Organizational Challenges at Walmart and Solutions for Them

Background 

Walmart Stores Inc. was started by Sam Walton and the first store was opened in early 1960 in Arkansas (Barberá, 2014). Walton’s idea was to create retail stores that would sell a variety of goods under one roof. Some of the items that Walton had in mind included: food, fashion and apparel, equipment, simple machinery, among others. Ultimately, the firm grew into one of the largest retail stores in the world. Besides, the firm went public in 1970. Currently, Walmart operates more than 11,200 retail stores under 55 banners in 27 countries as well as eCommerce websites in approximately 10 countries (Mujtaba & Maxwell, 2012). According to the company’s website, Walmart has employed about 2.2 million associates around the globe but has 1.5 million associates in the United States alone. Evidently, Walmart is a large company, whose global presence implies that it constitutes of employees from diverse ethnic, racial, and cultural backgrounds. 

Vision and Mission 

According to Hyatt & Spicer (2012), Walton founded Walmart with the intent of making it the best retailer in the minds and hearts of consumers and employees. Retrospectively, Walmart, to some extent, managed to achieve Walton’s vision, especially in the 20 th century. As it will be discussed later, although a significant proportion of the vision was and has been achieved, Walmart’s current emerging challenges may derail the company from actualizing the vision in totality. Walmart’s mission is to help people save money and live better lives. This mission is even best reinforced by the company’s slogan which states, “Save money. Live better”. Therefore, the slogan means that one can expect to buy commodities at reduced prices in any of Walmart’s stores and consequently, save on costs. Although Walmart strives to abide by its vision and mission, critics state that Walmart’s retail stores have been selling counterfeit and inferior products. 

Organizational Challenges 

Organizational Structure 

Mourdoukoutas (2018) posits that Walmart uses the hierarchical and functional organization structure. Hierarchical in this respect means that there is a vertical type of management with a chain of command. On the other hand, functional implies that the firm is split into several departments that serve different functions. For instance, there are marketing, purchase, and supply departments. These types of organization structures have presented a myriad of challenges to Walmart. The first problem is the slow flow of information from one command level or department to another. For example, when a junior employee wants to deliver a message to the top management, he or she has to follow protocol. It becomes even more complex when one or more people in the command structure are absent. That means one has to wait till the unavailable people report to their offices for the message to flow. As a consequence, inefficiency and ineffectiveness tend to be characteristics of organizations that employ an organizational structure similar to Walmart’s. 

Alexander (2012) asserts that Walmart’s organizational structure is likely to have bureaucracy and autocracy. In regard to bureaucracy, it takes a long time for decisions or actions to be taken. On the same note, in case of emergencies, there is no certainty that timely actions will be taken to cushion the company against threats. Autocracy implies that senior managers make decisions, which junior employees are expected to implement and adhere to. However, autocracy impedes creativity (Mourdoukoutas, 2018). The most prominent reason is that employees are confined within a certain way of thinking and have to follow the traditional way of doing things. Walmart faces this challenge because employees have to stick to the traditional organizational culture even when the business environment is changing rapidly (Lichtenstein, 2011). 

Employee Motivation 

Walmart has been variously criticized for paying low wages to its employees. In fact, the wages have been described as too meager to make ends meet (Barberá, 2014). Perhaps the greatest criticism has been against Walmart’s overseas factories it uses to produce cheap commodities. There are allegations that the overseas warehouses are dirty and unsafe, making employees to put their lives on the line each day. For instance, in 2013, a factory in Bangladesh collapsed and killed more than 1,000 people and reports indicated that it was a consequence of how shoddy and unsafe the building was (Mourdoukoutas, 2018). After the incident, retailers from countries all over the globe signed an agreement to foster bringing their sweatshops to reasonable safety standards. However, Walmart adamantly refused to sign the pact but instead proposed to provide their own inspections. To a significant number of people, this move by Walmart was read as insensitive and selfish. As expected, the implications were dire, one of the most grievous being negative public image. Trade unions ganged up to protest against Walmart and the situation became worse when the media adopted it. Walmart was forced to pay bloggers in an attempt to save face but it had already lost its reputation. 

The consequences of low motivation among Walmart’s employees have been costly. There are reports that Walmart’s sales have been declining (Barberá, 2014). Although the employees are subjected to long working hours, they are seemingly not productive. In fact, a significant number of employees work for convenience and when they spot better opportunities, they resign from Walmart. Walmart risks losing skilled and experienced employees to its competitors. Similarly, Walmart may turn into a training ground, where workers only seek experience and leave. Such a cycle of acquiring skills and leaving may affect the flow of activities because each time new and probably unskilled people have to be hired to replace those who leave. It is also highly unlikely that skilled and experienced people will want to work in an organization that is variously described as unsafe and that pays low wages. 

Customer Satisfaction 

The primary objective of which Walmart is in operation is to provide superior products to its consumers, an aspect that is meant to place the company ahead or at par with its competitors. However, Walmart has been accused of producing counterfeit and inferior goods to unsuspecting consumers (Mujtaba & Maxwell 2012). It seems Walmart has to produce such goods to maintain consistency of providing cheap goods. However, such a strategy may narrow its target market. It is because Walmart may be branded as a company that targets the low-class citizens who are not so keen on quality. That will consequently lock out the middle-class and the upper-class. Secondly, Walmart’s customer service and interaction have been described as poor. The cause is that employees do not have adequate training to handle customers. Mourdoukoutas (2018) states that most of the employees are left to guess for themselves how to handle customers. It is unlikely that employees who are subjected to long working hours and poor pay will handle customers satisfactorily. 

Adoption of Technology 

Although Walmart has been in operation for a long time, it does not compare with recently established companies such as Amazon in regard to the adoption of technology. As already mentioned, Walmart has eCommerce websites in only 10 countries while Amazon has a global presence (Yanrong, 2013). It may be argued that Amazon and Walmart deal with products that have different nature but the rapid growth of Amazon demonstrates that incorporating technology in business is becoming not only important but also necessary. Emerging retail stores that are creating online applications where customers can view their products as well as place their orders are a threat to Walmart’s operations. Perhaps it is also the reason why Walmart is experiencing declining sales. 

Walmart’s adoption of new technology has been slow because of the bureaucratic structure as well as due to having a management team that believes in traditional structures. The fear that emerges from the management team is being made redundant by technology. Additionally, incorporating technology into the company’s operations means that a young workforce will need to be hired. Evidently, it will be necessary to restructure the organization by firing and hiring. The young workforce will also likely encounter conflict with the older senior management personnel. While a young management team will want to create new ideas, older members of the management will resist change and instead insist that the existing structures be followed. The thought of such a conflict makes the senior management to be reluctant to adopt new technology. 

Cultural and Gender Issues 

In this respect, Walmart has been accused of engaging in gender discrimination (Mourdoukoutas, 2018). Most prominently, most women work in its stores as marketers, customer service providers but the senior management positions are held by men. Such a representation makes many people doubt whether promotions are based on merit. Besides, such a representation makes it difficult for Walmart to produce products that women need. Owing to the fact that a majority of shoppers are women, Walmart risks losing the women clientele especially when the media decides to highlight on the gender biases. Secondly, Walmart stores in foreign countries tend to outsource senior managers from the United States. Although the practice is important to foster the company’s culture, the outsourced managers may not know the consumer habits of the customers. There is a possibility of Walmart selling products that are not needed by consumers in different countries or even engaging in practices that are offensive. 

Solutions and Recommendations 

Horizontal and Functional Organization Structure 

The most important aspect of any retail store is the ability to ensure that consumers get superior products and in a timely manner. Evidently, it becomes necessary for supply and purchasing, production and distribution departments to coordinate their activities to enhance efficiency. Organizations that have horizontal organizational structures are made up of departments. Instead of Walmart having a long chain of command that often duplicates functions, it is paramount for emphasis to be placed on departments to ensure that they are working efficiently and effectively. Strengthening departments is necessary because it simplifies operations. Splitting up tasks into manageable units enhances specialization, where when people work on the same tasks repeatedly, they develop skills and the capacity to work efficiently (Csaszar, 2013). On the same note, specialization results into creativity. That means that as employees spend more time working on tasks, they gain experience and discover new ways of completing tasks. 

The organization structure and management style is always almost inseparable. As already mentioned, Walmart’s hierarchical structure favors an aristocratic management style. The people at the helm make decisions in isolation and expect the junior employees to implement to the letter. However, a horizontal management style favors a democratic management style (Csaszar, 2013). It is a style where employees take part in making decisions that affect them. Most of the time, the senior managers organize meetings where everyone is free to express their views and opinions. In regard to Walmart, it will imply that junior employees working in the various departments will attend meetings organized by their respective departmental heads to discuss issues relating to their departments. Such meetings encourage healthy competition among the departments because every division seeks to become the best. As Walmart’s hierarchical structure is currently constituted, decisions are made by administrators who are far aloof from the actual operations. However, in the proposed management structure, decisions will be made by people who are close to the actual daily operations. 

As Csaszar (2012) stipulates, the role of members of the executive management team ought to be guiding the firm to attain its objectives. Simply, the executive should ensure that the organization does not derail from its vision. In Walmart’s case, the heads of departments will need to organize meetings with the executive from time to time to update them on the progress as well as ensure that they are achieving the company’s targets. The meetings also serve as opportunities to present the grievances or views of junior employees to the executive. Nevertheless, department heads ought to not just be tools of conveying information from junior employees but need to be champions of the junior employees’ interests. 

Human Resource Manager and Employee Motivation 

Walmart needs human resource managers who are conversant with the current business environment dynamics. According to Al Araimi (2011), employees make up a very crucial resource for any company that desires to stay competitive. In fact, employees constitute of what is popularly known as intangible assets. Intangible assets are resources that are difficult to account for but very essential in fostering the success of an organization. In accordance with this fact, Walmart needs to hire human resource managers that have skills of motivating employees and advising the management on the needs of employees. 

Consequently, Walmart will need to review their employees’ wages to retain skilled and talented employees. Secondly, the working conditions need to be improved. The environment should be safe and conducive. Thirdly, Walmart should observe labor rules and subject workers to fair working hours. In case the employees work overtime, they should be compensated appropriately. On the same note, it is necessary for Walmart to hire or outsource a legal advisor to help the firm navigate around legal issues. The legal advisor will help the company to observe rules that concern the rights of workers as well as help them respond to issues that may emerge. 

Employee motivation also entails simple measures such as team building activities. When such activities are organized both the senior management and the junior employees need to participate. Participation of everyone in the company fosters bonding and building of positive relationships. That means that everyone will start working as a team. Rewarding and promoting hard working and dedicated employees is also another significant source of motivation (Al Araimi, 2011). Nonetheless, rewarding and promotion need to be based on merit and not underhand methods. Additionally, the promotion also needs to be accompanied by high perks, that is, higher wages. When employees are promoted genuinely, others will find the motivation to work selflessly for the success of the firm. 

Training Employees on Customer Care 

Based on the accusations that Walmart employees handle customers poorly, it is important for the hiring process to be evaluated. The recruitment team should ensure that only qualified applicants are hired (Al Araimi, 2011). Secondly, a grace-period should be provided where employees are taught the company’s culture and values. Thirdly, feedback ought to be provided to new employees as well as how they can improve on service delivery. Most importantly, hiring should not be the end of training. The human resource manager should devise training programs where employees are constantly trained to enhance their compatibility with the existing business dynamics. The human resource manager, as well as the executive management team, can also award scholarships to some of their employees to learn new and competitive skills. 

Technology and Managing Change 

Most companies have resisted technology because employees and managers are insecure about their jobs. The consequences have been cushioning people at the expense of efficiency and competitiveness (Csaszar, 2013). Nonetheless, the process of implementing change with reference to technology needs to be smooth to prevent conflict. Again, the human resource manager has a crucial role to play. Inevitably, a young workforce that is conversant with matters technology needs to be recruited to spearhead the transition. But to make the process devoid of conflict, some of the existing employees need to be trained to operate new technology. Secondly, senior managers that constitute the hierarchical structure need to be reconstituted to the departments to use their experience to guide other members achieve the company’s objectives. 

Embrace Diversity 

Walmart needs to hire and promote employees based on merit and not gender constructs. Women managers have also proved to be resilient and result-oriented (Al Araimi, 2011). Discriminating against women could make Walmart lose special talents and be unable to fit in the modern business environment. Most importantly, it is essential for Walmart to conduct a thorough market analysis in any new country it seeks to invest in. The analysis will help the company avoid providing goods that are not needed or engaging in practices that seem offensive. Besides, locals need to be incorporated into the management team in overseas stores and not only in low-level positions. The first advantage of such an incorporation is that better advice will be given in regard to the needs of the local consumers. Secondly, the locals will develop a positive perception of the company as an entity that does not discriminate people on the basis of their race, gender, culture or ethnicity. Summarily, the company will not be viewed as a foreign entity or affair. 

Conclusion 

Most of the organizational challenges that face Walmart pertain management of human capital, which is an intangible but crucial asset. Starting from the organizational structure, it impedes the efficient and effective flow of communication especially from the bottom to the top. It also emerges that the hierarchical structure favors the aristocratic style of management, which in essence works akin to a command system where instructions are issued from the top and the people at the bottom are expected to obey without raising questions. Perhaps it is also the reason why employees are less motivated. The executive managers are out of touch with daily operations but are oblivious to the plight of junior employees. Other problems include the slow adoption of technology as well as diversity. These challenges require almost a total overhaul of the system to enable Walmart to stay competitive in the modern business environment. The process ought to start with hiring competitive human resource managers to help initiate and foster changes. 

References 

Al Araimi, F. (2011).  Power of human resources . AuthorHouse. 

Alexander, K. (2012).  Challenges and opportunities: the Wal-Mart effect in South Africa  (Doctoral dissertation). 

Barberá, M. (2014).  Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals  (Doctoral dissertation). 

Csaszar, F. A. (2012). Organizational structure as a determinant of performance: Evidence from mutual funds.  Strategic Management Journal ,  33 (6), 611-632. 

Csaszar, F. A. (2013). An efficient frontier in organization design: Organizational structure as a determinant of exploration and exploitation.  Organization Science ,  24 (4), 1083-1101. 

Hyatt, D. G., & Spicer, A. (2012). Walmart's Sustainability Journey: Andy Ruben and the Design of Organizational Structures and Systems (B). 

Lichtenstein, N. (2011). Wal-Mart’s authoritarian culture.  International Herald Tribune , 8. 

Mourdoukoutas, P. (2018).  Walmart's Outdated Management Style Is Failing Customers .  Forbes . Retrieved 17 October 2018, from https://www.forbes.com/sites/panosmourdoukoutas/2016/01/30/walmarts-outdated-management-style-is-failing-customers/#164c82a613ae 

Mujtaba, B. G., & Maxwell, S. (2012). Wal-Mart in the global retail market: Its growth and challenges.  Journal of Business Case Studies ,  3 (2), 1-10. 

Yanrong, L. I. U. (2013). Strategy Adjustment of Walmart China.  Management Science and Engineering ,  7 (4), 88-93.