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1 human resources practices at wal-mart case study

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  • 1. Analysis and RecommendationsIntroduction – Wal-Mart, founded by Sam Walton in 1962, is one of the world largest companies bymarket capitalization and number of people employed and touching millions of customers everyday.There are more than 7,800 Wal-Mart stores and Sam’s Club locations in 16 markets worldwide and thereare more than 2 million associates serving more than 100 million customers per year (About Us, n.d.) Itis the largest grocery retailer in the United States with an estimated market share of around 20% of theretail grocery and consumables business. To be able to efficiently operate such a complex operation atsuch a large and do it consistently would only be possible by the huge effort by Wal-Mart’s ‘associates’as its employees are called. This papers looks at the human resources practices of Wal-Mart with aspecial focus on group and team behavior, leadership, conflict and negotiation, human resourcepractices and organizational culture and diversity within the company to understand them and alsoprovide some recommendations to make them better in the future.Analysis of various HR related areas of Wal-Mart – One of the reasons why Wal-Mart has been sosuccessful and scale up its model across so many locations is the values and beliefs established by itsfounder and the customer centric culture that is replicated across locations. The company right from thetime of its inception has a clear mission which is to save its customers money and enable them to livebetter. Below is an analysis of current Wal-Mart practices across various areas and how Wal-Mart hasalign then to perfectly with its mission statement Group and team behavior – There has been a focus on achieving things together as a team rightfrom the days of Sam Walton. Sam Walton firmly believed that all the people working in Wal-Mart areordinary people and as a team they are able to do extraordinary things, growing together andaccomplishing much more than each of them could individually (Teamwork, n.d.). This same spirit isingrained even today into the day to day operations of Wal-Mart all over the world, where they leverageteam work to overcome obstacles as they all work together to serve their customers the best. Themanner in which they work as a team and the single mindedness in which they serve their customer isgiven to them in the guidelines that the employees follow to extract the maximum value out of workingtogether.Leadership – To manage the complex operation of the huge number of super stores across the world,there are store managers who are given complete ownership of store operations and given a lot of datathat in other companies would not be shared with the middle management. This trust that managementhas in it increases their ownership in the business and they are motivated to put in better performancesand also motivate their team to achieve their targets while ensuring complete customer satisfaction.The focus on the customer is seen here also with the philosophy of ‘Servant Leadership’. As per thisphilosophy, it is their strong belief that effective leaders don’t lead from behind a desk and that it isimportant to develop leaders who are servants to the customers, can work with partners and who areable to motivate the team to perform well. Across stores all over the world, the managers at Wal-Martcan be seen right on the floor working along with other associates (Servant Leadership, n.d.). Thisenables leaders in Wal-Mart to lead by example which is very motivating for the associates as well to putin their best effort. Conflict Resolution - Wal-Mart also realizes the importance of free flowing communication to beingresponsive to customer needs and actively encourages two way communications across the organizationboth top down and bottom up. To encourage associate to come up and speak with the management,Wal-Mart actively promoted the open door policy where associates can walk up to many manager or
  • 2. leader and share suggestions, ideas or raise any concerns that they might have (Open Door, n.d.). It isexpected of the leaders that they treat all discussions fairly without bias and with an open mind and inconfidence if required and work with the associate to resolve the issue or problems that they mighthave. This again is a very good policy that helps Wal-Mart to fix problems or resolve conflicts and issuesquickly and focus on its purpose which is to serve its customers in the best possible manner.Human resource practices – As described earlier, one of the most important functions in Wal-Martwould be the human resources who have to come up with processes and policies to manage the hugetwo million associates that are employed by the business. The employees are treated as an integral partof the business and are called as ‘associates’ which makes them feel a part of the company and hencemotivates them to give their best. Wal-Mart also recognizes that it would not be able to achieve itsmission without the support of its associates and has got a variety of programs for the benefit of theemployees. All associates and their families are provided with health coverage and this program is beingimplemented currently (Health & Wellness, n.d.). It also uses a lot of technology in its operations such ascash registers being shut off automatically so that associates can take their break and relax and also toaccount for accurately the amount of time that they had worked. There is also a very open culturewhere people are encouraged to come up and resolve issues. Though there have been a lot of criticismin the past of Wal-Mart being a bad employer, not giving enough chances for women to get promoted,exploiting workers with very low wages, (Miller, G. 2004) it seems that they appreciate these issues andare working on them to find a solution. Organizational culture –Sam Walton had started the company based on strong beliefs and values onhow the business should be run and these rules and customs are strongly instilled even today into theculture of Wal-Mart. In the company this is known as the three basic beliefs and values and each andevery associate is expected to adhere to at every moment in Wal-Mart. The first of the three basicbeliefs and values of Wal-Mart is respect for the individual, for the customer, associates, and supplierswith a focus for building relationships and most importantly treating each other with dignity, whichhelps Wal-Mart to better serve its customers and the community it operates in (Culture, n.d.). Thesecond important belief is of service to Wal-Mart customers, as they believe that customers are thereason why Wal-Mart exists and hence they should be given the best customer service possible.Associates at Wal-Mart are encourages to look for every opportunity where they can exceed customersexpectations and put every effort in that direction. The third important belief that guides employees atWal-Mart is that they should never be satisfied with what they have already accomplished but theyshould always extend their boundaries and strive to achieve excellence. This passion for continuousimprovement o serve their customers best while saving them money (3 Basic Beliefs & Values, n.d.) hat,customer service is deeply ingrained in the culture of the company, as can be seen from one of the manyrules of Sam Walton that they follow even today, called as the ’10 Foot Rule’. As per this rule, associateshave to pledge that whenever they come within 10 feet of a customer, they would look at them in theeye, greet them and ask them if they require any assistance. Many similar rules of customer service thatare followed in the company help to form a culture that is built around customer which helps thebusiness achieve its long term strategy (1o Foot Rule, n.d.)Organizational Diversity – Of late Wal-Mart has been taking a lot of steps to encourage and increaseemployee diversity in the organization with its pro diversity practices. As an organization it says that itvalues diversity and fosters a working environment that enriches the personal and professionalexperiences of our associates, promotes excellence, and cultivates the intellectual and personal growthof the entire associate population. Wal-Mart plans for diversity as they feel a global business like themneeds to have employees from various backgrounds and cultures to understand the customer better
  • 3. and operate a successful global operation. Therefore from the management level, associates and alsothe suppliers, Wal-Mart tries to create a diverse work environment and a culture of inclusion thatpromotes diversity (Diversity, n.d.). To encourage and promote diversity in the organization, Wal-Marthas established a Employment Practices Advisory Panel which will work with Wal-Marts seniormanagement to develop and implement progressive enhancements to equal employment opportunityand diversity initiatives for the company (Communities, 2006). In addition to that all supervisors in Wal-Mart receive training on diversity issues which will make them appreciate the diverse work environmentand help them deal with people from different cultures and backgrounds. Of late Wal-Mart has alsostarted women in leadership and mentoring programs to help female employees further their careersand more into management roles (Retail Merchandiser, 2005). The above discussion shows that Wal-Mart recognizes the need for a diverse and multi cultural workforce and has taken many steps topromote the same.Recommendations – Though Wal-Mart has taken many steps towards ensuring a highly charged up,motivated and diverse work environment as can be seen from the analysis above, there are still someareas where a lot of improvement is needed to make Wal-Mart a better place to work for the associatesand in the eyes of the customers. Over the years, Wal-Mart has been in the news for many wrongreasons and a lot of negatives with regard to its operations have been greatly highlighted in the press. Ithas been criticized by women’s rights groups and other community organizations and there are manyhigh profile court cases against it due to alleged discrimination against women employees in terms tolower wages than their male counterparts and also with regard to promotions and managementopportunities (Drogin, 2003). This kind of bad press reflects very badly and there may be truth in that asit has been endorsed by thousands of current and former Wal-Mart female employees. In this regardWal-Mart should take affirmative action and ensure that the amount of managerial women employeesreflects the actual percentage of women that are working in Wal-Mart and also ensure that needs ofwomen working are addressed. Another criticism that has been alleged against Wal-Mart is that it pays relatively lower wages forthe amount of work that is done by its associates, and the associates have to suffer due to its mission ofconstantly lowering its prices for its customers (Miller, G. 2004). Wal-Mart is currently taking some stepsin this regard like offering healthcare and wellness benefits for its associates and having overtime pay,and also using advanced IT systems to ensure that employees are paid accurately and in time for theamount of work that they are doing. However Wal-Mart should understand that the associates, whowork so hard to ensure the high standards that have been set should be treated fairly and should try torationalize their wages or offer other benefits that would ensure that they are able to maintain a goodstandard of living. To manage an issue and prompt a very quick resolution, Wal-Mart has a open door policy where anassociate can walk up to an discuss with the store manager or supervisors any of the problems that theyare having. In addition to this, Wal-Mart should have outer outlets for employees to address theirconcerns as some of the employees may not want to go through this channel due to various reasonssuch as for the fear of being reprimanded or not having confidence in the store management that theywould resolve the issue. This can be one reason why so many issues has escalated into the majorproblems that have gone outside Wal-Mart and it receiving very bad publicity for it. Also as Wal-Mart isstrictly opposed to unions, there are no other outlets for employees to raise concerns or openlynegotiate with the management. Therefore it is recommended that in addition to the open door policyand the direct communication channel, there must be a host of other communication channels both at
  • 4. the store level and at the corporate that specifically looks at these issues and addresses them, and thisreduce employee grievances as soon as possible. In addition to that, being a company the size of Wal-Mart it is very difficult to manage the operationsunless very well process have been designed for each and every organizational activity and also controlmechanisms to ensure that these processes are being adhered to. Wal-Mart makes very heavy use ofinformation technology and communication systems in other parts of its business such as supply chainmanagement and operation with a very good deal of success. For the human relations functions as well,Wal-Mart should leverage technology for many of its daily operations to track the effectiveness of itscurrent processes so that they can take remedial actions if necessary and achieve their goals faster.Conclusion – Wal-Mart without a doubt can be said to be one of the companies of the century and asymbol of how one man’s vision can make a great difference to the entire world. It has got very welldefined processes backed by technology that has enabled it to scale up its business to become theworld’s largest private enterprise. Even through it is not the best paymaster, by creating a culture ofcustomer service and high performance, and by making them owners in the core business processesthrough trust, it is able to motivate its employees to achieve greater things and strive for excellence.However there are some areas that Wal-Mart needs to concentrate on to achieve its goal of makingWal-Mart a great place to work for its associates and provide them with a professional experience thatwill make them better.ReferencesAbout Us.(n.d.) Retrieved February 8, 2009, from Wal-Mart Stores, Inc. Web site:http://walmartstores.com/AboutUs/Read more: http://www.bukisa.com/articles/399599_assignment-1-human-resources-practices-at-wal-mart-case-study#ixzz1xUIvk2TD