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:

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universalistic, contingency, and configurationally performance predictions, Academy

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Gary Dessler(2005), Human resource management, tenth edition, Pearson Prentice

Hall, p 76-78.

http://www.huffingtonpost.com/2012/11/16/walmarts-internal-compensation-

plan_n_2145086.html

Gerald R.Ferris, Wayne A. Hochwarter(1999), Human Resource Mangement: some new

directions, journal of management, 1999, Vol,25, No.3, 385-415.

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Michael E. Porter(1980), Competitive Strategy, the Free Press, p33(Chinese edition).

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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: