University of Science & Technology Chittagong

Course Name: Strategic Management

Topic: Human Resource Strategy and Productivity at
Walmart

Submitted To: Mr. Rupam

Chowdhury Assistant Professor
FBA,USTC

Submitted By: Arnab Barua

Id: 1506
Semester: 8th (Finance)
Batch: 40th
Program: BBA
Faculty of Business Administration
 Human Resource Strategy and Productivity at Walmart

Introduction: The founder and former CEO of Wal-Mart, Sam Walton is the greatest resource
the organization has. Walton’s leadership model and the desire for success have been significant
in taking the company towards the realization of its objectives. In fact, Wal-Mart is relying on
Walton’s business idea and model to stay ahead of other companies such as target in the
industry. Additionally, Wal-Mart has approximately over 2 million active staff. With such a big
size, the company is able to accomplish things that smaller companies cannot. Additionally, the
size is valuable in providing large economies of scale that translates to high profitability. Wal-
Mart became the largest company in the world, based on sales. Through they turned their annual
income into daily income; currently the company is facing the challenge of maintaining
profitability in a tough economy. Companies use human resource strategies to achieve
competitive advantage. With a need for continuously growing workers, Wal-Mart is not being
able to meet management expectation. Consequently its expense must continuously reduce to
maintain target profit margins. Previously, they provide lower salary than the salary provided by
their competitors. But they provide other inducements to the employees like Family friendly
policies, Working facilities in weekend, Facility to be shareholder, Retirement benefits etc. In
this case, Walmart Company is obviously taking the resources to maintain competitive strategy,
that is to say, it aims to become the low-cost leader in the retail industry. Walmart maintains its
competitive advantage through its satellite-based distribution system, and by keeping store
location costs to a minimum by placing stores on low-cost land outside small to medium-sized
towns, no matter in the US or in its abroad affiliations.

Basic History: Walmart is the leading retail brand of United States. It has enjoyed enormous
growth during the recent years. In 2018, its revenue surged past 500 Billion dollars. The number
of Walmart’s stores including both US and international has also grown a lot in the recent years.
For years, Walmart has been able to sustain its distinct advantage of being the most popular and
leading retail chain of US. United States is its main market but its international presence and
revenue have  grown impressively over the recent years. The US based retail giant was
incorporated in Delaware in 1969. However, Sam Walton had founded the business long back in
1945. Its first international initiative  began in 1991 with its entry into the Mexican market. Now,
Walmart is a global business divided into three main reportable segments – Walmart U.S.,
Walmart International and Sam’s Club. The largest business segment is Walmart US with
operations in all 50 states. The company operates its retail and wholesale units as well as e-
commerce websites in U.S., Africa, Argentina, Brazil, Canada, Central America, Chile, China,
India, Japan, Mexico and the United Kingdom. Walmart International has operations outside US
in 27 countries. Sam’s Club is a membership only warehouse club with operations in 44 U.S.
states. Walmart U.S. operates super-centers in 49 states, discount stores in 41 and other small
formats including neighbourhood markets in 36 states. Number of Walmart employees in 2018
was 2.3 million with 1.5 million in US and 0.8 million outside US. Number of  Walmart retail
units in 2018 reached 11,718 with 5,358 in United States and 6,360 located internationally.

Key Points: Finally Wal-Mart has some competitive advantages related with proper resource
planning like they have developed a hub-and-spoke distribution network which is very efficient
and low cost and increased its delivery schedule. It also has a god market position where it has
placed itself as a market leader. Its Policy everyday low prices enabled them to have two main
competitors like Target and Kmart. Wal-Mart also has a good Human Resource Management and
employees of Wal-Mart are very committed. Because of its good impact on the market,
everybody feels proud of being a Wal-Mart employee.

1. Human Force Planning and Difficulties

2. Employment Requirement
3. Development and Training
4. Human Resources Strategy
5. Distribution Management
6. Competitive Supply Chain

Human Force Planning and Difficulties: Human force planning and preparation of all your
options before going into the real work set for the staff to get the organizational goals is very
important issue. It is well understood principle that the people are organization’s important asset.
Because without the capable staff it is difficult for all organizations to reach towards their goals.
The bulk of organizational improvement will come only after ensuring that the right staff with
the right skills, knowledge and behaviors in the organization. Workforce planning related to
achieving this outcome, and any serious link between business planning and development,
recruitment and retention, and staff training. (Michael E. Porter, 1980). Wal-Mart is much concern
about this issue, human resources and recruitment system and effective to deal with their needs
for this purpose and put the plan always. They announced the vacancy correctly, a pre-
assessment before engaging in the selection process. They provide benefits to its employees and
facilities in spite of, is blamed for some time to Wal-Mart facilities discrimination and ill-
especially low-paid.

Employment Requirement: Critical stage in the recruitment of human resources management.

It should be well planned and structured so that the organization can recruit the right person for
the right place instead of just making the availability of another person at work. There are many
of the problems faced during this process and managers for some time and the inability to focus,
time and financial resources necessary to make this process effective (Jones, 2007). Wal-Mart
that they always take qualified personnel and according to it, and it makes employees with
proper education and skils efficiency.

Development and Training: Appointment comes after the development and training stage.
Most the organizations unfortunately sometimes even for technical jobs do not provide adequate
training for their employees before hiring and employment. There must be made sound system
which can ensure that the Organization the necessary arrangements to work before and on the job
training and development for their employees. The-job training is the main part in the field of
human resources at Wal-Mart is now not only offers these courses for their employees, but in
times of recession, they offer training courses for some people who are by this time of recession.
(Wal-Mart, 2018). Human resources management are primarily responsible for the employee’s
performance in business administration (Jones, 2007). To achieve its purposes, which is
responsible for dealing with staff from induction to work on and improve their commitment and
reduce absenteeism and turnover, and improving skills levels and productivity, and improve the
quality and efficiency of its work.

Human Resource Strategy: When some human resources management and strategy for
implementing the tasks set by the department of handling human resources management. Have
human resources functions of the Organization include the recruitment and selection policies,
and procedures related to disciplinary procedures, policies, rewards and prizes, and human
resources plan and policies specific learning and development. But it should be aliened all these
regulatory issues in the overall strategy for the business sector. Human resources management
strategy and the comprehensive plan, with regard to human resources policy in the
implementation process. (Michael E. Porter, 1980). Wal-Mart always gives priority to the strategies
that best fit and best practices, which means there is a link between human resources
management strategy and corporate strategy. Encountered some blam critic Wal-Mart to use this
strategy against the employee benefits and fair pay, so many times waltmart cases of
discrimination against them. But the people Wal-Mart’s efficient in the field of continuous
monitoring of the human resources strategy, through the study of the employee, feedback and
surveys necessary for the organization.

Distribution Management: Distribution channels of Wal-Mart were very efficient and it

allowed for low pricing, thus creating another barrier to entry for firms who are wishing to enter
the market. Wal-Mart was also developed unique resources which are not used before. It
installed a new barrier to entry when it developed its EDI system which is Electronic Data
Interchange system which improved communication with the suppliers and the distribution
centres. By developing the EDI system Wal-Mart has also improved inventory control. Wal-Mart
has differentiated itself from its huge competition. It has launched many superstores which offer
groceries and also a good shopping environment. It has been successful in creating a brand name
and good reputation as the leader in the industry. Their everyday low prices philosophy was
influential in developing the loyalty of customers that prompted the growth of the company. This
constancy in price and service empowered Wal-Mart to establish a reputation of loyalty.
Customer loyalty has been increased by development of reputation and brand name which has
helped in reducing the price elasticity of demand. Wal-Mart also offers guarantees and return
policies which assure the customers of their purchase. Method of providing guarantees and
warranties also act as a barrier to entry because new entrants also provide high quality goods and
offer customers competitive services which are often very difficult.

Competitive Supply Chain: If the brand has been able to sustain its low price advantage the
reason is it has smartly managed a large supply chain. It buys in bulk form a large number of
suppliers which offers it higher bargaining power allowing it to ask for the lowest prices on all
products. The global supply chain of Walmart includes more than 100,000 suppliers which are
located around the globe. In several cases Walmart buys products from producers near the store
or Club. Products sold in the fresh category are mostly purchased from producers in close
proximity to the retail stores. For most suppliers, the purchases Walmart makes represent a
significant part of their annual sales. The company is able to obtain products from them on
highly favourable prices. Walmart being their largest client is also their most favoured one. In
turn, the company passes this advantage on to the customers. These suppliers are subject to
standards of business conduct related to local laws, labor standards, product quality and similar
more. Moreover, Walmart has focused on technology to make its supply chain efficient and is
also working to raise its level of supply chain transparency. It has strategically placed 157
distribution facilities for its Walmart U.S. segment all throughout U.S. It shipped around 78% of
Walmart U.S. purchases of its store merchandise through its distribution facilities. Walmart has
total 179 distribution facilities in U.S. of which 157 are dedicated to Walmart U.S. and 22 to
Sam’s club. (Walmart Report, 2016).

Cause and Effect: The productivity regressions demonstrate that lines using a set of innovative work
practices, which include incentive pay, teams, flexible job assignments, employment security, and
training, achieve substantially higher levels of productivity than do lines with the more traditional
approach, which includes narrow job definitions, strict work rules, and hourly pay with close
supervision. Our results are consistent with recent theoretical models which stress the importance of
complementarities among work practices which can be controlled by introducing proper human
resource planning. I figured out five relatable question to explain :

1. Corporate strategy and HR strategy at Wal-Mart. Are they important?

From this case material I can also see that Walmart purchased massive quantities of items from
its suppliers to form scale economy which is under their HRM strategy and its made a huge
difference in competitive market. On other hand, the plan has the efficient stock control system
helping make its operating costs lower than those of its competitors. It also imported many goods
from China, “the world factory” for its low cost. So in a word the company-level strategy of
Walmart is low cost and low cost, with little differentiation strategy. Managers engage in three
levels of strategic planning (Gary Dessler, 2005): the corporate-level strategy; the business-level
strategy and the function-level strategy. The functional strategy should serve the overall
company strategy so the corporate strategy could be implemented more effectively and
efficiently. As for Walmart, its corporate-level strategy and business-level strategy, as we
analyzed above, is the low cost leadership. Then we’ll focus on its functional strategy, especially
its HR strategy. Besides the above factors, Walmart builds its low cost leader on employment
policies that help it to achieve extraordinarily low employment costs. Through low-cost HR
activities, Walmart tried to maintain its predominate competitive advantage.

2. Whats the process with HR policies and at Walmart and How encouragement works for them?
From the performance management perspective, Walmart made very high demanding standards
and job designs. The New York Times reported Walmart had extensive violations of state
regulations requiring time for breaks and meals. And there are so many instances of minors
working too late, during school hours, or for too many hours in a day, for the performance
appraising just force them to do so. In the Career management, Walmart also goes great lengths
to reduce cost, there are many cases that women sued Walmart for its discriminated policy
against women by systematically denying them promotions and paying them less than men.
Women are pushed into “female” departments and are demoted if they complain about unequal
treatment just for more cost reduction against its competitors. From the employee benefit and
safety perspective, Walmart’s HR policies are also well aligned with the corporate-level strategy.
At Walmart, workers eligible for benefits such as health insurance must pay over the odds for
them. In 1999, employees paid 36 percent of the costs. In 2001, the employee burden rose to 42
percent. While in the US, large-firm employees pay on average 16 percent of the premium for
health insurance. Unionized supermarket workers typically pay nothing. Walmart was frequently
accused of not providing employees with affordable access to health care, but the top managers
and HR managers know their focus was just to try their most to implement the “low-cost”
strategy. From training perspective, Walmart refers to its employees as “associates”, and
encourages managers to think of themselves as “servant leaders”, that is, to encourage them to
serve others while staying focused on achieving results in line with the organization’s values and
integrity. An organization’s strategy necessitates behavioral requirement for success, and the use
of HR practices in the organization can reward and control employee behavior, therefore the
organization should implement HR practices that encourage the employee behaviors that are
consistent with the organization’s strategy (Delery, John E; Doty, D Harold, 1996). Through this
training and encouragement, Walmart tried to adjust the employee behaviors and competencies
to what the company’s strategy requires, that is to low down cost more.

3. The role of the HR manager in this company?

So in the above part we have assessed how various human resource practices and systems of
Walmart “fit” the organization’s competitive corporate strategy. Then what the role of HR
managers in this company, who are HR professionals with strategic and other skills required to
build a strategy-oriented HR system. As managers in one of the functional departments of
Walmart, they have tried their best to “fit” the corporate strategy to low down cost. They made
some rules and policies, for example, they implement anti-union policy in its stores to reduce
extra-costs from union workers; they help implement “lock-in” policies; they tried to resist
disability people for the efficiency loss; they discriminate women by giving them much fewer
money and opportunities to be promoted, and actually the male workers in Walmart also got
much lower salary compared with industry average level. Walmart HR managers also tried to
adjust the employee behaviors and competencies to what the company’s strategy requires
through the actions and policies. So in the above paragraph, I have analyzed the role of HR
mangers in Walmart using their best in the next level. Work reflects what has come to be known
as the “universalistic” or “best practice” approach to SHRM, which assumes that there are
certain “best” HRM practices that will contribute to increased financial performance, regardless
of the strategic goals of the firm. In this case, for example, Walmart HR managers refers to its
employees as “associates”, and encourages managers to think of themselves as “servant leaders”,
that is, to encourage them to serve others while staying focused on achieving results in line with
the organization’s values and integrity. All such kinds of HR policies just are universal best
practices adopted by HR department in all good companies. (Gerald R.Ferris, 1999).

4. Is it important to improve the employment practices at Walmart?

Actually from the above analysis of the role of HR managers, we knew from different theoretical
SHRM models, there are still many things for HR managers to improve. The resource-based
view focuses on firm resources that can be sources of competitive advantage within the industry.
Three basic types of resources can provide this competitive advantage (Barney, 1991). Human
capital resources include such things as the skills, judgment, and intelligence of the firm’s
employees. So from the case material we just most information concerning how Walmart
exploited its workers by various HR policies to low down the cost to the minimum level, which
would certainly reduce the loyalty and dedication of those human resource in the company. And
besides referring to its employees as “associates”, and encourages managers to think of
themselves as “servant leaders”, there seems little training and other activities taken to develop
its valuable human resources, while human capital and learning could be a core source of
sustainable competitive advantage (Nile & Jeffrey, 2004). As for the specific training and
develop methods and forms, it would depend upon the specific and proper time, place and the
right store. But what’s worth mention is the HR managers should pay more dynamic and long-
term attention when it calculates the future benefits of such HR practices. As for the present
employment practices, even with the “contingency model of best fit”, there may still many
opportunities for improvement. It’s really hard to be measure whether Walmart’s aggressive
actions to bring cost down really get its strategy in the long term. The workers are complaining
its discrimination and low compensation policies, and they bring many charges against Walmart
in the world. The government and other communities are just turning more and more sensitive to
Walmart’s way of aggressive acting, all these bring big damage, or even bigger cost, to
Walmart’s reputation and may very well affect its ability of long-term profitability. It imported
so much goods from China, and it even possess some sweat shops in less developed countries to
produce products with Walmart brand, which cultivate many problems such as business ethics,
followed by the opposition of its consumers, the final source of profit. So it seems Walmart HR
professional would harvest more by seeing the long-term potential cost, and with more advanced
management tools.

5. How Wal-Marts Productivity Works?

It is the nation's largest company, representing 2.3 percent of the gross domestic product and
employing 1.5 million workers. On this case I can feel thats its prowess and buying power are
breathtaking. It is the largest trucker in the nation. Moreover, it is a remarkably innovative
exploiter of the latest technologies, enabling it to run its huge retail network highly productively,
and providing its 20 million or so daily customers both low prices and a wide variety of
products. (Economists Barry Bosworth). Productivity in the U.S. Services Sector that retailing in
general has contributed substantially to the nation's productivity boom since the mid-1990's. And
Wal-Mart is the industry leader (Jack E. Triplett, 2015). By contrast, its process of making
revenues was highly productive, meaning high output per hour of work, just as Wal-Mart is now.

Conclusion: So from all those above content we know the human resource management is of
strategic importance and productivity to Walmart, which is also the definition of HRM. So the
top managers besides the HR executive should pay more attention to the everyday employment
management, after all, the issues that are related with employment are what they must face
everyday. So they should play more positive roles in training and using their human resources,
and maybe cultivating better organization culture, all of which may prove more cost-saving, and
correspondingly help realize Sam Walton’s simple philosophy of “bringing more value to
customers”.

Reference List:

Barney, J., (1991), Firm resources and sustained competitive advantage, Journal of Management.
Wong, Y.H., (1995), "The benefits of "guanxi"(edn. 1st )
D Harold, (1996), Modes of theorizing in HRM (edn. 2nd ) Page 235
Gary Dessler, (2005), Human resource management, tenth edition, Pearson Prentice Hall, p 76-
78.
Gerald R.Ferris, Wayne A. Hochwarter, (1999), Human Resource Management, Page 415
Jackson&Schuler, (1995), Understanding human resource management in the context of
Productivity (Indian Edition)
Michael E. Porter, (2015), Competitive Strategy.