Question: 

Case Study Of Strategic Human Resource Management In Wal-Mart Stores Introduction Sam
Walton Established Wal-Mart Store In 1962 On Three Revolutionary Philosophies; Respect For The
Individual, Service To Our Customers And Strive For Excellence. Walmart, Inc. Is Not Only The Largest
Discounted Retailer In The World, It Now Also Ranks As The Largest
Case study of Strategic Human Resource Management in Wal-Mart Stores
Introduction
Sam Walton established Wal-Mart Store in 1962 on three revolutionary philosophies; respect for the Individual, service to our customers and
strive for excellence. Walmart, Inc. is not only the largest discounted retailer in the world, it now also ranks as the largest corporation in the
world. The retail giant dwarfs its nearest competition, generating three times the revenues of the world's number two retailer, France's
Carrefour SA. Domestically, Wal-Mart has more than 1.2 million workers, making it the nation's largest nongovernmental employer. U.S.
operations include 1,478 Wal-Mart discount stores (located in all 50 states. Its international operations commenced in 1991 covering Canada
and Puerto Rico; Wal-Mart Supercenters in Argentina, Brazil, China, Germany, Mexico, Puerto Rico, South Korea, and the United Kingdom
(http://www.referenceforbusiness.com/history2/20/Wal-Mart-Stores-Inc.html#ixzz56lss8VII).
Walmart Company strives to maintain 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.
Corporate strategy and HR strategy at Wal-Mart
Walmart purchased massive quantities of items from its suppliers to form scale economy, and with the efficient stock control system, help in
making its operating costs lower than those of its competitors. It also imported many goods from China, “the world factory” for its low cost.
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.
The basic premise that underlying SHRM is that organizations adopting a particular strategy require HR practices that are different from
those required by organizations adopting alternative strategies (Jackson & Schuler, 1995). Generally, there are two primary SHRM
theoretical models the universalistic best practices and the contingency perspective of “best fit”. The contingency perspective of “best fit
elucidates that the individual HR practices will be selected based on the contingency of the specific context of a company. As Wal-Mart has
different corporate strategy with those retailers with differentiation strategy, which actually cultivates the primary contingency factor in the
SHRM literature. What’s more, we should be reminded that the individual HR practices will interact with firm strategy to result in
organizational performance, and this interaction effects make the “universal best practices” may not apply so well in a specific company.
The following part we’ll examine the “fitness” of HR practices in Walmart with this theoretical model, which is obviously also the integration
process of HR practices with the contingency variables to some extent.
From the recruitment. For example, the New York Times (January 2004) reported on an internal Walmart audit which found “extensive
violations of child-labor laws and state regulations requiring time for breaks and meals.” The cheap price of children labors and minors make
it earn more cost competitive advantage over other companies. Walmart also faced a barrage of lawsuits alleging that the company
discriminates against workers with disabilities, for the recruitment of these people means providing more facilities for them and the loss of
efficiency to some extent.
From training perspective, through training on behavioral requirement for success 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. This logic is also embodied in its “lock-
in” of its nighttime shift in various stores. Through this enforced policy, Walmart tried to prevent “shrinkage” behavior of its employees, to
eliminate unauthorized cigarette breaks or quick trips home.
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. 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 did. 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 compensation management perspective, Walmart has also showed very aggressive HR policies and activities. Walmart imported
$15 billion worth of goods from china, for not only the strategic consideration of supplier chain economy, but also Walmart has some factories
in china, whose products are branded with Walmart name. With this method, Walmart pays much less to Chinese labors in this “world-
factory” and earn some advantages, so we could just see how the Walmart corporate strategy is just intensely integrated with its HR policy.
In 2002, operating costs for Walmart were just 16.6 percent of total sales, compared to a 20.7 average for the retail industry as a whole,
which supported greatly the overall strategy. Walmart workers in California earn on average 31 percent less than workers employed in other
large retail business. Actually, with other operating and inventory costs set by higher-level management, store managers must turn to wages
to increase profits, and Walmart expects the labor costs to be cut by two-tenths of a percentage point each year.
From the employee benefit and safety perspective, 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 Walmart’s corporate strategy.
Finally, from the labor relations perspective, Sam Walton sought to bring great value through aggressive discounting to customers. Because
unionized supermarket workers typically pay nothing, Walmart has strong anti-union policy. Allegations of firing workers sympathetic to labor
organizations have been made, all new employees are shown a propaganda video tape, which said joining a union, would have bad
implication for them, and the employees should never sign a union card. In the UK it was reported in the Guardian that Walmart is facing the
prospect of a bruising legal battle with the GMB trade union in a row over collective bargaining rights, for the union would not accepting
Walmart withdrew a 10% pay offer to more than 700 workers after they rejected a new package of terms and conditions, which included
giving up rights to collective pay bargaining. Here there may be some doubt why Walmart has recently allowed unionization in their stores in
China, where unionization is mandatory. But actually, this mandatory rule is made a long time before Walmart walk into china, so why
Walmart give up its persistence in not having some unions, and its former reason to China government is that it did not have any unions in its
global working. So how do we see Walmart’s compromise if that constitutes a “compromise”?
It has been argued that doing business in China is particularly difficult because of the higher relative importance of personal relationships
(guanxi), as opposed to the specification and enforcement of contracts in the West (Davies et al, 1995). Walmart China has tried every effort
to develop good relationships with China government and other influence groups. So, Walmart made this exception of have unionizations is
just in accordance with its corporate strategy and HR strategy. If it ignores the Chinese government’s firm rule, its cost would just outweigh
what it would save by organizing no unions in its labor relations management as Walmart provides little power for Chinese workers as the
unions are controlled by the state.
Conclusion:
Therefore, from all those above content we know the human resource management is of strategic importance to Walmart. Both the top
managers and HR executives should pay more attention to the everyday employment management. They should play more roles that are
positive 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”.
Based on the case answer these two questions
1- Identify the challenges your business will face and how it will affect your HRM strategies.
2-Design HRM strategies to address these business challenge

Strategic human resource management:

case study
Strategic human resource management (SHRM) is a complex integration of human resource to the strategic management of the organization with the objective of
achieving the organizations goals efficiently and effectively. SHRM is a process that requires understanding of the status of the firm, human resource available,
and then placement of the right human resource personnel in the right position to achieve the strategic goals of the organization. This essay will seek to create a
working SHRM plan for the stated case study by providing solution to the listed problems. The following will be tacked in the essay; the practical aspects of SHRM,
the balanced scorecard approach, then provide a summary on how to move the organization forward. This will be achieved through review of relevant literature.
According to Purcell & Kinnie (2007), there are different ways of achieving the integration of human resource and the strategic objectives of the organization.
Some of the theories available include the best fit, the best practice, and the resource based view (RBV).
The best fit theory according to Hodge et al, (2003) is a contingency model that is designed based on internal and external environment of the business. This
model links the HR strategy to the existing environment, the pressures, and the demands of the organization. For the best fit theory to work in meeting the needs
of the organization, it requires flexibility and professionalism in the HR strategy. This theory categorizes organizations into three major groups; the defenders, the
prospectors, and the analyzers.
These classifications are developed based on HR practices that are required for the various categories. Defenders are those organizations producing limited
goods in a narrow product-market. Prospectors produce goods based on market opportunities and needs, while analyzers combine the aspects of both defenders
and prospectors (Davila et al, 2007). For defenders to remain active they need innovation to improve on the existing products while on the other hand, prospectors
need active innovation to satisfy the existing market opportunity.
The best fit theory requires that any organization align its human resource to fit its operations. For the defenders, because their market environment is stable, they
need for example, innovation, but only to remain at the top of the market by delivering on customer satisfaction (Millmore et al. 2007). On the other hand,
prospectors because they are in a highly dynamic market environment, they need to strategize their human resource for aggressive innovation. In addition to
innovation, the human resource relationship structures in these classifications differ. For example, in defender organization, human resource relationship can be
vertical and horizontal, but in prospector organization, competitive structure is most appropriate.
Best practice theory on the other hand entails the employment of several practices that are considered best and they contributed to the improvement of the
organizations performance. In best practice theory, there are no contingency models as characteristic of the best fit model. The practices in use as well as the
changes in practice are not determined depending on the market environment rather, they are “universal prescription”. The determination of the implementation of
any practice is based on wisdom, according to Wright et al, (2001).
The best practice theory requires advancement in knowledge management. This can be through knowledge management literature, through partnership between
organizations, and through employment of knowledgeable employees. In common market terms, this is referred to as experience. In situation where experience is
deficient, best practice theory requires the use of common sense, and sensitivity to the organization.
Best practice theory aims at developing the employee and developing their commitment to the business with the goal being to improve the organizational
performance with the ultimate goal of improving on competitive advantage. To achieve this, organizations using the best practice theory have firm human resource
nurturing structures. Employees in these firms are very vital and valuable resources.
Some of the best practices used by organizations include; ensuring employee’s security of employment. Practices under this include formal contracts, equal
employment opportunities, etc. Selective hiring to ensure the best-qualified candidate is selected for the vacant position. Qualification under the best practices
theory is a combination of skills and experience. In addition, effective compensation strategies through wages or salaries, allowances, and rewards. Reduction in
status terms to make the highest status not very different from the lowest rank in. Effective use of teams, which are has seen the shift from centralized control of
organization to per based control.
For effective implementation of the best fit theory in the SHRM of an organization, it requires a process of analysis, strategizing, and evaluation (Jiang et al, 2012).
The first step is stating the organizations goals and mission, values and management philosophy. These act as the drivers of what is to be done as well as the
controllers because they provide the direction the organization should take.
The second step is to analysis the status and position of the organization. Before any new strategy can be implemented, it is essential that the current position be
established. The various evaluations in this step include environmental analysis of the organization, scan of internal position, and external positions (Wright et al,
2001). Some of the aspects in this evaluation are the current human resource capabilities and the required skills, which help to determine the right course of
action.
The third step is strategic formulation. Formulation is developing the way forward. Formulation involves determination of the various solutions and then strategic
choice. The choices to be made are corporate, business, and functional (Salaman et al, 2005). For example, corporate choice maybe between hiring new human
resource with the right required skills or training the existing human resource. In choice making, consideration has to be made on the opportunity cost among other
factors.
Step four is strategic implementation of the choices. Implementation has to be done in the various aspects of the business including leadership, structure, control
systems, and the human resource.
The fifth and last step is analysis of performance. The aspects analyzed include the strategy, operational and financial. Analysis determines the effectiveness of
SHRM.
Lastly, the RBV is based on the idea that the organizations resources whether tangible, intangible, form a critical and important part when undertaking a strategic
position. The assets included in this theory include cash, brand name, loyalty, assets, and research and development abilities. Internal resources rather than the
environment drive RBV. In organization operating under RBV, the organization is viewed as a hub of abilities, powers, and achievement, which are integrated
through strategic management to achieve competitive advantage.
Typically, the environment of on organization in relation to competitive advantage is viewed with two assumptions. The fist being that organizations in a given
industry have similar resources that they control as well as the strategies they pursue. The second is that, resources can develop heterogeneity, but it is short lived
because the resources are very mobile. This is the argument behind the best fit and best practices theories being not related on the organizational resources. The
reason behind the argument being that, for ay two industries in a product-niche, it is impossible to create competitive advantage (Barney, 1995). However, the
RBV assumes that firms in a niche industry can be heterogeneous in terms of the strategic resource they control therefore, heterogeneity can be long lasting and
the firm is immobile, hence competitive advantage of two firms in an industry can compete.
Balanced scorecard
The balanced score card is an approach to effectiveness that is based on four dimensions of performance. This is informed by the understanding that performance
is a multidimensional aspect. To an organization to achieve effectiveness in performance, it must achieve financial performance, customer performance, internal
operational performance, and innovation and learning performance (Campbell et al, 2012).
Financial performance is to measure shareholder success including revenue growth, profitability, economic value added, and ROI. It designing a balanced scored
card, it is advised that the aspects chosen be towards establishing how to look for shareholders.
Internal operational performance measures productivity, and quality levels and cycling time. The measures included in this performance indicator are those that
seek to establish where the organization can excel. Internal operational performance assesses the process involved in production. Customer performance
measures seek to establish the customer opinion of the organization. The aspects included in customer performance are market share, repeat sales, and
customer satisfaction levels with the services and goods on offer.
Innovation and learning performance measures the growth of the organization. Learning and innovating are aspects of growth in an organization. This
measurement seeks to establish the continual of success in the organization and it is achieved through analysis of people and infrastructure. The key aspects
assessed include employee satisfaction, organizational innovation, intellectual capital, and employee development.
An effective balanced card should assess the organization current position as well as project on its future. This is done through the leading and lagging indicators
(Hodge et al, 2003). Lagging indicators show the outcomes so far, while leading indicators are drivers to what will happen. For a well designed and effective
balanced scorecard, some of the measurement aspects have to be related. For example, productivity, employee satisfaction, and product quality should be directly
related to customer satisfaction and retention, which should be in turn related to market command share and financial performance.
Based on balanced scorecard details, it is possible to know where the business is from and where it is headed. This is possible as the balanced scorecard shows
what has worked and what has not. In relation to strategic human resource management, the card will show which strategies of human resource management has
worked in the past and those that have failed. Based on such details, it is possible to manage strategically human resource by implementing strategies, which
have been proven to work or modify existing strategies for optimized performance.
Conclusion
For John to achieve the 20% growth as well as improve the business as required by the CEO, it is important that he adopt a SHRM plan. First, he needs to
establish the competencies and capabilities available for the business. This is to be done through human resource evaluation. In addition to human resource
management, evaluation of the business is important. This can be done through SWOT analysis. The SWOT analysis provides the strengths, the weaknesses, the
opportunities, and the threats to the business (Purcell & Kinnie, 2007). Based on the SWOT analysis, the human resource has to be strategically integrated with
the business to optimize the strengths, make use of the opportunities, strengthen the weaknesses, and eliminate the threats as much as possible.
For maximized implementation of strategic management, John has to select between choices for the right options for the business. The choices have to be made
based on the HR evaluation and the business evaluation. The choices to be made in terms of HR are, does the business have at its disposal the right skills and
experiences to achieve the set mission and goals. If not, can the existing HR be trained to develop the skills or is a recruitment drive required to get the right
resource. The choice has also to be made based on the best practice to the business. For example, between training and hiring, which would be effective and the
costs involved.
The next step for john is to implement the SHRM plan. To ensure effective and fast realization of the set goals and growth of the business, it is advised that John
employ both best practice and best fit models. While the best fit model would require the business to operate as analyzers, the best practice model would require
the right employee to be placed in the right position based on their skills and expertise.
To boost HR productivity, which is essential for the realization of the set goals, the right culture and environment should be created in the business. These can be
created through adoption of the right structure. For example, the competitive structure would be right for to promote innovation and dedication to work. The right
structure will determine how information flows in the business for effective communication between HR management and the rest of human resource (Millmore et
al. 2007). in addition, introduction of a reward structure in the business would serve to motivate employees towards improved productivity.
With every implementation structure in place, the next will be to adopt an analysis strategy. This can be at employee level or at the business level or both. It is
recommend that both employee and business evaluation strategies be adopted. At employee level, evaluation strategies include performance appraisal while at
the business level the SWOT or balanced scorecard can be used.