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

Length: 1219 words

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.

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

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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.

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.

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)

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