed training so as to optimize on the capabilities that technology accords. Human Resource Challenges Facing Wal-Mart Despite the many strategies undertaken to ensure effective human resource at Wal-Mart, the company has had a myriad of challenges in managing its human resources, bearing in mind its large size and international spread. According to Crofoot (2011), the corporation has been largely associated with poor treatment of its employees. The first issue raised by the researcher involves its compensation plan where hourly sales employees earn averagely below $250 per week. A majority of the employees would be paid $7.50 per hour for the 28 to 40 hours of work per week. This researcher affirms the findings by PBS (2010) who claim that majority of Wal-Mart employees live below the poverty line. The reason for the low pay has been attributed to the anti-union culture in the company. Compared to other unionized employees working for retail companies in the US, Wal-Mart employees at the same grade earn about 25% less annually. But going against the human resource principle of transparency cited by Stredwick (2008), Wal-Mart retail chain of stores has been at conflict with the United Food and Commercial Workers International Union which seeks to represent the plight of workers in Wal-Mart with the tussles being arbitrated by the National Labor Relations Board. The union perceives the company as being discriminative and low paying to its workers. In addition, its expense control program could have caused the company’s insensitivity to compensating its employees competitively. The company has been largely cited for its expense control programs with the human resource making it a pillar of total quality (Wohl, 2011). Wal-Mart has in addition to compensation plan had challenges in its benefits plan to its employees. Even after years of pressure on the organization to improve its benefits to employees, Wal-Mart reviewed its employees’ healthcare plan downwards in 2011 with the new plan indicating that those employees working less than 24 hours a week would have their health insurance plan provided by the corporation terminated. Furthermore, those working between 24 and 33 hours a week on average would be denied the opportunity of including a spouse in their healthcare plan (Wohl, 2011). Therefore, in as much as Wal-Mart human resource strives to provide the best working conditions to its employees, this insensitivity to their basic needs goes against the human resource principle of dignity which eventually slows down workers’ productivity. Wal-Mart has been in the media on allegations of gender discrimination in pay and promotions. Though the company evaded being sued by a group of the offended, the firm did not escape lawsuits filed by individual female employees who were affected. According to the latest lawsuit against the firm, it was indicated that in as much as 80% of supervisors are female employees, only a third of female employees hold management positions with the ratio decreasing with increase in hierarchy (Amendola, 2012). Although the organization has a strong culture against gender discrimination, its female employees and ex-workers felt that they had lesser opportunities for promotion and poorer pay than their male counterparts, an aspect if true contravenes the human resource principle of fairness. Recommendations Despite the international success of Wal-Mart, its human resource management has to be sensitive to its employees so as to realize sustainable competitive advantage. Of importance would be to devise effective approaches to motivate its staff. The company should adopt appropriate approaches that would cause its employees to be motivated to continually keep the company’s expenses on the low and still feel satisfied. The expectancy theory described by Victor Vroom postulates that employees would be motivated to act in the desired way with the expectation of a reward with no pain or trouble on accomplishment of the act (Stredwick, 2008). Thus, Wal-Mart should review its reward system to ensure that it matches employees’ expectations. This could be informed by gathering feedback from employees from various forums. With the match between the employees’ expectation and the reward received, they would be motivated to observe the organization’s culture including expense control to the latter. As evidenced from the lawsuits raised by its female employees, Wal-Mart’s human resource management has so much to restore the confidence among its female employees on fairness. The equity theory upholds distributive justice noting that pay should be “seen to be fairly distributed in line with employee’s worth and output” as opposed to their gender as claimed to be the case in Wal-Mart (Stredwick, 2008, p.108). A sense of equity motivates employees to put more effort at work as this would be commensurately compensated. Conclusion Wal-Mart, the largest international warehouse and discount chain of stores globally, was founded in 1962 with the mission of providing low cost merchandise. Despite its success and global operation, Wal-Mart faces challenges in its human resource management, notably low wages, gender discrimination and ineffective benefit plan. To ensure sustainable competitive advantage, the corporation has to ensure fairness in compensating its employees, provision of satisfactory benefits and being sensitive to its employees’ expectations. References Amendola, E. (2012, December 28). Wal-Mart Stores Inc. The New York Times. Retrieved 29 January 2013 from http://topics.nytimes.com Crofoot, A. (2011). Wal-Mart: rolling back on ethics. Retrieved 29 January 2013 from http://www.neumann.edu/academics/divisions/business/journal/review2012/crofoot.pdf PBS. (2010). Store wars: when Wal-Mart comes to town. Retrieved 29 January 2013 from http://www.pbs.org/itvs/storewars/stores3.html Stredwick, J. (2008). An introduction to human resource management (2nd ed.). Burlington, MA: Elsevier Butterworth-Heinemann. Walmart (2013). Walmart: save money, live better. Retrieved 29 January 2013 from www.walmart.com Wohl, J. (2011, October 21). Wal-Mart trims some U.S. health coverage. Reuters. Retrieved 29 January 2013 from www.reuters.com Read More