2 Compensation Practice Felicia Griffin Professor Teresa Wilburn BUS 409: Compensation Management February 2, 2020 Question 1 Brief Company Description (Walmart) The company researched is Walmart. Walmart is a publicly-traded company that started its operations in the 1960s. It is a chain of retail stores with its headquarters in the United States but operates globally. The company offers a wide variety of products and services to meet the different needs of the customers in the market (Roberts and Berg, 2012). As far as revenue is concerned, Walmart is the largest company in the world, and this is attributed to the practical strategies that it puts in place. The company has an extensive product range, which includes electronics, furniture, music, toys, jewelry, grocery, footwear, clothing, and fitness products, among others. The company understands that the market has a wide variety of needs, and this has enabled it to diversify its range of products to meet and exceed the expectations of customers. Compensation Strategy A compensation strategy determines how an organization provides its employees with payments and other benefits. It is notable that when employees work for an organization, they dedicate their time and effort to make sure the organization achieves its goals and objectives. It is the responsibility of the organization to compensate for this input. Walmart's compensation strategy stems from various aspects, such as basic pay. The company's minimum wage per hour is $7.25, but plans are underway to raise it to $10.00. The company also offers benefits such as comprehensive health insurance plans and associate discounts. Incentives include recognition of high performers and sponsoring the education of employees. Best Practices As far as compensation is concerned, Walmart engages in various best practices to make sure the payment is sufficient for each employee. The company understands that its employees can fall sick at any moment, and this has prompted it to provide them with a medical insurance plan. This indicates that Walmart is concerned about the health of its employees and is willing to give its support to make sure they receive the medical attention that they deserve. The company also understands that its employees play a significant role in its existence; therefore, it provides them with discounts when they purchase products from its stores. This is one of the best practices in terms of compensation because it offers employees a particular treatment (Biswas, 2014). Apart from the basic pay that businesses compensate their employees with, it is necessary to engage in additional best practices to show the commitment that an organization is concerned about the welfare of its employees. Compensation-Related Challenges The major challenge related to compensation that Walmart is facing is concerning its minimum wages. The company offers a minimum wage per hour of $7.25, which is below the national average of $9.9.

1. 2
Compensation Practice
Felicia Griffin
Professor Teresa Wilburn
BUS 409: Compensation Management
February 2, 2020
Question 1
Brief Company Description (Walmart)
The company researched is Walmart. Walmart is a publicly-
traded company that started its operations in the 1960s. It is a
chain of retail stores with its headquarters in the United States
but operates globally. The company offers a wide variety of
products and services to meet the different needs of the
customers in the market (Roberts and Berg, 2012). As far as
revenue is concerned, Walmart is the largest company in the
world, and this is attributed to the practical strategies that it
puts in place. The company has an extensive product range,
which includes electronics, furniture, music, toys, jewelry,
grocery, footwear, clothing, and fitness products, among others.
The company understands that the market has a wide variety of

2. needs, and this has enabled it to diversify its range of products
to meet and exceed the expectations of customers.
Compensation Strategy
A compensation strategy determines how an organization
provides its employees with payments and other benefits. It is
notable that when employees work for an organization, they
dedicate their time and effort to make sure the organization
achieves its goals and objectives. It is the responsibility of the
organization to compensate for this input. Walmart's
compensation strategy stems from various aspects, such as basic
pay. The company's minimum wage per hour is $7.25, but plans
are underway to raise it to $10.00. The company also offers
benefits such as comprehensive health insurance plans and
associate discounts. Incentives include recognition of high
performers and sponsoring the education of employees.
Best Practices
As far as compensation is concerned, Walmart engages in
various best practices to make sure the payment is sufficient for
each employee. The company understands that its employees
can fall sick at any moment, and this has prompted it to provide
them with a medical insurance plan. This indicates that Walmart
is concerned about the health of its employees and is willing to
give its support to make sure they receive the medical attention
that they deserve. The company also understands that its
employees play a significant role in its existence; therefore, it
provides them with discounts when they purchase products from
its stores. This is one of the best practices in terms of
compensation because it offers employees a particular treatment
(Biswas, 2014). Apart from the basic pay that businesses
compensate their employees with, it is necessary to engage in
additional best practices to show the commitment that an
organization is concerned about the welfare of its employees.
Compensation-Related Challenges
The major challenge related to compensation that Walmart is
facing is concerning its minimum wages. The company offers a

3. minimum wage per hour of $7.25, which is below the national
average of $9.93. Several stakeholders have complained that
Walmart does not compensate its employees enough, even
though the company is among the most profitable in the world.
They feel that the minimum wage is too low for a company the
size of Walmart. It is perceived as a challenge since it has had a
negative impact on the company's public image. Many think that
the company mistreats its employees by offering them very low
wages even when it has the potential to do better.
Question 2
Compensation and its Impact on Stakeholders
Compensation is perceived as an expense because a company
has to spend in order to compensate its employees. Given the
fact that businesses are interested in cutting down costs, they
try as much as possible not to use a lot of resources in
compensating employees because this will have an impact on
the company as well as its stakeholders. Walmart has a
competent human resource management team which is tasked
with the responsibility of ensuring employees are compensated
in the best way possible and to minimize the impact on the
company and its stakeholders. Basically, Walmart applies a
compensation strategy that is based on the performance of
employees or departments. In other words, the better an
employee performs, the higher the compensation they receive.
The application of this compensation strategy has a positive
impact on the company and its stakeholders in the sense that it
increases performance (Biswas, 2014). Employees are motivated
to do better so that they can earn more, and this enables the
company to be more productive and competitive in the industry.
On the negative side, some employees might feel that their
efforts are not recognized as they should be and might complain
of discrimination. This is likely to lead to a drop in motivation,
which will have a negative impact on performance. This will
lead to a negative effect on the company as well as its
stakeholders, especially the shareholders. It is important for

4. organizations to use effective and efficient compensation
strategies that have a positive impact on stakeholders.
Compensation does not only affect employees; it also affects the
company and the stakeholders in general.
The management team needs to understand that the
compensation strategy utilized affects virtually all stakeholders
in the company (Roberts and Berg, 2012). From a monetary
point of view, the compensation should be high enough to
effectively motivate employees to work even harder and enable
the company to be more productive and competitive in the
industry. This will be an effective strategy in the sense that it
will be taking the welfare of the employees into account. At the
same time, the management team should know that the company
has investors who expect to earn from its operations. Therefore,
it should not use all revenue on compensation. It has to ensure
that even the shareholders have something to take home. The
compensation strategy must be balanced to address the needs
and concerns of all stakeholders should they be employees or
shareholders.
Question 3
Laws
Laws have a significant impact on an organization's
compensation strategies. The law determines how much a
company needs to compensate its employees for services
provided. This implies that when an organization sets its
compensation strategies, they must be in line with what the law
demands. For example, the minimum wage per hour in the
United States is $7.25. This implies that organizations should
not pay their employees below this amount. This is also the
minimum wage per hour for employees at Walmart. The law
affects the compensation that different organizations set.
Organizations must always operate within the law that has been
set by the government of the day. Whatever practices they
engage in, they have to work within the confines of the law.
This ensures that the compensation is legal and approved by the

5. existing legal framework. In simple terms, the law has a direct
impact on an organization’s compensation practices since it
provides the guidelines that should be followed while setting
the compensation.
Labor Unions
Labor unions fight for the rights of their members (Martocchio,
2016). It is important for workers to join labor unions so that
they can represent them. Through this, better compensation can
be negotiated. In other words, labor unions have an impact on
the compensation practices of organizations in the sense that
they can negotiate for an increment. They ensure that employees
are effectively compensated for the services they offer to their
employers. Labor unions are the representatives of employees at
different negotiating tables. When employees need their
compensation raised, they go through a labor union so that their
grievances are effectively addressed. A competent labor union
negotiates for an increment in employee compensation. It
ensures employees are well treated from different points of
view.
Market Factors
Market factors also affect compensation practices by
organizations such as Walmart. It is noted that the
compensation packages that different organizations in the
market offer the employees can help in attracting and retaining
the workforce. With an attractive compensation package, an
organization is likely to be a destination of the best Talent in
the market. This affects compensation in the sense that
businesses want to be competitive with respect to how they
compensate their employees in order to attract the best.
Question 4
Traditional Bases for Pay
From a traditional point of view, compensation was done at a
flat rate. This implies that at the end of the month, all
employees were paid an equal amount of money as

6. compensation for the services that they offer to an organization.
At some point, Walmart relied on a traditional base for pay, and
this created a sense of equality between the employees. The
employees believed that they were being paid based on
fairgrounds since each of them took home an equal amount.
This is an effective compensation strategy given the fact that
some employees are not treated as special to others
(Martocchio, 2016). It also categorized all employees in the
same class. Each of the employees understood that their effort
was equally important in enabling the organization to be where
it was.
However, with the advancement in the business world as well as
the introduction of more professional positions within an
organization, it became necessary for employees to be paid
based on different grounds rather than just a uniform pay. In the
modern world, employees want to be paid according to their
qualifications as well as the complexity of their work. This
makes the traditional base for ineffective since it cannot be
effectively applied in a complex working environment.
Employees are exposed to different conditions; therefore, they
cannot be compensated on the traditional basis of the flat rate.
It is important to consider various factors before determining
how an employee should be compensated. This ensures that each
employee is explicitly compensated according to their unique
factors. It creates a sense of fairness for individuals.
References
Biswas, B. (2014) Employee Benefits Design and
Compensation. Upper Saddle River, NJ: FT Press.
Martocchio, J. (2016). Strategic Compensation: A Human
Resource Management Approach. London: Pearson Edication.
Roberts, B. & Berg, N. (2012). Walmart: Key Insights and
Practical Lessons from the World’s Largest Retailer. London:
Kogan Page.