Walmart is the world’s largest retailer. It is second to china’s military in terms of employment opportunities. The organization faces a high staff turnover rate. With the rate standing at around 50%, it shows gaps in the employee retaining strategy (Berg & Roberts, 2011).
Otherwise, it points out to a weak human resource department that fails to articulate needs of its employees. It could also point out to lack of job satisfaction among the employees. Similarly, it could mean that Walmart is unable to stay at par with other organizations in terms of remuneration causing mass exit of employees.
Other organizations could also be offering incentives to their workforce thus encouraging employees to stay. With its market presence, the rate of staff turnover can easily ruin the image of the organization. This is especially so gauging on the profit margin that Walmart realizes. It is important, therefore, for Walmart to invest more in the development of its workforce so as to avoid losses as a result of employee exit.
It is agreeable that exit of employees has far reaching consequences to any retailer and this does not exclude Walmart. When employees leave, they go with hard earned knowledge to add value to other organizations. Their destiny organizations benefit from the value created by the previous employer. If the business is of the same nature, then it cuts the new employer the cost of training and avoids the low productivity period of induction.
This is a direct loss of investment in terms of the training expenditure and time used in developing the employees. There is also a danger of the employees transferring trade secrets that form asymmetries for any organization. The leadership, therefore, has a role to play in mitigating strategies that ensure employees stay in the organization so as to reap the benefits of training vested (Ploetner, 2011).
Recommendations
The first recommendation involves restructuring of the employee recruitment process. The key to maintaining a stable workforce lies in the ability to formulate attainable objectives prior to recruitment. The department concerned should outline what their expectations are, the key competences desired, and the characteristics of choice.
This limits the scope of exploration since the employer already has a checklist to vet the hopefuls. With such a strategy in place, the employer will obtain employees who are best suited for the positions on offer. On the other hand, the employees feel comfortable with their placement and are happy to execute their primary role. It would also be wise not to place the employees in to permanent contracts immediately. This gives room for the employer to continuously vet the recruits for suitability.
Recruits who maintain a high standard of integrity and consistency would form good employees. The level of productivity can also be tested during this stage at minimum risk. The period can also be used to assess how well the recruits blend in with the rest of the employees as well as how they adapt to the organization’s culture. Age should also be taken into consideration during the recruitment process.
Older people are more likely to hold on to job positions since they are less ambitious compared to college leaving applicants. After recruitment, new employees should be well inducted to their positions to make sure they understand their job descriptions well. Poor perception of expectations is a main cause of dissatisfaction to employees in an organization usually resulting to attrition (Gatewood et al, 2011).
Indirectly, Walmart can discourage attrition through involvement in corporate social responsibility (CSR) activities. Supporting students in college and high schools through bursaries and sponsorship is one way of instilling a sense of confidence in the organization.
When students are supported through school, they tend to develop a liking for such an organization and are more likely to work with dedication. It helps instill loyalty of employees as an obligation or gesture of good faith towards support through school. CSR offers an organization a chance to establish its brand confidence.
It helps create a positive attitude for the organization. Though the implications are not direct, giving back to the society encourages workers associated with the brand and increases their loyalty. Issues of environmental protection, sporting activities and cleanliness campaigns would form good points of interaction with the society. The current breed of employees likes having fun while at work. When the activities are incorporated in the monthly schedule, they provide room for interaction between employees.
To some extent, the activities provide additional room for bonding outside of the work environment. This reduces the level of boredom among employees. Bonding creates positive energy and friendship which employees would miss out on if they left. Participating in sporting activities allows employees to loosen up from the tensions of work. Actively participating in charitable events would exhibit the organizations ability to take care of their own.
This brings about positive anticipation while encouraging employee residence in the organization. Changing the attitude attributed to an organization can mean a difference in how employees view their employer and, therefore, instill confidence (Gatewood et al, 2011).
Remuneration forms the other area that requires to be addressed. Other than correct placement and good working environment, employees require their financial needs to be adequately met. The recruiting department should set good compensation packages for their employees if loyalty is to be achieved. This can be done through thorough research on how other players in the sector compensate their employees. When employees leave, the target field is usually similar to the former.
If the compensation differs within negligible margins, it would be hard for employees to exit if their main reason for departure is compensation. Other benefit packages such as bonuses and flexible working hours encourage employee loyalty. Recognizing and rewarding outstanding employees act as a motivator to others. It also encourages the person rewarded to keep up good work. A clearly outlined reward system such as employee of the month would increase positive competition in the workforce.
The anticipation of getting rewarded in the subsequent chance can act as a source of motivation and lead to production of exemplary results. Extra benefits with financial value encourage more saving. Allowing employees to save in a union would go a step further in enhancing the level of interaction between employees with a common goal. Remuneration packages should be reviewed overtime in a stipulated schedule.
When employees are informed on when to expect raises in their wages, they are more likely to stay. Poor wages in an organization such as Walmart would encourage employees to train then depart to other competitors offering better payment packages. This is detrimental since the cost of training new staff exceeds the salary denied to exiting employee (Cascio et al, 2011).
Expected Challenges
Any firm making major decisions involving restructuring must face unprecedented challenges. However, these challenges only last a while. In order to come up with a working strategy, Walmart may have to reshuffle or redeploy some of the top management, especially those involved directly in recruitment of new employees. If the same people are involved in coming up with new strategies, they resist change and derail the process.
Some may not come to terms with being deployed to unfamiliar positions. At the same time, formulating a new team to conduct the recruitment process overhaul requires time for development. The new team has to be trained intensively to change their mindset and become objective oriented. Training has financial implications to any organization. Some officials resist retraining and dismiss it as boring.
This leads to the inability to cope with change. As some may argue, the time and financial resources used in effecting the change could find application in formulation of new strategies that advance business. Restructuring also means laying aside people previously thought to add value to the organization when they become an impediment to forward movement. Issues of dealing with retrenchment develop as a by-product of the new strategies.
Coping with change, therefore, becomes a main hurdle when restructuring. At the same time, targeting the older population for employment positions may not sit well with everyone. The young population, though ambitious, is dynamic and flexible and is bound to deliver more units per time. College leavers would take lower wages since they know they are just starting their careers. The older population, on the other hand, seeks to settle and demands job permanency (Gatewood et al, 2011).
There is a downside to freedom of forming associations among employees. So far, Walmart has been able to avoid the headaches and legal suits that emerge when employees get into unions. In fighting for rights, employees abuse the privilege and use the associations as leverage to pressurize their employers into meeting unnecessary demands.
Walmart would face such challenges if it allows employees to form unions within the organization. Since they have backings in legally registered unions, employees would boycott wok without fear of any repercussions.
Employees would take advantage of the conditions to skip work for days and still earn. Productivity levels would reduce leading to shrinkage of profits for the organization. This would in turn slow down growth. Harmonizing the rates given to employees with those of competitors would mean that Walmart spends more in wages and salaries. The main objective of the organization is to reduce the production and other overhead costs in order to maximize profit.
This determines the choice of a low wage labor strategy. Paying higher would reduce the overall profitability. Walmart employees provide the organization with a customer base for its products. With the wages they earn, employees can barely afford costs of goods from other stores. Paying higher would cause the employees to seek the products elsewhere. This would mean loss of customers to the outlets. Incentives such as performance rewards can trigger unfair competition between employees.
Some employees would do anything to emerge at the top so as to carry the reward. This may create a hostile environment within the organization with employees holding feelings of bitterness. The process may also be a source of bias due to a wide range of parameters that have to be engaged in deciding who deserves the reward. Those found favorable to their supervisors and managers would, definitely, take home the prize (Cascio et al, 2011).
Overcoming challenges
There are different approaches that Walmart can employ to cope with the challenges. The research and development department should diversify in fields of technology. The aim is introduction of new and easy to use systems that facilitate flow of work without much labor input. This way, employees go about their business with ease and earn wages which correspond to the nature of work they perform. The department would also be mandated in ensuring that the current rates relate to those of competitors.
At the same time, the department can come up with interesting ways of functioning which reduce boredom at work and encourage participation. Similarly, Walmart can avert challenges in restructuring by indulging the services of change management consultants. The independent bodies provide an unbiased opinion concerning lay-offs and hiring. The consultants also possess wide scope of knowledge in dealing with problems that emerge during change.
Such consultants would take away the headache involved in weighing options that may cause decision making process to procrastinate. The consultants also possess tools that introduce change gradually thus averting anxiety and change shock. Such consultants can make a complex situation appear simple and easy to handle. At the same time, the organization can outsource the function of recruiting to specialized firms.
Recruitment process is usually time consuming and tiresome. Countless number of interviews may be held and still guarantee poor results. There are organizations that specialize in vetting of employees for various positions. Since that is their only function, the recruiting agencies are better placed to develop the recruitment objectives and establish the knowledge skills and abilities that the organization requires in employees.
Some even go to the extent of training the employees on their key performance indicators as well as orient them on their job descriptions. In addition, the recruiting agencies run the cycle repeatedly to retain a constant flow of probable employees who can take up positions upon demand. They also retain resumes in a database for ease of retrieval. Using such a strategy takes care of time wasted when interviewing employees at the organization level (Berg & Roberts, 2011).
There is a wide range of solutions that Walmart can use in rectifying the issue of employee attrition. However, more usually than not, the solutions act contrary to the profit objective of the organization in the short run. Modern solutions cannot take root without restructuring the already existing structures. Improvement strategies always oppose the inherent culture of any organization. Acceptance of change requires investment in education and training in order to avert anxiety and resistance.
Change requires renewal of leadership’s mentality or an entirely new leadership that is open minded. Walmart must also invest financially with a focus on the long-term benefits of retaining a stable workforce. The cost of training new employees is high and affects work flow. Currently, the organization is actively seeking expansion in the international market. Developing a stable workforce can facilitate the process of growth since it would only require redeployment of employees to other areas.
If Walmart is to remain profitable, the organization must strike the balance between excessive profits and development of its human resource. This is the only way to cope with challenges posed by competitors who are trying to catch up with the cost benefit approach that the organization uses. Luckily, there are firms specialized in dealing with such challenges no matter the complexity.
References
Cascio, F.W., Boudreau, J.W., Davis, A., Shannon, J., & Russo, D. (2011). HR Strategies for Employee Engagement. New Jersey: FT Press.
Gatewood, R.D., Feild, H. S., & Barrick, M. R. (2011). Human resource selection. Mason, OH: South-Western, Cengage Learning.
Ploetner, O. (2011). Counter Strategies in Global Markets. Basingstoke: Palgrave Macmillan.
Roberts, B.R. & Berg, N. (2012). Walmart: Key insights and practical lessons from the world’s largest retailer. London: Kogan Page.