Wal-Mart Organizational Behavior Challenges
In the contemporary economic environment, there is a tremendous change in the socio-economic arrangement and multicultural methods that underscore the implementation of needs and motivating factors. Wal-mart has been encountering critical issues that are related to organizational behavior in regards to poor management of their human resources. The company works the motto “save more, live better” with similar being applied to employees, causing their harassment. The entity has a significant labor force amounting to 2.2 million individuals in its 9000 outlets (Bonanno & Lopez, 2012). However, making a comparison with other firms in the industry, their salaries earn less. Wal-Mart has been aggressive in minimizing operational expenses on the presence of employees’ wages and benefits turning out to be the main casualty. Reducing costs by managing labor adequately is considered a great approach, but for the case of Wal-Mart, the strategy has been implemented poorly. The policy has significantly compromised morale for its workers, making it vulnerable to potential labor unrest. Wal-Mart’s situation requires strategic decision-making methods that will enable it to minimize labor costs while motivating their employees.
Overview
Wal-Mart is the most profitable retail entity globally and employer, with an average of two million employees inclusive of associates in its thousands of stores. Historically the company has been associated with its ordinary image built around the aggressive and innovative business framework. The company has implemented various acquisition home and overseas. The company has success has been based on its expansion policy distributed all over the world. However, the biggest problem is labor costs that have threatened the future of the largest private employer in the world. Labor challenges have defined Wal-Mart since the early 1970s, marked by frequent disputes with its employees, trade organizations, and unions. The founder of the organization instilled the culture of labor unrest by adopting an influential anti-union culture. The firm has been experiencing awkward moments in its desperate attempts to defend its labor guidelines. Some of the labor issues noted include; intimidations, illegal firing, compelled, and unpaid overtime. Some of the employees complain of the frustrations in their bid to get permanent jobs, health insurance covers, and irregular counseling (Sethi, 2014). The entity appears to be overwhelmed to pay better for its employees; otherwise, it would interfere with their profit margin, and being a private entity, it cannot allow it to happen. The company is even prepared to hire around 150000 workers to cater to customer interests amid the corona epidemic. It is also considering increasing bonuses to deal with the rising demand for the products in the corona epidemic in its variety of stores.
Analysis
It is hard for Wal-Mart to pay workers more than the current wages based on their vast labor force. For instance, in the 2015 fiscal year, the company made a profit of $16 billion, such that when divided by its million workers, it shows that the company can manage an additional on wages of approximately $7355 annually or $3.67 hourly. The company also utilized around $500 million on the associate hourly expenses and $900 million on retirement benefits (Seenivasan & Talukdar, 2016). The company has been receiving negative publicity with the media focusing on its poor working conditions. The company pays it, workers, less compared to rivals, and the media is interfering with its reputation hence compelled to raise minimum wages just as rivals. The company makes a move to avoid facing reduced applications to their jobs that would give rob the company of its crucial talents. The company also faces a potential threat of lowered performance due to low morale. The reduced compensation could be caused by financial and environmental pressures that keep their moods affected. It has been associated with deteriorating customer experience and satisfaction. It is caused by the failure of the organization to boost customer experience by the apparent way of creating quality jobs that reciprocates to the shoppers and staff members. It is a quality job with benefits such as retirement benefits and affordable medical care to offer quality services. However, for Wal-Mart employees, the compensation is below average such that they qualify for government assistance initiatives.
Appropriate Decisions
In the case of Wal-Mart, decisions such as minimum wage hike would not solve the challenge of poor quality services. It would also not boost worker’s training, effective management, or even uplift their workers’ welfare standards. Wal-Mart should adopt the strategy of minimizing the number of workers it recruits instead of increased compensation and reduced working time. Wal-Mart needs to consider implementing mass-automation in areas such as applying robots in areas such as points for pick orders, cashiers by self Serve checkouts. Self-serve has been installed in most of the retail industries due to its power-saving, making the company enjoy financial benefits from the initiative (Orel & Kara, 2014). The move to implement automation in distribution centers would reduce wages on cashiers. The decision would see cashiers be decreased by around 50% to 75% making it possible for the entity to hire remaining people full time and benefits. The increased competition with automation will not only make employees jobs more comfortable but also attract satisfaction.
Bonanno, A., & Lopez, R. A. (2012). Wal-Mart’s monopsony power in metro and non-metro labor markets. Regional Science and Urban Economics, 42(4), 569-579.
Orel, F. D., & Kara, A. (2014). Supermarket self-checkout service quality, customer satisfaction, and loyalty: Empirical evidence from an emerging market. Journal of Retailing and Consumer Services, 21(2), 118-129.
Seenivasan, S., & Talukdar, D. (2016). Competitive effects of Wal-Mart supercenter entry: Moderating roles of category and brand characteristics. Journal of Retailing, 92(2), 218-225.
Sethi, P. (2014). The Wal-Mart affair–where implausible deniability is the coin of the realm. Corporate Governance.