Human Resources Management at Wal-Mart Stores Inc - Case Study Example

Human Resource Practices: The Case of Wal-Mart Stores Inc Insert Name Institution Instructor Date Human Resource Practices: The Case of Wal-Mart Stores Inc Introduction Arguably the world’s largest private employer, Wal-Mart Stores Inc has two million employees across the world. The organization, which is a retail business with well over 8500 stores under fifty names, operates in fifteen countries. According to Fortune 500, Wal-Mart Stores Inc was the third largest corporation in the world in the year 2012. The multinational retailer is headquartered in Benton Ville, Arkansas. The organization is best known for the way in which it treats its employees. The members of staff at Wal-Mart Stores Inc are referred to as associates (Soderquist, 2005). This is a unique strategy aimed at making the employees feel motivated by being referred to as owners of the organization. Making employees feel affiliated to the organization has for a very long time made the organization progress from one phase to another as the feeling of affiliation makes the employees receive change positively. Wal-Mart Stores Inc was founded by Sam Walton in the year 1962 and incorporated on the 31st day of October 1969. The organization’s stocks were first traded on the New York Stock Exchange in 1972. To this day, the organization is run as a family business as the Walton Family controls 48% of the stocks. According to the 2013 report, the earnings per share (EPS) of the organization improved by 10.2%, which translates to 5.02 USD. The report also shows an upward trend in the net income as the organization recorded an additional 22 billion USD and an additional operational income of 4.7%, which translates to 27.8 billion USD (Wal-Mart Annual Report, 2013). The strength of the organization is the actuality that it has an exceptionally effective human resources strategy. The human resources of the organization perform exceptionally well in interacting with the customers. The human resources are deeply integrated into the organizational structure in such a way that they feel part of the organization. Sam Walton identified this as a potent strategy because, essentially, employees are the blood and life of the organization since they keep everything running, while maintaining and continuously improving the corporate image of the organization. The HR strategy at Wal-Mart Stores Inc is in such a way that the employees are referred to as associates, and are part of the decision making process. This keeps the employees motivated all through. As such, they give the organization a competitive advantage and become Wal-Mart Stores Inc’s biggest assets. The Role of the HR Manager When establishing the organization, Sam Walton came up with a unique strategy – one that focused on using people as the main resources towards success. In point of fact, the organization’s founder emphasized that the organization was to be differentiated from all other organizations through a powerful and unique HR department. For this reason, he gave prominence to the Human Resource sections and referred to it as the People’s Division instead of the tradition Human Resource Department. Referring to the department as the people’s division gave the employees a sense of belonging and importance (Bergdahl, 2010). The human resource manager, arguably one of the most significant top managers in the organization undergoes special training at the Walton institute at the University of Arkansas. Such training empowers the managers to keep the organization running effectively and in accordance to the Wal-Mart culture. Apparently, the most significant role of the HR manager is to align the HR policies to the overall organizational strategy. Essentially, this means that the HR manager is the bridge between the people or associates as the human resources are called in the organization, to the success of the organization. The HR manager of Wal-Mart Stores Inc is entrusted with the responsibility of overseeing and implementing continuous development, continuous learning, and overall employee empowerment. These will be achieved through continuous training and superior execution of employee practices. In point of fact, Wal-Mart employees are trained continuously, both on the job and off the job. The HR manager is therefore responsible for ensuring that the human resources are trained and aligned in such a way that they create a synergistic teamwork that best drives the organization towards success (Bergdahl, 2010). Synergies from within the organization have been identified as the most effective as they can be modified at any particular point in time to reflect the mission of the organization. The human resources manager is the figure behind the exceptional services offered by employees in helping them achieve the long term objectives. Speaking of exceptional services, the employees are trained in such a manner that they interact amicably with the customers, who are the most important stakeholders in a business organization. Overall Strategy Wal-Mart adopts an outstanding strategy in maintaining its position as the biggest retail business in the world. The organization is also known to the largest private sector employer. In maintaining these titles in the retail industry, the organization adopts a strategy that can best be explained through Porter’s thinking on the generic strategies. Worth mentioning however, is the actuality that the strategy adopted by Wal-Mart Inc is in such a way that it incorporates the human resources all through. Cost leadership Right from the time it was established, Wal-Mart has always sought to uphold cost leadership. Costs are the most important factor considered in making decisions relating to prices. As a matter of fact, the cost of a product determines the price of the product. The price of the product is simply the cost of the product plus a pre- determined margin. Therefore the amount of money spent as the cost could determine the prices of the products. Cost leadership is a business concept developed by Michael E. Porter of the Harvard business school to be used in achieving competitive advantage. The concept is often determined by the efficiency of a company, the size of the company, the scope of the company as well as the learning curve of the company. Wal-Mart has always endeavored to be a cost leader through lowering all cost of production through such practices as the cost efficient labor practices. The use of on the job training is a way of minimizing costs and hence maximizing revenue (Bergdahl, 2010). Apparently, Sam Walton recognized cost leadership as a key to success. This is evidenced by the fact that he located his stores in the averagely rich suburban areas as opposed to the competitors that were in large towns. Being I n such suburbs the costs were lower. A strategy associated with cost leadership seeks to exploit the scale of production as well as other economies such as a good approach of purchasing, producing goods of high standards and using exceptional technology. Differentiation strategy This strategy is most applicable where the buyer perceives the sellers and the products in the market to be near identical in terms of quality. Wal-Mart, being a multiline retailer, seeks to differentiate itself through various methods, such as exceptional human resource practices. Human resources are used to differentiate the organization from competitors in a multiplicity of ways. First and foremost, the organization’s workforce always seeks to treat customers in a manner that is extremely friendly. They are well trained to maintain customer relationships in the search for customer loyalty. The staff of Wal-Mart, commonly referred to as associates, treats the employees in a preferential manner – something that has always attracted the American shoppers who define Wal-Mart as an organization that not only offers quality, but also offers love for the customers. Differentiation could be achieved by advantageous creativity as the one evident in Wal-Mart. In the 2013 annual report, Wal-Mart believes “Talented associates deliver the operational efficiencies that make possible Wal-Mart’s EDLP” (Wal-Mart Annual Report, 2013). The focus on strategic scope This element is not an independent strategy. Instead it defines the scope within which the organization can compete in the basis of differentiation or cost leadership. The organization may opt to compete in the global market with a broad coverage or in a local market, or a particular segment within a narrow scope. In both cases, the foundation of competition remains to be either differentiation or cost leadership. Wal-Mart has always endeavored to target specific sections of the market. In its initial years, the organization was known to target the middle income earner as the competitors were aiming at the high income earners (Soderquist, 2005). This is usually referred to as niche strategy or segmentation strategy. Usually this are supposed to be strictly different groups with particular needs. The choice on whether to offer low prices or differentiated prices solely depends on the preferences of the preferred segment and the capacity or the abilities of the organization. It is assumed that if an organization focuses its marketing endeavors on a few market segments and doctoring their market mix to this particular market, it can effortlessly meet the needs of the targeted segment. The organization usually seeks to achieve competitive advantage through efficiency. It is particularly suitable for growing organizations but in normal circumstances it can be used by any company. A strategy with focus should aim at the market sections that are not vulnerable to many substitutes, which are associated with high competition. The Human Resources Approach Wal-Mart has at all times fought the spirit of unionization in the human resource affairs (Jackson et al, 2009). Trade unions are among the most powerful force affecting the human resource factors in an industry. Wal-Mart and most of the organizations adopt a pluralist approach to employment relationships. The pluralist approach is one that ensures stability in an organization. Stability in an organization is associated with fewer conflicts associated with collective bargaining. It is important to note that collective bargaining efforts disrupt activities in organizations, especially where there are conflicts between the management and the workforce. It is because of this pluralist approach that the organization has faced high rates of labor turnover. As per the end of 2012, the organization was performing exemplarily well, but had some faults in the human resource section. The human resource function of any organization depends on a good flow of information to perform well. Communication is essential as it eliminates tension and uncertainties in the internal environment of an organization. Wal-Mart is currently characterized by high employee turnover. Despite the unique treatment of the employees, the organization is experiencing a high rate of change in the workforce. Such change is costly to the organization as it attracts more training and orientation costs. All these problems affect employees negatively because they cannot bargain collectively. References Bergdahl, M. (2010, June 21). How the HR Division at Wal-Mart Drives the Company’s Success through People. The HR Magazine, Retrieved from http://www.hrmagazine.co.uk/hro/analysis/1018448/how-hr-division-wal-mart-drives-companys-success-people Jackson, S. E., Schuler, R. S., Werner, S., & Jackson, S. E. (2009). Managing human resources. Mason, OH: South-Western Cengage Learning. Soderquist, D. (2005). The Wal-Mart way: The inside story of the success of the world's largest company. Nashville: T. Nelson. Read More