Wal-Mart’s Recruitment and Retention Program

Introduction

Formed in 1962, Wal-Mart is the world’s largest retail chain that has operations in more than 26 countries in all the continents of the world except Australia. The company has been voted six times as the world’s largest corporation that employs more than 2.3 million workers. It has a market capitalization of more than 280billion. In 2014, the company had revenue of USD$471billion. From this figure, as Mayer and Noiseux confirm, it is evident that if it were a nation, it would be the world 23rd largest economy.5 With more than 11,000 stores worldwide, Wal-Mart is truly a giant corporation that continues to expand to other locations. According to Sheremet, it is the world’s largest employer and the largest company in the USA. Its revenue represents almost 2.0% of the US GDP.6

The fact that the company is the world’s popular employer, Wal-Mart’s human resource practices have been at the center stage of numerous studies that focus on its business culture that is characterized by inefficient employee recruitment and retention strategies. In many instances, the organization has received criticism for its employee approaches. Many critics claim that such approaches have not been the best and that there is more room for improvement. However, the organization has disregarded many of these criticisms by arguing that with more than 2.2million employees, it is difficult to please everybody and that few of them who are not satisfied are the ones who portray Wal-Mart’s human resource practices in bad light.

However, whether these assertions are true or false, the fact remains that the world is ever changing and that the concepts and approaches that work today may not work tomorrow. Consequently, the situation attracts the need for organizations to always be on the lookout concerning the emerging best employee practices. The goal is to adopt them. This paper is a case study of Wal-Mart’s recruitment and retention strategies. It also includes key recommendations and implementation plans that Wal-Mart can adopt to ensure a robust, engaged, and highly productive labor force, which can meet the expectations and challenges of the 21st century business environment.

Issue Statement

Why trying to remain competitive, organizations have adopted many strategies to ensure organizational efficiency and effectiveness, especially in a world, which has become very competitive due to the advancement of technology and globalization. There is no room for laxity. Hence, any organization that is not ready to change risks being driven out of the market by competition, as more effective and efficient alternatives continue to emerge. What are the areas that are currently critical in ensuring organizational effectiveness and competitiveness? According to Shereme (2013), it is without doubt that one of the key areas and emerging trends is information technology. Emerging technologies have eliminated many problems that previously affected organizations. For instance, through technologies, organizations can adopt more cost-effective and efficient production processes, as well as other activities that improve communication within and without the organization.

Of all the various strategies that organizations have adopted, one critical area, namely the human resource, has been identified as the most important. According to Mello, while other areas of organizational effectiveness such as technologies and resources can easily be adopted, human capital remains one of the most elusive yet critical factors for organizational success.4 The role of the human resource is no longer restricted to recruiting, employing, and firing individuals. Currently, the human resource department has become a deeply integrated section whose mandates must be aligned with other organizational operations at all levels to ensure maximum success and outcomes for the organization. Indeed, according to Maxwell, numerous studies that have emerged on human resource management emphasize the centrality of human capital in the success of the 21st century organizations.3 One of the core areas that have been emphasized include the recruitment and retention of the right employees who can drive the organization’s competitiveness. Some of the key areas of emphasis in this area have been on how to attract the best talent, how to ensure employee engagement and productivity, and how to guarantee employee retention among others.

In the light of the emergence of human capital as a central tenet for the success of the 21st century organization, this case study focuses on the human resource management strategies of recruitment and retention that Wal-Mart has adopted in ensuring that it remains competitive while at the same time catering for employee welfare. The case study will first analyze the current human resource management situation of Wal-Mart with a view of setting a background understanding of this report. Such background analysis will involve the discussion of important statistics, as well as literature on its past and current human resource management situation, the various efforts that the organization has put forward, and most importantly, the identification of the areas where it has lagged behind relative to other organizations that are known for their best human resource management practices.

In analyzing the current human resource management situation at Wal-Mart, the case study will be setting a platform where it can discuss the current industry’s best practices, employee recruitment and retention strategies, and/or how these strategies can effectively be implemented at Wal-Mart. Further, the study will discuss the various challenges that Wal-Mart as an organization faces in its push for effective recruitment and retention strategies. How can these challenges be overcome? As a global leader in its field, Wal-Mart also has its main advantages and opportunities that it can capitalize on to guarantee best practices in its human resource. This issue will be discussed in details. The performance strategy will also involve an implementation plan to guide the whole process. Finally, the plan will be accompanied by recommendations that Wal-Mart can consider in this process. Overall, the case study will provide an unbiased analysis of the modern Wal-Mart human resource management situation, its pros, and its flaws. Further, it will suggest the applicable strategies that the organization can apply to ensure that it gets a maximum output from its 2.2million strong workforce.

Case Data Analysis: Wal-Mart Employee and Recruitment Strategies

The Current Situation of Employee Recruitment and Retention at Wal-Mart

Looking at the history of Wal-Mart, the organization has faced a myriad of challenges in its human resource management approaches that have put it in a negative light. In the last decade, Wal-Mart has faced serious criticisms from different people and interested groups concerning its employee relations approaches. According to Allen and Bryant, the company has not only been accused of low wages, but also for alleged mistreatment of employees and poor working conditions.1 For instance, the giant retailer has been accused of paying below-wage-limit hourly wages to its employees. In addition, the company has been accused of gender discrimination, as well as overworking of employees. The gravity of these accusations is evident from its many lawsuits by its workers and interest groups. For instance, in 2000, the company faced over 4000 lawsuits. In 2008, 80 such lawsuits arose from these issues. While the wages have been improved over the years, they are in many instances below the market trends. This issue has brought significant concerns and discontent among employees in this giant organization.3

Another report in 2000 indicated that while good policies were geared towards betterment and protection of the welfare of Wal-Mart’s employees, outright violation of these policies was evident. To make matters worse, these violations were well known by managers in the numerous outlets. According to Hutchinson, the report, which was based on a weeklong audit on 128 Wal-Mart stores, showed over 75, 000 violations in 127 of these stores.2 One of the major violations that were the evident outright disregard for two 15-minute breaks or one 30-minute break that was entitled to workers as part of the company’s policies.

Of great concern to this organization over the years has been its very high employee turnover, which has attracted stakeholders and external parties. In 2011, the organization had an employee turnover of 37.26%, which despite being below the industry rates of 43.6%, was a very significant number because of the high number of employees it employs.5 With a workforce of over 2.3 million, a 37.276% turnover represents over 800,000 employees who leave Wal-Mart in any given year. The main cause for this trend is definitely because of poor working conditions, pitiable wages, and overworking among many other reasons that have been cited against Wal-Mart’s human resource management strategy.

The impact of high rates of employee turnover or low employee retention is enormous in any organization. This situation has been evident in Wal-Mart. According to Sheremet, the cost of losing an employee who earns approximately $8 per hour can range from $3,500-$25,000.6 For a company such as Wal-Mart, losing over 800,000 employees can translate into a loss of up to $2.5billion, which is a very high figure. These costs are accrued in the form of recruitment and hiring expenses, lost sales, training costs, and productivity.3 In addition, an elevated worker turnover is evidently a catalyst for the reduced staff confidence, which results in compromised output. Low productivity due to low morale sets out a chain of reaction processes, which lead to low products and service delivery. These inconsistencies may affect a company’s productivity. Low employee retention has a direct impact on the company’s wellbeing and hence the reason why Wal-Mart must revisit its recruitment and retention strategies to ensure that it not only attracts the best employees but also retains them in the end to achieve a higher return on investment.

Constraints and Opportunities Facing Wal-Mart

The journey towards an organization whose employee recruitment and retention strategies represent the best practices in the industry is a difficult one. For Wal-Mart, the constraints of ensuring that it can achieve the best recruitment and retention strategies are specifically difficult, owing to its worldwide presence. Hence, it has to work under different regulations and other country-specific conditions that make it difficult to have a strategy that can cater for all these regions.2 For instance, the country faces tremendous challenges in its Chinese subsidiary due to strict regulatory frameworks that are aimed at protecting the domestic market from domination by Wal-Mart. Such a strict control over the activities of Wal-Mart in overseas markets makes it difficult to implement employee recruitment and retention strategies that it can apply universally to its human resource management strategies.

Another constraint that the company experiences in its human resource management is the already existing high employee turnover. While employee turnover is indeed a problem that affects the organization, it should be addressed by adopting new human resource management strategies. The problem has almost become a part of the employees’ culture, which requires more than just new strategies. Costs that are involved in the recruitment and training of new staff members make it difficult for the company to invest in the adoption of new strategies. The situation has become a vicious cycle, which is difficult to break out of.

However, the main challenge for Wal-Mart and its human resource management is the desire to cut costs and to maintain profitability in its operations. The retail industry is one of the most labor-intensive industries. Indeed, this segment takes a significant share of the organization’s revenue. According to Mayer and Noiseux, through employee value addition, a retail organization can achieve better competitiveness in its industry than its rivals.5 This claim is true even for Wal-Mart. At Wal-Mart, this issue particularly poses a dilemma since the company has to choose between profits and higher wages for its employees to be ‘seen as sensitive to their welfare’. Just like a conscious business entity, profits are important and hence the reason why Wal-Mart keeps its wages to the lowest as a way of cutting costs. At the end of the day, any decision it chooses in this regard is likely to leave it worse or in the same situation.

For instance, increasing wages and bettering the employee working conditions imply that it will have to spend more on salaries and other programs, which can take away its profit margins. On the other hand, if the organization chooses to increase employee wages and reduce its costs on such increment, instead of reducing its workforce, it may jeopardize its capacity to serve its employees well and hence leading to a loss of customers to its rivals. The move will still have the same results, namely a loss of revenues. Consequently, at the end of the day, these constraints may present a serious hindrance towards the organization’s desire to ensure better recruitment and retention strategies.

Despite these constraints, a change in its human resource management strategies offers a better opportunity for the company to be more competitive in its operations. Since the industry is highly labor intensive, the process of attracting and maintaining a highly talented and highly motivated workforce is the surest way of attaining better returns and great customer satisfaction and loyalty. This outcome can cushion the company from the effects of increased wages and other employee welfare improvement strategies. In addition, with its enormous financial base, the company has the resources that can be used to adopt new human resource management strategies. In addition, the company has an opportunity to change its perception, which has been tainted by its numerous wrangles with its employees who consistently express discontent with the treatment they receive in the workplace. The costs of lawsuits, recruitments, and other areas of expenses that the organization faces can be eliminated in this way, hence leading to more revenues and reputation.

Alternatives Analysis: Suggested Recruitment and Retention Strategies for Wal-Mart

The process of ensuring a robust and highly efficient workforce starts from the process of employee recruitment. At this level, an organization can ensure that it allows only the qualified individuals into its system. The effectiveness of the recruitment exercises is highly dependent on the recruitment strategies that the organization adopts. Indeed, plenty of approaches have been suggested. However, this section will discuss only the highly efficient recruitment strategies that are applicable to Wal-Mart in relation to its current practices.

Looking at the current recruitment strategies that Wal-Mart has adopted, it is evident that with its over 2.3 million employees, the strategy is highly efficient. It has enabled the company to maintain an adequate number of employees as the organization requires. For this organization, having an ineffective employee recruitment strategy cannot be allowed, especially in the presence of a high employee turnover, which ensures that the organization is constantly looking for individuals to employ. According to Mello, an effective recruitment strategy requires the adoption of three main strategies.4

The first approach towards efficient recruitment is what is referred to as decentralization of recruitment efforts. In devolution of enrollment efforts, an organization ensures that its recruitment efforts are spread across different regions or departments by ensuring a well-trained team that can consistently guarantee that the organization is able to short-list, interview, and hire the best candidates in each given region of the department. For the better part of Wal-Mart’s existence, the human resource management segment has been located at its headquarters. This situation has ensured that the human resource slowly drifts from the core business needs. The result has been a disconnection between what the organization demands in terms of skills and what the HR provides in terms of human resources.1

The centralization has always worked against the company. It means that the business is no longer in harmony with the needs of the employees at the field level in its numerous locations around the world. Such an approach is a ripe ground for recruiting the wrong people. It sets the organization towards failure. Indeed, failure of the HR to understand the needs of its organization, as well as the needs of its employees, is highly attributed to its numerous suits and negative reputation, which the organization cannot afford to have in the end. There is a need for change. Wal-Mart has been striving to achieve this change.

The second most important strategy towards effective recruitment is specialization of recruitment roles in the organization. Wal-Mart, which is a major employer, requires employees to fill numerous positions that are available at any given time, ranging from the top management to the lowest-level employees. In this case, specialization allows the organization to have a dedicated recruitment team or a group of HR personnel with the prerequisite training and knowledge of what each position requires. Other key areas of specialization include the hiring process, workforce planning, and business analysis among others. Consequently, specialization gives an organization the opportunity to ensure that it segments its HR or recruitment processes into various teams that can handle different recruitment needs and positions in the organization. For example, at Wal-Mart, recruiting customer care attendants is done almost on a daily basis. This task does not need a detailed and thorough screening as compared to management positions. Hence, managers and the field HR bosses of each store or region can easily recruit these individuals, thus making the process faster. However, for management positions, it is important to have a more detailed recruitment process to ensure that the best candidates are employed.

Lastly, the most important approach towards an effective recruitment is referred to as the focused recruiting. In this approach, an organization’s HR dedicates its efforts towards tracking potential employees who can offer value to the company. This way, the company can effectively shortlist the best candidates from a pool of applicants and consequently go ahead to employ the best of the best.4 Such an approach at Wal-Mart can be used to recruit top management individuals since their expertise and competency are a vital aspect towards the success of the organization.

Consequently, borrowing from the existing literature, the era of posting jobs on the local dailies or on the Internet is no longer enough to have the right candidate in an organization. Instead, it attracts hundreds or thousands of unsuitable candidates and further makes it difficult for the HR to narrow down on the likely candidates. The likelihood of getting it wrong and employing a mismatch is very high and very costly to an organization.

The use of the above strategies has its pros and flaws in an organization such as Wal-Mart. Firstly, by adopting the discussed strategies, the organization is in a better position to understand its needs and focus its recruitment efforts on recruiting the most qualified individuals. Secondly, by having dedicated teams for recruitment of various positions, the organization will ensure that its recruitment efforts are responsive to the needs of the organization. The recruitment teams are more likely to remain objective, hence ensuring better outcomes for the recruitment exercises.2 However, on the other side, the weaknesses of these approaches include the cost that comes with establishing a decentralized HRM, as well as in the process of specialization of different HR teams. Further, if the selected HRM groups or teams are not effective, they may lead to more problems in recruiting individuals who cannot do the job as required in the organization.

While the recruiting strategies are very important to an organization in helping to get the right candidate, the main challenge lies in the retention strategies that it adopts. Getting the right candidates is difficult, but retaining the candidates, ensuring they perform their best, and guaranteeing that they enjoy their stay at the organization present the biggest hurdles that the 21st century organizations are facing. The employee of the current business environment comes into an organization with his or her expectations, which go beyond the salary. This expectation presents a unique problem to organizations. In other words, paying employees a good salary, offering bonuses, and other financial incentives are no longer the main retention factors for the 21st century employee.3 Instead, other factors such as a challenging job setting, work environment relations, and work-life balance among other factors that cannot be attached to monetary gains are the central tenets of employee retention.

Wal-Mart can use various retention strategies to contain its employee turnover, which is currently very high and costly to the organization. These retention strategies or alternatives are informed by the existing literature as well as other case studies of organizations where they have been used successfully. Many organizations dedicate most of their efforts in the recruitment segment where the focus is on attracting and hiring the best talent.4 This prominence has seen the materialization of what has been referred to as the ‘international capacity management’, which relates to the course of aptitude attainment, maintenance, and management. Indeed, aptitude management has become the new idea that is challenging the current international commerce. The commercial sector does not portray a deficiency of talented individuals, but a lack of the appropriate people in the appropriate employment positions.

Further, while the description of talented individuals is not clear-cut, many explanations have been put forward. Universally, capacity management denotes premeditated proceedings that are aimed at drawing, employing, establishing, and maintaining individuals who are well positioned to execute tasks exemplarily and/or have an enormous constructive impact on the results of any business. However, it is very important to note that the most important resource at any given time is the employees who are already in the system and hence the need to invest in them. Most employees enter an organization wishing to stay for a long time. Hence, whatever happens in between determines whether they will stay or leave. The contemporary employee has specific needs that must be met without which they will leave. The first need or expectation is career development.

Hutchinson asserts that employees want an environment where there is an opportunity to grow their skills to remain relevant in the market and rise in the ranks of their jobs in terms of wages and benefits.2 The second expectation for employees is the feedback they receive. Employees want to know how they are performing, as well as how their company is fairing. If there is no way employees can receive feedback, they are likely to feel out of place, unvalued, and insignificant. Hence, they look for better opportunities. The third important expectation among employees is recognition and work-life balance.4 Fourthly, working conditions and environments are very important to employee retention. Lastly, compensation levels that are fair and in the same range as industry rates are an important retention factor. For Wal-Mart, it is important to implement these employee retention strategies to ensure that it reverses its current state that is marked by a very high rate of employee turnover. The strategies are discussed as follows:

Working Environment Strategies

The work environment is a key factor for employee retention in an organization. It is important for organizations to ensure that the work environment is attractive. The work setting should nourish each employee. Work environment covers a wide range of issues that range from the mission and vision, value system, safety, and culture. To achieve a good working environment, Wal-Mart must ensure that it has a clear mission that reflects the goals of the organization.6 Further, it must ensure a good performance feedback system, honesty, openness, and integrity at all times, non-tolerance for poor performance, and above all, workplace safety. All workers must have a feeling of unbiased and reasonable management. Wal-Mart has been accused of gender discrimination. Women have complained of poor wages than their male counterparts. This situation definitely works against the organization.2 Therefore, Wal-Mart should look at ways of improving its work environment to ensure that employees have a sense of belonging.

Employee Relationship Strategy

How employees relate with each other, as well as with the management, is a key factor in determining the retention rates. Employees are not machines. They need to work in an environment that listens, supports, encourages, and takes care of their welfare. Further, employees want to know that someone has their back. The situation is even better if the organization is supportive. The best way to ensure a good relationship is through putting effective communication mechanisms in place. Ensuring that the organization is open to its decisions and that the employees’ opinions are sought when making decisions that affect their welfare is a very important step towards good relationship. Further, protecting employees from harassment among themselves by ensuring non-tolerance for such behavior is a sure way of making employees have a sense of belonging. Promoting respect among employees and good working relationship among themselves is an important step towards good job conditions. If an employee feels out of place and not accepted and appreciated by others, it becomes easy for him or her to quit. Lastly, the management team must use an open-door policy where employees can easily access it for any concerns they may have.

Worker Maintenance Strategies

In an organization such as Wal-Mart that is characterized by high labor intensity, the importance of supporting employees with the right equipment and technologies cannot be understated. When employees are provided with the right paraphernalia, their level of job satisfaction rises drastically. This situation translates into more commitment, engagement, and productivity at the workplace.5 Worker maintenance strategies are based on three fundamental guiding philosophies, namely the desire to shine, the need to have ample resources to get the job done, and the desire to have ethical, touching, and intellectual backup. Employee support starts at the management level. It is important for the managers to ensure that they see their subordinates as humans who deserve to be treated well. For instance, the study, which showed over 75,000 violations, revealed that managers made these violations on employee rights when they were fully aware of the vice.2

Therefore, the management must be aware of the value of employees to an organization’s success and put the necessary support systems to ensure that they perform their work without unnecessary challenges. The organization should provide the necessary resources, including the obligatory information, which must be given adequately and timely to ensure that all decisions are well supported and understood. The organization should remove obstacles to job performance, keep promises, clearly define tasks, offer job flexibility, and ensure effective communication systems.4 This strategy is a valuable one in ensuring high employee retention rates that Wal-Mart should adopt.

Worker Growth Plans

These plans focus on worker private and certified development. It is important for an organization to put in place necessary structures that will allow employees to grow in terms of skills, knowledge, and marketability. Most organizations just offer education and training to employees, regardless of the quality. This approach is not the best. An organization must structure its learning and education programs to ensure that they are relevant to its needs of the individual worker. The organization must take time to understand the learning needs of the employees and consequently put the right strategies to ensure that such needs are also met. Such programs are very important since they reflect the organization as a caring partner. This situation bonds the employees even closer to the organization.2 Some of the training activities that can be put in place at Wal-Mart include in-house training programs, outside training workshops and seminars, allowing employees to be facilitators in areas of their specialty during training, and paying for college and continuing education.

To support learning, the organization should create a culture of learning, encourage membership into professional associations, ensure availability of individual learning plans, invest in career planning, and create mentoring programs at the organization. It should also provide incentives for learning among other initiatives. By putting in place such measures, Wal-Mart will not only have highly skilled personnel but also highly motivated labor force that will stay in the organization for long.

Employee Compensation Strategies

Long time ago, organizations paid employees for their time. However, currently, organizations pay their employees based on their performance. This emerging trend will change how compensation is determined. It is important to note that compensation alone cannot keep employees in an organization. Therefore, it must be implemented together with other strategies that have been discussed above.1 To ensure that compensation on performance is fair, an organization must guarantee that it has well-defined job descriptions and roles, and most importantly a performance measurement tool. In addition to monetary compensation, an organization must also put in place other compensation plans such as time off, providing childcare options for mothers, and funding memberships to health clubs amongst others. When implemented well, Wal-Mart can have a compensation strategy that reflects the best practices and trends in the industry. Consequently, the plan can promote employee job satisfaction and engagement, and hence lead to high levels of employee retention.

Recommendations/Implementation Plan

The findings of this case study depict an organization whose human resource management functions of recruitment and retention need total overhaul to ensure that Wal-Mart reverses its current trend of a turnover of over 37% of its employees representing over 800,000 employees annually. The costs of such a high turnover influence negatively the organization’s reputation, employee morale, as well as costs of recruiting and training new employees. These costs are over $2.5 billion annually. Consequently, there is a need for the following steps to be adopted for the development of the recruitment and retention strategies that will allow the organization to change its current situation in its human resource management.

  • Development of employee retention strategies that cover compensation, work environment, employee relationship, support, and growth
  • Development of recruitment strategies that cover all areas of recruitment from advertising, job descriptions, screening, and interviews

The following is an implementation plan that Wal-Mart can adopt in its process of revolutionizing its recruitment and retention strategies to ensure that it reverses its high employee turnover.

Implementation
Activity/ Description
Implementation Measurement Estimated Costs Duration of Implementation
  1. Recruitment Strategies
  • Decentralization of recruitment efforts
  • Specialization of recruitment roles
  • Focused recruiting
  • Establishment of HRM divisions in each region
  • Successful establishment of specialized teams for recruiting employees at each level
  • Establishment of potential candidate tracking strategies
$2.5Million 1 Year
Ongoing
  1. Retention Strategies
  • Working Environment Strategies
  • Train managers on good employee relations
  • Put in place safety measures for all employees
  • Put in place communication strategies that allow for honesty and transparency
  • A working performance management system
$4.0 Million 1 Year

Yearly

  • Employee Relationship Strategy
  • Open-door policy
  • Non-tolerance for harassment
  • Participation of employees in decision-making
$500,000 Ongoing
  • Employee Support Strategies
  • Provide right equipments to all departments
  • Providing one stop desk for information
  • Elimination of identified obstacles to performance
$1Million Ongoing
  • Employee Growth Strategies
  • Structured Learning Programs
  • Identification of Learning Needs
  • Establishing training activities
  • Mentorship program
  • Establishment of individual learning plans
$2.5Million Ongoing
  • Employee Compensation Strategies
  • Establishment of performance measurement strategies
  • Well-defined job descriptions
  • Putting in place non-financial compensation
$5Million 1 Year

Ongoing

References

  1. Hutchinson I. People Glue: employee engagement and retention solutions that stick. Warriewood, N.S.W.: Woodslane Press; 2010.
  2. Allen G, Bryant C. Managing employee turnover dispelling myths and fostering evidence-based retention strategies. New York, N.Y: Business Expert Press; 2012.
  3. Maxwell J. Employee turnover & retention in the retail industry: the issues, statistics and success strategies. Carlsbad, Calif.: Institute for Retail Excellence; 2012.
  4. Mello A. Strategic human resource management. Australia: South-Western College Pub.; 2002.
  5. Mayer S, Noiseux Y. Organizing at Wal-Mart: Lessons from Quebec’s Women. Global Labor Journal 2015; 6(1): 1.
  6. Sheremet A. Comprehensive Economic Analysis Of A Company. Advances in management & marketing 2013; 3(1): 1-5.