Walmart: the relationship between HRM,business performance and employee welfare in the organisation - Essay Example

? Walmart: the relationship between HRM, business performance and employee welfare in the organisation What do you understand by the term ‘employee welfare’?  Employee welfare refers to the array of benefits (either monetary or as services) salaried employees are entitled to during their term of association with a company. Usually employee welfare measures include contributions to the pension fund, health insurance coverage, offering stock options, providing paid leave, etc. Some modern employers even offer creche or play areas for children of female employees. The purpose of these measures is to provide employees with a safety net against unexpected events and occurrences. Some of the measures are offered as a goodwill gesture on part of the management. But unfortunately, the term ‘employee welfare’ is not readily associated with Walmart. Despite being voted the most admired corporation in America by its customers, the experience of its employees is learnt to be unsatisfactory. Perhaps there is a trade-off between customer satisfaction and employee satisfaction and the achievement of the former comes at the cost of the latter. 2. What are the business priorities of the organisation? What strategic developments (e.g. growth in core business, new business development) have taken place that requires a change in the organisation’s approach to managing employees?  Walmart is not only America’s largest retailer, it is also one of its biggest corporations in terms of revenues. It regularly features in the top 10 in the Forbes list. The sheer scale of its operations is mind-boggling. For example, it is now a $250 billion enterprise in terms of annual revenue with close to 1.5 million employees across the world. According to Business Week magazine, just the amount Walmart “loses to theft each year is equal to the revenues of a Fortune 1000 company.” (Muir, 2005, p.19) The following is an account of the 2004 annual event. And it is fairly indicative of the strategic framework of the company: “...despite the threat of soaring oil prices cutting into sales, the company is still on track to open one massive supercentre in the US every 36 hours during 2004. That will enable it to add $33 billion to its sales this year. As is the case in much of corporate America, emboldened shareholders want a bigger say. However, proposals such as calling for an independent chairman and seeking shareholder approval of a deferred pay scheme for executives are expected to be roundly defeated. Such deliberations are not thought likely to affect the high spirits at the meeting. Newer and bigger stores are the fuel for the company's extraordinary growth. The bigger the store, the bigger the profit Wal-Mart can glean per square foot. That is why the company's supercentre concept is its expansion method of choice. (The Evening Standard, 2004, p.40) The company management has now set its sights on expanding operations in other countries, including the Euro zone and emerging economies like India, China, Brazil, etc. When one includes the sub-contracted workers who are involved in producing the merchandise, the total employee count grows exponentially. There are numerous accusations against Walmart that its contractors exploit cheap labour in the Third World in sub-standard sweatshop conditions. In this backdrop, a culturally sensitive and a humane approach to managing local workforce is called for. 3. What stakeholders are managers ultimately accountable to (e.g. shareholders)? What are the priorities of these stakeholders for the business? How might their priorities affect or constrain the organisation’s ability to look after employees’ welfare?  The stupendous success of Walmart means that the shareholders are handed impressive returns on their investments. Although, the stakeholders in Walmart include customers and employees as well, it is often reported that Walmart employees get a bad deal. In terms of priorities, empirical evidence suggests that the shareholders come first, followed by customers and then the employees. Even the emphasis on looking after the customer is questionable, when one considers how the giant retailer's business practices, including its notoriously low pay and stingy benefits, are costing American taxpayers millions of dollars every year. Hence, what is gained at the billing counter in terms of discounts gets offset through taxes to the government. This is especially true as a majority of Walmart employees (placed at the lower levels of the corporate ladder) are dependent on Medicare, Medicaid and other government social welfare programs. For example, a report was released in 2004 by the minority staff of the U.S. House of Representatives Education and the Workforce Committee. Titled ‘Everyday Low Wages: The Hidden Price We AIl Pay for Wal-Mart’. The report states that “each Wal-Mart store employing 200 people costs taxpayers well over $420,000 annually in public services-staples like food stamps and child healthcare-that Wal-Mart workers have to rely on because their meager pay and health insurance place most of them among the working poor.” American Teacher, 2005, p.17) In this context, there is little doubt that there’s huge, hidden cost to both Walmart customers and employees. Moreover, Walmart “is in the driver's seat in the global race to the bottom, suppressing wage levels, workplace protections and labor laws. The giant retailer also has been found guilty of violating child labor laws. In 2005, the U.S. Department of Labor cited the company for 24 child labor violations, including one incident in which a minor was injured while operating a chain saw.” (American Teacher, 2005, p.17) Hence, it is fair to say Walmart does not fulfil the requirements of all its stakeholders in a fair and balanced manner. This is an area where their HRM department will have to introspect. 4. What jobs are there in this organisation, and what kind of people (in terms of skill level, education, motivation, reasons for work etc.) choose to work there?  Being a retailer, Walmart’s most important asset is its employees, who provide a human face to the economic behemoth. The entry level positions include greeters, cashiers, clerks and customer service representatives. These positions do not require high skill and consequently a basic college diploma is sufficient qualification. Even a high-school pass out certificate is sufficient for certain positions. Personnel in supervisory or managerial roles either have a business school background or rise through the ranks. People of all racial and ethnic backgrounds are hired, although people from minority communities are disproportionately represented at the managerial level. A significant portion of Walmart employees are temporary/contracted workers and part-timers. This group is usually low-skilled and drawn mostly from minority communities. Those seeking temporary work also tend to be quite young (in their late teens or early twenties). They seek these positions either to supplement their incomes or to save up for college tuition, etc. Walmart is criticized though, for hiring fewer women when compared to men. Hence, there is a perception of gender bias within the organization. For instance, in the largest class-action lawsuit in American history, Walmart v. Dukes,  “Walmart stands accused of systematically discriminating against as many as 1.5 million women in wages and promotions. The Supreme Court has agreed to a limited review, judging solely whether class-action certification was justified. In 2000 an ex-greeter named Betty Dukes sued Walmart under Title VII of the Civil Rights Act (an obvious intervention in the market) for lack of promotion. Walmart unsuccessfully argued that Dukes had received frequent reprimands for lateness from her female supervisor, which led to a demotion. In 2001 Dukes and several other plaintiffs asked the U.S. District Court in San Francisco to "class certify" their case.” (McElroy, 2011, p.37) 5. How do managers attempt to manage and improve individual performance? How are employees selected, rewarded and developed? In your view, are these mechanisms effective in managing and improving the performance of employees?  Walmart inculcates into its employees a simple yet powerful set of beliefs that enhance their effectiveness. The three basic beliefs that shape the organization’s culture, focus, thinking and energy are: * Respect for the Individual * Service to Our Customers * Strive for Excellence (Newsome, 2000, p.20) These beliefs also provide a "value yardstick" against which actions of employees are judged. It was Sam Walton who conceived of these three principles when he founded the organization. He saw them as the foundation from which the company will make robust policies and decisions. These beliefs are held valid even in the changed context of business today, compared to the early days of the company. (Newsome, 2000, p.20) Walmart’s motto of ‘Service to Our Customers’ includes two kinds of customers--external customers who shop in Wal-Mart stores and internal customers, the associates Wal-Mart works with every day. Wal-Mart translates these beliefs into action, through the following three principles: * Aggressive Hospitality * Satisfaction Guaranteed * Every Day Low Prices (Newsome, 2000, p.20) While these beliefs are the qualitative means of enhancing employee performance, Walmart employs other standard quantitative HR measures to improve performance as well. These include suitable financial incentives for improving performance, job promotions, offer of stock options, etc. 6. In your view, do these mechanisms have adverse effects on employee performance?  These mechanisms have been fairly successful in fetching desired results for the Walmart management. But, while extracting maximum productivity and effectiveness from employees is one thing, catering to their welfare is quite another. Often there is an inverse correlation between employee performance and employee satisfaction. While Walmart has consistently managed to achieve the former, it has largely failed in accomplishing the latter. As noted Nobel prize winning economist Paul Krugman observes, Walmart is constantly waging a ‘war on wages’. (Reed, 2010. P.4) Hence, mechanisms employed to optimize employee performance tend to have overall adverse effects on the employees. The following passage bears further evidence of adverse effects on employees: “The extensive public record on cases filed against Wal-Mart, currently the most sued corporation in the United States, reveals disturbing allegations. These include sex discrimination in pay, promotion, and compensation, wage abuse, exclusion of contraceptive coverage in insurance plans, violations of child labor laws and the Americans with Disabilities Act, and discrimination on the basis of sexual orientation...Employees have also filed cases charging management with discouraging workers from unionizing, firing pro-union workers and eliminating jobs once workers joined unions...In addition, Wal-Mart refuses to dispense Preven, the "morning-after pill," in effect imposing a right-wing political agenda on all of its shoppers.” (Bull, 2002, p5) 7. What if anything is done for employees and their welfare above and beyond these mechanisms?  Sadly, for an organization that is voted the Most Admired by Corporate America, there’s little to claim in terms of providing employee welfare. At NOW's annual conference on June 22, 2002, President Kim Gandy announced the latest Merchant of Shame in the Women-Friendly Workplace campaign: Wal-Mart. NOW took this step after receiving “numerous complaints regarding workplace environment and employment practices at Wal-Mart stores, distribution centers, and regional and corporate offices.” (Bull, 2002, p5) Amid this plethora of complaints and grievances against Walmart, it is fair to say that employee welfare is not a priority for its management. As a reaction to these mounting criticisms, its Head of Human Resources, Susan Chambers, has made some gestures that might change the company’s self-image to that of a benevolent one. One of her first decisions after assuming the top HR role is to “expand Walmart’s health care coverage to parttime workers after they have been on the job for a year. Part-timers have had to work at the company two years before becoming eligible for coverage. Wal-Mart also will offer coverage for children of part-time workers..."Keep in mind that covering part-time employees is not the norm in retail," Chambers said in prepared remarks to the World Health Care Congress. "But every American deserves health care, and we want to lead by taking this step."” (Frauenheim, 2006, p.11) 8. Is the organisation maximising the potential of its employees? Are they fairly treated?  It is fairly obvious that Walmart’s employee relations is not an ideal model for corporate America. Based on what one can gather from its annual meetings, employee empowerment is not a high priority. Instead, the focus is largely on business expansion and increasing shareholder value. Hence, maximising employee potential is not in the management agenda. To the question of whether employees are fairly treated, the company’s track record speaks for itself. For the top business enterprise on the Fortune 500 List, Wal-Mart holds some truly embarrassing statistics. These statistics further show that the organization is lagging behind in terms of treating its employees fairly. “Women comprise 72 percent of Wal-Mart's hourly workers, but are only one third of its managers and supervisors. Only 38 percent of Wal-Mart employees participate in its health insurance plan-the national average is 60 percent-because at Wal-Mart the premiums and deductibles are prohibitively high. This leaves six out of every ten employees (more than 425,000 Walmart employees) with no company-provided health insurance. Two-thirds of them are women. The complaints against Wal-Mart come from across the nation...employees are suing Wal-Mart for sex discrimination in pay, promotion, and compensation. This will be the country's largest sex discrimination suit against a private employer if it is granted class-action status.” (Bull, 2002, p.5) 9. What recommendations (evidence-based) would you make to improve employee welfare? What would the impact be on business priorities? *One need not look anywhere else than heeding to Sam Walton’s founding vision, to turn around the company’s HRM record. Articulated by Walton on numerous meetings with stakeholders, the list of 10 golden rules contains many direct and indirect references to employee welfare. Hence, it is a matter of revitalizing these principles and following them in their true spirit, which will improve employee welfare in Walmart. Sam's Rules for Building a Business are as follows. The management will do well to remember that by ‘partners’ Walton meant not just customers, suppliers and shareholders but also employees. Rule 1: Commit to your business. Rule 2: Share your profits with all your associates, and treat them as partners. Rule 3: Motivate your partners. Rule 4: Communicate everything you possibly can to your partners. Rule 5: Appreciate everything your associates do for the business. Rule 6: Celebrate your successes. Rule 7: Listen to everyone in your company. Rule 8: Exceed your customers' expectations. Rule 9: Control your expenses better than your competition. Rule 10: Swim upstream. (extracted from Newsome, 2000, p.20) References Bull, C. (2002, Fall). Now Declares Wal-mart a Merchant of Shame. National NOW Times, 34, 5. Dinovella, E. (2005, January). The True Costs of Low Prices. The Progressive, 69, 44+. Don't Be Fooled by the Smiley Face. (2005, May/June). American Teacher, 89, 17. The Ever-Expanding Empire; after Wal-Mart Chief Talks to Key Men in Europe He Has a Big Message for His Shareholders. (2004, May 27). The Evening Standard (London, England), p. 40. Featherstone, L. (2011, May). Fighting Back: What the Unions Have Learned-And What They May Still Need to Learn-About Fighting Wal-Mart's Expansion. The American Prospect, 22, 20+. Frauenheim, E. (2006, April 24). New Wal-mart Hr Chief Makes Early Splash. Workforce Management, 85, 11+. Hansen, F. (2003, April). Diversity's Business Case: Doesn't Add Up. Workforce, 82, 28+. McElroy, W. (2011, May). The Ominous Expansion of Class-action Suits Walmart V. Dukes. Freeman, 61, 37+. Muir, E. (2005, April). Taxing Companies for 'everyday Low' Pay Packages. American Teacher, 89, 19. Newsome, D. (2000, Summer). Think Small One Customer at a Time. One Associate at a Time. Business Perspectives, 12, 20. Reed, L. W. (2010, July/August). Good Economists, Bad Economists and Walmart. Freeman, 60, 4+. Spangler, M. A., Britt, M. M., & Parks, T. H. (2008). Wal-mart and Women: Good Business Practice or Gamesmanship?. Journal of Applied Management and Entrepreneurship, 13(2), 14+ Read More