In 1970, Sam Walton the founder of Wal-Mart implemented an extremely significant warehouse distribution system. This new system evolved into Wal-Mart Stores Inc. and in that same year the company was publicly traded on the New York Stock Exchange. The company began to expand extremely rapidly throughout the 70’s. During this period Wal-Mart started incorporating pharmacies and auto service centers into its stores which incited even more growth. By 1979, there were 276 Wal-Mart stores in 11 states.
During the early 1980’s Wal-Mart’s sales exceeded one-billion dollars. Sam Walton soon began to buy out competitors and incorporate his low cost/high volume concept into these newly purchased companies. In 1987, Sam Walton started what we currently identify as the Wal-Mart Superstore. These superstores consist of a grocery store, a general merchandise market, and service outlets such as restaurants, banks, vision centers and videotape rentals for a one stop shopping experience.
EMPLOYEE PROGRAMS AND PRACTICES Peterson, points out in “Employee Retention: The Secrets Behind Wal-Marts Successful Hiring Policies” that a major concern of any corporation is employee retention. Motivated employees are seen as a competitive advantage in today’s society. One of a manager’s main tasks in any organization is to motivate the employees to make them more efficient and effective.
Therefore, making motivation one of the most important concepts in good management practices. Wal-Mart has employed numerous motivational methods to increase motivation in their employees. These motivational factors include; career opportunities, incentive/bonus plans, educational programs, health benefits, profit sharing, 401K, and stock options. Wal-Mart solicits feedback from all their associates annually, which provides their opinion of their work experience and the company’s implementation of Wal-Mart’s basic beliefs and values.
Wal-Mart uses the associate’s feedback to improve job conditions and thus increase motivation. In addition to this Wal-Mart also offers career opportunities to their associates. The associates have the opportunity to change career paths and unlimited career advancement opportunities available within the company. According to Wal-Mart’s web site “more than 65% of Management Associates started out as Hourly Associates (Wal-Mart).” Along with career opportunities, there is also incentive/bonus plans.
These incentives are based on the company’s performance. Both hourly and management associates are eligible to receive a percentage of their wages as additional income. The associates are also eligible for merit increases throughout the year. Merit increases are also based on performance. Associates also receive a holiday bonus, which is based on the length of time they have been with the company.
Another good motivational factor that Wal-Mart employs is the alliance they have formed with many colleges and universities to provide educational opportunities through the “My Education Connection” program. These benefits offer all associates the opportunity to take online GED preparation, college courses, language courses and personal enrichment courses. Along with this, associates and their spouses are reimbursed for GED completion. Scholarships are also offered to associates and their families.
Sixty-two million dollars in scholarship funds have been awarded since 1975. Wal-Mart associates become eligible to receive a share of the company profits after being employed for one year and providing 1,000 hours of service through the Profit Sharing Program. Wal-Mart has contributed more than $2.7 billion toward this plan since 1972. Wal-Mart makes contributions to associate 401k plans based on company performance. These contributions can amount to 15% of the associate’s pre-tax income. However, the stock options and purchase options are based on individual performances.
This motivational strategy allows employees to benefit from their performance which will in turn make the company’s overall performance better. Home office management associates are eligible to receive additional compensation through stock options. Associates can become shareholders through the Associate Stock Ownership Plan. Wal-Mart also contributes 15% each year toward associate stock purchases.
This contribution is capped at $1,800 each year. Since the typical Wal-Mart employee only makes between $6 and $7.50 per hour, most are unable to afford the stock options and only one in fifty associates participate in the program. Wal-Mart associates also receive 10% off selected store merchandise and are offered discounted child care through four national providers (Peterson Coleman). These benefits help Wal-Mart keep its best and brightest employees. Diversity Challenges
Problems in businesses conducted across cultures often arise when individuals from one culture are not able to understand culturally determined differences. The most common difference is the language barrier if individuals are not fluent in the language. With individuals, who don’t speak the same language, the use of nonverbal cues can explain what is trying to be communicated. Nonverbal cues and behaviors vary from one culture to another.
For example, people from the U.S. are taught to use direct eye contact when communicating; in many Asian cultures, it is considered improper or rude to look directly at another person while speaking. Differences in foreign governments, laws and policies in other countries can have an impact on business, however, they must be obeyed or result in problems. Individuals have to become acquainted with even the smallest details, what may be perceived as laziness to one could be behavior that’s part of that countries culture.
China is a communist country and Wal-Mart’s venture to indulge in its economy comes with a risk. Coca-Cola attempted to expand into China and was unsuccessful because they failed to do their research first. It is said that “by the end of 2003 there were 460,000 approved foreign companies in China” (Expanding into China). When Wal-Mart moved to Mexico, they were successful because they bought into an established grocer.
The same would be the case for venturing into the Asian Market. A study into China’s culture would be beneficial to ensure Wal-Mart’s practices and products are not viewed as offensive. Wal-Mart has shown that it supports diversity because it is the largest private employer of minorities in the U.S. (Wal-Mart). “When employees make a commitment to diversity it translates into better products and service. (Diversity is more than Good PR).” The firms’ annual profits speak for its ability to put diversity to work within its organization because differences in age; race and religion are common within Wal-Mart stores.
Plan of Action As the U.S. economy becomes increasingly international, and the global economy increasingly competitive, it’s imperative to be able to communicate effectively with people from other cultures. It is important to conduct thorough market research to aid in making sound marketing decisions that provide a clear picture of factors that affect the ability to sell products. Wal-Mart should study stores in China to get acquainted with the market.
This would be beneficial because Wal-Mart would see what sells, and what doesn’t. Next, they should look into the recruitment and hiring practices of those stores and mirror the successful ones. For the most part, the race of people living in China is Chinese yet there are additional diversity challenges such as age and differences in religion practices that must also be considered. Initial studies in these areas would greatly benefit Wal-Mart in China.
Wal-Mart should attempt to replicate the method used to enter Mexico to reduce potential problems of conducting business in the country. By purchasing an established grocer’s employees some training has already been provided and the company is well aware of the practices that have worked well in addition to the ones that have failed within the market. Additional training and recruiting will be needed to expand beyond Wal-Mart’s first acquisitions in the country and to ensure that each associate is following the vision and beliefs of the company
. The in-depth training provided should be specific to the location. To aid in the language barrier a company should try and find managers that may be fluent in the language or have some communication skills already for that country. If an individual can’t fluently speak the language they could learn some basic words and phrases to help them communicate not only on the job but in the community. Individuals will need to have a thorough understanding on a countries customs and courtesy’s as to not insult any of the employees or partners.
They should have a general understanding of the laws and policies where they work. Hire local Chinese nationals trained in the United States, managers for market research or managing a new facility. It’s not enough to have a good business plan; the culture must also be respected.
The best thing about Wal-Mart is that it does not rely on the sale of one product. Since it sells numerous appliances, clothes, electronics and groceries in one location, it provides one stop shopping which benefits many people. Wal-Mart is on the path to global success due to the diversity of its people, products and services. The success in America, South America, and European nations has laid the ground work for Wal-Mart to expand into Asia. By mirroring methods used to gain access into those regions Wal-Mart will have the ability to succeed in the Asian markets.
There are both visible and invisible challenges and rewards involved in a venture to expand globally. By being flexible and conducting research in the areas mentioned above, Wal-Mart will be able to operate successfully in the Asian market while still following the overall vision, strategy and beliefs of the company.
1. Giancola Franka “The Generation Gap: More Myth than Reality. HR Human Resource Planning. New York: 2006 Vol. 29 Is. 4 pg 2. Peterson Coleman Employee Retention: The Secrets Behind Wal-Mart’s Successful Hiring Policies. Human Resource Management, Spring 2005, Vol. 44 No. 1 3. Politt David “Diversity is more than observing the letter of the law. Human Resource Management International Digest Bradford 2005 Vol. 13, Is 4 pg. 37 4. Tip Sheet: Diversity is more than good PR PRNEWS Potomac: Jul 31, 2006. Vol.63 5. Wal-Mart. (November 21, 2004). Retrieved November 20-23, 2011 Available: www.walmart.com