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Walmart Case Study

1) Walmart adopts HR practices that aim to reduce costs in line with its low-cost strategy, such as recruiting children and those with disabilities who can be paid less, extensive training to control employee behavior and prevent losses, and aggressively cutting compensation costs. 2) While these HR policies help Walmart achieve its low-cost goals, they have also led to lawsuits alleging discrimination and violations of labor laws. 3) The document discusses whether Walmart's HR practices that prioritize cost cutting above all else can truly be considered the most "fit" approach or just an aggressive means to an end.

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283 views2 pages

Walmart Case Study

1) Walmart adopts HR practices that aim to reduce costs in line with its low-cost strategy, such as recruiting children and those with disabilities who can be paid less, extensive training to control employee behavior and prevent losses, and aggressively cutting compensation costs. 2) While these HR policies help Walmart achieve its low-cost goals, they have also led to lawsuits alleging discrimination and violations of labor laws. 3) The document discusses whether Walmart's HR practices that prioritize cost cutting above all else can truly be considered the most "fit" approach or just an aggressive means to an end.

Uploaded by

Shemsu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Work on the following case study.

The basic premise that underlying strategic HRM 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 Strategic HRM
theoretical models in the study of this discipline: the universalistic best
practices, the contingency perspective of “best ft” and the resource-
based confguration perspective. Here the writer would not deliberate
on all these three models to examine the HR practices at Walmart, but
just choose the contingency perspective of “best ft ”. With this view,
the individual HR practices will be selected based on the contingency
of the specifc 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 frm strategy to result in organizational
performance, and just for this interaction effects make the “universal
best practices” may not apply so well in a specifc company.
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 lost 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 ft 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 profts, and Walmart expects the labor costs to be
cut by two-tenths of a percentage point each year.
Required:
A) What lessons do we learn from Walmart training, recruitment and
compensation strategy?
B) Do you think these aggressive HR polices, are just the most
“fttest”? Explain?

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