Walmart is one of the largest retail companies in the world, raking in billions each year. Sam Walton the founder of Walmart had a vision for its store and sadly his vision for selling American made merchandise, the best customer service and home to all employees has failed miserably in recent years. I use to work for Walmart so reading this article sparked interest and a little bit of outrage at how much money the CEO is making when its employees are suffering. In this case analysis I’ll report the actual finding for what Walmart pays its employees and just what they think of it.
1. Compare the impact of incentive pay on the total compensation of Wal-Mart’s CEO and the company’s average workers. Does the difference in the way pay is structured at these two levels make business sense? Why or why not? In this article it said “he average wage for an hourly Wal-Mart employee in the United States $12.40 per hour.”(Gerhardt, Hollenbeck, Noe, & Wright, 2009) I’ve spoken to many Wal-Mart employees and know that Wal-Mart only pays its employees barely more than minimum wage.
I looked up the U.S Department of Labor “The federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009.”(USDL 2014) and states can actually make up their own wages and not follow federal. States like Georgia, Minnesota, Arkansas, Wyoming minimum wage is actually less than federal and states like mine which is South Carolina has no minimum wage law set. So knowing how much others get paid I looked up what the actual average is of a Walmart employee and found that “Wal-Mart’s average sale Associate makes MANAGING TALENT: How Wal-Mart Is Setting Pay at the Top ... and Bottom 3.
$8.81 per hour, according to IBIS World, an independent market research group. This translates to annual pay of $15,576” (makingchangewalmart.org 2014) and not 12.20 average as the book states and nowhere near 25k a year. So knowing how much Wal-Mart’s workers are getting paid and looking at what the CEO made that year that’s 1,201 times the annual income those of other Wal-Mart associates.
Now I know CEO position is one that comes from work and education not something you just come out of high school and obtain, however I believe a CEO pay should also be based on how well his company does in every aspect. If your turnover rates are extremely high, you’re being investigated for more than violation of the law, your workers are setting up food drives for themselves then yes I don’t think the pay he received was fair as it’s the general sales associates that are the backbone of the company.
They are the first face that every customer sees, they are the ones responsible for the upkeep for all the stores, they are the ones to make sure to keep driving sales up and maintain the image Wal-Mart has always set for itself, and they should be taken care accordingly. A CEO’s incentive pay should be the same as a employees, and at this point business wise it’s only hurting the company.
2. How do you think Wal-Mart’s store workers would judge the equity of the difference between their total compensation and Mike Duke’s total compensation? Do you think the difference would motivate them to work hard to move into management positions? Why or why not?
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Workers are often willing to work when they feel they are being paid what they deserve to be paid or are granted the hours they should be. I know for one I’m outraged to see how much the CEO made that year compared to how many are living pay check to paycheck and giving their all to the company. I worked there for year and half, always came in on my days off, came in on snow days, worked in many different departments at once, and worked their without complaint throughout my entire pregnancy and was dismissed right before my maternity leave because they didn’t want to pay my compensation.
I was the 4th woman they had done that to in the last 5 years at that point. I was motivated during my work, I often did jobs that were way above my pay raise and actually applied for manager positions because I had become so good at doing the job my own manager refused to do, and a pay raise certainly would have helped since I was only 7.50 a hour, and raising 2 kids as a single mom.
I feel that if workers felt like their hard work mattered and that they didn’t have to struggle to survive working for Wal-Mart that Wal-Mart would see more loyalty and less money going out the door because employees either can’t afford to keep working there and find alternative work or they get so fed up that they quit. We did get bonuses every 6 months but those bonuses were based on sales and where we were on the stock market usually averaging about 100 extra every 6 months.
Every year you had an evaluation that could result in a raise just depending on how they scored you on your evaluation. The fact that becoming full time employee was almost non-existent unless you became management which usually resulted in 3+ if you were lucky, your every 2 week check for normal employees is about 4 to 500 and if you’re the sole provider in your home that’s barely enough to survive without some kind of assistance which only drains MANAGING TALENT: How Wal-Mart Is Setting Pay at the Top ... and Bottom 5.
resources from the states. So at this point there’s not really any incentive to move up because of how much time it takes and having to survive is priority number one.
3. What, if any, changes would you recommend that Wal-Mart make to its policies for incentive pay so that its compensation better supports its strategy? If I could make changes to or recommend any to Wal-Mart to its policies for incentive pay it would be first to pay its employees more at start up, or employee more full time employees. If you can keep your employees working for you longer than a year than there’s more to look for. Giving bonuses not solely on sales or stock market prices but for how well clean the store was kept or how many customers had good things to say it would give the employees a better reason to work harder at customer service and to make sure their store was ran easier and cleaner.
Wal-Mart has a lot to work on when it comes to securing its employees and the pay it gives to them. A new CEO came in this year and many have already written regarding on changes they believe should be made to making a better store and job to others. Wal-Mart has plenty of potential to be once again the store that it once was when Sam Walton opened its doors July 2nd, 1962. Hopefully the new CEO will hear its employee’s cries for help and realize that with a little change it can not only become more profitable but become the image of the family friendly store we see every day.
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References Gerhart, B., Hollenbeck, J., Noe, R., & Wright, P. (2009). Fundamentals of human resource management (3rd ed.). New York, NY: McGraw-Hill. U.S Department of Labor (2014) Retrieved from http://www.dol.gov/dol/topic/wages/minimumwage.htm Making a Change at Walmart (2014) Retrieved from http://makingchangeatwalmart.org/factsheet/walmart-watch-fact-sheets/fact-sheet-wages/