Walmart: the relationship between HRM, business performance and employee welfare in the organisation

  1. What do you understand by the term ‘employee welfare’? 

Employee welfare refers to the array of benefits (either monetary or as services) salaried employees are entitled to during their term of association with a company.  Usually employee welfare measures include contributions to the pension fund, health insurance coverage, offering stock options, providing paid leave, etc.  Some modern employers even offer crèche or play areas for children of female employees.  The purpose of these measures is to provide employees with a safety net against unexpected events and occurrences.  Some of the measures are offered as a goodwill gesture on part of the management.

But unfortunately, the term ‘employee welfare’ is not readily associated with Walmart. Despite being voted the most admired corporation in America by its customers, the experience of its employees is learnt to be unsatisfactory.  Perhaps there is a trade-off between customer satisfaction and employee satisfaction and the achievement of the former comes at the cost of the latter.

  1. What are the business priorities of the organisation? What strategic developments (e.g. growth in core business, new business development) have taken place that requires a change in the organisation’s approach to managing employees? 

Walmart is not only America’s largest retailer, it is also one of its biggest corporations in terms of revenues.  It regularly features in the top 10 in the Forbes list.  The sheer scale of its operations is mind-boggling.  For example, it is now a $250 billion enterprise in terms of annual revenue with close to 1.5 million employees across the world.  According to Business Week magazine, just the amount Walmart “loses to theft each year is equal to the revenues of a Fortune 1000 company.” (Muir, 2005, p.19)  The following is an account of the 2004 annual event.  And it is fairly indicative of the strategic framework of the company:

“…despite the threat of soaring oil prices cutting into sales, the company is still on track to open one massive supercentre in the US every 36 hours during 2004. That will enable it to add $33 billion to its sales this year.  As is the case in much of corporate America, emboldened shareholders want a bigger say. However, proposals such as calling for an independent chairman and seeking shareholder approval of a deferred pay scheme for executives are expected to be roundly defeated. Such deliberations are not thought likely to affect the high spirits at the meeting. Newer and bigger stores are the fuel for the company’s extraordinary growth. The bigger the store, the bigger the profit Wal-Mart can glean per square foot. That is why the company’s supercentre concept is its expansion method of choice.” (The Evening Standard, 2004, p.40)

The company management has now set its sights on expanding operations in other countries, including the Euro zone and emerging economies like India, China, Brazil, etc.  When one includes the sub-contracted workers who are involved in producing the merchandise, the total employee count grows exponentially.  There are numerous accusations against Walmart that its contractors exploit cheap labour in the Third World in sub-standard sweatshop conditions.  In this backdrop, a culturally sensitive and a humane approach to managing local workforce is called for.

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