Leadership and Management at Wal-Mart - Case Study Example

Leadership and management at Wal-Mart of 10/23/2009 In order to succeed in the business world companies must be able to optimize the performance of its human resource. To achieve this task a firm needs to have a good managerial staff that motivates the employees to perform at a higher standard. A company that has been able since its creation to achieve incredible things is Wal-Mart. Wal-Mart is the most successful retailer in the world and also the largest corporate employer in the world. The company has a global workforce of over 2.1 million associates (Walmartstores, 2009). The purpose of this paper is to describe and analyze how the leadership and management practices at Wal-Mart enabled the firm to achieve global dominance. Company Profile The founder of Wal-Mart was Sam Walton. He opened up the first Wal-Mart store in Rogers, Arkansas in 1962. The goal of the Mr. Walton when he opened up the first retail store was to save people money to help them live a better life (Walmartstores, 2009). The company took off very fast and by 1969 the firm became a publicly traded company. The company’s trading symbol on Wall Street is WMT. Today the corporation enjoys a great level of success. The company is the market leader in the retail industry due to the fact that the service and prices the entity offers are superior to the competition. In fiscal year 2009 Wal-Mart generated $401 billion in global revenues while serving nearly 200 million customers per week (Walmartstores, 2009). Leadership and effective management are two critical success factors that enabled the company to achieve high levels of success. Management vs. Leadership Management and leadership are two completely different business concepts. Leadership can be defined as a special case of interpersonal influence that gets an individual or group to do what the leader wants (Schermerhorn & Hunt & Osborn, 2003, p.286). Management is the act of performing the four managerial functions which are planning, leading, organizing and controlling. In order for a person to become an effective leader the group has to trust the individual. Leadership is not a trait that is limited to the managerial staff. Anybody within an organization can display leadership. It is very common for leadership to manifest itself within a team setting. In such a setting leadership provides the vision to achieve the end state goal (Kumle & Kelly, 2009). I have personally worked in teams in which I became the leader of the team in order to ensure that the team completed the project at hand. Depending on the circumstance a manager has to decide whether to act as a manager or as a leader. For example in circumstances in which a task is not routine and requires innovative thinking a person should act as leader; on the other hand when the work being undertaken by the employees is well understood and there is an existence of specific parameters the person should act as a manager (Spurgeon & Cragg, 2007). The early success of Wal-Mart Corporation had more to do with leadership, rather than management. Sam Walton was a transformational leader. Transformational leadership occurs when a person broadens and elevates the follower’s interest and stirs its followers to look beyond their own interest for the good of the company (Shermerhorn, et al. 2003, p.301). We cannot disregard that correlation between the concepts exist. A person with superb leadership abilities in a managerial function is going to utilize his leadership skills to become more efficient at implementing the four managerial functions. A managerial function that Sam Walton performed very well was the planning function. While other did not believe him he had a vision for the company in which he foresaw the future as far Wal-Mart becoming the global market leader it has become today. Mr. Walton had a master plan for the company which he executed to perfection. Wal-Mart Organizational Culture The organizational culture of an enterprise is very important in order to create a business culture to achieve success and longevity in the marketplace. An organizational culture can be defined as a system of shared actions, values, and beliefs that develops within an organization over time that guides the behavior of its members (Shermerhorn, et al. 2003, p. 262). Wal-Mart has a very dynamic and solid organizational culture. The company truly cares about the well being of its customers. I have personally entered a Wal-Mart establishment and have seen how the employees provide tremendous service to its customer. They are polite, courteous, and very informative. I have also entered the establishment of one its competitors, K-Mart. When you enter a K-Mart store the employees are nowhere to be seen. If you need any help you have make a long line at the customer service desk. That is not cool when all you need is a little assistance to buy a specific item. Wal-Mart has a strong corporate culture. The company has been building its culture the correct way since 1962. Innovation was a key factor that help the company differentiate itself in the retail industry. As the computer industry was born in the late 1970’s Wal-Mart immediately took advantage of the technological advances to improve its managerial control function. In 1975 the company leased the IBM 370/135 computer system to maintain inventory control for all the merchandise in the warehouse and distribution centers in order to prepare individual income statements for each of its 125 stores at the time (Wailgum, 2007). Maintaining high levels of ethical standards is important to build a solid corporate culture. Wal-Mart handles its supply chain management in an ethical manner. The company created a program called Ethical Standards Program (EPS). The purpose of the program is to strengthen the implementation of positive labor and environmental practices in factories, to bring opportunity for a better life in the countries where Wal-Mart merchandise is sourced from, and to verify factory compliance with the company’s code of conduct for suppliers (Walmartstores, 2009). The corporate culture at Wal-Mart values the importance of diversity. Diversity in the workplace refers to variety of difference between the people in an organization which includes dimensions such as race, gender, ethnic group, personality, cognitive style, tenure, organizational function, and education among others (Greenburg, 2006). The company’s culture is built around what Wal-Mart refers to as Mr. Sam’s Values whose core principles are business values, morals and respect. Teamwork is a very important aspect of the organization culture. As mentioned earlier teamwork provide opportunities for employees to show their leadership abilities. The culture of the company believes in mutual respect, open communication, and mutual support (Wal-Mart Stores, 2009). A ritual Sam Walton created decades ago that is still implemented by the organization is the Wal-Mart cheer. A full description of the cheer is illustrated in Appendix A. The company has a practice called the showdown rule. This rule implies that the customer, employees, and supplies when they make an inquiry will receive same day service. Globalization and Management across Borders Sam Walton built a corporate empire that today spreads across 15 countries with over 8159 store locations (Walmartstores, 2009). Some of the company stores operate under a different banner or name, particularly those located in international locations. Wal-Mart uses a different banner in 75% of its international stores. The first international store of the company was created in 1991 with the opening of a Wal-Mart store in Mexico City. Once the company expanded outside the United States the firm recognized that diversity became more important than ever. The company already had experience dealing with international affairs due to the fact that the majority of its purchases came from foreign suppliers of goods. The leading and organizing managerial functions were very instrumental to ensure the company’s operations oversee were run in an efficient and smooth manner. The locations that were established outside American soil had the same expectations as the US based stores. Wal-Mart has an international presence in Argentina, Brazil, Canada, Central America, Chile, China, India, Japan, Mexico, Puerto Rico and the United Kingdom. With the exception of China and India to a certain extend the customers in the other foreign countries have a consumerism mentality. For Wal-Mart their motto for international expansion is simple “Saving money – Good in any language” (Walmartstores, 2009). Strategies to Maintain Healthy Organizational Culture Wal-Mart has a tremendous corporate culture, but there is always room for improvement. A specific strategy that could be utilized at Wal-Mart to improve the corporate culture is to implement an economic incentive service voucher program. The associates working at Wal-Mart would keep track of each customer they served through a voucher mechanism. Every time they serve a customer the employee would ask the customer to sign a small voucher. In exchange the customer would receive a savings coupon for a specific item. The employees in each store would receive a small weekly bonus depending on how many people they serve. Each voucher could be worth $0.10 cents each which means that if employee served 5 customers in an hour he would make an extra $0.50 an hour. A viability analysis would have to be performed to determine the exact value of the service vouchers. The customer would receive the benefit of getting additional savings whenever they ask for help. The store would be able to increase the demand of the items they decided to give savings coupons. The strategy would enhance the corporate culture by improving the customer service the store provides. It would also improve the leading managerial function because the economic incentive would motivate the staff. Another mechanism that could be used to enhance the corporate culture is by implementing survey feedback mechanisms. Wal-Mart could place feedback booths in all stores. In order to facilitate the process and minimize the labor costs associated with this function the feedback booth should be electronic terminals. The use of technology would make it more attractive for customer to participate in the process. From a managerial perspective a technique that can be used to facilitate the organizing managerial function is delegating. Delegating implies empowering employees to accomplish the company goals by giving sufficient authority and responsibility to make their own decision (McNamara, 2008). All Wal-Mart stores have hundreds of employees working at each location. The workers need to have the freedom decide by themselves how to handle everyday situations, otherwise the manager would have to monitor too make events an employee with good training can handle without the intervention of the manager. A company that implements delegating must establish clear protocols on which situations merit the intervention of a manager. Conclusion As we move forward in the 21st century businesses have to recognize customers expect more from them than ever before. The managers of corporations have to adjust their practices in order to become more efficient at implementing the four functions of management. Creating a solid corporate culture can help a firm achieve its long term goals. Wal-Mart is a great example of an American company that has excelled by showing superb leadership and managerial skills. The firm became the world’s top retailer because its founder from the start place emphasis on the values of the company which he called Mr. Sam’s Values. As the firm evolved these values help maintain a solid business foundation based on mutual trust and respect between all the company’s stakeholders which includes the customers and suppliers. Wal-Mart was able to provide its customer with better prices than the competition because they spend time and money to improve their logistics and relations with international suppliers which enabled the company to get lower prices in their bulk purchases of merchandise. Information technology is one of the driving forces that helped the company stay ahead of the competition. Two recommendations in order to improve the corporate culture of the company are the implementation of a service voucher program and utilization of delegating responsibility to the employees. The future of Wal-Mart is bright. The company has the potential to continue its global expansion to other territories. The firm should target other European nations other than the United Kingdom. The company Sam Walton created is a true example of the American dream. Appendix A: Wal-Mart Cheer Give me a W! Give me an A! Give me an L! Give me a squiggly! Give me an M! Give me an A! Give me an R! Give me a T! Whats that spell? Walmart! Whose Walmart is it? Its my Walmart! Whos number one? The customer! Always! (Walmartstores, 2009). References Greenburg, J. (2006). Workplace Diversity: Benefits, Challenges, and Solutions. Retrieved October 23, 2009 from http://www.diversityworking.com/employerZone/diversityManagement/?id=9 Kumble, J., Kelly, N. (2006). Leadership vs. management. Supervision, 67(8), 11. McNamara, C. (2008). Delegating to Employees. Retrieved October 23, 2009 from http://www.managementhelp.org/guiding/delegate/delegate.htm Schermerhorn, J., Hunt, J., Osborn, R. (2003). Organizational Behavior (8th ed.). New York: John Wiley & Sons. Spurgeon, D., Cragg, R. Is it Management or leadership? Clinician in Management, 15, 123-125. Wailgum, T. (2007). 45 Years of Wal-Mart History: A Technology Time-Line. CIO. Retrieved October 23, 2009 from http://www.cio.com/article/147005/45_Years_of_Wal_Mart_History_A_Technology_Time_Line Walmartstores.com (2009). About Us. Retrieved October 22, 2009 from http://walmartstores.com/AboutUs/ Read More