Wal-Mart is the single largest private employer in the world. It is a retail business with numerous outlets inside the US as well as in other developed and developing countries where it operates in different names. Its global nature necessitates the development of compensation strategies which take into consideration the company’s policies as well as the local factors applicable in the country of operation. Ensuring efficiency for a workforce transcending cultural and national borders is a critical determinant of success for global companies such as Wal-Mart. This paper discusses the compensation befitting a Store Manager at Wal-Mart and considerations for both the local and global factors in compensating.
The store manager at Wal-Mart is considered a professional employee working at the managerial level. He/she is the top company representative at the branch where posted. He/she is a critical employee in ensuring continued availability of supplies at the shelves and timely replenishing of stock outs. He develops the terms of engagement with suppliers and follows them up in cases of defaults and eventualities. He/she is also involved in the audit of inventories. He handles employees at the branch level. He is charged with the responsibility of ensuring compliance to local requirement in the areas of operation. He/ she coordinate the entire processes in the store. These processes range from supplies, repackaging, store operations which include cash management liaising with banks and other financial institutions operating locally to enable the use of credit and debit cards in the stores. Also, the store manger takes overall responsibility in all occurrences pertaining to the stores. He is the chief correspondence with the headquarters.
Compensation is an important aspect in motivating workers and differentiating organizations. Properly developed compensation programs ensure internal consistencies between countries. Considerations of the level of development for the countries should be made in developing a compensation program (B-Net, 2009, Par 5).
This report borrows on the research conducted by WorldatWork
and Watson Wyatt Worldwide. Surveys were sent electronically to a random sample of WorldatWork members and Watson Wyatt clients. A total of 360 responses were received during a two-week period. Sixty-five percent of responding organizations (n=230) reported having operations outside of the U.S. and thus were able to complete the survey.
The study brought out one fundamental fact about compensation. Companies were torn between centralized and decentralized approach to compensation. The trend is however in favor of greater centralization
There should be both global and local factors considered in developing the compensation program for Wal-Mart Inc. Some global factors determining compensation include the need to deal with differing costs as well as standards of living in the different economies of operation. Under this, Wal0mart has to consider the disparities between the US and other western countries and the emerging economies such as India and China. The cost of living for India and China is much lower compared to that of the US and the rest of the west. In such cases, compensation for those in the Asian countries should be lower than those in the west. Secondly, the compensation package should be in compliance with local compensation practices and regulations. In this regard, the compensation package for the store manager has to adhere to local trends regarding the position. Significant deviations to the negative can lead to high rates of turnover while too much positive deviations can result in unnecessary costs on the part of the firm (Mercer, 2008, Par 6).
The firm also has to take to consideration the different tax regimes applicable to the different countries. The US and other western countries have relatively higher tax rate compared to other nations. Wal-mart has to ensure that the employees are adequately compensated for the extra taxation on their incomes (Mercer, 2008, Par 4).
Competitiveness in the labor market should also be a factor of consideration in developing the compensation plan. Areas with competitive labor markets should be offered a bigger compensation package than those whose labor supply surpasses the demand. Also the strength of collective bargaining through agents like labor unions is a critical requirement for establishing relevant compensation (Beaman, & Walker, 2007).
However, there needs to be some form of consistency in the compensation program for the firm. The category of managers should have a minimum package defined for all the managerial posts. A special plan is however applicable for the post of store manager due to the greater responsibility he/she wields in comparison with other managers.
A close observation of these factors reveals that some are local while others are global. The important question here is the extent to which the local factors should prevail in relation to global factors in the process of compensation. What portion should standardization of compensation as opposed to localization? (HR.com, 2005, Par 5).
The findings of the study on the extent for which local, regional and global factors should be considered for managerial jobs are shown in the table below.
As can be seen, local factors such as taxation, living standards and competitiveness of labor markets should least be considered for the management segment of employees. Only 18% of the compensation package should be in consideration of these local factors. A whooping 84% should be standardized.
Considering this, the basic pays for all the store managers should be largely similar. Slight differences should be in the allowances section. These allowances should reflect the local standards and costs of housing, transport and other social amenities. An important consideration in coming up with these measures is the fact that during operations, store managers will always com into contact and exchange views on the compensation programs. Cases where some feel disadvantaged will always happen if the compensation packages are not largely even. The denominational effect would be great.
Due to the nature of the store manager’s role, the compensation program can be split into two. The first would be the fixed component mainly composed of the basic pay and related allowances. The second should be the flexible remuneration based on the performance of the store. Performance should be based on the growth in revenues as well as application of better business practices. Bonuses and commissions should be used to compensate. Care should be taken to ensure that this portion of compensation accounts for a small portion of the whole package.
Applying the above principles in determining payment for store managers will prove effective in not only motivating but also retaining store managers. All managers would be content by the package as it does not significantly favor some against others.
Reference List
Beaman, K., & Walker, A., (2007). Making Global Business Possible. Web.
B-Net, (2009). Business Services Industry. Web.
HR.com, (2005). Multinational Firms Favor Global Approach to Compensation Management. Web.
Mercer, (2008). More multinational organizations taking global approach to compensation, Mercer survey finds.