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Employee Reward & Pay Structure in
Wal-mart Stores Inc.Group Members: Kafil Ahmed BBE-661
Talha Hassan BB-2131
Course: Salary and Compensation
Code: MGT-605
Instructor: Muhammad Asif Khan
Wal-mart Stores Introduction
Wal-mart Stores, Inc is an American multinational retail corporation.
Run chains of large discount department stores and warehouse stores.
It is world's second largest public corporation, according to Fortune Global
500 list in 2013.
Biggest private employer in the world with 2.2 million employees.
Largest retailer in the world.
Wal-mart is still a family-owned business.
Company is controlled by the Walton family.
They own over 50 percent of Wal-mart.
It is also one of the world's most valuable companies.
Wal-mart Stores Introduction
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.
It also owns and operates the Sam's Club retail warehouses in North America
Samuel Robson Walton is Chairman
Mike Duke is President/CEO
Apparel, footwear, specialty, cash & carry, warehouse club, discount store,
hyper market, super center, superstore, supermarket
Wal-mart has 8,500 stores in 15 countries, under 55 different names.
Corporate and HR strategy at Wal-mart
Wal-mart purchased massive quantities of items from its suppliers
Efficient stock control system
It also import many goods from China, for its low cost
This shows Wal-mart company level strategy is low cost
Wal-mart builds its low cost leader on employment policies
It helps to achieve extraordinarily low employment costs.
Through this Wal-mart tried to maintain its predominate competitive
advantage.
Analyze HR policies of Wal-mart
There are three strategic human resource management theoretical models
(a) Universalistic best practices,
(b) Contingency perspective of “best fit”
(c) Resource-based configuration perspective.
Wal-mart perform HR practices through Contingency perspective of “best fit”
As there are the HR policies and activities (such as how the company
recruits, selects, and trains and rewards employees)
Analyze HR policies of Wal-mart Examples
From the recruitment Wal-mart has tried its best to reduce the cost considering so big
number of its employees.
The New York Times in January 2004 reported on an internal Wal-mart audit which found
“extensive violations of child-labor laws and state regulations requiring time for breaks
and meals.”
By this cheap price of children labors and minors make it earn more cost competitive
advantage over other companies.
Wal-mart also faced a barrage of lawsuits alleging that the company discriminates
against workers with disabilities,
For the recruitment of disabled person means providing more facilities for them and the
lost of efficiency to some extent.
Wal-mart “fit” the organization’s competitive corporate strategy.
Managers have tried their best to “fit” the corporate strategy to low down
cost.
Example, they implement anti-union policy in its stores to reduce extra-costs
from union workers
They implement on “lock-in” policies
They discriminate women by giving them much fewer money and
opportunities to be promoted
Male workers also got much lower salary compared with industry average
level
Role of the HR manager in Wal-mart
Wal-mart is in hot legal water. Though a nationwide sexual discrimination lawsuit was just
settled in their favor by the Supreme Court, it looks like they have similar, though smaller,
suits on the way – possibly a lot of them. What do we know about Wal-mart and what
can we learn from this cautionary tale for employers?
Three of Wal-mart’s female employees filed a case on behalf of themselves and 1.5
million of their female coworkers nationwide (intended to include all female employees
at Sam’s Club and Wal-mart stores from 1998 to 2001), claiming sexual discrimination in
Wal-mart’s pay and promotion practices.
The Supreme Court did not decide in the female employees’ favor, but the battle does
not appear to be over.
Article: Wal-mart Lawsuit Sends Employers a Warning
Article: Wal-mart Lawsuit Sends Employers a
Warning
The Supreme Court decided that Wal-mart did not have a single, nationwide policy that resulted
in all of the discrimination claims made and that is why the plaintiffs lost. Next up are cases in
local courts that will be filed by individual’s or small groups of female Wal-mart employees.
This legal mayhem is a nightmare for any company, even one with deep pockets like Wal-mart.
One line from the above-mentioned story is especially interesting to those of us here
at Compensation Today. It reads,
“Kwapnoski and others pressing their suit claimed they were victimized by Wal-mart’s practice of
letting local managers make subjective decisions about pay and promotions. More than 100
employees had filed sworn statements saying they were paid less and given fewer opportunities
for promotion than male colleagues.”
Wal-mart’s pay practices are being scrutinized for inequity based on gender. Subjective
decisions by managers? Those can happen anywhere. The fact that Wal-mart won the first case
suggests that they have been paying close attention to their policy language. It’s hard to say. But
it seems that it may be more the practice of the policy that is failing.
Wal-mart’s situation brings up some important questions for HR professionals. HR leaders play
an important role in helping ensure that their company does not end up where Wal-mart is, in
court. Not only are they part of the policy creation, they are essential to it being understood
and implemented properly by the management team and other employees.
Here is a checklist of questions to address to ensure you minimize the risk of legal problems
at your company:
Do you have your compensation philosophy well defined?
Have you done market research on what to pay your employees in each position,
depending on their level of experience, location, skill level and other factors?
Do you maintain a salary structure that rewards employees on legally defensible criteria,
such as experience, skills and performance?
Article: Wal-mart Lawsuit Sends Employers a
Warning
Can you explain why each employee at your company earns what he or she does?
Do your managers understand the company’s pay practices?
It’s always hard to defend pay decisions made by many different managers unless the company can prove that it provides good guidance to managers on how to make pay decisions. That starts with a well-executed compensation structure. How does your company stack up? If it’s time to mitigate this risk in your organization, a well-executed compensation structure is the best route.
For information’s sake, we dug through and found some information in our PayScale database on Wal-mart’s pay practices and culture, as reported by its employees:
Wal-mart’s gender balance tips towards female employees: 57 percent female and 43 percent male.
Women’s hourly pay range bumps up a bit higher than men’s, on average. Women: $8.67 -$12.10 per hour. Men: $8.63 - $11.70 per hour
Article: Wal-mart Lawsuit Sends Employers a
Warning
Wal-mart does not typically offer vision or dental insurance.
Opticians, pharmacists and production managers are some of the best-paid Wal-mart
employees.
Permanent employees are some of the best paid at Wal-mart, with part-time
employees earning nearly two dollars less per hour on average.
Employees with 5-9 years of experience don’t get quite two weeks of vacation per
year.
Outside of Bentonville, Ark., the best paid Wal-mart employees are in Dallas, Texas.
Article: Wal-mart Lawsuit Sends Employers a
Warning
Article: Wal-Mart's Internal Compensation
Documents Reveal Systematic Limit On
Advancement
The company website declares that "a job at Wal-Mart opens the door to a better life"
and "the chance to grow and build a career." But interviews with 31 hourly workers and
one former store manager reveal lives beset by paychecks too small to handle the bills,
difficult to manage part-time schedules with hours subject to constant change, and little
reason to hope for career advancement. Citing fear of losing their jobs, most spoke on
the condition of anonymity.
The testimonials of these workers are confirmed by Wal-Mart's official compensation
policy, an internal company document obtained by The Huffington Post, titled the "Field
Non-Exempt Associate Pay Plan Fiscal Year 2013." The plan details a rigid pay structure
for hourly employees that makes it difficult for most to rise much beyond poverty-level
wages.
Low-level workers typically start near minimum wage, and have the potential to earn
raises of 20 to 40 cents an hour through incremental promotions. Flawless performance
merits a 60 cent raise per year under the policy, regardless of how much time an
employee has worked for the company. As a result, a "solid performer" who starts at
Wal-Mart as a cart pusher making $8 an hour and receives one promotion, about the
average rate, can expect to make $10.60 after working at the company for 6 years.
A Wal-Mart corporate spokesman confirmed the existence of the compensation
document. He said the company pays fair wages while providing substantial
opportunities for motivated, hard-working people to work their way up to higher-paying
jobs.
Article: Wal-Mart's Internal Compensation
Documents Reveal Systematic Limit On
Advancement
"In order for Wal-Mart to attract good people we need to offer competitive wages and
benefits, and we do," said Kory Lundberg, Wal-Mart's director of National Media
Relations. "We offer pay and benefits that meet or exceed the majority of our
competition in every location we operate, and that includes unionized competitors.
We're clearly offering jobs that people want, because last year Wal-Mart received
more than 5 million applications to come work in our stores.“
Most major retail chains that compete for customers with low prices pay relatively low
wages to hourly workers. But as the largest private employer in the world, with 1.4
million workers in the United States alone, Wal-Mart bears outsized influence on
American working opportunities: It has largely set the standards for similar companies.
Article: Wal-Mart's Internal Compensation
Documents Reveal Systematic Limit On
Advancement
"In order to deal with competition from Walmart, other retail outlets have
been forced into a reduction in wages and benefits across the board," said
Ken Jacobs, chairman of the Center for Labor Research and Education at
the University of California at Berkeley.
The 33-page compensation plan is written as an advisory document for
company managers. Though it is addressed to Sam's Clubs -- a retail
division of Walmart Stores Inc., that tends to attract slightly higher-income
customers -- multiple Walmart employees confirmed that the plan applies
to Walmart stores as well.
Advise to improve employment practices at
Wal-mart Three basic types of resources.
Human capital resources, judgment, and intelligence of the firm’s employees.
Wal-mart exploited its workers by various HR policies to low down the cost to the minimum
level,
This certainly reduce the loyalty and dedication of those human resource in the company.
Besides referring to its employees as “associates”, and encourages managers to think of
themselves as “servant leaders”,
It seems little training and other activities taken to develop its valuable human resources,
Human capital and learning could be a core source of sustainable competitive
advantage
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.
They should play more positive roles in training and using their human
resources,
Cultivating better organization culture,
This may prove more cost-saving, and correspondingly help realize Sam
Walton’s simple philosophy of “bringing more value to customers”.
Conclusion:
Reference:
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Management, 17, 99–120.
Davies, H., Leung, T.K.P., Luk, S.T.K. and Wong, Y.H. (1995), "The benefits of "guanxi",
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http://www.huffingtonpost.com/2012/11/16/walmarts-internal-compensation-
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http://big.assets.huffingtonpost.com/Walmart_0.pdf
http://www.payscale.com/compensation-today/2011/06/walmart-lawsuit
http://en.wikipedia.org/wiki/Criticism_of_Walmart#Employee_and_labor_relations
Reference:
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