Reward Strategies- Case Study of Wal-Mart
Introduction
Employee motivation is an essential aspect to enhance trust between employees and employers. Research shows that several organizations still grapple with how they can satisfy their employees to reduce employee turnover, absenteeism, and increase competence. The underlying factor is that employee reward improves employee-employer relations. Consequently, the reward system entails more than financial satisfaction. Employees are valuable resources for an organization. Employees become satisfied if employers value them. The reward system that organizations adopt determines whether they will retain workers, increase productivity, or enhance a better relationship with employees. From this backdrop, Wal-Mart stores have devised an employee reward system. It operates in several branches and countries, thereby experiencing cultural differences and issues in its reward system. This report will analyze Wal-Mart’s reward strategies, compare the reward systems with small companies if it is possible for small organizations to learn from large companies, how to improve reward systems.
Wal-Mart Reward Strategies
A reward system is a significant aspect for organizations to motivate and retain employees. Wal-Mart has a well-developed reward system aimed at making employees feel part of the company. Its reward system involves strategies aimed t retaining talents, developing talents, and attracting talents.
Retaining TalentsWalmart identifies the importance of maintaining talents in its enterprises through exploration. Employees are the most significant resources that determine the success of a company. Retaining employees help an organization keep its experience to maintain productivity. According to Song (2018), Walmart identifies the importance of keeping talents in its operations. Its first strategy for retaining top talents is training. Employee training is a significant aspect that improves and strengthens talents. The company regards training as a vital aspect to improve talent productivity (Corporate.walmart.com, 2020). To enhance training, Walmart trains employees through education. Existing employees are provided with educational training through financial support. The company trains its employees on managerial and leadership skills to prepare them to take the company’s responsibilities and vision.
The company also has a policy of calling its employees “partners.” The policy aims at making employees feel they are part of the company’s vision and ownership. Additionally, the company has introduced several bonus schemes, such as the purchase and loss-reward scheme. The company’s managers reward employees by praising and caring for their needs, heeding issues raised by employees, and allowing employees to make decisions (Song, 2018). overall, the company has developed an employee-employer partnership, an aspect that motivates employees, thereby retaining them.
The company has also developed an employee-friendly communication system. The company provides employees an open-communication platform where they voice their issues without reprisal. Employees can communicate with managers and the president at any time. Furthermore, managers who retaliate against employees who raise issues through communication face disciplinary action. This policy makes employees feel that they can participate in the company’s philosophy and choose to remain part of the company.
- Developing Talents
Talent development is the most significant aspect that Walmart’s HR department has identified. Through education and training, the company increases employee experience and determination. The company has invested a lot of resources to train its employees with managerial and leadership skills. Through this strategy, employees feel to be part of the company because they want them to become successful by becoming part of its developmental philosophy. Therefore, through training and educational strategies, employees become motivated and feel part of the company.
The company also enhances teamwork as a talent development strategy. According to Song (2018), the company does not over-emphasize the employee’s educational background. For instance, the company considers the working experience to enhance promotion. The company promotes teamwork as an aspect that increases performance. Employees who show excellent teamwork capabilities are selected to take managerial roles in the company (Corporate.walmart.com, 2020). These managers are given more responsibilities, such as opening new branches and decision-making. Thus, the company enhances teamwork as a strategy for retaining talents.
The company has also adopted the philosophy of retaining talents through reservation, development, and recruitment. The company emphasizes on improving the potential of its employees by enhancing internal promotion. Its Human Resource (HR) department conducts regular employee evaluations to determine areas where improvement is required. This strategy of retaining, developing, recruitment, and intrinsic rewards enhances the company to retain its most productive talents.
- Attracting Talents
The company has a well-developed strategy of attracting top talents. Through recruitment, the company identifies employees with the potential to adapt to organizational philosophy (Edirisooriya, 2014). Moreover, the company provides equal opportunities to its employees regardless of ethnicity, culture, and gender. Additionally, the company has adopted an employee management program in partnership with universities and colleges. The program aims at attracting the most competent graduates from respective colleges. Furthermore, the company’s employees are trained in these institutions, thereby increasing their experience. Employees who undergo college training are promoted to take senior managerial positions and top decision-making. Moreover, the program helps mine the potential of employees (Corporate.walmart.com, 2020). When employees are trained, they feel to be part of the company. These offers satisfy the theory of Organizational Support, which states that employees are satisfied through the way an organization treats them (Eisenberger, Malone, & Presson, 2016). If an organization treats its employees positively, they will develop a positive feeling toward the organization. As a result, they apply their potential to help the company achieve its goals and objectives. Thus, by attracting top talents and training existing employees, the strategy helps employees feel part of the company, thereby increasing performance.
- Intrinsic and Extrinsic Rewards
Walmart also provides intrinsic and extrinsic rewards. Extrinsic rewards include those involving recognition, gifts, and financial resources (Walmart, 2014). The company awards these rewards to employees to motivate them to increase their competitiveness. Additionally, the company provides intrinsic rewards, such as healthcare and financial benefits. The company’s workers and their family associates are guaranteed health insurance covering doctors, pharmacies, and other healthcare expenses (Walmart, 2014). Additionally, employees are provided with discounts when they purchase stocks from the company. On top of this, the company rewards employees based on their performance. When the company’s profit increases, a significant percentage of its profit goes to the employees. This strategy makes employees feel that their performance is rewarded. Therefore, the company rewards its employees through intrinsic and extrinsic strategies that motivate employees to increase their performance. The approach also helps retain top talents.
Reward System of Small Organizations
Small businesses experience several issues regarding rewarding strategies. The major challenge they experience is the lack of enough resources to enhance employee motivation. Furthermore, most small enterprises are new in the market, which makes them reluctant to enhance employee motivation because of market uncertainty. However, some small businesses have a well-functioning reward system that enhances employee motivation. Their reward system involves strategies such as eliminating a long bureaucratic process, small financial rewards, and employee loyalty programs.
Small organizations reward their employees by reducing the bureaucratic process. Organizations with long bureaucratic processes hinder employee motivation (Baumann & Stieglitz, 2014). Decisions from employees are delayed because they go through several departments before reaching their designated departments. In small organizations, managers reduce the aspect of bureaucracy because they can communicate with employees directly. This strategy builds employee confidence and acts as a form of reward system.
Furthermore, small businesses have a financial reward system to motivate their high performing employees. Employees, especially those who market the company and win more customers, are provided with financial rewards in the form of free lunch and leave bonuses. These rewards motivate employees who view the company as appreciative.
Furthermore, some small organizations have established a loyalty program to reward highly-performing employees. Loyalty programs target the performance of employees in their field of operations. Employees with positive results beyond expectations are rewarded with points. After a specific period, employees can reclaim points by suggesting whether to be given prizes, weekends off, or a vacation. Loyalty programs are essential to employees because they know there is a reward from hard work. Therefore, small businesses are provided with loyalty points as a point of the reward system.
Comparison between the Reward System of Big and Small Companies
The biggest difference between the reward system of big companies and small organizations is based on resource and complexity differences. For instance, small businesses have little resources, while big companies have limited resources. As a result, a difference in the reward system exists between bigger and smaller organizations.
For instance, big organizations reward their employees through employee training and education, while small organizations are unable to do this. Big companies such as Walmart develop their employees through training and education. Employee training aims to increase employees’ experience and information (Korir & Kipkebut, 2016). It aims to prepare employees to take managerial roles in the future. However, small companies lack enough resources to provide employee training. Training employees is an expensive task that requires financial resources. Because most small companies are startups, they are unable to provide employee training, thereby running a risk of losing their most productive employees.
Additionally, bigger companies provide both intrinsic and extrinsic rewards, while smaller companies are unable to provide these rewards because of their small financial position. Big companies such as Walmart provides employees with intrinsic rewards such as healthcare insurance and employee benefits (Corporate.walmart.com, 2020). Big companies reward all employees based on the profit they make within a particular period. On the other hand, however, small businesses have a limited resource base. Therefore, they are unable to provide intrinsic benefits to their employees. Exceptional small companies, however, offer extrinsic benefits to their employees based on their performance. They offer financial benefits to their employees as a form of motivation.
Overall, the difference between big and small businesses regarding the reward system is determined by its financial muscles. Big companies provide their employees with both intrinsic and extrinsic benefits, while smaller companies cannot provide intrinsic rewards. Therefore, employees in big organizations enjoy more benefits than their counterparts working in small organizations.
Because of the lack of financial muscles, small companies are unable to learn from big companies. Big companies use their abundant resources to provide several employee rewards. These rewards aim at enhancing employee motivation, thereby retaining their top talent. Because big companies invest heavily in employee training, they do everything possible to keep their employees. Losing employees to other companies will be a significant loss after spending resources to develop them. However, there are several recommendations on how small companies can improve their reward system using Walmart as the case study.
Strategies on how Small Businesses can Improve their Reward System
Offer Employee Development Opportunities
Small businesses should offer professional training to their employees. Employee training does not only increase working experience through knowledge but also enhances motivation. Most small businesses lack the financial power to provide employee training, which is costly. However, they can use a small percentage of their profits to offer employee training, especially management and leadership skills. This training will increase the experience of their employees and motivate them. Furthermore, employees will view the organization as human-development oriented, thereby developing loyalty and productivity (Baumann & Stieglitz, 2014). Because of costly employee training, small companies can adopt online learning, which is cheaper and convenient. Walmart provides employee training and development opportunities (Corporate.walmart.com, 2020). This strategy aims at increasing employee productivity. The approach also increases employee motivation by making them aware of how the company is determined to enhance their performance and knowledge. Small businesses should emulate Walmart’s employee training strategy as a form of rewarding employee system. Therefore, small companies should develop an employee training program to enhance motivation and retain them.
Offer Intrinsic Rewards to Employees
Small businesses should provide intrinsic rewards to their employees. These rewards might include benefits such as health insurance covers, financial benefits, and performance rewards. Intrinsic rewards make employees feel appreciated, thereby increasing motivation. Walmart provides intrinsic and extrinsic rewards to their employees. After every financial year, a particular percentage of the profit is given to employees (Corporate.walmart.com, 2020). Furthermore, employees are provided with health insurance covers that extend to family members. This strategy motivates employees to increase performance because they are aware that an increase in profitability increases their financial rewards. Therefore, small businesses should provide intrinsic benefits to promote workers’ motivation and retain their most productive talents.
Create a Fun Environment
A fun environment in the workplace creates a refreshing atmosphere and engagement. Creating fun involves strategies such as taking lunch and breakfast together, holding entertainment events, and playing together. These fun activities are ideal for small businesses because they are less costly. The activities also bring employees along with their managers. A fun environment also motivates employees because it creates a friendly bond between the employer and the employees. Therefore, small companies should create a fun environment to enhance employee motivation and close bonds.
Conclusion
Overall, the report has explicitly analyzed Walmart’s reward strategies. These strategies include retaining talents, developing talents, and attracting talents. For instance, the company calls its employees “partners,” an aspect that creates a feeling of ownership in employees. Moreover, the company develops talents through education and other training. Employees are trained to increase their experience and knowledge. Additionally, the company attracts top talents and also providing equal opportunities to its employees. The company also offers intrinsic rewards to employees to motivate them and enhance a feeling of appreciation. Consequently, the major difference existing between big and small companies regarding employee rewards is that big companies offer intrinsic rewards, while small companies do not. The difference regarding resource availability accelerates this difference. Big organizations have more resources, while small organizations have limited resources. As a result, big companies such as Walmart provide a favorable reward system while small businesses offer an unattractive reward system. However, small companies can adopt reward strategies to enable them to address the reward gap existing between them and the big organization. For instance, they should offer training and development opportunities, intrinsic rewards, and create a fun environment. These activities will create employee motivation, thereby helping address the reward gap between them and big organizations.
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