HRM Assignment: Strategic Human Resource Management in Walmart

Question

Task: You are required to prepare a 2500-word HRM assignmentanalyzing the external and internal factors affecting Walmart, then select Best fit HRM strategy to ensure low employee turnover, high productivity and low absenteeism. Also use High Commitment HR policies, Performance Management, Employee Training Needs and Motivating compensation plans.

Answer

Introduction
The company chosen for the HRM assignment is Walmart, the biggest company from the retail industry. The company is built to provide great value and great services to the customer and these values have helped the company become one of the largest retail stores in the world(Walmart, 2020). Walmart, being such a massive company, is affected by various external and internal factors that play a huge factor in determining its success. The company has also been found to rely on various Strategic Human Resource Managementstrategies to manage and regulate the increasing number of employees under its control. Therefore, the report will analyze the external and internal factors that come into play while making decisions within the companyand how it manages to keep its more than 2 million employees in check. The training requirements of its employees, motivating compensation plans, and how the company manages the performance of each store and employees will also be analyzed, which will help in understanding more about the concept of Strategic Human Resource Management and a sixty-year-old company.

External Factors affecting Walmart
External factors are the most important part of strategic management. Walmart, as a leader in the retail industry, has to stand various threats within the political, economic, socio-cultural, technological, legal, and environmental elements of business that can hamper the company's business operations. These external factors are best analyzed through the PESTLE analysis model, which has been given below.

Political Factors: The political factors that Walmart needs to be concerned with are mostly the government policies that it needs to follow because of its extensive operations worldwide. The high stability in politics may bring about opportunities, whereas political pressure on raising the minimum wage can prove a threat to the company. An example of political factors affecting Walmart can be seen in the case of the bill passed that asked to raise the minimum wage of workers to 15$ per hour or shut down its stores in the United States (Corkery, 2021).

Economic factor: Since Walmart tries to provide its products and services at the most minimum price, possible economic changes have a huge effect on the company. The economy also changes based on the country; therefore,, the company always has to be aware of each region's economic landscape. If the economy hits, Walmartwon’t be able to raise its price like other brands, which can be a problem for the company. Though the company was successful during the previous recession, it cannot be said the same for the future. However, a stable economy, continued development in regions can also become an opportunity for the company.

Socio-cultural factor:Despite being such a massive company, Walmart isn’t a very popular stop for most people. It did not understand this factor, and negligence with its marketing in Germany cost the company about $1 billion, which was due to the company’s refusal to adjust to the German market. Therefore, as a global company, Walmart has toconsider socio-cultural values in each region, like its venture in Japan, which also failed since the company was unable to anticipate the impact of the expanding online marketplace (Nikkei Asia, 2020). However, since e-commerce has made itself known in most part of the world, Walmart also had to launch its e-commerce service, which can be considered as an impact of the socio-cultural factor.

Technological Factor:Walmart has been found to adopt robotics and automation in order to swiftly fulfil orders, streamline production, which can lead to increased efficiency. This can be considered as a step towards digital transformation, which is one of the biggest technological trends in the business world. Automation and online services are to be expected since it is such a massive company(CNN, 2019)

Legal factors:Walmart has to abide by the rules relating to health and safety laws, data protection, regulation on employment and labour laws. Walmart failed to abide by these rules, which resulted in the company paying $65 million to its 1000 employees since it didn’t provide any seating accommodation in the workplace (Banerjee, 2015).

Environmental factors:Walmart is largely effected by environmental conservation concerns and has to abide by promoting and producing environmentally friendly products. Walmart’s sewage fiasco and its impact on the company is a great example of environmental factors affecting the company.

Internal factors affecting Walmart
Just like external factors, internal factors of Walmart are also never constant. Therefore Walmart has to depend steadily on its ability and exploit the various strength, opportunities to ensure success in the retail industry.SWOT analysis model has been used in order to assess the internal factors affecting Walmart.

Strengths: The organizational size of Walmart can be taken as its biggest strength which helps the company to withstand various threats that might occur from its imposing weaknesses. Its strategy of cost leadership also provides the company with effective management of its overall cost as it helps to produce its standardized products in high volumes and exploit the scale of economies.

Weakness:Walmart’s biggest weakness is visible in its practice of Strategic Strategic Human Resource Management and conflicts in terms of labour relations leading to a high employee turnover rate. Also, since it has adopted the policy of providing its services at the lowest cost possible, it has resorted to certain human resources practices which are not favoured by the employees. Its business can also be replicated easily, which has led to thin margins for the company. The productivity rate has also been found to be considerably lower, which has led to slow-growing incomes for the company. Opportunities: Walmart’s investment in various international operations provides several opportunities for the company since its international markets grow at a much rapid pace than domestic markets. As the third principle US corporate user of green power, Walmart has the opportunity to invest in renewable energy. Doing this will also boost the company's efforts towards social welfare, which can help in improving its reputation within the community (Helman, 2015).

Threats: The constant change in the economies threatens Walmart and its operation. Walmart purchases more than 80% of its product from China; however, the country is undergoing changes in its government policy in order to increase the value of the national currency, which carries the biggest threat of hindering its operations (Ehrlich, 2020). Walmart's policy and its practices also threaten and negatively affects the local retailers, which might cause them to lose their clients and even cause them to close their business after it starts operating in the area. This can lead to saturation and poses a great threat to the company. Walmart's biggest strength is its cost leadership strategy; however, its competitors like Amazon, Target and Tesco are emphasizing nullifying the price differences in order to compete with Walmart. This threatens Walmart’s strategy and may cause the company to lose a majority of its clientele base(Serwaa Ofori, 2020).

Analysis of Human Resource Policies and practices within Walmart Human ResourcePolicies and practices are used by Walmart not only for regulating its two million employees around the world but also for protecting the company's business practices, values and policies, which helps the company to top the global retail industry. The company, therefore, adopts the contingency practices of best fit, which helps in creating human resource practices based upon the company’s contingency upon a specific context. Therefore, HR practices can be seen interacting with the firm’s strategy of maintaining its values of providing products at the lowest possible price and also mitigating the problems related to employee turnover, productivity and also absenteeism within the organization. Walmart adopts some aggressive HR policies and activities that help the company to fit into its low-cost strategy (Balaraman, 2015). Since the company adopts the best fit strategy, which means aligning the human resource strategies with the organizational strategy, which is providing value for the customer's money by holding down operational cost within the company.

Therefore, the company tries its best to reduce its overall cost and stand up to its organizational strategy right from its recruitment phase. This can be seen in the case of Walmart recruiting employees who are currently studying and need a job just to earn some few cash. Recruiting such employees prevents Walmart from paying any large amount to them, which reduces their cost. Strategic Human Resource Management also encourages the managers and their employees to stay focus and achieve the desired results that are complementary to the values of the organization(Ratnam, 2021).

Walmart uses its SHRM as a means of regulating the behaviours of the employee in accordance with the strategy followed by the organization. Performance management within Walmart has also been designed by SHRM to fit the organizational strategy by creating a high job design as well as working standards. The performance management forces the employees to work long hours at the same pay so that more work can be done with reduced cost. This reduced cost is then used as leverage for standing up to its organizational strategy of providing its products at minimum cost to its customers. HR policies are seen the fittest in case of its compensation management perspectives. Walmart uses various methods in order to pay less to its labours, whether it be the ones working in China who does the work of importing for Walmart or in its numerous sites around the world. This helps the company to reduce its operating cost, which shows how its organizational strategy is integrated into its HR policies. However, these practices have continuously led to high employee turnover, high absenteeism and low productivity from employees, which needs to be addressed by the company (Ratnam, 2021).

Recommendation of SHRM strategy for Walmart
Though the best fit practice helps Walmart to maintain its organizational values and strategy, it is highly recommended for Walmart to take care of the problems related to high employee turnover, high absenteeism and productivity. Walmart can adopt certain strategies which can help in mitigating these problems. Therefore SHRM practices that Walmart can adopt are:

Compensation plans: It can be found that Walmart's compensation plans are focused more on the managers rather than the low-ranking employees. Therefore instead of focusing upon either supervisor or managers, SHRM should focus more upon increasing incentive plans for the sales personnel since they are the most important foundation in any retail business. SHRM in Walmart should come up with strategies that would help the employees find some form of fulfilment while working for Walmart. This could also encourage employees to uplift the customers by using their own positive experience within the company, which can also lead to eliminating the training needs, and the cost saved on training needs can be used to compensate the employees. This method can highly increase productivity, lower employee turnover ratio and lead to lower absenteeism within the company.

Employee training needs: Walmart can use needs analysis as a means of training the employees. The company can include various skills and technological needs in its training programs which are all relevant for the performance of each salesperson. Also, in order to ensure the quality of services provided at the stores of Walmart, SHRM can use the traditional face to face training programs for encouraging as well as improving any sale personnel.

Performance Management: Since the company already uses a performance appraisal system, it should be used by HR themselves to provide feedback to each employee and recommend how to improve their performance rather than adding long hours of work as a means of performance evaluation. This will not only motivate the employees to improve themselves; it can also help in lowering the employee turnover rate and absenteeism within the company.

Plans for lowering absenteeism and labour turnover: As mentioned above major human resource problem of Walmart is related with management of human resource since the company incorporates the HR strategy with the corporate strategy. Removing this practice and focusing more on providing facilities to the employees can increase productivity from the employees. On the other hand providing bonus at the end of the month for not taking any extra day off and increase pay grade and promotion after a certain time within the company can help in lowering absenteeism as well as retaining the employees.

Improving employee attitude and behaviour: It is often possible that the organisation isn’t getting the behaviour they want from the employees because they are unable to communicate and model the behaviour that they want from their employees.Therefore, it is recommended to document and direct the behaviours that the organisation wants from their employees.

Conclusion
In conclusion, it has been assessed that, despite being a global company, Walmart still has to experience various internal and external threats in all of its businesses around the world. Walmart takes extreme precautions in executing every business operations, and they do it by keeping their organizational strategies intact, that is, to operate at a cost as low as possible. Walmart's biggest strength is its organizational size and the scale of its operation, which gives the company a huge advantage in buying products from different part of the world, and its biggest threat is the economy of the regions in which it operates. Walmart has been continuously unsuccessful in retaining employees due to its SHRMpractices, which have become a huge concern and need to be addressed right away by the company.

References
Balaraman, G. (2015). Case study of strategic StrategicStrategic Human Resource Management in Walmart stores.www.academia.edu, [online] 1(1). Available at: https://www.academia.edu/33409821/Case_study_of_strategic_human_resource_management_in_ Walmart_stores [Accessed 25 Mar. 2021]. Banerjee, D. (2015). WALMART STORES INC. - A STRATEGIC ANALYSIS. International Journal in Management and Social Science, [online] 03(12). Available at: https://www.researchgate.net/publication/327664225_IJMSS26Dec3866 [Accessed 25 Mar. 2021].

CNN (2019). Walmart wants robots in stores. Target doesn’t. [online] CNN. Available at: https://edition.cnn.com/2019/10/24/business/walmart-target-robots-automation-retail-jobs/index.html [Accessed 25 Mar. 2021].

Corkery, M. (2021). Walmart will raise wages for 425,000 workers. The New York Times. [online] 18 Feb. Available at: https://www.nytimes.com/2021/02/18/business/walmart-will-raise-wages-for-425000-workers.html [Accessed 25 Mar. 2021].

Ehrlich, S. (2020). Not A Cold War: China Is Using A Digital Currency Insurgency To Unseat The US Dollar. [online] Forbes. Available at: https://www.forbes.com/sites/stevenehrlich/2020/10/15/not-a-cold-war-china-is-using-a-digital-currency-insurgency-to-unseat-the-us-dollar/?sh=17720d25748a [Accessed 25 Mar. 2021].

Helman, C. (2015). How Walmart Became A Green Energy Giant, Using Other People’s Money. [online] Forbes. Available at: https://www.forbes.com/sites/christopherhelman/2015/11/04/walmarts-everyday-renewable-energy/?sh=3d1b26ad4a30 [Accessed 25 Mar. 2021].

Nikkei Asia (2020). How Walmart flopped in Japan, and elsewhere overseas. [online] Nikkei Asia. Available at: https://asia.nikkei.com/Spotlight/Comment/How-Walmart-flopped-in-Japan-and-elsewhere-overseas#:~:text=Japan%20was%20the%20world [Accessed 25 Mar. 2021].

Serwaa Ofori, N. (2020). SWOT ANALYSIS: WAL-MART STORES INC. International Journal of Recent Research in Commerce Economics and Management (IJRRCEM), [online] 7(3), pp.32–35. Available at: https://www.paperpublications.org/upload/book/paperpdf-1595065803.pdf [Accessed 25 Mar. 2021].

Walmart (2020). Our History. [online] Walmart.com. Available at: https://corporate.walmart.com/our-story/our-history [Accessed 25 Mar. 2021].