A critical overview of employee issues at Walmart

1.0  Introduction

Employees are the main driving force behind organisational success and are therefore one of the main stakeholders to any business. Walmart prides itself of a labour force of at least 1.6 million workers who have propelled the company to be the world’s leading retailer with branches in over 14 countries around the world (OneSource, 2012). Walmart is known to be one of the large retail chains to embrace the low cost low price strategy and have been at the forefront in offering affordable products in the market. However, the execution of this strategy has arguably led to strain relationships between the company and their employees with the wage rates notably being below the industry average (Walmart, 2010). Other elements of violation of employees’ rights and the provision of poor working conditions have been cited at the company. This report explores these issues and offers recommendations on how they can be rectified. The recommendations are informed by the principles of the stakeholder theory which call for stakeholder engagement to guarantee long term existence of any organisation (Hemmati, et al, 2002).

2.0 Findings

2.1 Company introduction

Walmart is the world’s largest retail chain with operations spanning across 14 countries (OneSource, 2012). The company has over 2.1 million employees with approximately 1.6 million in the USA alone (OneSource, 2012). Walmart operates under the Walmart US and the Sam’s club brand within the US. The company embraces a low cost strategy to keep its operations costs low.  This low cost approach has ramifications for how the company relates to their employees as outlined in the sections below.

2.2 Walmat’s position on employee relations

Walmart reiterates their commitment to employee welfare through the provision of a good working and the provision of good working conditions. The company also emphasises its commitment to provide employee training and empowerment programs and this helps in improving the competence of their workers (OneSource, 2012). Principles such as equality at work and the provision of fair and transparent systems for rewarding productivity have also been provided. This gives the hardworking employees a fair chance to advance in terms of earnings and position within the company. Walmart also boasts of an open communication culture with employees; a system that allows for information to be shared across various organisational levels with relative ease (OneSource, 2012). 

2.3 Observations on issues affecting Walmart-employee relations

2.31 Wages

Despite their commitment on good employee conditions, Walmart have been found to be wanting on a number of fronts. To begin with, the global retailer has been accused of exploiting workers through low wages. In 2001, the average sales clerk at Walmart would be paid $13,861; a figure lower than the federal poverty line limit of $14,630 (Labour Issues, 2012). Walmart subsequently bowed to pressure and increased its wage levels. However, reports conducted in 2006 indicate that the company’s wage level remain 20% lower than the industry averages (Labour Issues, 2012).

2.32 Working conditions

In 2005, workers at Walmart (about 200,000 employees) sued the company for being denied lunch breaks, rest, denial of overtime pay, and being forced to work off the clock. A similar case in 2000 had asserted that 69,000 other employees had been forced to work off the clock (Keil and Spector, 2005). There were also cases of gender discrimination which culminated with a protest in 2006 where 200 employees were protesting unfair policies and cases of gender discrimination. In 2004, there were claims that the company held employees prisoners by locking them inside their work places against their will (Keil and Spector, 2005). The company partially admitted to this even though they insisted that employees only got inconvenienced for at most an hour when they needed to leave the premises.

2.33 Freedom of association among employees

The company has remained consistent in its opposition to labour unions. They have continually argued that they were best placed to understand their employees and that their commitment to their employees was sufficient (Human Rights Watch, 2012). Many of the liberties have actually been won through strife and court battles. For instance, the union and bargain rights for the company’s meet cutters were only recognised after a court order was issued to the same effect in 2003 (Human Rights Watch, 2012). As things stand, there is still a bit of bad blood between the company and labour unions with the company putting pressure on employees to forfeit their right to be part of the unions.

2.34 Comparison with competitors

As has been noted, the wage levels at Walmart are below industry average. Costa is known to be a much better payer and has a much lower rate of employee turnover than Walmart. In terms of the provision of good working conditions, Tesco seems to score higher with the company consistently scoring high in industry analyses on employee performance and working conditions (Labour Issues, 2012). Walmart remains the company with the highest number of employee related complications in the US despite its strong market performance.

3.0 Conclusions

3.1 Walmart’s commitment to providing good working conditions to their employees has been stated clearly in its policies. The company claims to provide good wage rates, good working conditions, freedom of association and good training facilities among others.

3.2 Observations on the labour practices of Walmart indicate that the company’s commitment to employee welfare is questionable. This goes against assertions made by the company in almost all areas of employee relations.

3.3 The wage levels have been observed to be below the market average. For a company with an exceptionally high rate of profitability, observers find this unacceptable.

3.4 The company has also been accused of providing poor working conditions. Concerns of inequality in the work place have been rife. There is also the question of workers being coerced to avoid joining labour unions. Cases of imprisonment in the work place have also been raised.

3.5 When compared to competitors such as Tesco and Costa, Walmart is lacking in terms of wage levels and in terms of provision of a good working environment.

3.6 The low wage approach can be said to be crucial to Walmart strategy that enables it to compete effectively in the market. By keeping their costs low, they are able to charge less for their products.

4.0 Recommendations

4.1 Walmart should not bow to pressure and increase their wage expenses arbitrarily. The key to survival is the low cost low price strategy and this should be maintained. Any additions to the wages should be accompanied by a commensurate improvement in productivity.

4.2 Employee rights should be respected at all times. The company should seek to engage provide freedoms of movement in a manner that makes employees feel comfortable.

4.3 Equality and transparency of reward systems make a big difference in promoting higher levels of productivity. Walmart should promote these principles and reduce cases of dissatisfaction and employee turnover.

4.4 Long term prosperity can only be achieved in organisations when stakeholders are engaged in consistence with the arguments of the stakeholder theory (Hemmati, et al, 2002). The company should seek out ways of engaging labour unions constructively and turn them into partners for ensuring the long-term prosperity of the company and not adversaries out to harm them.

References

Hemmati, M., et al., 2002. Multistakeholder Processes for Governance and Sustainability: Beyond Deadlock and Conflict. London: Earthscan

Human Rights Watch, 2012. US: Wal-Mart Denies workers Basic Rights. (Online) Available at: http://www.hrw.org/news/2007/04/30/us-wal-mart-denies-workers-basic-rights (Accessed 19 February 2012)

Keil, S. R., Spector, L. C., 2005. The Impact of Walmart on Income and Unemployment Differentials in Alabama. Review of Regional Studies. 35 (3), pp. 336-355

Labour Issues, 2012. Walmart’s Track Record. (Online) Available at: http://www.walmartworkforce.org/?p=301 (Accessed 19 February 2012)

OneSource, 2012. Wal-Mart Stores Inc. (Online) Available at: http://globalbb.onesource.com/web/Reports/ReportMain.aspx?KeyID=30257&Process=CP&FtrID=UNIFIEDSUMMARY (Accessed 19 February 2012)

Walmart, 2010. Did Walmart Wake Up: How strategic management handled walmart’s reputation. (Online) Available at: http://www.awpagesociety.com/wp-content/uploads/2011/09/Wal-Mart_CaseStudy.pdf (Accessed 19 February 2012)