Wal-Mart's human resource management (HRM) issues and strategies
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Wal-Mart and how the management of human capital
An organization’s human capital management philosophy must value the workforce as a key asset that will define an organization’s character and performance capacity (Champion-Hughes, 2001). This is a very basic idea that leads to enormously positive results. Abramson and group (2002) stated that human capital is a critical factor that would either lead the organization to success or to failure. Now that the value of the workforce has been realized, human capital management is believed to be the critical link in a modern performance management program, which promotes a healthy employee relations agenda. According to Walker (2000), the concern in a modern performance management program is on the achievement of the desired results or outcomes, measured by their impact and not by their quantity. Treating the employees as champions and as a significant aspect of the organization naturally results to other positive outcomes. One of which is the improvement of the overall organizational performance (Brewer & Selden, 2000). In the current job market, private and public sectors are both engaged in “war for talents” as their concern is on the recruitment, development and retention of talented and bright employees (Abramson, et al., 2002). In this regard, the organization must be able to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals (Thompson et al., 2004; Pearce & Robinson, 2000). The most vital asset of an organization is its employees. This paper explores the case of Wal-Mart particularly its human resource management (HRM) issues and strategies.
Wal-Mart: a superpower in the retail industry
Wal-Mart is a multinational corporation because it basically has its operation in a worldwide perspective and approaches. Today, Wal-Mart is not only considered as the world’s largest corporation but also the world’s most admired company as based on the result of the 2003 Fortune magazine poll of 10,000 business executives, board directors, and financial analysts in 25 countries (Stein, 2003). In its corporate records the same year, the company has 1.4 million “associates,” which is what Wal-Mart calls its employees. Its international operations extend as far as Argentina, Canada, Germany, South Korea, Puerto Rico, the United Kingdom, China, Brazil, and Mexico achieved sales of $41 billion in fiscal 2003 (Wal-Mart Stores, Inc., 2003a). It cannot be denied that Wal-Mart is a company that considers global opportunities and with this, a considerable portion of its assets is definitely globally prepared. According to Hitt, Ireland and Hoskisson (2003, p. 13), the Wal-Mart stores are invading the global arena in the business competition by doing the activities of retailing, pricing, sourcing and logistics in a global and international transactions and approaches. As a proof of this fact, it was revealed that originally, the international investments of Wal-Mart stores are basically laid in its branches in Canada and Mexico. However, with continuous expansion and business growth, the company was able to moved and invade other countries such as Argentina, Brazil, Indonesia, and China. Wal-Mart has proven to be doing well in their line of business but despite that it comes across a lot of interruptions and delays. From a small Arkansas retailer they became nationally acclaimed because of its first-rate management team that takes on in a lot of pioneering operating strategies that helped allocate the company’s dedication to a large choice of “high-value merchandise” at a low price to customers. As the company becomes bigger and wider, they run into a lot of opportunities, develops new schemes and use a variety of approach to maintain its growth rate, however, every decision they make involves risk. However, it is noteworthy to say that Wal-Mart, despite its success in the field of doing business in the global arena, is still facing certain difficulties and problems arising with the transactions made in the global perspective and approaches. There are still some factors that are contributing in making the business difficult to handle and the transactions hard to accomplish.
Strategy is a common attribute in both small and large businesses specifically in managing people. On the case of Wal-Mart as the world’s largest company, the strategy is rooted the attributes of its corporate culture that originated from Sam Walton. These attributes include:
Respecting every individual
Exceeding customer expectations
Partnering with associates and suppliers
Keeping an eye on competitors and putting forth a little extra effort above and beyond them
Streamlining operations and controlling costs
Selling for less
Learning continuously, striving for excellence, and embracing changes
Getting involved in community activities
Having some fun while working hard
Expressing appreciation to customers and associates often (Wal-Mart Stores, Inc., 2003).
While the corporate culture of the company is recognized to be fairly admirable, the company faced several HR issues in the past years. Sambrook (2000, p.159) has stated that the HRM plays a key role in leveraging the knowledge of the organization specifically the enhancement of the abilities and skill of the employees. In particular, the function of the HRM in employing people with the right skills and competence influences the morale of the employees. Conducting a proper analysis of each employee’s abilities enables the human resource department to assign them to responsibilities or positions where they can perform their best. In turn, this contributes to employee motivation. Moreover, the HRM involves the provision of feedbacks through employee appraisal, which also motivates the employees overall performance. This enables the company to assess their employees individually based on various aspects such as daily work output, quality of work, work attitudes and overall performance. It also helps the company identify their employees’ strengths and weaknesses. Included in this aspect is the provision of various forms of recognition for hard working and deserving employees.
Issues: Motivation, Compensation, and Conflict
The issue of motivation and compensation was manifested in news articles and research studies conducted stating that Wal-Mart has low wages and sparse benefits package. With this, the management needs to restudy and focus the competitiveness of their offers that will lead to further motivation and productivity of their workforce. As with organization, “people are the most valuable asset”, employee satisfaction – ensured through proper motivation and compensation – must be carefully considered by the HR team. This must be done to retain good staff and to encourage them to give of their best while at work requires attention to the financial and psychological and even physiological rewards offered by the organization.
Basic financial rewards and conditions of service are determined by national bargaining or government minimum wage legislation such as the Employment Relations Act (2004) or by collective bargaining with labor unions. Details of conditions of service are often more important than the basics (Sims, 2002). Hence, financial and other motivations must constantly be evaluated and improved to ensure employee satisfaction. According to the expectancy theory, employees expect and need to be rewarded according to the work they do, and will help them to develop their capability, help them to work up to a higher level so that they can be better rewarded. Employees expect organizations to have compensation systems that they perceive as being fair and commensurate with their skills and expectations (Sims, 2002). The compensation may, in some cases, act as employee motivators. These compensations that employees receive may be value-added compensation including direct compensation, such as salary, incentives and commissions; and indirect compensation, such as insurance benefits, employee recognition programs, flexible work hours, and vacation benefits. In accordance to the systems theory, work must be divided specifically among work units such as companies, divisions, departments or groups. Tasks must be assigned perfectly so there will be no gaps and overlaps of responsibilities, as dictated by the contingency theory. Also, different levels of an organization require different kinds of work. The HR staff needs to consider these aspects in the planning of the organizational structure.
One of the spill-over effects of the macro problems in the organization is conflict. For one, it wastes essential human resources that should have been used in more productive endeavors, which should include the ultimate goal of the organization. Managers spend increasingly more time mending conflicts and its repercussions. Yet, conflict gives out negative results and it ironically paves the way for beneficial results. For example, the emerging conflict between Mr. Tony and Glenn often helps uncover persistent problems so that they can undergo careful scrutiny. In this manner, conflict sometimes serves as the drive for effective and needed change (Rahim & Buntzman 1988, p.198).
Managing the process of resolving conflicts is the central task regarding organizational order. Such management of conflict requires a full and sophisticated grasp of major elements in the conflict process. Individual causes and determinants of conflict, such as faulty attributions, poor styles of communication, and personal traits or characteristics that contribute to interpersonal friction, all play a role and must be taken into account. Similarly, organization-based factors, such as competition for scarce resources, ambiguity over responsibility or jurisdiction, growing internal complexity, and faulty or inadequate forms of communication, must also be considered. Make sure that positive effects are garnered from the situation and all of those involved or in control must do everything in their power to maximize the positive products while minimizing the disruptive consequences.
With all the issues identified, these are the practical recommendations. In connection to employee motivation and compensation, Wal-Mart’s management must focus on the fairness and equal treatment of employee. Managers must be willing to communicate with their associates. The leadership style must be evaluated in order to know if it is effective or not. Benefits, incentives and rewards are some means to motivate employee performance. However, it is also recommended that it must be used in moderation. Further, collective bargaining and maintaining an open line of communication among concerned parties is imperative. Effective implementation of motivational actions will result to increased productivity. Finally, in managing conflict, the manager must be equipped with the skills in conflict solving process. Investigation and the process of mediation is the most vital solution to this problem. Additionally, fairness and equality must be present in the working environment.
In conclusion, the HR function plays a great role in the execution of company’s goal. Through effective implementation from the start up to the end, it will yield to higher employees’ productivity and increase of revenue. All HRM functions are deliberate and directed to the success of the organization. Richard Pinola, chair and CEO of Right Management Consultants, Inc., has identified what administration officials require from lead professionals in terms of HR. he also added that to increase real value to a company, HR must relate to the organization’s overall strategy. When this approach is accomplished, affirmative changes can occur in talent management, leadership development, and organizational performance (Hornsby & Kuratko 2005, p.26).
The function of HRM is for the betterment of the organization’s working force. It is very essential for the HRM officer to concentrate on the feature wherein it needs special kind attention. Everything changes. In order for companies to go with the flow of current trends, they must be fully equipped with all the necessary factors affecting a satisfactory HRM system. As from the conception of an employee up to the end of his/her service to the organization, the HRM function will always be directed to the purposes of holistic human development to attain the ultimate goal – competitive growth rooted on people’s trust, commitment, loyalty, adaptability, and high-quality knowledge and abilities.
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