strategy alignment and remedies university of karachi(KUBS) abdul basit khatir basitkhatir@gmail.com

1. WALL MART CORPORATE & COMPENSATION STRATEGY
WALLMART CORPORATE STRATEGY & COMPENSATION STRATEGY
SUBMITTED BY: ABDUL BASIT (MBA HR)
SUBMITTED TO: MEHMOOD QASIM
MAY 23, 2019

2. WALL MART CORPORATE & COMPENSATION STRATEGY
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Table of Contents
Introduction......................................................................................................................................2
Walmart’s Mission Statement........................................................................................................2
Vision statement............................................................................................................................2
CORPORATE STRATEGY ......................................................................................................................3
Walmart’s Compensation Strategy.....................................................................................................3
Basic Pay. ..........................................................................................................................................3
Benefits.............................................................................................................................................4
Incentives..........................................................................................................................................4
Analysis.........................................................................................................................................4
Strategy.........................................................................................................................................4
Current State .................................................................................................................................5
Alienation of compensation strategy and corporate strategy ..........................................................5
Conclusions and Recommendations............................................................................................7
 Provide Sufficient Compensation.........................................................................................7
 Clear Career Path................................................................................................................8
 Change in Management Culture ..........................................................................................9

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INTRODUCTION
Wal-Mart stores.inc considered as one of the world’s largest organizations operating withinthe retail
industryand the largestretailerinthe UnitedStates was foundedin1963 in Roger Arkansasby MR. Sam
Walton. Since then this organization has rendered its services more than 200 milliontimesper weekvia
its network of 8576 retail shops spread over 55 countries (Wal-Mart, 2010). As of 2010 the company
employees over 2.1million employees, and recorded a substantial sales revenue of 405 billion USD.
Ranked as the number one company in the world by the Fortune 500 magazine, Wal-Mart regardless of
recentworldfinancial crisisrecordedan astonishing operational income of 22.8 billionUSD in 2009. Thus
manyprofessionalsargue thatWal-Mart hasforeverchangedthe waythe retail industryfunctions
As a forerunner for low prices and convenience. It has always been the goal of Wal-Mart to exceed customer
expectations. In turn Wal-Mart wishes to excel at employee satisfaction and exceed their expectations.
Wal-Mart stores are known internationally for low prices on everyday items. The expansion of WalMart is
virtually unmatched by any other store or business of its kind. As expansion and revenues have increased Wal-
Mart has faced multiple criticisms in the public eye.
Although efforts have been made to createan effective employee retention program Wal-Mart remains at a
high employee turnover ratecompared with competitors in the retail industry. Because employee turnover is
an ongoing concern in the retailindustry that seek to change the current trend of employee retention at Wal-
Mart and set a new industry standard similar to the standard that Wal-Mart has set for low prices..
Walmart’s Mission Statement
To save people money so they can live better.
Vision statement
Be THE destination for customers to save money, no matter how they want to shop

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CORPORATE STRATEGY
The company’s competitive strategyis to dominate every sector where it does business. It measures success
in terms of sails and dominance over competitors. Its strategy is to sell goods at low process, outsell
competitors, and to expand. Generally, Wal-Mart does everything it can to win over competitors
STRATEGIC GOAL
 Dominate the Retail Market wherever Wal-Mart has a presence.
 Growth by expansion in the US and Internationally.
 Create widespread name recognition and customer satisfaction with the WalMart brand, and
associate the retailer with the reputation of offering the best prices
 Branching out into new sectors of retailing such as pharmacies, automotive repair, and grocery sales.
Walmart’s Compensation Strategy
Basic Pay.
Walmart is known for low prices and low wages. These low wages are frequently criticized for
inadequacy in supporting employees’ needs. At present, the company’s minimum hourly wage is
$7.25, which is significantly below the national average of $9.93. However, Walmart is reforming
its human resource management. As such, the firm plans to increase its minimum hourly wage
to $10.00. This new minimum hourly wage will set Walmart at the level of other retailers, such
as Gap, which currently uses a minimum hourly wage of $10.00. Also, Walmart plans to increase
managers’ minimum hourly pay to $10.90 in 2015. The company’s human resource management
expects that these changes will improve the workforce, especially with regard to employee
retention.

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Benefits. Walmart has a considerable list of benefits. The following is an overview of these
benefits:
 Company-matched 401(k) contributions, up to 6% of salary
 Associate stock purchase plan with company match
 Associate discounts
 Comprehensive health insurance plans
Walmart maintains employee motivation through these benefits. The health insurance plans
include, among others, a vision plan, dental plan, life insurance, accidental death &
dismemberment insurance, and accident insurance. These benefits address the human resource
management goal of employee retention.
Incentives
Walmart offers many incentives for its workers. For example, the company gives recognition to
high-performance employees. The optional APU credits are also incentives to motivate workers
to improve their knowledge, skills and abilities. Walmart employees can improve their
performance and plan a long-term career though continuing education with APU. These
incentives address the human resource management objective of motivating workers, especially
in aiming for promotion and contributing more to Walmart’s success.
Analysis
Strategy
After analyzing their increasing employee turnover between the years of 1994-1999 Wal-Mart implemented
a new retention program.
Part one of this strategy was to obtain high-quality personnel. They determined that they were responsible for
their own high turnover because of poor interviewing and filtering of possible new hires. Many employees

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would leave within the first 90 days because of a conflict with schedule or preference of workplace that was
not discussed in the hiring process.
Part two was to make sure that all associates know their leadership and feel comfortable with discussing
problems with them. They strive tohave theiremployees involved from day one with immediate and extended
supervisors so they feel that they can receive care and respect from them as they work for the company.
Part three is to grow great people. Wal-Mart takes a few approaches to helping their employees grow in the
company. They focus on how they tell about what opportunities exist and they clarify the process that gives an
even playing field to all who have interest in those opportunities
Current State
The current state of employee retention and satisfaction is highly debatable and there arevarying reports and
claims available tosupport both sides. According to a Wal-Mart Human Resource Report, as of 2003, employee
retention was 44%. If we refer to an article in Harvard Business Review published in 2006 this is close to the
industry standard. Respectively the turnover ratefor first year employees however, is much higher at 70% at
Wal-Mart Stores.
The estimated loss on employee turnover can reach up to 1.5-2.5 times that of the worker’s annual salary.
They also estimated that if even 60% of that salary is lost by Wal-Mart every time an employee leaves they
would lose an average of about $5,274 per employee. This would total around $612 Million each year lost in
employee turnover
Alienation of compensation strategy and corporate strategy
Compensation strategy involves a stratified approach. Pay is based on the job level relative to
the organizational structure. Compensation is also partly based on the worker’s performance.
This combination involves pay grades and levels that correspond to different job positions in
the company. The success of Walmart’s incentive plans is high. Sales performance is the core
consideration in the business. The focus of these incentive plans is on sales productivity and

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performance. Thus, through these incentive plans, human resource management directly
addresses such focus. These plans create significant boost for the company’s business
performance.
Walmart’s incentive pay is focused on managers. The company can improve the resulting
imbalance by giving a more equitable emphasis on the incentives of managers, supervisors, and
rank-and-file employees. An applicable recommendation is to use an incentive plan that gives
better incentives for low-ranking employees. Instead of focusing on supervisors and managers,
Walmart’s HR management can increase incentives for sales personnel, who are the bottom line
and foundation of the retail business.
From the compensation management perspective, Walmart has also showed very aggressive HR
policies and activities to fit the “low-cost” strategy. Walmart imported $15 billion worth of goods
from china, not only for the strategic consideration of supplier chain economy, but also Walmart
has some factories in china, whose products are branded with Walmart name. With this method,
Walmart pays much less to Chinese labors in this “world-factory” and earn some advantages, so
we could just see how the Walmart corporate strategy is just intensely integrated with its HR
policy. In 2002, operating costs for Walmart were just 16.6 percent of total sales, compared to a
20.7 average for the retail industry as a whole, which supported greatly the overall strategy.
Walmart workers in California earn on average 31 percent less than workers employed in large
retail as a whole. Actually, with other operating and inventory costs set by higher level
management, store .
Managers must turn to wages to increase profits, and Walmart expects the labor costs to be cut
by two-tenths of a percentage point each year. So these aggressive HR polices, are just the most
“fittest”

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Conclusions andRecommendations
I believe that if Wal-Mart employees found fulfillment in longtime employment with Wal-Mart
they would work harder, uplift customers through their positive shopping experience and save
the company money by cutting additional training and turnover costs. After reviewing multiple
studies on employee retention i feel it best to recommend adopting a new approach to employee
retention at Wal-Mart.
 Provide Sufficient Compensation
When employees are properly compensated they are positively motivated to excel
expectations on the job. Employee’s efforts on the job are directly connected to their wage.
This has a greater impact than the hope for a bonus, than profit sharing, than stock options or
commission. Therefore pay needs to be increased for greater satisfaction and performance in
the workplace at Wal-Mart. From this comparison i have determined our set of compensation
recommendations, which are:
1. Compare compensation amounts with competitors who feature a higher employee
retention rate. Once their pay rates have been reviewed, take necessary action to
match their wages or exceed them.
2. Evaluate those same competitor’s employee benefits plans and proceed to match or
exceed them for Wal-Mart employees.
3. Research further outside the retail industry for ideas on how to properly compensate
employees compared with successful employee retention businesses. By doing this,
Wal-Mart will determine ways to stay ahead of competitors in the retail world in
providing employee satisfaction.

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 Clear Career Path
Currently there is not a clear enough career path laid before employees to believe there is a
sustainable and desirable career ahead of them at Wal-Mart. Employees need to believe that
there is a bright future ahead with any company for them to desire long term employment.
Wal-Mart should provide the following to encourage long term commitment from their
employees.
1) Management needs to help set career goals with those who desire and give frequent
feedback on their progress By taking this step Wal-Mart employees will be able to see
the progress that they are making as well as feel as though they are valued enough to be
considered for long term employment and growth.
2) Provide comparable compensation with high paying competitors.
Paying your employees a high competitive wage will also help reduce the perception of
a career elsewhere as the superior choice. Providing your employees with proper
compensation will also help them feel confident that they can remain in your
employment long-term because they are capable of taking care of their needs as well as
their family needs.
3) Maintain desirable positions through flexibility
Employees become discouraged when they feel overwhelmed and over worked.
Employees become stressed when over worked and underappreciated. Wal-Mart needs
to maintain a flexible workforce that is concerned about employee well-being. Managers
and Supervisors need to be empowered to watch out for health concern and stress in the

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work place. Additionally Wal-Mart needs to hire and retain managers who genuinely care
about their employees and demonstrate this on a regular basis
 Changein Management Culture
I feel it is sufficient to say that there are many employees that have been disappointed by their
leadership at one time or another. Because Wal-Mart is such a large company I wish to present
an effective management plan that encourages employee retention in the majority of all cases
to come.
First, there needs to be criteria in place for finding the right personality traits in management. If
we refer back to the analysis portion we recall that employees thrive on the following three
characteristics of managers:
1. Management is open to new ideas
Demonstrating this characteristic to lower employees would require that management provide
a receiving feedback/new idea program. A fairly simple option would be to provide allotted time
for each employee to talk about new ideas with management each week if they desire.
Employees want to feel their voice is heard. By allotting time each week to speak one-on-one
with asupervisor willdemonstrate that employee’s voices canbe heard and are heard frequently.
2. Management deeply cares about their employees
In the section prior addressing a clearer career path i mentioned that well-being of employees
needs to be a priority for employees to desire a future career at the company. With the large
employee base at each store it may be difficult to monitor each employee and their well-being
at all times. One option may be to hold monthly anonymous surveys through an online server.

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This survey will be used to gather information on employee physical and mental health levels.
This can also be used to determine overall moral of each store. Additionally, management
training on proper communication and care could also help defuse negative interactions with
employees. If employees feel safe talking with their management they will be more open to
disclose health and stress concerns. In turn this would allow management the opportunity to be
open to helping each employee maintain optimal health.
4) Management makes employee development a priority
Employees want to remain employed by companies that value them. One strong way to
exhibit this value in employees is to encourage their development and expansion at the
company. A few major reasons why employees want to leave their employment is because they
receive too little coaching and feedback and there are too few growth and advancement
opportunities (Branham). It should be part of management’s responsibility to allow employees
to sit and discuss what future there is available at Wal-Mart and how to get there. If each store
manager opened times on his schedule to talk with employees at their leisure throughout the
month about their future and how to get there it would create a stronger desire to excel in the
work place because of a foreseeable, beneficial, outcome.