Compensation and Benefits - Wal-Mart - Case Study Example

Compensation and benefits Wal-Mart is the largest private employer in North America. The company has encountered numerous compensation and benefits challenges since employees have complained of cutting hours, unfair dismissals and deployment in the wrong designations. Though the company offers profit sharing plans, health care plans and stock purchase plans, it has encountered the above challenges in its compensation packages. The company should introduce free transport services, performance recognition awards and training opportunities for all employees. Employees should be allowed to join unions while a security of tenure should be provided to all full-time employees. Proposed compensation and benefits of Wal-Mart Introduction Wal-Mart is one of the organizations among the largest employers in North America. Wal-Mart business operations have increased rapidly compared with similar organizations. Although Wal-Mart offers its employees with various benefits and compensations like “health plan benefits”, “profit sharing plans” and “ stock purchase plan”, there are certain challenges facing the organization since compensation procedures have not addressed the numerous employee complains (Wal-Mart Watch, 2007). A recent case happened in Oklahoma in 2007 when employees complained of compensation policies that included “cutting hours” and not hiring the employees in designations where they have proved competent and skilled (Wal-Mart Watch, 2007). The employees also complained that a number of them had been fired without any apparent reason. The above reasons are just some of the challenges which Wal-Mart employees. The employees are currently unsatisfied thus lowering their work productivity in the organization. The management should establish compensation and benefit policies that maximize employee productivity and motivation in the organization (Wall Mart, 2008). According to the current benefits and compensation plan, Wal-Mart claims that the package is competitive relative to other industries and organizations. The benefit package includes health benefits, profit sharing, retirement savings and stock purchase programs. All associates are eligible for health benefit for as little as $ 5 per month to a maximum of $ 8. Wal-Mart contributes 2 percent of all eligible Associate’s annual salary or wages to the 401 (k) Plan after a one year waiting periods. Wal-Mart also contributes about 2 percent of each eligible Associate’s wages to the profit sharing plan provided they have worked in the company for at least 12 months. In the stock purchase plan, the company contributes only 15 cents for each dollar of the company stock purchased by the employees through deductions in the payroll up to $ 1,800 of stock purchases in each plan year (Wall Mart, 2008). Wal-Mart compensation and benefits policies are inadequate since the company has engaged in “cutting hours” and employees are not hired in designations where they are talented. The company has also fired numerous employees without any apparent reason and explanation. Employee work motivation and productivity has declined thus leading to poor job performance and total productivity of the organization. Wal-Mart Stores Inc which is the largest private employer in North America has been accused of scaling down the health benefits offered to part-time employees and increasing the premiums deducted from most of the full-time employees’ salaries. Wal-Mart has engaged in cost cutting measures to offset the slowdown in consumer spending which has affected the company revenues in the last few years (Wal-Mart Watch, 2007). The company has reversed the eligibility of part-time workers by requiring them to cover their children healthcare and reduced the co-payments for prescription drugs. Wal-Mart has denied most of its employees from working full-time thus reducing the health care benefits to the employees. The company has also been accused of discriminative working policies against women and employees from minority groups thus leading to bad reputation and consistent lawsuits. The company is also Anti-union since it has rejected all efforts made by employees to form unions by closing down some stores (Beam & McFadden, 2001). In September last year, the company closed down Quebec store when the employees successfully formed a labor union by citing economic reasons but Quebec’s labor relations board later found out Wal-Mart’s actions to be illegal in firing the employees (Wall Mart, 2008). The company has been accused of employee exploitations since employees are denied the minimum wages, the overtime pay and working conditions are unsafe for most of the employees. The company has been testing the “flexible scheduling” policy which is entail working in shifts but analysts say it will reduce the working hours thus resulting to part-time schedules. Wal-Mart is geared at the cheaper health insurance plan but neglecting the quality of health care. This is done by discouraging unhealthy employees from continuing with employment, hiring more part-time employees, and reducing the 401 (k) contributions (Wall Mart, 2008). Compensation and benefits of other organizations Some organizations that have been able to attract and retain talented workforce through compensation and benefit policies include Starbucks, Microsoft and Coca-Cola. These organizations have a comprehensive and inclusive benefit package that allows the employee to select a compensation package according to their needs (Beam & McFadden, 2001). All full-time employees and those working on a part-time but on regular basis for more than 24 hours are eligible for the comprehensive benefits package (Beam & McFadden, 2001). For instance, all employees are included in the stock purchase scheme and profit sharing plans. The medical and health care package covers accident insurance, cancer or critical illnesses, and dental problems (Beam & McFadden, 2001). There is a flexible spending account that mainly reimburses the employees health care expenses incurred through private medical consultation and treatment. All employees have a health saving account where they can save money for future health care costs from minimum deductions on their salaries (Beam & McFadden, 2001). These organizations also offer long-term care and short-term disability insurance benefits that cover either permanent or short-term disability that may impair the employee from working and providing for his family. These companies provide time-off benefits and flexible working schedules that improve the work-life balance of the employees. For instance, full-time and some part-time employees have absence with pay incase of medical illness, holiday pay and paid time off based on the tenure of the employee in the organization (Beam & McFadden, 2001). Other employee benefits include commuter expenses reimbursement, recreational benefits like fitness clubs, and employee recognition programs that rewards employees through bonus programs, and long serving awards at the end of the financial year. These companies also offer retirement benefits plans. The employees commit at least 2 percent of the salary or wages to the plans and the organization matches the employee contribution with similar contribution to the account (Beam & McFadden, 2001). A particular note, these organizations have attained employee loyalty through continuous training and development programs. These include University fee compensation, in-house training and development programs on leadership, seminars on career planning and mentorship programs that increase productivity and growth potential of each employee in the organization. The organizations will reimburse up to 100 percent of the costs incurred by the employee on tuition and books on programs approved by the company according to the educational assistance programs (Beam & McFadden, 2001). Though these organizations have spent heavily on employee compensation and benefits programs, they have achieved success since they have witnessed higher employee productivity and loyalty to the organization (Beam & McFadden, 2001). These compensation plans have reduced employee turnover and absence in the organization. The organizations have maintained a good reputation in the market thus they can easily attract and maintain talented employees. The organizations have reduced costly law related suits like discrimination related practices in the workplace or employee strikes that can adversely affect the operations of the organization (Beam & McFadden, 2001). Recommended strategies Wal-Mart should implement a Fair share health care fund by contributing at least 10 percent of the payroll expenditure towards either health care, paying the employee health care costs directly or paying the money to the State for the health care costs in that particular state. Wal-Mart should compensate employees with at least $ 10 per hour for the part-time employees and at least $ 3 of benefit pay. The company has been accused of cutting hours thus it should make efforts to offer full-time employment to all employees. The company should provide both Whole life insurance since most of the employees work in risk environment that require them to wear protective clothing. The company should contribute at least 10 percent of its payroll expenditure to financing disability insurance and other medical-related covers such as critical illness cover (Berger & Berger, 2008. Wal-Mart should match the employee contribution to the 401 (k) plans by contributing an equivalent amount according to each employee personal contribution to the plan. Wal-Mart should also implement time-off benefits like sick pay leave and time-off pay depending on the tenure of each employee. Wal-Mart has been accused of discrimination in hiring practices. The company should provide equal opportunities for all employees regardless of their medical condition. The company should ensure gender representation in the workforce and hire minorities even in the senior management levels. All Wal-Mart supervisors should be trained on the need to avoid sexual harassment or any other forms of harassment in the work place (Berger & Berger, 2008. Since most of the employees have been hired without apparent reason, Wal-Mart should allow employees to join trade unions and implement disciplinary and retrenchment procedures that are fair to all employees (Berger & Berger, 2008. The company should provide job security which will enable employees to feel valued by the organization. All dismissals should be done after affected employees have been notified on the pending dismissal and availed the opportunity to appear and disciplinary and grievances handling committee (Berger & Berger, 2008. Since numerous employees have complained they are not assigned tasks in designations where they are qualified, the management should change the implement training benefits programs. The job allocation should recognize employee qualifications, skills and attitudes. The management should ensure job rotation, job enrichment and promotion policies are in place in order to ensure employee motivation (Berger & Berger, 2008. Wal-Mart should offer Training and career advancement programs that help the employees to improve their skills through learning and mentorship. The management should provide flexible working schedules in order to allow time for the employee to advance their careers and obtain promotion in the organization (Berger & Berger, 2008. Wal-Mart should implement wellness programs as part of the benefits package. These include stress counseling services, sporting activities and gyms in the organization facilities that enable employees to remain healthy and reduce work related stress and depression (Berger & Berger, 2008. The management should also provide baby-sitting services for the women employees and family assistance programs in case of death of a close relative (Berger & Berger, 2008). Wal-Mart should offer additional fringe benefits like transport allowances, housing allowances and low interest loans to the low income employees. The company should also provide adequate working equipment and tools in order to guarantee employee safety in the stores. Wal-Mart should also provide employee excellent performance recording schemes through regular job performance evaluation and service awards that recognize excellent job performance and employee loyalty to the organization (Berger & Berger, 2008. The above strategy has been selected since employee training will improve their work productivity. Most of the employees work in unsafe workings thus there is a need of a fully-funded medical health care scheme. Most of the employees have no job security thus dismissal procedure should be fair and individual employee performance should be recognized through awards and promotion opportunities (Berger & Berger, 2008. Impediments and contingency plans Some of the impediments to the above program include the unnecessary sick pay leaves by most of the low income employees in subordinate positions. This can be avoided by requiring such employees to provide adequate medical documents in order to benefit from the sick pay leave. Most of the employees may not be willing to contribute towards the 401 (k) plans. The organization will overcome this challenge by educating the employees on the need and benefits of retirement plans. Wal-Mart may not have the financial capability to finance the above program due to the economic slowdown in the consumer goods sector, but can gradually implement the program within a time period of five years. Benefits of the above program The above strategy will address Wal-Mart benefits challenge since most of the employee will have security of tenure and become full-time workers. Through job enrichment, job rotation and training opportunities, employee will receive promotions and career advancement opportunities and work in designations which they are better qualified. Implementing job security and disciplinary procedures will motivate the employee. Allowing the employee to join unions will create a close working relationship with the management since employees will feel valued and respected by the company since they have the opportunity of collective bargaining for higher salaries. Conclusion Wal-Mart should increase employee salaries, provide security of tenure and allow employees to join trade unions. The company should commit at least 10 percent of the payroll expenditure to employee healthcare by providing benefits such a Whole life insurance, disability insurance, medical expenses reimbursement scheme and wellness programs. The company should also offer recognition and award programs together with education assistance programs. References List Beam, B & McFadden, J. (2001). Employee benefits. Chicago: Real Estate Education. Berger, L & Berger, D. (2008). The compensation handbook: a state-of-the art guide to compensation strategy and design. New York. McGraw-Hill Wall Mart. (2008). Wall Mart. Retrieved July 17, 2012, from www.walmartstores.com:http://www.walmartstores.com/sites/sustainabilityreport/2007/associatesWages.html Wal-Mart Watch. (2007). Wal-Mart’s Worker Compensation Program . Retrieved July 17, 2012, from walmartwatch.com: http://walmartwatch.com/wp-content/blogs.dir/2/files/pdf/workers_compensation.pdf Read More