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Organizational behavior refers to the “understanding, prediction, and management of human behavior and how it affects the performance of the organization”. Generally, managing organizational behavior focuses on influencing the actions of employees by aligning them to the goals and objects of the organization.
Concisely, effective management of organizational behavior involves nurturing the actions and attitudes that enable employees to increase their productivity and the overall performance of the organization. This paper will focus on analyzing the organizational behavior of Walmart.
In particular, it will analyze the company’s culture, modes of communication, nature of authority, motivational techniques, as well as, the firm’s approach to emotional intelligence, and virtual organization.
The analysis will highlight the positive and negative effects of these aspects of organizational behavior on the company. The thesis statement that will underpin the analysis is that effective management of organizational behavior leads to high performance.
Walmart is a leading international retailer that operates in over 27 countries. It operates under 69 different brands in different regions. The company employs more than two million people in different parts of the world. In 2012, it recorded a sales turnover of $444 billion (Walmart, 2013). Generally, the company has achieved organic growth over the years, thereby becoming the largest retailer in the world.
This success has been achieved, in part, due to the company’s core values, which include “service to customers, respect for individuals and striving for excellence” (Walmart, 2013). Moreover, high growth has been enhanced by the firm’s culture, which promotes honesty, fairness, and objectivity. The organizational behavior of the firm affects its performance as follows.
Type of Culture
The management of Walmart is based on pluralism. The rationale of adopting a pluralist culture is that the company has a multicultural workforce and it operates in different cultures. Consequently, its organizational culture must focuses on promoting diversity and respect for individuals.
This has led to the adoption of a pluralist culture that is characterized with diffuse power, knowledge-based work, as well as, divergent objectives. The benefits of this culture to the company include the following. Using diffuse power enables the company to empower its managers and employees to make decisions that are relevant to their departments. This improves efficiency in decision-making processes.
Additionally, the employees feel that their efforts are recognized because their opinions are taken into account by the management. This improves their commitment to the firm. Knowledge-based work enables the employees to work independently in order to fully exploit their talent.
This promotes creativity and enables the firm to achieve its innovation objectives. Finally, acknowledging divergent objectives enables the management to promote diversity by accepting varying opinions from employees. It also promotes ideation in the process of strategy formulation.
Despite these benefits, the pluralist culture hinders the integration of the company’s action. For instance, the employees in China and the UK subsidiaries have always resisted the company’s decisions concerning shifts and remunerations. This has made it difficult for the firm to have a uniform pay and shift schedules. Allowing divergent objectives and using diffuse power sometimes complicates the decision-making process.
Concisely, it leads to the achievement of consensus at the expense of the practicality of proposed strategies. For example, the employees often demand high salaries, which the company cannot afford.
This has always led to the closure of some of the company’s branches in America, thereby hindering the implementation of its expansion strategy. Finally, pluralism has negative effects on the implementation of change in the firm. Strategic changes in the firm are often diluted because they are negotiated and implemented by the same people who initiated the change process.
Modes of Communication
Written form of communication is the dominant means of conveying important information at Walmart. The use of this mode of communication is based on the American business culture, which promotes formal and verifiable forms of communication.
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The written forms of communication that are used by the firm include memos, newsletters, blogs, formal reports, and emails (Walmart, 2013). Written communication has the following positive effects on the company.
First, it helps in defining the company’s principles and policies due to its permanent nature. In this regard, it helps the company to keep a record of various policies and principles, which employees can refer to at any time.
Second, it helps in delegation of responsibilities by acting as proof of the powers and authorities that have been bestowed upon an employee. For instance, promotions in the company are only recognized if they are approved through signed letters from the human resource manager (Walmart, 2013).
Third, written communication provides precise and explicit information, thereby enhancing employees’ understanding. Fourth, Walmart has successfully used written communications such as press releases to create a good image, especially, when it is facing a scandal allegation.
Finally, written forms of communication such as financial reports and transaction documents have always been used by the firm in court as evidence. This has helped it to avoid losing lawsuits.
Written communication has also had negative effects such as high costs of printing and transporting documents. For example, printing newsletters and financial reports for employees, the public, and investors often cost the company millions of dollars annually.
Using written communication is sometimes difficult because the company has a multicultural workforce (Walmart, 2013). The company uses English as its official language. However, some employees, especially, in China have low command of English. Thus, they can hardly read and understand the company’s messages.
Nature of Power
Walmart uses organized social rank system to distribute power and authority among its employees. This system uses the organizational structure as the legitimate means of distributing power.
The company’s organizational structure consists of four reporting levels. In a descending order, the levels include the board of directors, the executive officers, the line managers, and the front line employees. The use of this system is based on the company’s culture, which focuses on respect for individuals and fairness by allowing everyone to climb the corporate ladder.
The organized social rank system has had the following positive effects in the company. To begin with, promotions to higher positions serve as a motivational tool. Employees feel appreciated when they are elevated to senior positions through a fair process.
This promotes high productivity and commitment among the employees. The system clearly defines the legitimate source of power and authority in the organization. Concisely, everybody knows whom he or she is answerable to in various departments.
This prevents the confusions that might arise due to role conflicts. It also helps to instill discipline among the employees. For example, front line employees cannot disobey their managers because they recognize their authority.
The main negative effect of this system is that it undermines the autonomy of various departments and employees. Most employees prefer to work independently. However, the hierarchical reporting system requires them to report to their bosses periodically. In this regard, some employees and departments have a limited scope to make decisions concerning their work.
In addition, the hierarchical reporting system sometimes delays the process of making decisions because the company uses a centralized management system (Walmart, 2013).
Decisions concerning activities such as staffing can only be made by the head office. For example, store managers cannot hire or fire employees without the approval of the head office. Thus, the delays associated with the approval increases the cost of replacing employees who leave the company.
The company uses intrinsic rewards to motivate its employees. Intrinsic rewards refer to “psychological rewards that employees get by doing meaningful work and performing it well”. The company uses this technique because the high competition in the global retail industry has limited its capacity to use extrinsic rewards such as bonuses.
Using intrinsic rewards involves creating a sense of meaningfulness, choice, competence, and progress. The sense of meaningfulness enables employees to believe that their work is of great value, whereas the sense of choice enables them to decide the means of accomplishing their work.
The sense of competence enables employees to feel confident in doing their work, whereas the sense of progress encourages them to pursue high goals.
Intrinsic rewards have benefited Walmart in the following ways. First, the rewards have improved the commitment and productivity of the employees. For instance, in 2011 the company promoted more than 180,000 part-time employees who were ranked as more effective by their managers (Walmart, 2013). Second, intrinsic rewards has reduced labor turnover in the company.
For instance, over “250,000 employees have worked for the company for more than ten years” (Walmart, 2013). Additionally, 75% of the management consists of employees who joined as part-time associates, but have since been offered fulltime contracts due to their commitment to the company.
Finally, intrinsic rewards minimize the occurrence of burnout because it enables employees to develop positive feelings about their work.
Despite its benefits, implementing intrinsic rewards has forced the company to spend a lot of time and financial resources. This is because implementing intrinsic rewards involves a culture change that often takes time to occur. Due to high labor turnover, the company has to spend a lot of money on seminars and training programs in order to inculcate the culture of intrinsic rewards among new recruits.
Approach to Emotional Intelligence
Emotional intelligence refers to the ability to “identify, use, understand, and manage emotions in a positive way in order to relieve stress, communicate effectively, overcome challenges, and to resolve conflicts”. The management of Walmart focuses on improving the emotional intelligence of its workforce because it believes that the success of the company depends on the well-being of its employees.
In this regard, the company focuses on improving their employees’ self-awareness, social awareness, self-management, as well as, their relationship with the management. This involves implementing training programs in which employees acquire skills that enable them to resolve conflicts, communicate effectively, and to manage stress.
Moreover, the company has invested in recreational facilities such as sports equipment. These facilities enable employees to interact in activities such as sports, thereby reducing stress and developing strong relationships.
High emotional intelligence has enabled Walmart to manage its multicultural workforce effectively. Conflicts usually occur among employees due to their cultural differences. For example, Walmart’s branch in China has always reported a large number of conflict cases due to the differences between the American and the Chinese business culture.
However, the employees began to tolerate each other and to corporate in their work, after the introduction of conflict resolution training programs (Walmart, 2013). Additionally, the productivity of the employees has improved due to their ability to tolerate each other.
Approach to Virtual Organization
A virtual organization is a “flexible network of independent entities linked by information technology to share skills and knowledge, as well as, to deliver products and services”. Walmart uses the concept of virtual office to coordinate its activities in various parts of the world from a centralized location.
The company has an effective information and communication infrastructure that links all its branches to the head office, thereby negating the need to establish regional offices. The company’s sales and supply chain activities are managed by virtual teams, which are located in remote areas. The teams use internet technologies such as email and video conferencing to coordinate the operations of the company.
It also uses the concept of mobile working to serve customers. This involves taking orders from customers through cell phones and the company’s website. The company’s employees do the shopping and deliver it to the customer’s premises. Payments are done via cell phones and smart cards.
The concept of virtual organization has enabled the firm to reduce its operating costs by eliminating the need to setup multiple regional offices to manage its activities. Additionally, the concept promotes efficiency by enabling the organization to manage its activities from a centralized place.
For example, the sales in the UK branches can be monitored in real time from the head office in the USA. This enables managers to make quick decisions because the information about the company’s performance is readily available (Walmart, 2013).
One of the major challenges of the concept of virtual office is the security of information. The company has occasionally suffered losses due to fraud or loss of data through online transactions.
The aim of this paper was to analyze the organizational behavior of Walmart. It focused on aspects of organizational behavior such as culture, power, modes of communication, motivation techniques, as well as, the firm’s approach to the concept of emotional intelligence and virtual organization. Walmart is a pluralist organization that uses organized social rank system to delegate authority.
It mainly uses written forms of communication to convey messages. The firm uses intrinsic rewards to motivate its employees. Furthermore, it uses virtual teams to coordinate its activities.
The positive effects of these aspects of organizational behavior have enabled the firm to become the largest and most profitable retailer in the world. This reaffirms the premise that effective management of organizational behavior leads to high performance.
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