Case Study of Strategic Human Resource Management in Walmart Stores
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Case study of strategic human resource management in Walmart stores
Introduction
Part 1: the analysis of corporate strategy and HR strategy at Wal-Mart.
Part 2: The analysis of HR policies at Walmart and its integration with Corporate Strategy.
Part 3: the role of the HR manager in this company?
Part 4: some advices to improve the employment practices at Walmart.
Conclusion
Introduction:
Michael E. Porter (1980) in his famous book said there are three basic competitive strategies for a company, which are overall cost leadership; differentiation and focus strategy. Companies use these competitive strategies to achieve competitive advantage. In this case, Walmart Company is obviously taking the cost leadership strategy, that is to say, it aims to become the low-cost leader in the retail industry. Walmart maintains its competitive advantage through its satellite-based distribution system, and by keeping store location costs to a minimum by placing stores on low-cost land outside small to medium-sized towns, no matter in the US or in its abroad affiliations.
Part 1: the analysis of corporate strategy and HR strategy at Wal-Mart.
From this case material we could also see that Walmart purchased massive quantities of items from its suppliers to form scale economy, and with the efficient stock control system helping make its operating costs lower than those of its competitors. It also imported many goods from China, “the world factory” for its low cost. So in a word the company-level strategy of Walmart is low cost and low cost, with little differentiation strategy.
Managers engage in three levels of strategic planning (Gary Dessler, 2005): the corporate-level strategy; the business-level strategy and the function-level strategy. The functional strategy should serve the overall company strategy so the corporate strategy could be implemented more effectively and efficiently. As for Walmart, its corporate-level strategy and business-level strategy, as we analyzed above, is the low cost leadership. Then well focus on its functional strategy, especially its HR strategy. Besides the above factors, Walmart builds its low cost leader on employment policies that help it to achieve extraordinarily low employment costs. Through low-cost HR activities, Walmart tried to maintain its predominate competitive advantage.
Part 2: The analysis of HR policies at Walmart and its integration with Corporate Strategy.
The basic premise that underlying SHRM 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 SHRM theoretical models in the study of this discipline: the universalistic best practices, the contingency perspective of “best fit” and the resource-based configuration perspective. Here I would not deliberate on all these three models to examine the HR practices at Walmart, but just choose the contingency perspective of “best fit”. With this view, the individual HR practices will be selected based on the contingency of the specific 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. Whats more, we should be reminded that the individual HR practices will interact with firm strategy to result in organizational performance, and just for this interaction effects make the “universal best practices” may not apply so well in a specific company. In the above part we have put great emphasis in identifying and analyzing the primary contingency factor of Walmarts corporate strategy, so in the following part well examine the “fitness” of HR practices in Walmart with this theoretical model, which is obviously also the integration process of HR practices with the contingency variables to some extent. 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 organizations values and integrity. An organizations 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 organizations 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 companys 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