Group Assignment 2

APS1004 Human Resources Management An Engineering Perspective

Arta Alagheband
a.alagheband@mail.utoronto.ca

Vigneshwar Parameshwar
vigneshwar.parameshwar@mail.utoronto.ca

Sarovar Patel
sarovar.patel@mail.utoronto.ca

Natalija Sabljic
natalija.sabljic@mail.utoronto.ca

May23rd, 2014

995029400

1000453136

1001003059

1000934322

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TABLE OF CONTENTS
Introduction

HRM Practices and Analysis: Walmart Retail

Staffing and Training

Performance Evaluation and Pay for Performance

High Commitment Practices and Internal Labour Markets

Motivational Tools and Processes

Non-unionization Practices and their Effects

Cultural and Social Norms

Conclusion

References

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Introduction
Human Resource Management (HRM) practices are typically easiest to understand in an office
environment. It is therefore motivating to see how HRM is applied to something other than a white-
collar environment. Walmart, the worlds largest retailer with 2.2 million employees globally, is
analyzed in detail in this report, with a critical analysis of its HRM strategies, recognizing the positives
and suggesting potential ways of overcoming the current flaws. It is to be noted that Walmart is a
large organization with many business verticals like logistics, procurement, transport, retail, etc. This
report focuses only on staffing in the retail sector.

Sam Walton, an ex-serviceman in Bentonville, Arkansas, USA, started Walmart in 1962. With
its pioneering concept of cross docking in logistics and retail philosophy of Everyday low pricing,
the organization managed to attract a huge volume of customers and grow rapidly, from a small retail
business in Bentonville, to a global giant within only a few decades. It is evident that HRM practices
have been managed appropriately, because according to Packards law, if the HRM practices were not
managed in the right way, they would never have managed to get so far. Through research on
customer and employee experiences at Walmart, it has been found that employees are not always
helpful to customers and not all are very proud of working there. This report investigates various
aspects of HRM affecting this, such as Staffing and Training, Performance Evaluation and Pay for
Performance, High Commitment and Internal Labour Markets (ILM), Motivational Tools and Practices,
Non-unionization Practices and its Effects, and finally the Cultural and Social Norms.

HRM Practices and Analysis: Walmart Retail

Staffing and Training
Staffing and Recruitment at Walmart has been synonymous with controversies such as
discriminatory processes and improper or excessive use of temporary and part time workers over the
years. It is important to note that due to the size of Walmart Corporation, these practices differ based
on the job categories. These practices are put in place to help with the bottom line at Walmart and it
might seem justified to save costs for the management in the short run. However, as results have
demonstrated this type of staffing ideology can be detrimental to both company brand in customer
service and eventually sales [1]. It seems the retail positions within Walmart are considered transient
and are setup to deter long term employment as oppose to the many local stores they replaced in
different communities. Although practices of Walmart in recruitment has been affected by their wage
and benefit structure, the overall strategy has been quite successful. As Walmart states on their
website, Over 75% of our managers started out as retail associates, [2], their strategy is aligned
with reducing the cost of recruitment for higher salaried jobs.
The founder strongly believed that its employees were the key to their success. The company
aims to offer a career to its employees rather than a job, by offering mentoring, leadership programs

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and sponsorship programs to help employees bring out their full potential. Special training is offered
for managers in partnership with a university. Employees are taught how to interact with customers in
their 10 foot policy, encouraged to seek help in their open door policy and contribute new ideas in
their grass roots [3].
However, while there is a career path, the progression among the levels is unclear. It would
help to establish consistent job definitions, training programs and rewards procedures in order to
ensure that employees are treated consistently in comparison with each other and across time. There
should be a demarcation on what benefits are available to hourly employees as compared to full time
employees. The path to transition from part-time to full-time employees, as well as from hourly to
salaried employees should be clearly defined. A counsellor role could be created to talk to employees,
understand their problems and to guide them along their careers. This would make the training and
career development program more holistic.

Performance Evaluation and Pay for Performance

In store employees at Walmart consists of two categories: manager (salaried) and associates
(hourly). Managers evaluate the associates and have the right to fire them by judging them on their
absolute performance. Firing of an employee at Walmart is based on two factors: 1) a business
decision to cut down operational costs or, 2) due to low productivity (performance) of an employee on
performance review [4]. In the former case, the employee is left unjustified of his/her firing whereas in
the latter case firing takes place after managers have evaluated the productivity of the employee over
a sufficient period of time. It is also found that performance evaluation system at Walmart is not the
best. We recommend that the complexity and labour involved in the job should be weighted highly
among all other parameters considered in performance evaluation. Often, in order to reduce costs,
Walmart may lay-off senior employees first in order to save costs on incrementing their salaries and
providing health benefits in the long run. New employees are typically temporary or part-time who do
not qualify for incremented salaries and are not eligible for health benefits. This is clearly not an
acceptable strategy as it could lay-off potentially high performing employees in the process. We
recommend that the company improve its policy of hiring and firing and base it on estimating number
of personnel required while minimizing operating costs and actual performance evaluation carried out
in a more organized manner (multi-source and multi-criterion) rather than merely leaving it in the
hands of a few managers (single source), respectively.

The pay scales at Walmart are substantially low. Majority of employees at Walmart receive the
minimum wages benchmark set by the government. Walmarts official compensation policy details a
plan consisting of a rigid pay structure for hourly employees that makes it difficult for most to rise
beyond poverty-level wages [5]. Low level associates typically start near minimum wage, and have
potential to earn raises of 20 to 40 cents/hour through grade level promotions. In addition, wages are
capped at a certain level by grade. Flawless performance results in 60 cent/hour raise per year

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irrespective of the time the employee has spent in the company. This is clearly a flaw in the
compensation system as it ignores the longevity of an employee while matching pay against
performance. We recommend that while deciding the pay for performance of an employee, past
experience of work should be weighted significantly high as compared to what is being done today.
Also, given the fact that minimum wages are being offered to employees at Walmart, a 20 to 40 cent
raise is significantly low. This structure definitely needs to be revised if Walmart wants to retain its
employees over a longer period of time. Most jobs at Walmart do not require dealing with a lot of
complex technology. The tasks are clearly defined and quality of work is easy to measure. Thus, it
should be easy for such a company to match pay against performance and if exercised properly, it
could be beneficial to the company.

High Commitment Practices and Internal Labour Markets

The founder encouraged a high commitment organization by expecting all employees to act as
entrepreneurs [3]. Although this is still encouraged and supported by open communication, it is not
effective at translating into a dedicated flexible workforce that works with their heads as well as their
hands. A major reason why the high commitment organization is not effective is because employees
are making very low wages and therefore do not feel extrinsically motivated.
With 75% of its management team having started as associates [2], Walmart believes and
follows promotion from within, proving the existence of an ILM. However, there is little reason to
hope for career advancement because the incremental promotions of 20 - 40 cents/hour [5] are not
enough to make a difference in peoples lives. Of the full-time associates covered by the current ILM,
only 18% were promoted a pay grade in 2011 [5], meaning that promotions are distributed scarcely.
The pay grade promotions and capping structure was newly introduced in 2006, after numerous
complaints and class action lawsuits claiming that promotions were unfair and discriminatory [5].
Anyone can apply for open management positions, and while some importance is placed on seniority,
individuals' skills and performance are of greater importance.

The current existence of high commitment expectations and promotions from within is a good
foundation to develop a more effective ILM, where employees feel extrinsically motivated by the
wage increases that come with promotions and intrinsically motivated by the procedural and
distributive justice, and are more inclined to act with high commitment practices. To be more
effective, the ILM needs to place more emphasis on seniority, s, and seniority rules need to be clearly
described to demonstrate procedural justice. The associate grade promotions need to be distributed
more frequently, so employees can see their wage grow faster. In addition, more intermediate
positions need to be created between the hourly associate and management levels, as the current
ratio of management to associate positions is very low and management positions rarely open up [5].

Motivational Tools and Processes

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Motivation is alive through all level of positions at Walmart, evident through organizational
culture, financial benefits and training programs. The organizational culture at Walmart enforces to
make use of the term associates instead of employees, making the employees feel more engaged
with the company. Also, the use of first name instead of last name for all level of employees increases
the involvement of each employee and creates a family oriented business instead of boss-oriented
one. These strategies touch employees hearts more deeply and are meant to intrinsically motivate
them. As has been shown in previous sections, financial benefits of compensation, profit sharing
among employees and health-care benefits are too low to extrinsically motivate employees.
Although Walmart has some good practices of motivating employees, it is found that due to
lack of innovativeness of the job, employees often lack intrinsic motivation. It has been proved that
intrinsic motivation is stronger and lasts longer than extrinsic motivation. Scarcity of intrinsic
motivation is deteriorating customer relations and customer experience. Walmart should restructure
the jobs such that a single job requires more skills to be applied instead of one person doing the same
repetitive task. Given the fact that pay scales at Walmart are low, and unfair hiring and firing practices,
it could significantly reduce the expectancy of valance for an employee thereby reducing motivation.
Walmart should reconsider its strategy of saving costs without affecting the motivation of employees.
This could be done by creating jobs with diverse skill sets and assigning them to employees in such a
way that redundancy of jobs is reduced.

Non-unionization Practices and their Effects

It is a well-known fact that Walmart is an anti-union employer, and has taken drastic measures
to ensure that none of its locations are unionized. To a large degree, it has done this to sustain its
business model of everyday, low prices; by focusing on low labour costs, and retaining full control
over that. The model of low wages, limited hours, limited job safety and aggressive rejection of
collective agreements coined Walmartization [6] is in contrast to the essential goal of a union. While
Walmart has set in place strategies to avoid unionization as part of its HRM, they have also promised
mechanisms to retain their employees satisfaction.

Possibly somewhat unethical, Walmart has created a team of experts known as People Division
to address the unionization attempts in different Walmart locations [7]. This unit is mainly responsible
to come up with creative strategies to not only discourage unionization, but also create conditions
so a collective agreement is not achievable. This was the main reason for failure of the first Canadian
unionized Walmart in Windsor, Ontario [8]. Walmart also refused to purchase existing unionized
branches of retailers in Canada, as the community had a long standing support for unionization (social
and personal factors) [7].
Although premise of a union is very positive for employees and essentially employer to have a
unified voice from its employees, by the time a union is formed, the organization culture is reduced to
us vs. them. We dont believe that this would be an environment that promotes productivity. Instead

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of playing games and spending millions on strategies to avoid unionization, we recommend

employers in retail to look at possibly placing a two-way feedback system as discussed with high
commitment organization methodology, as to address the concerns of both parties. Caution is also
advised as these feedback systems should not be an illusion and both parties should be accountable
for their end of the bargain.

Cultural and Social Norms

Walmart is a global company, currently operating in 27 countries [2]. The original core values 1)
Respect for the Individual, 2) Strive for Excellence, 3) Serve Your Customers, and 4) Act with Integrity,
are still in effect today [3]. The overarching core strategy of cost savings, echoed through slogans such
as "Save people money so they can live better [2] and "everyday low prices" [9], have shaped
Walmart's corporate culture to primarily focus on financial concerns, sometimes at the expense of
ethical considerations. A number of lawsuits have been filed against Walmart for wage and hours of
work reasons, as well as for discriminatory reasons. The expansion of Walmart overseas has been less
successful than its North American expansion, due to regulatory issues and incompatibilities with
societies and its business model. For example, Walmart has pulled out from Germany in 2006 due to
its inability to adapt to working with consultative organizations and collective bargaining agreements
[9]. It was also unable to sustain in South Korea, as its warehouse retail style turned away customers,
who are more accepting of a festive, social setting [9]. In addition, there have been reports of bribery
scandals in Mexico, and Walmart has been linked to garment suppliers from Bangladesh working in
sweatshop like conditions [10].

Walmart needs to change from primarily focusing on financial concerns, to placing a greater
emphasis on ethics. Professional ethics needs to be one of the core values, and needs to be
emphasized and communicated to every new and existing employee. Walmart needs to improve its
supply chain management, by selecting suppliers dependent primarily on ethical practices and quality,
as well as price. It also needs to do a better job at researching the culture and societal norms of the
country it wants to expand into, and adjust some of its practices to be able to enter and sustain in the
market. Walmart also needs to follow consistent HR practices and a high level of professional ethics,
to avoid problems related to discrimination and unfair wages and hours of work. Walmart needs to do
a better job of following the Employment Standards Act and its own HR plan. Every employee should
have a formal training on ethics, legislation, and Walmart's HR plan, such that deviations are avoided.

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Conclusion
Through this report, some HRM practices in Walmart retail have been identified, analyzed and
recommendations for improvement introduced. Research shows a number of problems with Walmart
HRM practices, such as unethical and discriminatory practices, inconsistent HR practices, very low pay
scales, miniscule promotions and unclear promotion progression rules, unjustified layoffs to save
costs, drastic measures against unionization, and incompatibilities with cultural norms of different
societies. It also shows that Walmarts primary concern is financial, sometimes at the expense of
ethical considerations.

Although Walmart tries to create a high commitment organization, which intrinsically

motivates employees, it fails due to low pay, inconsistent HR practices, an ILM that is subject to much
discretion, and non-innovative repetitive tasks. It is vital for Walmarts success that it follows
consistent HR practices in recruitment, training, performance evaluation, and promotions. Training
and development programs such as mentoring, sponsorship need to be fortified. Part-time employees
should have an opportunity to transition to full-time employment, and a clear promotion path should
be defined for all associates. A counselor position can be created to talk to employees about their
aspirations and to guide them along the way. More emphasis needs to be placed on seniority when
considering for promotions. Changing HR policies to be fair and reward loyalty alongside performance
would remove anxiety from the minds of employees and set them at ease. The incremental
promotions need to be distributed more frequently and more intermediate positions need to be
created between the associate and management levels, so employees can see their career progress
more rapidly. Although Walmart targets intrinsic motivation by trying to make employees feel a part
of a big happy family, a judicious mix of extrinsic and intrinsic motivation would help improve the
situation greatly. It would benefit Walmart to change these practices and keep their employees happy
as studies show that happy employees are 12% more productive [11].
To maintain its principle of everyday low prices, Walmart has rejected collective agreements
and prevented the formation of unions, as well as disregarded ethical considerations at times. It would
be better to listen to employee needs and reason out with them through two-way communication
rather than using preventive us vs. you procedures. In order to do a better job of following the
legislations and its own HR plan, Walmart needs to train every employee on ethics, legislation, and
have a clear and truthful HR plan across both salaried and hourly based employees to enforce
consistency and equality.

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References
[1] R. Dudley, "Customers Flee Wal-Mart Empty Shelves for Target, Costco," 26 March 2013. [Online]. Available:
http://www.bloomberg.com/news/2013-03-26/customers-flee-wal-mart-empty-shelves-for-target-costco.html.
[Accessed 15 May 2014].
[2] "Working At Walmart," Walmart, [Online]. Available: http://careers.walmart.com/about-us/working-at-walmart/.
[Accessed 15 May 2013].
[3] M. Bergdahl, "How the HR division at Wal-Mart drives the company's success through people," HR Magazine, 21
Septepmber 2010. [Online]. Available: http://www.hrmagazine.co.uk/hro/analysis/1018448/how-hr-division-wal-mart-
drives-companys-success-people. [Accessed 14 May 2014].
[4] "Working for Walmart, Part Two," Chicagoist, 12 March 2010. [Online]. Available:
http://chicagoist.com/2010/03/12/wal-mart_from_the_inside_-_part_two.php. [Accessed 18 May 2014].
[5] "Walmart's Internal Compensation Documents Reveal Systematic Limit on Advancement," Huffington Post, 16
December 2012. [Online]. Available: http://www.huffingtonpost.com/2012/11/16/walmarts-internal-compensation-
plan_n_2145086.html. [Accessed 18 May 2014].
[6] N. Lichtenstein, Wal-Mart: The face of twenty-first-century capitalism, The New Press, 2013.
[7] R. J. Adams, "ORGANIZING WAL-MART: THE CANADIAN CAMPAIGN," Just Labour, vol. 6, no. 7, pp. 1-11, 2005.
[8] CBC News, "Wal-Mart to close unionized Quebec store," CBC News, 9 Feb 2005. [Online]. Available:
http://www.cbc.ca/news/business/wal-mart-to-close-unionized-quebec-store-1.554398. [Accessed 15 May 2014].
[9] G. G. a. M. Christian, "The Impacts of Wal-Mart: The Rise and Consequances of the World's Dominant Retailar,"
Annual Review of Sociology, vol. 35, pp. 573-591, 2009.
[10] S. P. Sethi, "The World of Walmart," Carnegie Council, 08 May 2013. [Online]. Available:
http://www.carnegiecouncil.org/publications/ethics_online/0081. [Accessed 14 May 2014].
[11] A. O. a. D. S. Proto, "Happiness and Productivity," 2009. [Online]. Available: http://hdl.handle.net/10419/35451.
[12] Guardian, "http://www.theguardian.com/business/2013/sep/05/walmart-workers-strike-us-thursday," Guardian, 5
Sept 2013. [Online]. Available: http://www.theguardian.com/business/2013/sep/05/walmart-workers-strike-us-
thursday. [Accessed 15 May 2014].