Business strategy and HR policies at Wal-Mart stores
�For your organisation, or another organisation that you know well, familiarise yourself with the
organisation�s business strategy and existing HR policies.
�Identify your chosen organisation and specify the HR policies that you will evaluate.
�Critically evaluate the HR policies for their alignment with the organisation�s business strategy.
�Recommend changes to specific aspects of HR policies and/or practices based on your analysis
and provide a justification for each recommendation.
Business strategy and HR policies at Wal-Mart stores
When business executives develop business strategies and plans, in most instances
they leave out a vital aspect of these business plans. The human resources (HR) personnel are
BUSINESS STRATEGY AND HR POLICIES AT WAL-MART STORES 2
usually not asked to take part in the process of planning. When finance, production, sales or
marketing departments are required to execute their tactics and strategies for the next
financial year, they often find themselves with team members or employees who do not
possess the right abilities. It actually makes sense to align business strategies with the human
resources and this has been found to help organizations attain their corporate goals (Binyamin
& Carmeli, 2010). This paper provides a critical evaluation of the human resources (HR)
policies of Wal-Mart stores for their alignment with the business strategy of Wal-Mart. The
paper also provides a recommendation of changes to specific facets of human resources
policies and human resources practices basing upon the analysis. A justification for the
recommendations is provided.
Chosen company: Wal-Mart Stores
The chosen company is Wal-Mart supermarket chain. This retailer has a workforce of
over 2 million globally and the corporation is one of the biggest firms worldwide not just
based on the number of workforce, but also based on market capitalization. The firm was
founded by Sam Walton and has its head offices in Bentonville, Arkansas (Reuters, 2016). At
the moment, this retailer has nearly 8,000 retail stores in about 27 markets worldwide. In the
United States, Wal-Mart is recognized as the biggest grocer and retailer. The retailer offers a
wide variety of services and goods at everyday low prices. It carries out its business
operations through 3 segments: Sam’s Club; Wal-Mart International; and Wal-Mart United
States (Halzack, 2015). Wal-Mart competes with BJ’s Wholesale Club and Costco Wholesale
in America.
Human Resources policies to evaluate
Compensation and benefits: compensation is an essential aspect of employment and
an integral policy of human resources management. Compensation is not just about what a
BUSINESS STRATEGY AND HR POLICIES AT WAL-MART STORES 3
person is paid as it includes more than just salary. It also includes indirect and direct rewards
as well as benefits which the worker is given in return for his or her contribution to the
company (Holbeche, 2013). Career development and training: training and development are
functions of human resources management which comprise leadership training, job skills
training, orientation of new employees, as well as professional development (Buller &
McEvoy, 2012). Employee relations: employee relations refer to the human resource
management practices which ensure staff members are productive and happy. Tooksoon
(2011) reported that employee relations offers policy development, employee recognition, in
addition to all sorts of problem solving. These three are the HRM practices that would be
evaluated in relation to Wal-Mart.
Wal-Mart’s business strategy – Low-cost leadership
This retailer has adopted the cost-leadership strategy as its business strategy, and its
slogan, everyday low prices, is globally known. Ever since its founding in the early 1960s,
the mission of this retail giant has been to save its clients cash and enable the customers to
live better (Ferguson & Reio, 2010). By adopting a low-cost strategy, this corporation seeks
to be the low-cost leader in the retail sector. The retailer imports a large amount of products
cheaply from low-cost regions particularly China. By procuring goods from suppliers at a
cheaper cost than its competitors, Wal-Mart is able to pass this lower cost to its customers by
selling goods in its retail stores at comparatively cheaper prices than other retailers; although
it makes marginal profits from each product. However, because it sells in high volume, it is
able to make significant profits (Halzack, 2015).
HR policies aligned with Wal-Mart’s business strategy
Compensation and benefits: Wal-Mart’s HR management compensation and
employee career development practices are centred on reducing costs. As a case in point, as
BUSINESS STRATEGY AND HR POLICIES AT WAL-MART STORES 4
part of the giant retailer’s cost leadership generic strategy, this firm always seeks to reduce
spending for HRs (Halzack, 2015). Therefore, the HR management (HRM) at the company
focuses on ensuring that its compensation packages are actually minimized, though not
reduced to the point where it may compromise the employees’ job performance. It has been
reported that Wal-Mart is an employer that exploits employees with extremely with low
salaries and pay (Alfes et al., 2013). Wal-Mart is generally well-known for low wages and
low prices. The low pay for its workers is often criticized for being inadequate to support the
needs of the employee. At the moment, Wal-Mart pays an hourly minimum wage of $7.25; an
amount that is considerably lower than the $9.93 national average (Binyamin & Carmeli,
2010). Even so, the retailer is planning to increase the minimum wage for its workers to at
least $10.00.
Wal-Mart retailer recognizes that it cannot really attain its mission or realize its
business strategy without the support of its millions of associates/employees. As such, Wal-
Mart has various programs for the benefit of its staff members. For example, all employees
along with their families are currently offered health coverage. Besides comprehensive health
insurance plans, other benefits the company offers its employees include associate discounts,
associate stock purchase plan, as well as company-matched 401(k) contributions to six
percent of salary (Jiang et al., 2012). The retailer is able to maintain employee motivation by
means of these employee benefits. It is worth mentioning that these employee benefits
address the HRM objective of retaining employees and reduce turnover costs.
Career development: in addition, Wal-Mart has in place career development
strategies which are aimed at minimizing employee turnover through maximizing the level of
fit between staff members and their duties. These HRM considerations are crucial in ensuring
that the employees at Wal-Mart are at all times adequate in supporting Wal-Mart’s continued
international expansion (Halzack, 2015).
BUSINESS STRATEGY AND HR POLICIES AT WAL-MART STORES 5
Employee Relations: employees at Wal-Mart are recognized as associates rather than
workers. They are referred to as associates and there are in excess of 2 million of them. The
company has realized that the human resources function is one of the most vital throughout
the organization. For this reason, Wal-Mart’s HR department treats the company’s workers as
a vital aspect of the business, and by calling them associates, the employees are inclined to
feel as being part of the organization and actually become motivated to give their best even
when the pay is low (Alfes et al., 2013). Furthermore, the retailer gives recognition to
employees who perform highly. This helps to motivate and retain workers and avoid costs
associated with employing new workers thereby keeping costs low.
Recommendations
All in all, the human resource management of Wal-Mart has done a really good job
aligning the HR practices to the company’s overall low-cost business strategy which focuses
on ensuring everyday low prices. However, it can still do more. As described above, Wal-
Mart’s HR department has strived to align only a few HRM practices with the company’s
strategy; career training and development; compensation and benefits; and employee
relations. However, the HR department can do more to align HR with business strategy.
Therefore, it is recommended that Wal-Mart’s HR department should adopt the following
cost saving in line with the retailer’s cost-leadership strategy: use subjective performance
measures extensively; apply consistent policies to decrease the costs of employee turnover;
and carry out effective training programs aimed at improving the effectiveness and efficiency
of employees (Holbeche, 2013). Moreover, the HR department should utilize performance
evaluation as a control device; ensure that job descriptions are explicit; provide detailed work
planning; give emphasis on job-based salaries/wages; emphasize on job-specific training; and
emphasize on technical skills and qualifications (Buller & McEvoy, 2012).
BUSINESS STRATEGY AND HR POLICIES AT WAL-MART STORES 6
These recommendations are suitable for Wal-Mart since they will ensure that all of
the HR practices at Wal-Mart are truly aligned with the cost leadership business strategy and
help achieve corporate goals and objectives. When Wal-Mart’s HR is properly aligned with
the company’s business strategy, the HR department could actually contribute to successful
strategy and the company’s fiscal bottom-line. Proper alignment will mean that the HR
department of Wal-Mart ensures that the company’s human assets are effectively aligned
with business strategy adopted by the company’s top leadership which would allow the
company to attain a competitive advantage over its competition.
Conclusion
To sum up, this paper has exhaustively evaluated the human resources policies of
Wal-Mart stores for their alignment with the firm’s business strategy. The findings of the
evaluation reveal that on the whole, Wal-Mart’s HRM has been rather effective in aligning its
HR practices to Wal-Mart’s low-cost business strategy that is focused on providing everyday
low prices. Several recommendations have been made that if adopted and implemented,
would give this retailer a competitive advantage over other retailers.
References
Alfes, K., Shantz, A. D., Truss, C., & Soane, E. C. (2013). The link between perceived
human resource management practices, engagement and employee behaviour: a
moderated mediation model. The international journal of human resource
management, 24(2), 330-351.
BUSINESS STRATEGY AND HR POLICIES AT WAL-MART STORES 7
Binyamin, G., & Carmeli, A. (2010). Does structuring of human resource management
processes enhance employee creativity? The mediating role of psychological
availability. Human Resource Management, 49(6), 999-1024.
Buller, P. F., & McEvoy, G. M. (2012). Strategy, human resource management and
performance: Sharpening line of sight. Human resource management review, 22(1),
43-56.
Ferguson, K. L., & Reio, T. G. (2010). Human resource management systems and firm
performance. Journal of Management Development, 29(5), 471-494.
Halzack, S. (2015). Wal-Mart to raise pay for 500,000 workers . The Washington Post.
Holbeche, L. (2013). Aligning human resources and business strategy. Albany, NY: Oxford
University Press.
Jiang, K., Lepak, D. P., Han, K., Hong, Y., Kim, A., & Winkler, A. L. (2012). Clarifying the
construct of human resource systems: Relating human resource management to
employee performance. Human Resource Management Review, 22(2), 73-85.
Reuters. (2016). Profile: Wal-Mart Stores Inc (WMT.N).
