Walmart Part-Time Employees Health Care Insurance Dilemma - Consequences and Possible Remedies - Case Study Example

It is More Than Just a Responsibility By Hongjin Jung Wal-Mart’s one of the biggest global companies, with over 8 million employees and close to 6,500 stores worldwide. Since 2005, it has launched several new social responsibility programs to enhance it position in the public as a more sustainable company. As a leader in sustainability, corporate philanthropy, and employment opportunity, Wal-Mart ranked among the top ten retailers in Fortune Magazine’s 2010 Most Admired Companies (Fortune Magazine, 2011).In order to achieve this success, the company has its own strategy and philosophy for managing customers and its employees. Despite many companies positing reduced earnings because of the bad economic environment, Wal-Mart has had posted good earnings although worse compared to its previous year. However, Wal-Mart announced that it would cut health care benefits for future part-time employees who work less than 24 hours a week on average. It is uncertain as to whether Wal-Mart’s attempt to cut costs by cutting part-time employee’s health care benefits will hurt its social image, as well as its impact tothe current bleakwork environment in the country. Part-time EmployeesHealth Care Insurance Dilemma Cutting the health care benefits for part-time workers occurred last year during the post-recession period. In this period, Wal-Mart was struggling to increase its sales growth. A few years ago, Wal-Mart had agreed to offer part-time employees health care insurance once they had served one year on the job. However, most of its major competitors and larger employers refused to emulate the move. Thus, to remain competitive with others, Wal-Mart had no choice except to cut the health insurance for part-time employees. Instead, Wal-Mart invested more money into better medical benefit plans for full-time employees. This implies, part-time employees who earn on average less than $20,000 a year, will not afford to pay their medical bills or buy private health insurance. The main reason that forced Walmart’s to cut health benefits for part-time employees was to reduce its costs for health insurance. This is because they have increased by as much as 7% over the last few years. In addition, its revenue growth has rose insignificantly compared to last year. In addition, since the economy has not recovered from recession, consumers’ spending has decreased, which means that sales for retailers, including Wal-Mart, have reduced drastically. Furthermore, most economic analysts predict that within the next few years economic situation will get worse than it is currently, as a result Wal-Mart cannot expect to increase sales growth any higher than this year’s level. This issue will have an impact not only on part-time employees at Wal-Mart but also on all other employees who work part-time for other companies. This is because cost of insurance plans offered by private insurance companies has been steadily increasing to a point at which these part-time employees cannot afford them. In other words, Wal-Mart’s announcement that it will no longer offer health care insurance to part-time staff has been devastating to its part-time workers and their families. Consequences and the Victims Wal-Mart’s announcement has caused disillusionment and frustration to present and future part-time workers.Thisis because loss of health insurance benefits has far-reaching consequencesto not only part-time employees but also their families and children. In Wal-Mart’s defense, it may have had no choice if it were to continue to manage its costs and at the same timecontinue to provide quality care and coverage for its current full-time employees. This was not an easy decision to make becausepart-time workers constitute a large portion of its employees. Furthermore,the use of part-time employees contributes greatly towards the company’s success in the industry. It was also a positive move to boost employee’s morale in the current work environment, by maintaining health benefits for current part-time employees and upgraded the quality of care and coverage for all employees. Wal-Mart’s major competitors—Target, Costco, and Kmart—will be pleased with this situation. Similar to Wal-Mart, these companies had also not offered health insurance to part-time workers. There has been massive lay off due to the current bad economic outlook. Thus, this announcement by Wal-Mart has only worsened the situation for the unemployed seeking out employment during this recovery mode for the economy. Consequently, despite people’s knowledge that there are no health benefits for part-time workers, this situation could create a secondary effect of economic panic. Thus, everyone seems to be pointing fingers and blaming Wal-Mart for not being a socially responsible company. It may be said that Wal-Mart contributes a great share to the gloom employment situation but nothing has been said ofothercompanies that do not offer health insurance for part-time workers and have never cared (Associated Press, 2010). Possible Remedies Instead of eliminating the health care insurance, Wal-Mart would have reduced the amount of health insurance it provides for part-time workers. Thereafter put the money saved into current health benefits to offer a better employee package for all current employees. This would have increased the morale of Wal-Mart’s current employees and led to high work enthusiasm in work environment. Such a move could solve the dilemma by striking a balance between managing costs and providing quality health care coverage to employees. Therefore, this might help to further Wal-Mart’s primary goals, which are to lower the cost of doing business and provide better quality coverage to encourage business sales growth, at the same time maintaining its good standing in the society. On the other hand, part-time employees constitute 30% of Wal-Mart’s 1.4 million employees. Currently, if Wal-Mart was to continue with it plan, most people would view it as being unfair to have two classes of employees (part-time and full-time), with one class receiving health benefits while the other does not in the same workplace. Therefore, there would be no resulting benefit except divisions in the work environment, and this would not be a viable solution to the problem. Considering there is no guarantee for current part-time workers that they will remain with the company for a long time. Wal-Mart could gradually change part-time positions around to permanentor hire new people on permanent basis to replace current part-time employees and the 30% of part-time workers could reduce. Despite this remedy being time consuming, it would be a win-win solution for all parties involved. Discrimination and Conflict in the Family A statement posted on Wal-Mart’s corporate website says, “We all are family,” implying that this company assumes a strong responsibility for customers and its employees. I am not sure whether it constitutes discrimination to make a distinction between full-time workers and part-time workers regarding benefits offered. Although I am sure,part-time employees are not part of this “family.” Let’s put it this way: Future babies born into part-time workers’ families will not have health insurance because of the increase in the cost of insurance, and these families will not be able to afford it. However, insurance costs are too high to offer it to all the “family members.” Thus, Wal-Mart will cut costs by failing to offer insurance to part-time employees in future, at least, until they have been employed for a full year. Nevertheless, current employees, or “family” members, who are working as part-time and full-time employees are receiving better quality health benefits and coverage. Literary, if someone’s family did this kind of thing to certain ones of its members and everyone in the worldknew about it, that family would be too embarrassed. Hence, Wal-Mart’s plans are against its organizational culture and are discriminatory rather than unifying. According to Wal-Mart representative, Mr. Rossiter, he said, “We made the difficult decision to raise rates that will affect our associates’ medical costs. The decisions made were not easy, but they strike a balance between managing costs and providing quality care and coverage” (Greenhouse and Abelson, 2011). Consequently, Wal-Mart ended up making the hard decision, which was to manage its own costs. Wal-Mart has three basic rules and three basic beliefs. One of the rules that have enabled it to be a successful business is something that Sam Walton said, and he believed in. He traveled continuously so he could visit all his stores at least once a year, listening to associates and seeking their ideas on various company issues (Wal-Mart, 2011). Listening to the workers’ ideas was a rule and a promise from the founder, Sam Walton. However, failing to keep the rule, Wal-Mart has cut part-time employees from Wal-Mart members without listening to what part-time workers. America is one of the countries that guarantees health care benefits for workers as a law without making a clear distinction between part-time and full-time employees. Wal-Mart defines part-time employees as those who work less than 24 hours a week. This unclear distinction could also create conflict among all employees of Wal-Mart. For example, what happens if someone applies for a full-time job but then desires to work only 26 hours a week? Should this worker then still be defined as a full-time employee? Long-term Consequences of the Plan Wal-Mart is one of the most successful global companies in the world, and it sponsors big projects for social responsibility; i.e., “save money and live better.” However, it should think about who is helping to create these profits and who is needed most in order to accomplish company’s goals. All employees, whether they work full-time or part-time, are the most valuable assets in making Wal-Mart’s business successful. In addition, the portion of part-time workers in the company is not so small that it can be ignored. Over the short term, Wal-Mart might believe that saving costs by cutting 30% of 1.4 million employees’ health benefits can resolve its current financial crisis and result to an increase its sales growth at the same time motivating current workers. However, in the long-term the 30% of part-time workers will not willbe motivated to work without receiving the same benefits as full-time workers. This could also affect the other workers’ resulting to riots, overwork, and high workers turnover. By retaining this portion of part-time workers, Wal-Mart will likely increase its sales growth in the long-term, and this will help keep them dominant in the industry and remain competitive with the other retailers. In my opinion, Wal-Mart needs to weigh down the consequences of its actions. Furthermore, it is also important to understand that the way it handles the health insurance issue regarding part-time employees is more than just a responsibility it owes to them but also to the public. Moreover, it needs to prioritize what is necessary most important to help it remain a successful company in the future. Wal-Mart represents itself as a socially responsible company in the world, and it seems to be proud of this. However, health insurance cutting for part-time workers is hurting Wal-Mart’s image regarding family and its societal responsibility. Works Cited Associated Press. Wal-Mart ending health coverage for some future part-time hires raises premiums. The Washington Post October 21, 2011. Retrieved from http://www.washingtonpost.com/national/health-science/wal-mart-scales-back-health-care-coverage-for-future-part-time-workers-amid-rising-costs/2011/10/21/gIQAznCQ3L_story.html# Accessed on 5 November.  Greenhouse Steven And Abelson Reed .Wal-Mart Cuts Some Health Care Benefits. The New York Times Oct. 20. 2011. Retrieved from http://www.nytimes.com/2011/10/21/business/wal-mart-cuts-some-health-care-benefits.html?_r=1&adxnnl=1&ref=health&pagewanted=1&adxnnlx=1319792446-ja56+KrA5BEWBaaOhoDMug Accessed on 5 November. Wal-Mart Corporate. 2011. Retrieved from http://walmartstores.com/AboutUs/284.aspx Accessed on 5 November. Fortune. 2011. Worlds Most Admired Companies. Retrieved from http://money.cnn.com/magazines/fortune/mostadmired/2010/full_list/ Accessed on 5 November. Read More