The Organization that we selected as our topic of discussion in our Project Paper is the Wal-Mart Corporation. Sam Walton is the founder of Wal-Mart. He opened his first store called Wal-Mart Discount City in Rogers, Arkansas in July of 1962. Their corporate office is currently located in Bentonville, Arkansas. Wal-Mart Stores Inc. incorporated its stores on October 31, 1969. In 1972, they started selling stock on the New York Stock exchange. Although, though the company has had controversial operational business practices they have grown to be the largest Retail Corporations in the world.
In 1997, Wal-Mart was able to become the largest private employer in the United States. In that same year, their annual sales totaled over $105 billion. In 2010, Wal-Mart has over 2. 1 million employees worldwide. There 2010 fiscal year sales exceeded $400 billion dollars (Wal-Mart About Us, 2010). I have been a loyal customer of Wal-Mart for years. Therefore, I was shocked when I found out about some of Wal-Marts questionable unofficial policies through talks with friends and family members who worked for them in the past and some who currently employed by them. My mother in law worked for them from 2006 thru 2008.
She was required to work 8-hour shifts without a lunch break on a regular basis. One of my cousins was required to clock out because he was about to be in overtime and continue to work to keep labor cost down. I decided to Google Wal-Mart, to see if other people experienced the same injustice. I was stunned to see some of the practices of this company I loyally supported. According to an article released by the Associated Press on 12/24/08 called Wal-Mart to Pay Workers Up to $640 Million it will pay as much as $640 million to settle 63 lawsuits over wage-and-hour violations, ending years of dispute.
Wal-Mart faced 76 similar class action lawsuits in courts across the country as of March 31, 2008. These violations range from having employees clock out and continue to work without pay, denying them with lunch breaks that they are entitled to by law, non-payment for overtime worked. They have also had issues with discrimination against women, resulting, from denying them promotions and paying them less then their male counterpart even though they held the same position, and in some cases, women had seniority over the men (Associated 2008).
It is widely known that Wal-Mart pays its associates below the average retail wages. In 2008, the average full time Associate (34 hours per week) earns $10. 84 hourly for an annual income of $19,165. That is $2,000 below the Federal Poverty Line for a family of four. In 2007, Wal-Mart CEO Lee Scott earned $29. 7 million in total compensation, or 1,551 times the annual income of the average full time Wal-Mart Associate. Consequently, large portions of their employees qualify to receive Government Assistance to support their families.
They are well aware that they pay their fulltime employees below the poverty level. In fact, Wal-Mart actually encourages their employees to take advantage of the Government Assistant Programs (Wake Up Wal-Mart, 2008). Wal-Mart does not offer its associates affordable healthcare insurance benefits. According to Wal-Mart employees, when they complained about high the cost of the insurance and lack of coverage it offers their managers would simply suggest that they try to qualify for Medicaid or Medicare.
According to Wal-Mart Facts. om, If an average full-time Wal-Mart employee chooses the least expensive family coverage plan, they would have to spend over 20% of their income before the health insurance provided any reimbursement. An average full time Wal-Mart Associate faces a serious family health issue. They have to pay the entire out-of-pocket maximum for the least expensive health plan, which adds up to pay 53% of their income (Wake Up Wal-Mart, 2008). I am just a customer of Wal-Mart. I am an accountant, so I budget my money pretty well and I love a good bargain. However, when I look at this organization and their business practices all I see is greed.
Therefore, as a customer I have to question my whether or not to continue to support this business if they persist on behaving in such an manner that is clearly unfair to its employees. This is not a struggling organization. It brings in sales exceeding $100 billion annually. Wal-Mart has the resources to make their employees NEEDS a priority. I would like to believe that they are sincerely willing to make the necessary changes.
Wal-Mart’s management behaves immorally towards its employees. They do not value their employees’ needs, rights, or the labor laws that the US put into lace to protect them. Wal-Mart’s low price on everyday household products is what sets them apart from other discount retailers. Their employees help make it possible for them to dominate their competitors in the discount retail market and maintain their competitive advantage. It is essential for employees to feel that the company that employs them provides an ethical organizational culture in order for them to feel a sense of job security and to be motivated to be productive for the company. What is Organizational Culture? What type of OC does Wal-Mart reflect? What effect does their OC have on employee job satisfaction, morale, and performance? What can management do to improve their employee relations?
According to our text Organizational Behavior, 11th Edition, a company’s organizational culture is a shared set of beliefs and values within an organization. The culture is the behaviors that employees feel they are required to fit in order to meet the expectations of their organization (Schermerhorn, Hunt, and Osborn, & Uhl-Bien, 2010, p. 12). On of the OCI’s that the Human Synergistic Study addresses the Aggressive/Defensive Culture.
The cultural norms are built upon a value structure whereby management puts its own interests before those of its key constituents—its customers, employees, suppliers, and even stockholders. Members place priority on doing what is best for themselves over the long-term best interests of their organization. Previous organizational successes (due to prior leadership, technological patents, or good business strategies) fuel the arrogance and short-term orientation of management and allow Aggressive/Defensive organizations to continue to appear effective—at least for a while.
However, as shown by John Kotter and James Heskett’s study of 207 organizations (and consistent with research based on the OCI), this type of value structure prevents organizations from effectively adapting to changes in their environments and ultimately has a negative impact on their financial performance (Human Synergistic 2006). Your business strategies shift; your organization’s values should not. Organizational values guide employee actions and influence business practices. They help provide meaning for employees searching for an emotional connection to work each day.
Also known as ground rules or operating principles, at their best values are actionable guidelines, not to be confused with abstract beliefs that are merely “held” or posted on a plaque (Organizational Values, 2008). ” In an Aggressive/Defensive Culture, management tends to have very little value for people. There focus is on setting goals and meeting them by any means necessary. They are very competitive and want to devour the competition. Some of the characteristics of this type of culture are oppositional, competitive, motivated by power, and perfection.
Managers may oppose things indirectly, stubborn, always has to be right, avoids admitting mistakes, resists suggestions made by others, and have a strong need to win or dominate. Their members do not feel any sense of job security. Employees typically believe that they have to go with the follow in an effort to avoid the label “troublemaker” in order to keep their job. They fears managements’ retaliation and often feel as though they are in a hostile work environment (Human Synergistic 2006). Staff turnover is near 20-year highs for many companies.
Two research firms, Walker Information and Hudson Institute, recently joined forces to conduct a nationwide employee loyalty study. Their results confirmed that staff loyalty is in short supply. Only 24 percent of employees consider themselves truly loyal, committed to their organization and its goals, and planning to stay at least two years. Thirty-three percent of employees were high risk, not committed and not planning to stay. Thirty-nine percent were classified as trapped. They plan to stay, but are not committed to their employer. Among those who felt they worked for an ethical organization, 55 percent were truly loyal.
For those who did not feel they worked for an ethical organization, the loyalty figure was 9 percent (Lowenstein 2006). Creating a culture within the organization that nurtures loyalty, commitment, advocacy and productivity from the moment the new hire walks through the door and throughout the lifecycle of the employee will go a long way to sustaining customer loyalty behavior. The good news is that employees, particularly those in customer service, seek trust and trustworthiness; and they desire to be active contributors to that effort (Lowenstein 2006).
The benefits for business of adopting ethical human resource management practices and viewing employees as human capital to be developed and to provide a unique advantage in the marketplace can be utilized as part of a corporate social responsibility strategy. Effective corporate social responsibility requires that along with minimizing harm to the environment, a company needs to be aware of the social impacts of its operations and ensure that they are not harming human stakeholders (Tracey Lloyd 2009).
The importance of health insurance as an employee benefit is also illustrated by the fact that more than one quarter of Americans report that they or an immediate family member have encountered job lock, passed up a job opportunity, stayed at a job they would otherwise have quit, or had not retired solely because they needed to keep the health insurance coverage they were receiving. According to another survey, employees are moderately satisfied with their benefits, with 39% of full-time workers reporting this, which is a rise from 32% in 2003 (Reddick 2009).
Employers who hope to retain solid, hard-working employees should be prepared to offer basic employee benefits. In addition to salary, good benefits provide important resources that not only help build a positive working relationship between employer and employee but also promote good work habits and financial practices (Thompson 2010).
Wal-Mart problem is their leadership style. It reflects many of the characteristics of an Aggressive/Defensive Culture. Its issues stem from them putting their interest before the needs of their members. It does not value its employees as of Human Capital.
Employees are just another resource used to achieve the organizational objectives. Wal-Mart leaders invest a lot into making decisions and strategies that will get the best prices for their customers and keep their competitive advantages. Nevertheless, they are not investing enough time and effort in training managers on how to treat their human capital. As a result, managers are presented with problems that they have no been trained for and they avoid the issue or make bad decisions. I find it hard to believe an organization as large and successful as Wal-Mart can make these types of mistakes and they go unrecognized or resolved for so long.
Several people had to have been complaining about the errors before having to go before a judge. Considering the validation of the errors during the trial investigation, it is safe to say that if Wal-Mart had done its due diligence prior to trial they would have resolved this pay issue. There is no reason a company of Wal-Mart’s size and resources could not have identified and addressed the discrepancy prior to it escalating to a court issue. Which raises the question of, was this done intentionally or their employees concerns or grievances are not a priority to them. This type of mmoral behavior ultimately leads to employees distrusting the company, resulting in a low morale, lack of motivation, and high turnover.
Every company has a distinct set of characteristics that drives the decisions, practices, policies, procedures, and organizational goals, which in turn affects the organizations’ atmosphere. The biggest influences are going to come from the visions and standards that the Senior Leaders of the company. Wal-Mart’s employees do not feel any emotional connection or sense of value from their organization, which leads to a lack of job satisfaction, loyalty, and commitment.
Of course, this is going to show up in how employees treat customers. All Wal-Mart has to offer is low prices, there is very little customer service. For example, I pulled up to customerservicescoreboard. com and some one posted this comment. “Wal-Mart has the worst customer service, worse yet, they ignore any inquiry and advertise that they value it… I really have to commit to not shopping there any more… lines are long, cashiers are slow and don’t even help put bags in carts.
Their greeters wont get carts and roll their eyes, the bathrooms are a mess, the shelves are empty, I hope they get what they deserve… ower customer count and lower profits… today I tried once more and wasn’t disappointed, no carts, very long lines and best yet… customer service said there was no manager on duty and there were not customer complaint forms… go figure. mad at Wal-Mart 4/1/10 2:21PM “. In order to change this Wal-Mart has to consider ways to attract and retain productive employees (Customer 2009). Another issue is the lack on emphasis on teamwork. Employees concerns and suggestions have no validity. They are not included in any part of the goal setting or decision making process on the individual store retail level.
The “my way or no way” management attitude does not work. There has to be some compromise. SOLUTIONS Wal-Mart has to change their leadership style. The CEO and other major Leaderships need to take a more active role in establishing acceptable managerial behavioral procedures and rules to direct the organization. Instead of reacting to all of the bad press concerning their employee relations they need to take a more active approach to dealing with all of the stigmas attached to the company.
For example, they can start by sending out a corporate communication-notifying managers and employees that the company is about to undergo so major changes to and are about to invest in an organization overhaul that will put just as much value in taking care of the associates that make their sales possible and they put into their valued customers. Wal-Mart can continue to ride the cloud of success with no regards to the long-term ramifications of lack of change, but these are the cost of avoidance. Change will be forced upon them one of two ways.
The lawsuits will continue to come and the courts will make to settlements high enough that Wal-Mart will feel the financial sting of their unethical behavior. Secondly, they will start to see a significant decrease in their sales because of the poor customer services rendered by their distrusting, low morale, and unmotivated associates. Considering how large Wal-Mart’s organization is this change would be a major project they could consider doing it in-house, but I suggest they hire an outside consulting firm that to oversee the project in order to get some fresh ideas and strategies.
Of course, they would be collaborating with Wal-Marts project team in order to what the deliverables are to complete the project. Wal-Mart Leaders need to ensure total participation by giving the project team the financial and staff resources needed to complete the project. The first step would be to perform a training needs analysis and determine where the practice and policy breakdowns are occurring. Then address the issue, by establishing a new uniform policy, updating the employee handbook, training managers and employees on the new policies, and finally enforcing it.
This project will take about a year to prepared, reviewed, and implemented. Prioritization will be according to the most critical needs, such as proper employee pay protocol, anti- discrimination policy training, and team building programs. For example, have a workplace diversity class set up to teach managers how to cultivate diversity and to prevent discrimination. Require that managers have a complete training class annually. Address and investigate all allegations of discrimination immediately. Written documentation is required for discrimination allegation, investigation, and resolution steps that taken.
The only way to ensure that employees feel a since of organizational justice is to uphold the companies policies on the matter. Consequently, immediate punishment is required if an employee found guilty of the allegation. Send out corporate communication, notifying employees of the companies’ commitment to improve employee relations. Send the communication via email and display it in high traffic areas. Express managements desire to include employees in some of the decisions that directly affect them by establishing an Employee Involvement Team to be apart of the project.
That will help Management and employees address employee concerns and grievances, such as a fair and competitive wages and health insurance package. Allowing employees to be apart of the decision making process will help management get feedback on the best ways to go about achieving up coming goals, while building team commitment, loyalty, and moral. There will be annual policies will be reviews and revision if necessary. Managers and employees will complete skill assessment tests annually.
There will be skill-training classes set up to teach managers how to promote effective communication and leadership abilities. Issue training results to department heads and certificates of completion to participants. Finally, collect feedback from the managers and employees to evaluate, results and feelings on the process improvements. Leave a comment section to get their feelings on the companies’ efforts to improve employee relations. Identify remaining problems and work with the In-house Project Team and the Employee Involvement Team to improve them.