A problem solving model for Wal-Mart - Essay Example

?A problem-solving model for Wal-Mart Step The largest retailing company of the world, Walmart has been facing a decline in sales in the US, continuously for “nine straight quarters”, according to The Wall Street Journal (Bustillo, 2011). This has been partially due to the economic recession and partially owing to the negative image that has been there for this company (Bustillo, 2011). In order to suggest a package of solutions to get over with this “sales slump”, this paper invisages synthesizing different organizational theories, with a focus on three- the neoclassical theory put forth by Roethlisberger and Dickson (1943), the socio-technical theory proposed by Pasmore (1988, p.87-109) and the contingency theory evolved by Hellriegel and Slocum (1973). This project will put forth innovative and creative solutions to rectify the sales slouch in Wal-mart, using the problem-solving tools provided by these three theories. Access has been gained into the facts about the organizational design of Wal-Mart by conducting interviews with three senior level managers in charge of organizational structure. Basically, the design of Wal-Mart, as an organization, is that of a divisional structure. It has different divisions like, Wal-Mart Realty, Wal-Mart International, Wal-Mart Specialty Stores, Sam's Clubs, and Supercenters which are separate and partially autonomous units. Each division has its own specific set of goals. Step-2 The three theoretical frame works selected for this paper are chosen based on the advantages they have in addressing the specific issue in focus. For example, most of the complaints against Wal-Mart that have led to legal litigations and negative publicity has been regarding labor issues and hence a worker-centered approach put forward by Roethlisberger and Dickson (1943) can help re-model the organization’s functioning in such a way as to avert this criticism. Similarly, the socio-technical theory of Pasmore ((1988, p.87-109) and the contingency theory by Hellriegel and Slocum (1973) have their focus on the environmental aspects of an organization, which can be applied in the case of Wal-Mart which is haunted by many a social conflicts. Neoclassical theory of Roethlisberger and Dickson (1943) has as its core focus, the relationship between “working conditions” and “employee efficiency” (p.1). Through an experiment, Roethlisberger and Dickson (1943) had proven that there was a connection between better working conditions and better performance. In this way, this theory had changed the essence of organizational theories evolved thus far by replacing the mechanistic views by a more humanistic worker-oriented view. This theory had asserted that: An individual is not a mechanical tool but a distinct social being, with aspirations beyond mere fulfilment of a few economic and security works. Individuals differ from each other in pursuing these desires. Thus, an individual should be recognized as interacting with social and economic factors (NRMED-FAO, n.d.). Participative management has been another aspect of this theory, whereby employees are given an appropriate role in the decision making process (NRMED-FAO, n.d.). Any application of the neoclassical theory has to be by keeping in mind, the existence of an informal organization within any formal organization, the socio-psychological factors that influence workers, the inherent illogicality of human mind, the two-way flow of communication within the hierarchy, and the need of teamwork (Pradeep, p.295). Socio-technical theory of Pasmore (1988) has based all its assumptions on the fact that “every organization consists of the people, the technical system and the environment” (NRMED-FAO, n.d.). In this theory also, the importance of considering workers a human beings and all the more, social beings, is stressed (Pasmore, p.5). It has been observed that what is meant by an organization is actually an agreement, a contract between and among people and “changes in the organization will affect this agreement and vice versa” (Pasmore, 1988, p.5). It is also argued that the environment of an organization has the capacity to inspire and provoke it and greater flexibility is demanded from an organization when the environment is strongly provoking (Pasmore, 1988). The sensitivity to environmental provocations and also the ability to get inspired by it are the yardsticks that determine the success of any organization, according to this theoretical perspective (Pasmore, 1988). The six important points to be followed while solving problems of an organization using Pasmore’s theory are, innovative thinking and action by workers at all levels, the qualitative growth of human potential, environmental sensitivity, team spirit, courage to fix very high goals, and a sophisticated design that caters to the organizational needs (Pasmore, 1988). The third theory being used, namely, the contingency approach has suggested that “different environments require different organizational relationships for optimum effectiveness, taking into consideration various social, legal, political, technical and economic factors” ((NRMED-FAO, n.d.). This theory stresses upon context-specific interventions rather than universal rules in applying organizational tools (NRMED-FAO, n.d.). It also has been revealed by this theory that only in a relatively stable environment that lacks technological and market changes, that an organization can succeed (Hellriegel and Slocum, 1973). As in reality, this kind of stability is always elusive, it naturally follows that the organization must be organically evolving (Hellriegel and Slocum, 1973). And also, this theoretical viewpoint has called for better integration in an organization, thereby maintaining the harmony of different variables involved like, human, material and other resources” (NRMED-FAO, n.d.). Analytical tools and data collection methods Based on the neoclassical theory of Roethlisberger and Dickson (1943), a coded database will be prepared to assess the working conditions of the workers of Wal-Mart. For this purpose, all the major news items that have appeared on internet sites in the last one year regarding the working conditions of Wal-Mart workers will be collected. Each news item will be given a code and then the frequency of occurrence of each code will be summarized (Table-1). Table-1 Nature of complaint Code Frequency Percentage Under-paying the workers A ---- Poor work facilities B ---- Discrimination based on race, nationality etc. C ---- Termination of job D ---- Use of illegal workers E ----- . A list of the individual units, factories and shops of Wal-Mart about which no complaints have so far been raised will be officially obtained. Another list of the units about which at least one complaint has been made, will also be officially obtained. Then the performance score of the individual units in each list will be added up separately by giving a rating for each unit based on average, below average and above average performance. The performance score will be decided based on whether the unit showed average, above average or below average performance. The score will be: Average and Above Average: 1 Below Average: 0. Thus below-average performing units will be eliminated and others’ scores added up (Table-2). Table-2 Working Conditions (A,B,C,D,E) Total number Total performance score Percentage of average and above-average performing units Complaint-free units ---- ---- ---- Units about which complaints have been raised ---- ---- ----- Total units 9700 Here it is hypothesized that in the complaint-free units, the performance level is high and in the units about which complaints were/are there regarding working conditions, the performance is comparatively low. Using these sets of data and analytical tools, the first innovative suggestion that this paper will make on improving the sales of the company will be to improve the working conditions of the workers. Based on the neoclassical theory of Roethlisberger and Dickson (1943), an interview will be carried out with the CEO in charge of organizational design in Wal-Mart using a questionnaire, which will focus on participatory management, teamwork, and communication within the organization. Interview protocol Start with an documentary assurance that confidentiality will be maintained Open-ended questions regarding sales slump: What is the official explanation? a. Do you officially acknowledge any human resource factors? b. Do you officially acknowledge any organizational structural flaws? c. Do you see any connection between working conditions and worker performance? d. Isn’t working conditions important because in the retail industry, the down-end person is crucial in winning customers? What do you think? e. What is the kind of participatory management, teamwork and communication within the organization? f. What are the plans to reverse the trend of slumping sales? g. Why do so many complaints arise about the working conditions in Wal-Mart? Ask for supportive documents and data Keep the questions general and open-ended Use three or four sub-questions to reach at elaborate answers Probe and use follow-up questions Using the socio-technical theory of Pasmore (1988) and the contingency theory by Hellriegel and Slocum (1973), the social attitudes towards Wal-Mart in the US and other countries will be found out. For this, e-mail interviews will be conducted with three sociologists who have made in depth studies on Wal-Mart and the social resistance towards it, and their observations will be summarized and compiled. A questionnaire including 10 open-ended questions will be prepared and the same questionnaire will be imparted to each of the three social scientists. Data triangulation will be carried out in order to validate the results. Direct observation of the interactions between customers and workers in Wal-Mart shops and informal interviews with the customers will also be utilized for this purpose. Step-3- Analysis Table-1 Nature of complaint Code Frequency Percentage Under-paying the workers A 59% Poor work facilities B 23% Discrimination based on race, nationality etc. C 11% Termination of job D 4.5% Use of illegal workers E 2.5% The above compilation of data has shown that there are several problems existing in Wal-Mart regarding working conditions of the workers. The categorization given above is indicative of the nature and gravity of these problems. Working Conditions (A,B,C,D,E) Total number Total performance score Percentage of average and above-average performing units Complaint-free units 2291 1989 86.81% Units about which complaints have been raised 7409 4376 59.06% Total units 9700 The above compilation has shown that the complaints-free units regarding working conditions are better performers as well that units about which complaints have been there. The interview with the CEO in charge of organizational design has revealed that Wal-Mart has been into a series of social interventions that are aimed at increasing the organization’s environmental sensitivity. Diversity and inclusion has been recently the company’s proclaimed motto when it comes to customers as well as workers. This has been in view of the accusations of racial discrimination that have been raised in the past against the company. The company acknowledges that there is a slump in its sales but has been looking forward to changing this trend in the near future by way of the social interventions and diversification. What the correlation of data obtained from the data analysis and interview has suggested is that Wal-Mart come forward with more worker incentives as well as a change over from the traditional managerial structure towards a model in which team work and participatory decision making are ensured. The interview with the sociologists has provided with data that suggest that Wal-Mart has not kept its promise of being environmentally sensitive as an organization. The customers as well as community members have been expressing concern over the way in which Wal-Mart has not been keeping up it credibility. Sociologists have observed that the relationship that Wal-Mart owner had maintained with his associates in the formative period have not been there in its recent past. Conclusions The data analysis above is suggestive that Wal-Mart needs to re-orient itself in the line of a synthesis of the organizational theories, which stresses upon the human resource angle and the socio-environmental angle of organizational success. As the informal interviews conducted with the customers and the community members suggest, the company needs to practice its policies on paper- being inclusive and sensitive to the social environment. But ensuring the traceability of its products and by giving space on its racks to locally made produces, it can add itself a sense of belonging to the community. Providing the workers with wages at par with national standards and giving them proper insurance cover could be the first step towards ensuring better working conditions for the staff. As is shown in the data analysis, the company could profit by this as well by improving employee performance. Being an organically evolving company is another option that can be adopted by Wal-Mart and practically, this could be done through democratization of its manager-employee relationship. The way in which Sam Walton had held tightly together his work force is the cultural foundation on which Wal-Mart can evolve itself. Bottoms-up communication as promoted by Walton can be used once again to ensure a free flow of communication and creativity. The worker resentment has been one factor which has affected the overall performance of the company and it is suggested that the company organize informal socializing events for workers and a better chance to move along the hierarchy through merit-oriented performance. References Bustillo, M 2011, ‘Wal-Mart looks on course to end sales slump’, Wall Street Journal, 13 October, viewed 13 October, 2011, http://online.wsj.com/article/SB10001424052970204002304576626812936435944.html Hellriegel, D., and Slocum J.W., Jr. 1973. ‘Organization design: a contingency approach’, Business Horizons, April, 1973, pp.59-68. Natural Resources Management and Environment Department –FAO, ‘Management of agricultural research: A training manual, Module 3’, FAO Corporate Document Repository, viewed 12th October 2011, http://www.fao.org/docrep/w7503e/w7503e03.htm#exhibit 1: organization theories Pasmore, W.A. 1988. Designing Effective Organizations, New York, NY: John Wiley. Pradeep, S. n.d., Administrative Theory, New Delhi: PHI Learning Pvt. Ltd. Roethlisberger, F.J. and Dickson, J.W. 1943. Management and the Worker. Cambridge, MA: Harvard University Press. Read More