Cultural diversity is touted as the strength of any profit-making and non-profit-making institutions (McGuigan & McGuigan, 2012). The main challenge of any organization today is keeping the competing goals of the multicultural people in a way that they feel motivated to work towards the attainment of the organizational goals. However, it is notable that world over, not every business company has a normalized wade plan that is accorded to all employees. This is owed to the varied level of experience, educational standards and wage systems of the company as well as the existing labour regulation laws. Much challenge does occur when fortune companies such as Walmart are listed as one of the companies that have a larger disparity in their wage structures. For years, the company’s compensation policy has been considered irregular and dehumanizing to other workers. Such tags in all dimension affect the reputational image of the company. Nonetheless, the company does appear unmoved by the state of the worker concerns and condition. With all these negativity, Walmart is still listed as the world’s largest employer among public listed companies. Compounding the problems of the company is the fact that Walmart’ Human resource policies do not show many regards to employee welfare. This has resulted in a string of demotivated workers that could lower the productivity and subsequent profitability of the organization.
The study objective
The reasons above do affirm that the current compensation policy is having a negative effect on the performance of the employees. It is notable that motivation is proportionate to the high turnover rates at the organization. The high margin income level disparity at Walmart negates the benefits and the good repentance that the firm has massively benefited from over the years. This paper is purposed to explore the compensation benefit challenges at Walmart, give a comparative analysis as well as explore some of the ways through which the problem may be addressed.
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Organizational Background-Walmart
The organization finds its modest rooting from a tiny store in Arkansas to raise the rank and be listed among the top 500 global fortune companies with a solid financial stratum. Today, the company has seen exponential growth to have more than 4,100 outlets in the United States and 3,100 more stores in more than 13 nations across the globe (Roberts & Berg, 2012). This affirms the miles that the company has gone in the acquisition of its current stature. In their 2016/2017 financial reports, it was reported that the company sales worth stood at a staggering $374 billion just some figures lower than the Danish Gross Domestic Product (Roberts & Berg, 2012). It is home to more than 2 million works translating to double the number of servicemen and women in the United States Army (Roberts & Berg, 2012). The greatest leap of growth was however realized in 2014 when it did break almost its two-year streak in the three quarters. All these successes are, however, downplayed by the fact that the brand is now struggling to attract more customers to their store. The last two years can be touted to have been the most challenging for the firm that has had sustained growth for many years.
It has been noted that the sales related challenges that have been facing the company can be traced to its customer relation services, yet no changes have so far been made to improve the compensation policy that would result to a motivated workforce. The prices offered by the company are ordinarily low to be placed at the core of low sales turnouts. This has been one of the driving force that made customers frequent the stores. In an actual sense, no competitor has managed to beat the company’s low-price sets. However, their Employees price is too low, and they often feel demotivated to work for the greater benefit of the firm. The happenings at Walmart today affirms that every employee price comes at a cost on any company. It has been established that employees are Walmart are likely to earn 20% less compared to their counterparts in the retail industry as such, an average worker at the company has been discovered to earn $10,000 less than what family members need to satisfy their basic rights. The company is on the radar as one of with the worst insurance and pension plan for its employee further compounding the challenges of the organization.
With the happenings at Walmart, the company is now at the mercy of preying activists who fight for employee rights. With its reputation at stake, the company is losing billions in the mould of reduced customer visits at the stores. Instances of negative publicity and wrath of activism have heightened over the years as people agitate for better pay and employer respect. In Bangladesh for instance, the company came under the wrath of civil rights groups that were demanding better policies in the company chain’ supply chain. All these have been identified to have a significant effect on the company’s profit margin and suitability.
It is the prerogative of every company to have a sellable image that can assure more business and profit margin. Walmart has been seen to spend mega millions in the advertisement as a way of making up for the dented reputation. Nonetheless, it can be said that despite wide protests and signs of the demotivated workforce, the company is adamant to change its compensation plan that would see it grow. For instance, one of the Walmart competitor in the delivery sector, Amazon has been growing over the year, and its employees are touted to be one of the best compensated in the sector. It is notable that Walmart had grown to have different sectors of the business that are facing massive competition from other firms within the market.
Comparative Analysis
The company is positioned to benefit from comparing her compensation plans greatly, and that of other business should it hope to beat of the dwindling fortunes. In doing the comparative analysis and for the sake of study credibility, it is worth noting that Walmart is not facing a fiscal crisis. The company above many in the field have exhibited solid fiscal performance as was mentioned in the background study. For instance, in 2012, the company reported a profit of $17 which puts it in a better position to sufficiently address the wage challenges that it’s currently facing (Roberts & Berg, 2012).
The question that Walmart should be keen to address is why in spite of good fiscal base it has one of the most undervalued employees regarding wage compared to other retailers in the same category. The principal target of the company should it hope to sustain its profit margin must be to address the issues surrounding employee compensation plan. It is, however, demoralizing to other employees when it noted that Chief Executive officer rakes in wages that are 1000 times more than an average worker of the company. The disparity of the wage structure paints a bad picture of a company that is one of the world’s largest retailer and has shown sheer disregard for employee welfare through its meagre compensations. From a critical standpoint, it can be noted that Walmart has low regards to its reputation as a principal reason as to why it has decided to stick with a rigid wage structure that is inhibiting employee performance. How then can a company be comfortably increasing its profit margins while its employees are demotivated?
Lessons from Target
The study takes a comparative study with one of the company’s main competitor, Target. It has been established that even if the company wage structure of an hourly rate of $17.33, it can be realized that Target has better wage structure when compared with Walmart (Heslin & Ochoa, 2008; Wahba, 2015). Target is credited for its good compensation policy and employee welfare as such; it is one of the companies with high retention rates than Walmart. In addition to a better wage bill, Target is one of the few US companies that pay higher than the legislated minimum wage bill to workers in over 1800 stores across the state. It is notable that while there is an instance of wage bill reductions at Walmart, Target, has continued to increase the amount of money to its employees. To add to the quest to attain its profits, Target has an annual revision to its wage structure much to the benefits of the workers. According to Ziobro (2015), Target is on a better pay relationship with its workers in the sense that it pays them more than 9 hours in parts of the nation with higher costs of living such as North Dakota and the New York.
In comparison with Walmart, it can be averred that Target is much better in their commitment to have a motivated workforce. They are both major players in the retail industry. The main variance between the two companies lies in the fact that Walmart has shown lack of commitment to improving its image through better employee compensation as such, Target is a better performance in employee welfare enhancement. Comparatively, it can be noted that Target has lesser Human resource issues that are currently facing Walmart. However, despite all these, it cannot be conclusive enough to say that Walmart has low disregard for its reputation given the amount of resource it is spending on advertisements (Rhee & Valdez, 2012). The company must nonetheless realize that answers to the reputational damages it is undergoing lies in a motivated workforce.
Target in its dealings has shown commitment to remain competitive in the retail industry. Its action with employee compensation package puts more pressure on a competitor to change their human resource policies. If the current trend at Walmart continues, then the company is bound to continuously have a dented image that will attract more negative ratings despite huge investment in advertisements. These will not, however, show a positive influence on its financial wealth over the time. To sustain its profitability, the company must start investing in its employees above concerns of fiscal health. Comparing Walmart and Target, the latter has an advantage of sustained low-cost dealing which is unlikely in another retail competitor. A move to positively work with employees would mean that the company can grow above the negative image that it’s currently spending money in adverts to erase. (Gandel, 2013)
The 21 st -century workers especially the millennials are the most challenging workers to keep motivated (Eversole et al., 2012). As such, the focus of the modern century is for companies to put up human resource policies that aim at employee retention through competitive wages and benefits. Walmart seems to be on a different path to this development. The focus must then be on why Walmart chooses to stick to its current dealings and the reason why employees seem not to be at the core of its dealing despite the immense potential that they hold for the growth of the company. In actual sense, it is given that motivated and satisfied employees are more likely to have a greater output compared to the dissatisfied staff that Walmart currently broods. The long-term effect will be the realization of the negative effect of this current policy on the profitability of the company. Contrast to poor wages; the company should spend astronomically on human resource training and performance management. This will add an insight as to how the company can align its human resource policies to meet the current demands of the labour market.
Effects on the Brand
There are several effects if the company chooses to stick with the current dealings. The obvious one is that continued staff demotivation will result in employees seeking for better opportunity making the firm stand at the risk of losing experienced employees that they have invested in training (Bergeron, 2002). Employee performance is low with the feeling that the wages do not commensurate their output. Job dissatisfaction to any organization can lead to a downward performance if not attention is paid to revert the impending negative ramifications. In this regard, the current compensation policy at Walmart is hurting the organizational reputation if not changed in the long run. The company can improve its hiring process and employee welfares through programs that can sustain such growth. A profit-making company cannot purport that all is well when more than half of the employees lack a basic insurance plan.
A possible scenario is that lower wages often brood lack of dedication to service on the part of the company employee. There is a general feel of exploitative tendencies that have been adopted by the company that negatively affects its working relationship with employees. With a growing demand for fair and ethical business dealings, such a tag will surely have a negative effect on the company’s image. The company has built trust with her client base owing to its low pricing and higher quality. Such may be destroyed by the realization that those who work hard for the company feel undervalued. The greatest possible implication of the happening is that Walmart will be left in a dire state of attack from competitors, workers’ rights activists, customers, and employees. The resultant effect will be on the failure to compete.
Conclusion
The company is currently suffering from a damaged reputation that will further result in loss of the trust from the workers, communities and trusted customers. Based on the comparative studies, there are so many changes that can be made to the existing compensation policy plan. This will result to change in the turnover rates as job satisfaction is proportionate to employee satisfaction. Notable benefits to the company will be less expenditure on hiring new staff to replace those who quit in the quest for better opportunities. A good image is proportionate to good customer relations hence more walk-ins. It is further highlighted that a brand can have a better image that reflects both in fiscal health and employee welfare. Walmart is a global leader that must strive to set a good example to others in every aspect of their dealings hence need for a fair wage bill and livable employee policies. No amount of investment can substitute the benefit of a motivated workforce significantly so, the advantages of a motivated employee have far-reaching benefits to the general wellness of the company. Walmart must strategically ask questions about the proacted directions that their firm needs to follow to achieve employee satisfaction and sustained fiscal growth.
Recommendations
Walmart must learn from other organization if they need to keep motivated workforce. Target provides such avenue of learning since it's their closest competitor. The company needs to channel its resources to invest in the human resource capital that will result in a more motivated workforce and overall job satisfaction. As such, the company must then learn that there is a price to pay for establishing a good and reputable brand. Walmart deserves competitive wages to compete for highly skilled and talented workforce that can sustain its growth through a revised compensation policy that will help it retain its workforce.
References
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Eversole, B. A., Venneberg, D. L., & Crowder, C. L. (2012). Creating a flexible organizational culture to attract and retain talented workers across generations. Advances in Developing Human Resources , 14 (4), 607-625.
Gandel, S. (2013). Why Wal-Mart can afford to give its workers a 50% raise. In Fortune . Retrieved Dec 5, 2017, from http://fortune.com/2013/11/12/why-wal-mart-can-afford-to-give-its-workers-a-50-raise/
Heslin, P. A., & Ochoa, J. D. (2008). Understanding and developing strategic corporate social responsibility.
Kopp, C. (2014). Wal-Mart should fix its image problem over worker pay. In Market Watch . Retrieved Dec 5, 2017, from http://www.marketwatch.com/story/wal-mart-should-fix-its-image-problem-over-worker-pay-2014-07-03
Ziobro, P. (2015). Target to Increase Wages to At Least $9/Hour for All Workers in April. In WSJ . Retrieved December 5, 2017, from http://www.wsj.com/articles/target-to-increase-wages-to-minimum-9-hour-for-all-workers-in-april-1426709296
McGuigan, J., & Mcguigan, J. (2012). Culture and the public sphere . Routledge.
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Roberts, B., & Berg, N. (2012). Walmart: Key Insights and Practical Lessons from the World's Largest Retailer . Kogan Page Publishers.
Wahba, P. (2015). Target latest retailer to boost starting wage to $9, matching Wal-Mart and T.J. Maxx.In Fortune . Retrieved Dec, 5, 2017, from http://fortune.com/2015/03/18/target-wages-wal-mart-t-j-maxx/
