Walmart’s Key HR Functions Underperforming The WritePass Journal

Walmart’s Key HR Functions Underperforming Introduction Walmart’s Key HR Functions Underperforming ). This is clearly a violation of workers rights. Wal-Mart which was initially a corporate fortress seems to be headed to a downfall. Even its operations in the US indicate the possibility of a failure in the giant retailer. More recently, Wal-Mart warned its investors that its comparable store sales may be slightly negative after the third quarter. This is also evident in the huge layoff of 2300 workers at Sams club, one of its stores. The layoff was attributed to their poor performance. Whereas Wal-Mart still remains the corporate fortress in the retail sector due to its massive size, its underperformance in the US and emerging markets indicate the possibility of a failure in the near future. Walmart’s bad business practices Wal-Mart has on several accounts been criticized for poor wages. Why should employees suffer in one of the giant retail stores that make billions of profit annually? Wal-Mart is ranked among the best 100 corporations by Forbes magazine yet most of its employees take on average less than $250 a week. Full-time employees are paid between $6 and $7.50 an hour. A further a third of the employees who are part-time are limited to working up to 28 hours a week and are not eligible for benefits. Such pay scale places them and their families below the poverty line. The lack of rewards demotivates and discourages them from performing well. Perhaps Wal-Marts bad business practices are more evident with the Rana Plaza tragedy which led to the loss of over 1000 lives. The tragedy exposed some of the profound flaws in the industry. Rana Plaza produced private garments for some of the giant retailers including Wal-Mart. Evidence provided by the Bangladesh center for Worker Solidarity showed that Wal-Mart had been producing its garments in Ether Tex factory situated on the 5th floor of the building (Steven 2013). Some documents were found in the rubble detailing purchase orders for certain garments which were to be delivered to Wal-Mart. Further, at the time of the tragedy, Wal-Mart was already listed in Ether Texs website as one of the main customer. Although Wal-Mart denied knowledge of their operations at the factory building, it announced its plans to put in place new safety measures at some of their factories in Bangladesh. The corporate fortress, however, promised to stop production if urgent safety problems were uncovered at some of its factories. The company further assured the Bangladeshi government of their support and commitment towards improving workplace safety. But the company stopped short of committing to these improvements and distanced itself from the Rana Plaza tragedy. This is a clear example of bad business practice. Why these particular functions are considered to be underperforming Last year, Wal-Mart reported $11 billion in net income yet it has not been able to remedy some of its questionable workplace practices. Wal-Mart has been filed in over 5,000 lawsuits for poor employment practices such as inadequate health care, wage law violations, worker exploitation and their anti-union retailer stance. Wal-Mart anti-union stance can be seen in their recent threat to close one of its stores in Quebec after workers successfully unionized. Citing economic reasons; Wal-Mart announced their plans on shutting the store. However, this argument was rejected by Quebecs labor relations and Wal-Marts firings found illegal. Further, the move to extend operations to overseas markets including setting up factories in emerging markets such as Bangladesh and China was driven by the desire to take advantage of cheap labour. For example, Wal-Mart pays much less its employees in China compared to those in the US and the UK. A further criticism has been the lack of employment benefits. Part-time employees are limited to working up to 28 hours a week and are not eligible for benefits. While, workers who are eligible for benefits pay way over the odds to get health insurance and other benefits. The company has often come under criticism for not providing employees with affordable access to health care and employees are overburdened. For example, in 1999, 36% of the total costs were paid by the employees. In 2001, there was a 42% rise in employee burden. The health of its employees has been deteriorating at a faster rate. According to the companys internal memo discovered by New York Times, Wal-Mart workers were sicker compared to the national population. This begs the question: Why can’t such a giant corporation provide its workers medical retirement benefits given the huge profits that they make? This question was once raised by one of Wal-Mart’s managers only to be fired by the CEO and reasons of disloyalty cited as the reason for being quitted. (Jordan 2008). As Michael Porter (1980) once pointed out that a company would rely on three basic competitive strategies to maintain their edge in the market: differentiation, cost leadership, and focus strategy. Wal-Mart has obviously taken the cost-leadership strategy by reducing the cost of recruitment, providing low pay, no rewards, requiring overtime, and cheap children labors. It currently faces a barrage of lawsuits for extensive violations of labour laws. Wal-Mart also faces law suits for extensive violations of state regulations that require time for breaks and meals. In some instances, minors are forced to work late for the performance appraising. Outcomes for business Wal-Mart may be headed for a downfall. Its customer service is already low and their low-cost strategy has led to many cut offs of employees. Since recession, Wal-Mart has been cutting down on their staff. Without enough manpower for their retail operations and with workers on site underpaid, its merchandize remains stacked on pallets in warehouses instead of the shelves where customers can reach them. What then is the value of offering lower prices if the products are not accessible to the customers? Further, the check-out lines are painfully long and there seems to be a decline in the overall customer shopping experience. Customer shopping experience has been deteriorating due to the longer checkout lines, disorganization and less staff help. Last year, the giant retailer was placed last among in the American Customer Satisfaction Index, a six year in a row in which Wal-Mart has taken the last spot (Ungar 2013). Lessons must be learnt from the experience of the other low end retailers. McDonalds earnings have fallen significantly due to their poor terms of employment. Similarly, Wal-Mart needs to consider the potential upside of their aggressive policies. Despite the poor employment practices, Wal-Mart still remains among the leading retail giants. Its remains ahead of its competitors such as Target and JC penny. However, Wal-Mart faces a threat from Costco, its primary competitor. Costco has been experiencing a fairly healthy 8% growth in annual sales (Ungar 2013). In fact, a significant number of customers are moving to this retailer for their shopping experience. Could this be attributed to the good employment practices at Costco? Unlike Wal-Mart, employees at Costco get a decent living and are paid in excess of the minimum wage. Given the aggressive HR policies employed by Wal-Mart, it begs the question: what then is the role of HR managers in this company? Since, as HR professionals, they are required to put in place strategies oriented towards the employees. To some point, however, employees seem to be encouraged to think of themselves as servant leaders. For example, employees are called associates showing that the company values their contribution. Such kinds of HR policies are employed in most of the best performing companies. These policies and practices serve to motivate employees to increase their performance and can aid in developing good corporate culture. However, employees may not feel appreciated if they are paid less than minimum wages and denied rewards and opportunities for professional growth. There seem to be no opportunities for enhancement and professional growth. Wal-Mart does very little training and developments of its human resources and as such, opportunities for enhancement of professions especially for women are limited. In fact, several claims have been filed against Wal-Mart for discriminating against women in terms of employment positions and the lack of opportunities for advancement. Improving employee motivation and employment practices at Wal-Mart As HR professionals continue to seek bright, talented and highly engaged workforce, motivational theories can provide insights on how Wal-Mart can improve employee motivation and engagement. Several motivational theories have been suggested including the Expectancy Theory, Maslows Hierarchy of Needs theory, Herzbergs motivator Hygiene Theory, Goal Setting Theory, and Equity theory (Lockwood et al. 2010) Herzbergs motivator Hygiene Theory is perhaps more applicable to the case of Wal-Mart. The theory suggests that two main factors must be met for employees to become satisfied with work. These are: the hygiene factors and motivator factors. The hygiene factors include meeting the basic needs such as adequate pay, comfortable working environment, effective supervision and good relationships with the core workers. On the other hand, motivation factors include advancement and professional growth, and rewards or opportunities for recognition (lockwood et al. 2010) Wal-Mart needs to consider applying the two-factor theory of motivation if they are to improve on the performance of their employees. They need to revamp their policies, increase the salary of their employees, and the safety and security of the employees. Further, they need to consider motivators that are intrinsic to the job which include providing rewards for achievement and increasing their growth opportunities. Pundits, policymakers and activists outraged by the companys low wages have been calling for protests. According to Robert Reich, a professor at U.C. Berkeley, Walmarts net income is estimated at $17 billion meaning that they can easily afford to give its workers a small pay-rise (Atner 2013). The Chancellor professor of public policy has in fact urged shoppers to boycott Wal-Mart since they do not want to share even a little bit of their income with their employees (Atner 2013). Conclusion In todays highly competitive marketplace, motivation of employees and employing the best employment practices is key to success. Underperformance in the workplace has recently been a major concern in Wal-Mart stores. Several lawsuits have been filed against Wal-Mart for violation of workers rights including low wages, lack of employment benefits, being required to work overtime and denied to participate in union activity. Bad employment practices are clearly evident in Wal-Mart. This has affects employee productivity as it demoralizes and demotivates them. Wal-Mart needs to consider applying the two-factor theory of motivation if they are to improve on the performance of their employees. Incentives are key to maintaining a motivated workforce and ensuring business success. Appraising and offering hardworking employee with incentives will motivate them to go the extra mile of putting the company first. Employee valuations need to be implemented and growth opportunities made plenty. HR managers at walmart need to understand the benefits of employee motivation and engagement. By sharing their profit, employees will feel appreciated and more passionate about their work. Ultimately, this will result in improved performance and greater customer satisfaction Reference Ciura, B., 2014. Is Wal-Marts empire about to fail? Viewed on 29th March 2014. Available from fool.com/investing/general/2014/02/01/is-wal-marts-empire-about-to-fall.aspx Covert, B., 2014. Walmarts labor practices backfire. Viewed on 29th March 2014. Available from http://thinkprogress.org/economy/2014/02/10/3271221/walmart-downgraded-understaffing/ Gusdorf, M.L. and Reed, S.M., 2009. The role of mission and values in strategic human resource management. Society for Human Resource Management. 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Wal-Mart pays workers poorly and sinks while Costco pays workers well and sails-proof that you get what you pay for. {Viewed on 30th March 2014} available fromforbes.com/sites/rickungar/2013/04/17/walmart-pays-workers-poorly-and-sinks-while-costco-pays-workers-well-and-sails-proof-that-you-get-what-you-pay-for/