CASE STUDY OF STRATEGIC HUMAN RESOURCE MANAGEMENT IN WALMART HYPERMARKET

CASE
STUDY OF STRATEGIC HUMAN RESOURCE MANAGEMENT IN WALMART HYPERMARKET
TABLE OF CONTENTS
Contents Page
INTRODUCTION 1
THE ANALYSIS OF CORPORATE STRATEGY
AND
HR STRATEGY AT WALMART HYPERMARKET 4
HR STRATEGY AT WALMART HYPERMARKET 4
THE ANALYSIS OF HR POLICIES AT
ECONSAVE AND ITS INTEGRATION WITH CORPORATE STRATEGY 4
THE CHALLENGE OF HRM POLICY IN
WALMART 7
RECOMMENDATION 8
CONCLUSIONS 9
ABSTRACT

Wal-Mart Stores, Inc.,
branded as Walmar, is an American multinational retail corporation that runs
chains of large discount department stores and warehouse stores. The company is
the world's largest public corporation, according to the Fortune Global 500
list in 2014, the biggest private employer in the world with over two million
employees, and the largest retailer in the world. Walmart remains a
family-owned business, as the company is controlled by the Walton family, who
own over 50 percent of Walmart. It is also one of the world's most valuable
companies.
The company was founded by
Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on
the New York Stock Exchange in 1972. It is headquartered in Bentonville,
Arkansas. Walmart is also the largest grocery retailer in the United States. In
2009, it generated 51 percent of its US$258 billion (equivalent to $284 billion
in 2014) sales in the U.S. from grocery business. It also owns and operates the
Sam's Club retail warehouses in North America.
Walmart has over 11,000
stores in 27 countries, under 55 different names. The company operates under
the Walmart name in the United States, including the 50 states and Puerto Rico.
It operates in Mexico as Walmart de México y Centroamérica, in the United
Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly
owned operations in Argentina, Brazil, and Canada. Walmart's investments
outside North America have had mixed results: its operations in the United
Kingdom, South America, and China are highly successful, whereas ventures in
Germany and South Korea were unsuccessful.
INTRODUCTION
Michael E. Porter (1980) in
his famous book said there are three basic competitive strategies for a
company, which are overall cost leadership; differentiation and focus strategy.
Companies use these competitive strategies to achieve competitive advantage. In
this case, Walmart Company is obviously taking the cost leadership strategy,
that is to say, it aims to become the low-cost leader in the retail industry.
Walmart maintains its competitive advantage through its satellite-based
distribution system, and by keeping store location costs to a minimum by
placing stores on low-cost land outside small to medium-sized towns, no matter
in the US or in its abroad affiliations.
1.0
THE ANALYSIS OF CORPORATE STRATEGY AND HR STRATEGY AT WALMART
HYPERMARKET
From this case material we
could also see that Walmart purchased massive quantities of items from its
suppliers to form scale economy, and with the efficient stock control system
helping make its operating costs lower than those of its competitors. It also
imported many goods from China, “the world factory” for its low cost. So in a
word the company-level strategy of Walmart is low cost and low cost, with
little differentiation strategy.
Managers engage in three
levels of strategic planning (Gary Dessler, 2005): the corporate-level strategy;
the business-level strategy and the function-level strategy. The functional
strategy should serve the overall company strategy so the corporate strategy
could be implemented more effectively and efficiently. As for Walmart, its
corporate-level strategy and business-level strategy, as we analyzed above, is
the low cost leadership. Then we’ll focus on its functional strategy,
especially its HR strategy. Besides the above factors, Walmart builds its low
cost leader on employment policies that help it to achieve extraordinarily low
employment costs. Through low-cost HR activities, Walmart tried to maintain its
predominate competitive advantage.

2.0
THE ANALYSIS OF HR POLICIES AT ECONSAVE AND ITS
INTEGRATION WITH CORPORATE STRATEGY.
The basic premise that underlying
SHRM is that organizations adopting a particular strategy require HR practices
that are different from those required by organizations adopting alternative
strategies (Jackson&Schuler, 1995). Generally, there are three SHRM
theoretical models in the study of this discipline: the universalistic best
practices, the contingency perspective of “best fit” and the resource-based
configuration perspective. Here I would not deliberate on all these three
models to examine the HR practices at Walmart, but just choose the contingency
perspective of “best fit”. With this view, the individual HR practices will be
selected based on the contingency of the specific context of a company. Like the
Walmart has different corporate strategy with those retailers with differentiation
strategy, which actually cultivates the primary contingency factor in the SHRM
literature. What’s more, we should be reminded that the individual HR practices
will interact with firm strategy to result in organizational performance, and
just for this interaction effects make the “universal best practices” may not
apply so well in a specific company. In the above part we have put great
emphasis in identifying and analyzing the primary contingency factor of Walmart’s
corporate strategy, so in the following part we’ll examine the “fitness” of HR
practices in Walmart with this theoretical model, which is obviously also the
integration process of HR practices with the contingency variables to some
extent. As there are the HR policies and activities (such as how the company
recruits, selects, and trains and rewards employees) that comprise the HR
system itself, here we could illustrate the integration just by the sequence of
the HR activities.
From the recruitment Walmart
has tried its best to reduce the cost considering so big number of its
employees. For example, the New York Times (January 2004) reported on an
internal Walmart audit which found “extensive violations of child-labor laws
and state regulations requiring time for breaks and meals.” The cheap price of
children labors and minors make it earn more cost competitive advantage over
other companies. Walmart also faced a barrage of lawsuits alleging that the
company discriminates against workers with disabilities, for the recruitment of
these guys means providing more facilities for them and the loss of efficiency
to some extent.
From training perspective,
Walmart refers to its employees as “associates”, and encourages managers to
think of themselves as “servant leaders”, that is, to encourage them to serve
others while staying focused on achieving results in line with the organization’s
values and integrity. An organization’s strategy necessitates behavioral
requirement for success, and the use of HR practices in the organization can
reward and control employee behavior, therefore the organization should
implement HR practices that encourage the employee behaviors that are
consistent with the organization’s
strategy (Delery, John E; Doty, D Harold, 1996). Through this training and
encouragement, Walmart tried to adjust the employee behaviors and competencies
to what the company’s strategy requires, that is to low down cost more. This
logic also is embodied in its “lock-in” of its night time shift in various
stores. Through this enforced policy, Walmart tried to prevent “shrinkage”
behavior of its employees, to eliminate unauthorized cigarette breaks or quick
trips home.
From the performance
management perspective, Walmart made very high demanding standards and job
designs. The New York Times reported Walmart had extensive violations of state
regulations requiring time for breaks and meals. And there are so many
instances of minors working too late, during school hours, or for too many
hours in a day, for the performance appraising just force them to do so. In the
Career management, Walmart also goes great lengths to reduce cost, there are
many cases that women sued Walmart for its discriminated policy against women
by systematically denying them promotions and paying them less than men. Women
are pushed into “female” departments and are demoted if they complain about
unequal treatment just for more cost reduction against its competitors.
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”.
From the employee benefit and
safety perspective, Walmart’s HR policies are also well aligned with the
corporate-level strategy. At Walmart, workers eligible for benefits such as
health insurance must pay over the odds for them. In 1999, employees paid 36
percent of the costs. In 2001, the employee burden rose to 42 percent. While in
the US, large-firm employees pay on average 16 percent of the premium for
health insurance. Unionized supermarket workers typically pay nothing. Walmart
was frequently accused of not providing employees with affordable access to
health care, but the top managers and HR managers know their focus was just to
try their most to implement the “low-cost” strategy.
Finally, from the labor
relations perspective, Walmart couldn’t have done better to show us how the
contingency model of “best fitness” works. Sam Walton sought to bring great
value through aggressive discounting to customers, to implement its low-cost
strategy. Because unionized supermarket workers typically pay nothing, Walmart
has strong anti-union policy. Allegations of firing workers sympathetic to
labor organizations have been made, all new employees are shown a propaganda
video tape which said joining a union would have bad implication for them, and
the employees should never sign a union card. In the UK it was reported in the
Guardian that Walmart is facing the prospect of a bruising legal battle with
the GMB trade union in a row over collective bargaining rights, for the union
would not accepting Walmart withdrew a 10% pay offer to more than 700 workers
after they rejected a new package of terms and conditions, which included
giving up rights to collective pay bargaining. Here there may be some doubt why
Walmart has recently allowed unionization in their stores in China, where
unionization is mandatory. But actually this mandatory rule is made a long time
before Walmart walk into china, so why Walmart give up its persistence in not
having a some unions, and its former reason to China government is that it did
not have any unions in its global working. So how do we see Walmart’s
compromise if that constitutes a “compromise”? It has been argued that doing
business in China is particularly difficult because of the higher relative
importance of personal relationships (guanxi), as opposed to the specification
and enforcement of contracts in the West (Davies et al, 1995). Walmart China
has tried every effort to develop good relationships with China government and
other influence groups. So Walmart made this exception of have unionizations is
just in accordance with its corporate strategy and HR strategy. If it ignores
the Chinese government’s firm rule, its cost would just outweigh what it would
save by organizing no unions in its labor relations management. And also it
forgets not its basic corporate and HR strategy, for in china Walmart provides
little power for workers and the unions are controlled by the state. So from
this we could further understand how Walmart would adjust its HR policies and
activities to fit its corporate strategy contingency.

3.0 THE
CHALLENGE OF HRM POLICY IN WALMART
So in the above part we have
assessed how various human resource practices and systems of Walmart “fit” the
organization’s competitive corporate strategy. Then what the role of HR
managers in this company, who are HR professionals with strategic and other
skills required to build a strategy-oriented HR system. As managers in one of the
functional departments of Walmart, they have tried their best to “fit” the
corporate strategy to low down cost. They made some rules and policies, for
example, they implement anti-union policy in its stores to reduce extra-costs
from union workers; they help implement “lock-in” policies; they tried to
resist disability people for the efficiency loss; they discriminate women by
giving them much fewer money and opportunities to be promoted, and actually the
male workers in Walmart also got much lower salary compared with industry
average level. Walmart HR managers also tried to adjust the employee behaviors
and competencies to what the company’s strategy requires through the actions
and policies of the firm’s strategy-supporting HR system, and some of which we
have listed.
So in the above paragraph, we
have analyzed the role of HR mangers in Walmart using the “best fit” model, in
the next we would attempt to analyze their role from two other models. Huselid’s
(1995) work reflects what has come to be known as the “universalistic” or “best
practice” approach to SHRM, which assumes that there are certain “best” HRM
practices that will contribute to increased financial performance, regardless
of the strategic goals of the firm. In this case, for example, Walmart HR
managers refers to its employees as “associates”, and encourages managers to
think of themselves as “servant leaders”, that is, to encourage them to serve
others while staying focused on achieving results in line with the organization’s
values and integrity. All such kinds of HR policies just are universal best
practices adopted by HR department in all good companies. No matter Walmart
adopted low-cost strategy or differentiation strategy, these policies and
practices would bring no extra cost, but would motivate employees to contribute
more to the corporate, and even help to form even good corporate culture, to
reduce much more lawsuits and form good relationships with the community and
government. And then there is also a call for a configurational approach to
SHRM, and this theoretical model argues that there are specific “ideal types”
of HRM systems that provide both horizontal and vertical fit of HRM practices
to organizational structure and strategic goals. More specifically, there are
certain, specific systems of HRM practices that result in the highest internal
consistency and complementarity (horizontal fit), as well as congruence with
organizational goals (vertical fit). In the part 2, we have seen how Walmart HR
managers have coordinated a systematic type of HRM policies to complement each
other, to be congruent with organizational goals (Gerald R.Ferris, 1999).
4.0 RECOMMENDATION
Actually from the above
analysis of the role of HR managers, we knew from different theoretical SHRM
models, there are still many things for HR managers to improve. The
resource-based view focuses on firm resources that can be sources of
competitive advantage within the industry. Three basic types of resources can provide
this competitive advantage (Barney, 1991). Human capital resources include such
things as the skills, judgment, and intelligence of the firm’s employees. So
from the case material we just most information concerning how Walmart
exploited its workers by various HR policies to low down the cost to the
minimum level, which would certainly reduce the loyalty and dedication of those
human resource in the company. And besides referring to its employees as “associates”,
and encourages managers to think of themselves as “servant leaders”, there
seems little training and other activities taken to develop its valuable human
resources, while human capital and learning could be a core source of
sustainable competitive advantage (Nile & Jeffrey, 2004). As for the
specific training and develop methods and forms, it would depend upon the
specific and proper time, place and the right store. But what’s worth mention
is the HR managers should pay more dynamic and long-term attention when it
calculates the future benefits of such HR practices.
As for the present employment
practices, even with the “contingency model of best fit”, there may still many
opportunities for improvement. It’s really hard to be measure whether Walmart’s
aggressive actions to bring cost down really get its strategy in the long term.
The workers are complaining its discrimination and low compensation policies,
and they bring many charges against Walmart in the world. The government and
other communities are just turning more and more sensitive to Walmart’s way of aggressive
acting, all these bring big damage, or even bigger cost, to Walmart’s
reputation and may very well affect its ability of long-term profitability. It
imported so much goods from China, and it even possess some sweat shops in less
developed countries to produce products with Walmart brand, which cultivate
many problems such as business ethics, followed by the opposition of its
consumers, the final source of profit. So it seems Walmart HR professional
would harvest more by seeing the long-term potential cost, and with more
advanced management tools.
CONCLUSION
So from all those above
content we know the human resource management is of strategic importance to Walmart,
which is also the definition of SHRM. So the top managers besides the HR
executive should pay more attention to the everyday employment management,
after all, the issues that are related with employment are what they must face
everyday. So they should play more positive roles in training and using their
human resources, and maybe cultivating better organization culture, all of
which may prove more cost-saving, and correspondingly help realize Sam Walton’s
simple philosophy of “bringing more value to customers”.
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