Wal-Mart Compensation Practice (Essay Sample)

Wal-Mart Compensation Practice
Name
Institution
Wal-Mart Compensation Practice
Wal-Mart is the leading retail company in the U.S. Over the past few years, it is recognized as the top organization in the Fortune 500 index. The organization's corporate strategy entails dominating in the retail market and expanding in the U.S and other regional and international markets. In addition, the management ensures that there is a creation of positive brand and company recognition in their markets and branch out into new sectors of retail business. Wal-Mart offers wide-ranging commodities that include the family apparel, beauty products, household goods, electronics, clothes and shoes, fabrics and toys. Moreover, the organization also operates a pharmacy department and a car service bay. The ability to shun the intermediaries in its dealings enables the company to offer superior quality goods and services at low prices. Wal-Mart has also experienced several changes because of the competitive pressure and dynamism in the markets. The competitive pressure originates from the pricing, location, marketing mix and technology. The main Wal-Mart competitors include small stores that specialize more on a small number of similar products for their customers.
Wal-Mart’s compensation strategy
All existing and potential companies find it important to structure a compensation structure because of its significant role in human resource (Martocchio, 2013). An efficient compensation strategy helps in attracting and retaining key employees in an organization. Compensation entails a regular approach of offering economic value to workers in exchange of tasks done. Therefore, a compensation strategy drives the compensation policies and process in a company. It also offers a firm with the vision of its efforts of Human resource workers and investments in the human capital (Hitt, Ireland & Hoskisson, 2012).
Wal-Mart’s compensation strategy is a derivative of the HR strategy that describes its position in the labor market. In addition, it defines the total cash, the key bonus standards in the company and the regulations for the base salary situation. Wal-Mart’s compensation strategy has been marred by controversies over the years. This has led to numerous demonstrations from human rights and labor activities, and individual employees. The strategy includes all the hourly employees who participate in Wal-Mart’s profit sharing and retirement program and the employees involved in its stock purchase plan. Furthermore, the strategy involves savings on merchandise to workers with a 10% discount. The hourly compensation of an ordinary Wal-Mart worker amounts to $10.50. On the other hand, the top executives receive large amounts of compensation. For instance, in 2007 the executives received stock options valued at $1 million and $5 million (Wal-Mart, 2012).
Wal-Mart also offers a 40% salary increase annually to all ordinary employees. Conversely, the employees in the top positions receive higher starting salaries. Moreover, Wal-Mart’s pay plan is divided into seven different levels of job depending of their difficulty for the hourly workers. These levels are referred to as Position Pay Grades (PPGs) that range from level 1 to level 7. According to the plan, the difference in pay for each following job level is between 20 and 40 cents. The employees are also entitled to a raise in annual salary for good performances (Gomez-Mejia, Berrone & Franco-Santos, 2010). This takes place every financial year with an amount not exceeding 60 cent increment. Promotions are defined as improving the pay grade for the employees. However, they are rare especially for the hourly employees. The majority of the Wal-Mart’s employees work hours and are paid according to the payroll structure. They are also eligible for bonuses paid every four months of a given financial year. According to 2012 financial records, Wal-Mart paid out $200 million in bonuses. Other incentives are offered in the in-store associates who also receive the payouts every four months (Wal-Mart, 2012).
Wal-Mart portrays the distinctive brand personality as a best practice in the market. The brand personalities of the products Wal-Mart sells separate them from less notable perceptions in their groups. The stores positivity and simplicity to offering uncommon goods to the market creates the distinct character of the Wal-Mart and becomes memorable to the majority of the customers. In addition, the brand personalities are evident in the whole shopping experience. The store visual strategy captures the attention of shoppers creating the best display that encourages repeat visits. Moreover, the product assortment and customer services offered are superior in comparison to those provided by their competitors (Hitt, Ireland & Hoskisson, 2012).
Wal-Mart offers value added services and content to all customers that is, they deliver more value than the products in their stores. This is done through offering shoppers with information on the products in the stores, the manufacturing procedures, and their significance upon utilization. In addition, there are assorted demonstrations on how to use various products offered in the stores. This helps in improving the usage of the products and increases the value to the customers. The stores also aid in their marketing methods where they encourage more personal customer interactions. Consequently, the trust among customers towards Wal-Mart is enhanced.
Wal-Mart’s supply chain management best practices begin with the evaluation of the new markets. This is done to assess the market's maturity in order to come up with the right method of market entry. Wal-Mart’s management appoints a team whose tasks entails assessing several key factors in the market likely to affect their operations in new markets (Martocchio, 2013). Such factors include the customers’ needs and expectations, existing leadership developments in the region. Moreover, a region’s infrastructure and labor availability and costs also provide crucial information that assist in creating the stores strategies.
Compensation-related challenges they are facing.
Wal-Mart has experienced several compensation-related issues over the years. This has resulted in criticism from several groups and individuals in the majority of the regions they operate. The criticism originates from these groups viewpoints on the company’s compensation policies among other non-monetary complaints such as racial and gender discrimination. In relation to the compensation policies, several groups criticized Wal-Mart’s full-time hourly employee payments. According to various labor activists, Wal-Mart pays its employees less amounts per annum than the average retail worker.
Wal-Mart is also criticized for its policies on part-time and low paid employees in their stores. The company employs a large number of part-time workers who are partly eligible for country’s welfare programs. As a result, various activist bodies have accused Wal-Mart for increasing the burden on taxpayer-funded services. This leads to pressure on the management of the largest retail market to hire its employees on a permanent basis. The permanent employment leads to increases in the cost of running the stores thus reducing the profit margin (Wal-Mart, 2012).
Numerous class action lawsuits are also a major compensation-related challenges faced by Wal-Mart. Several stores have faced potentially expensive suits from unsatisfied employees. According to some employees, Wal-Mart management schemed to limit medical care for injured employees. This was allegedly done to save the company money by limiting their medical-related expenses. In addition, the company was accused of under insuring its employees and limiting the average amount of money per employee for health care. Dealing with these challenges has led to immense losses to the company (Wal-Mart, 2012).
Wal-Mart workers’ compensation practice offers solutions to the clients’ needs with respect to the employees’ compensation. In addition, the practice also concentrates on several existing and emerging concerns in the compensation industry. Therefore, Wal-Mart’s application of the compensation practices results to positive impact on the company and its stakeholders. The practice construes what reform modifications mean to stakeholders and the actions to be taken to optimize cost-saving benefits on a regional basis. Consequently, a section of the stakeholders gain from several implemented policies on employees’ wages that result in higher profitability for the company. Moreover, these policies have a positive impact on the company since the reduction of costs gives the management a better opportunity to expand to other states (Wal-Mart, 2012).
Despite numerous criticisms on Wal-Mart‘s compensation practice, the company has followed the labor regulations on workers’ compensations. Accordingly, Wal-Mart has provided solutions to clients in all markets in order to minimize their employee’s compensation claims. Consequently, the losses incurred from the claims are reduced to the advantage of the company and the stakeholders. Furthermore, the company has confronted the employees’ compensation practice challenges over the years to ensure positive results in its application. The practice takes a comprehensive approach to risk management in order to minimize the related costs thus increasing profitability.
The labor laws, unions and other market factors influence Wal-Mart’s compensat...