Walmart Company’s Human Resource Strategies

Abstract

Wal-Mart is ranked among the leading companies in the world not only in terms of market capitalization, but also in terms of performance. One of the key determinants of performance in a company is the way human resource practices are conducted. Therefore, this paper explores the human resource environment in Wal-Mart. The most important thing in the paper is the determination of the nature of human resource issues that the company confronts, as well as the human resource initiatives and strategies that are being instituted in line with the human resource issues that are facing the company. The paper finds out that the company faces a lot of challenges in terms of sustaining its employees, in spite of attaining a high performance. However, the company has instituted several human resource strategies to address the challenges. Most of the strategies are fruitful.

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Company overview

Wal-Mart is a United States’ multinational company that operates in the retail store sector. Having been founded in 1962, Wal-Mart has managed to grow into one of the largest retail stores in the world in terms of market capitalization, the number of customers, and the number of employees. The real operations of the company under the current name, Wal-Mart, began in 1969. The company operates its retail stores in different formats across the globe owing to the expansiveness of the operations. Wal-Mart operates through three main segments. These are Wal-Mart U.S., Wal-Mart International, and Sam’s Club.

The company deals in different categories of products and services. They include groceries, entertainment, apparel, health and fitness, and home products. Besides these, the company also deals in the marketing of merchandise offered under brands that are licensed. The company also conducts distribution operations. These operations gain support from the over 133 affiliated distribution facilities. Wal-Mart International operates small banks that offer consumer financing services under different financing programs in a limited capacity (“Wal-Mart stores Inc. (WMT: New York)”, 2013).

As of today, the company operates more than 7, 800 stores across the world. It is important to note that the stores fall under the three operating segments (“Wal-Mart stores Inc. (WMT: New York)”, 2013). The company operates stores in different regions in the world, namely Central and South America, Asia, and Africa under the Wal-Mart International segment. The company has approximately 2.2 million employees who work in the retail stores across the world. The international division of the company is also growing at an accelerating pace. The international division of the company accounted for 29% of the total sales of the company in 2012. The company was ranked as the number one among the 500 Fortune Companies in the world in May 2013 (Hoovers, 2013).

Human resource issues at Wal-Mart

It is important to begin by noting that Wal-Mart is one of the largest and the highest performing companies in the world. With more than 7800 stores across the world, the company has a resounding number of employees who number over 2.2 million. This denotes the hefty task of balancing between the needs of the employees and the competitiveness of the company. Therefore, the company faces a number of human resource issues. The table below presents issues that are polarized as far as the operation of Wal-Mart is concerned.

Table 1.0 Polarized subjects in the debate about Wal-Mart

Positive Negative
Lowers prices Exploits labor
Supports diversity Has gender/racial discrimination
Increases business efficiency Pushes down wages
Provides jobs Increases unemployment
Employs nontraditional workers It increases poverty and welfare allocations
Industry leader Erodes downtown business centers
Promotes environmental sustainability Increases environmental degradation

Source: Gereffi & Christian (2009).

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From the table, it is apparent that the human resource issue is under the most debated subjects about Wal-Mart.

Among the factors that have propelled the company to the contemporary level of competitiveness in the global business environment is the sustenance of a customer centered culture. The company tailors its services in such a way that they are favorable and appealing to the customers. From the marketing perspective, customers are the true determinants of the value of services and products that are offered by the customers, thereby giving the customers the chance to determine the nature of service and product offering. This often results in competitiveness. The company has come under sharp criticism for hiring employees with low skills over the past few years. This has resulted in a reduction in the level of competence in the company operations. The criticism comes from the fact that the company does not seek for a highly skilled workforce in the market; instead, the company targets the less skilled workforce in the market (Marquez, 2006).

Marquez (2006) observes that Wal-Mart has come in the limelight in the recent years over a number of labor and human resource violations. Among the issues that keep featuring in class-action lawsuits against the company are wage-and-hour violations, sexual harassment, as well as the discrimination of the employees based on gender differences. Clifford and Schweber (2011) observe that the company has struggled to clear its name over the last ten years over the allegations of embracing practices that portray discrimination against the female employees. A number of judicial proceedings against the company have already been set up and determined through litigation. Moreover, the employees are denied a lot of other benefits like the overtime pay.

These issues raise questions about the aspects of performance management in Wal-Mart. The criticisms about the human resource and business practices in Wal-Mart have grown to the level that a number of groups have been formed to help in railing against the poor human resource and business practices in the company. The employment policies of the company keep coming under the scrutiny of these groups, which include WakeUpWal-Mart.com and Wal-Mart Watch. These groups launch active public campaigns and protests against the human resource policies of Wal-Mart (Marquez, 2006).

Wal-Mart has come under sharp criticism over the low wages it gives its employees. The low wages in the company are attributed to the business strategy of the company that allows for the maintenance of low prices for its products and services as a way of attracting and maintaining its customers. The more the company keeps lowering its prices for its customers, the more it is forced to maintain lower pay rates for its employees to offset the gap that is created and keep the company making profits. The issue of low wages in the company has continued to swell to an extent that massive industrial protests are often launched by the employees of the company in the U.S. segment where the employees claim for an upward review of their wages (McVeigh, 2013).

Osenbloom (2010) observes that part of the initiative by the company when it comes to the restructuring of human resource management is laying-off employees from a number of its stores. The company announced a program that would see it cut about more than 11,000 jobs in 2010. The massive cut in jobs was to take place in Sam’s Clubs, one of its operational segments in the United States. This can be viewed as an issue and a strategy at the same time. Looking at it from the perspective of an issue, the massive layoff depicts a poor picture of the company in the market and the inability of the company to sustain its employees.

Therefore, the scenario points to the possibility of rampant protests, given the fact that the massive layoffs will worsen the macroeconomic problem of employment in the United States. The company is bound to be marked as a poor employer in the country. However, it is apparent that the company struggles to maintain a large number of employees across its stores. It is costly to remunerate a large number of employees because remunerations result in a huge increase in operating costs. These may not be easily offset by the normal business operations, even though the employees raise their performance by virtue of remuneration and other performance management practices (Osenbloom, 2010).

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Human resource initiative and strategies

One of the most resounding human resource initiatives that the company has sustained since it began its operations is the embrace of a group and team culture. The company established a belief that everybody working for the company is ordinary and cooperation through teamwork is necessary for attaining extraordinary results.

The company’s management has realized the need to develop and implement a number of changes in human resource management amidst the sharp criticism of the human resource policies and practices in Wal-Mart. This is the best way the company can maintain its image in the eyes of the entire public and maintain its reputation and competitiveness in the global business environment. The management of the company has embraced a reorganization of its human resource practices. This exercise was launched in the mid years of the first decade of the 20th century and is still going on. In a major restructuring exercise, which depicts the embrace of strategic human resource practices in Wal-Mart, the company has sought to move away from the centralized structure of management to a more decentralized system of management.

The management of the company embarked on an exercise of recruiting approximately 300 human resource managers, contrary to the maintenance of 100 executives in its headquarters who are charged with the responsibility of overseeing the entire operations of the company on the global scale. Unlike the executives, the human resource managers work in close proximity to the employees so that they can detect the problems and issues facing the employees (Marquez, 2006). The centralized system of management in the company meant that the company lacked human resource support in the field, which can now be attained through the presence of the human resource managers who work in the field (Marquez, 2006).

Another important thing to note is that the company continues to embrace the integration of human resource strategies with the business operations. This comes from the restructuring of human resource management in the company. As of today, each region of operation has a human resource director. Several human resource managers operate under the human resource director. Most of the human resources positions in the field are filled. This depicts the embrace of diversity in terms of the human resource practices in different operational destinations. The company allows the human resource managers who operate in different regions to translate the business strategies of Wal-Mart into human resource strategies that match with the geographical regions in which the company operates (Reed-Woodard, 2010).

The burden of sustaining a large number of employees in its stores across the world is quite high and costly. The company has embarked on a massive cut in the number of jobs as part of dealing with the problem of maintaining a large number of employees. Therefore, the company is embarking on an aggressive restructuring process that is aimed at reducing the number of the company employees to manageable numbers. The cutoff in the number of employees that are directly managed by the company begins with the change from the direct management of a number of practices to the outsourcing of such services. Among the services that are aligned for outsourcing is food sampling (Osenbloom, 2010).

The company has instituted a number of reforms in this line as part of the effort to clear its name from the allegations of employment discrimination based on gender. The company has revised its hiring policy such that it now offers equal chances of employment for both men and women. In addition, the policies of promotion have been revised to an extent that women and men are given equal consideration when it comes to promotion.

The percentage of women who occupy managerial positions in the company has increased significantly compared to the early years of its operations. Thus, the image of the company as an equal employer is also improving (Clifford & Schweber, 2011). According to Bergdahl (2010), the representation of women in the company’s Board of Directors, which is the highest managerial level, had risen to 13.6 % as at the end of 2010. This denotes a resounding improvement from the previous years where the representation was less than 10%.

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References

Bergdahl, M. (2010). How the HR division at Wal-Mart drives the company’s success through people. HR Magazine. Web.

Clifford, S., & Schweber, N. (2011). After the Wal-Mart decision: Despite setback, plaintiffs to pursue cases. New York Times. p. 1.

Gereffi, G., & Christian, M. (2009). The impacts of Wal-Mart: The rise and consequences of the world’s dominant retailer. Annual Review of Sociology, 35(1), 573-591.

Hoovers. (2013). Wal-Mart Stores, Inc. Company profile. Web.

Marquez, J. (2006). Wal-Mart puts on a new face. Workforce Management, 85(15), pp. 28-32.

McVeigh, K. (2013). Walmart workers protest over minimum wage in 15 US cities. The Guardian, Web.

Osenbloom, S. (2010). Wal-Mart tells employees it will cut 11,200 jobs. New York Times. p. 6.

Reed-Woodard, M. A. (2010). Maximizing employee value. Black Enterprise, 41(2), 56.

Wal-Mart stores Inc. (WMT: New York). (2013). Bloomberg Businessweek. Web.

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