Discuss what makes Wel-Mart successful and grow?
IV). Wel-Mart is an American corporation that is based in New York and has over 8000
branches across the US and neighboring countries. Wel-Mart is a retailing multinational
corporation that hosts over hundred million shoppers every week and has over two million
employees worldwide. The success of the company can be largely attributed to its successful
implementation of performance management system that makes it possible to manage such a
huge number of employees effectively (Bhave & Brutus, 2011). Performance management
system has made it possible for Wel-Mart to adopt competitive strategies that has propelled its
performance to the highest standards possible. However, the company’s competitive strategy has
not been aligned with its performance management systems (PMS). These means that the
company’s competitive strategy is also not connected to the Human Resource core functions of
staff motivation, training, development and compensation strategies. To maximize its potential,
Wel-Mart must improve its performance management strategies (Pulakos & O’Leary, 2010). The
company must exploit all the opportunities that come along with organized and effective
performance management systems (PMS).
I). Wel-Mart needs to create an inter-link between the various components of performance
management with employee goals together with the organizations strategies. The application of
PMS depends on the purpose and objective of the company strategies. Performance management
systems that have been designed to enhance decision making purposes and also for relative
employee development utilizes the information retrieved from the PMS feedback systems as a
PM.ASS.W6 & W7 2
basis for promotions, pay increases, transfers, reduction or even terminations on inefficiency
grounds. While if the PMS is purely meant for employee training, mentoring and skill
development activities then the appraisal information will be utilized only for that purpose. The
role of the human resource department in creation of value cannot be ignored and the only way
to gain competitive advantage is by linking its core functions to compensation and development
of employees. The resource-based view provides adequate theoretical foundation that links
human resource management together with performance. Resource-based view (RBV)
contributes massively to the development of human and social capital in an organization (Guest,
2011). Wel-Mart may achieve a higher competitive advantage if it incorporates the RBV in its
systems as its employee compensation package form a large part of its total revenue expenditure.
The major advantage of incorporating RBV models in performance management is that they
include most of the factors that are generally associated with success like leadership, technical
and interpersonal skills. Competency levels besides communicating the important issues in an
organization, they also provide the basis for developing human resource systems by integrating
performance management functions with the key HR functions like staffing, promotion, training
and succession planning.
III). The efficiency of performance management systems can be evaluated by its effectiveness
especially in communicating the competency levels required from different departments and the
employee behaviors in those departments. The other measure is the application of Line of Sight
(LOF) (Buller & McEvoy, 2012).
Wel-Mart can apply competency models as a way of measuring performance management.
Competency models practically articulate the skills, knowledge, characteristics and other abilities
that are instrumental in assisting the organization in its effort to achieve its goals. Job analysis
PM.ASS.W6 & W7 3
techniques can also be applied in performance measurement. Job observations, surveys and
interviews can be applied in identifying the key competencies that may define the measurement
units which are associated with critical work behaviors or tasks in organizations (Broadbent &
Laughlin, 2009, pg. 285).
II). The mission, vision and values of the organization should be aligned with the company’s
strategy. The performance management system should also be modeled along the same
principles that reflect the object and mission of the organization (Ferreira & Otley, 2009). The
decision to go global may affect a company’s performance management strategies especially if
the organization is unprepared. The challenges and the competitive nature of international
business require a high level of organization and competent performance management systems.
Performance management has always been treated with suspicion and fear among the managers
and the employees alike. To employees, performance management brings into the organization a
yardstick that can be used to judge or rate the performance of employees. Hence it creates a
frightening experience for some employees who are lazy and incompetent. Managers regard
performance management as a tool that can destroy the trust that the employees have placed in
them and the processes may damage their existing relationship (Jirjahn & Poutsma, 2013).
The relationship or link that performance management has with strategic planning is the link
between the PMS and the company’s strategic plan than synchronizes the needs of individual
employees and the company’s goals and objectives (Pulakos, 2010). Performance appraisals
form the basis of employee training and compensation. These processes are implemented
through training competencies known as raters. But according to Kaplan and Norton (2004) the
last and the most important high-level strategy is the daily schedule of operations that occur after
PM.ASS.W6 & W7 4
linking individual employee reward programs to the BSC. Wel-Mart would be able to motivate
and also monitor the progress and performance of its entire workforce. Performance Related Pay
(PRP) works effectively where system evaluations provide valuable feedback to the HR
department for revaluation and implementation (Kumari & Malhotra, 2012).
V). Finally, the major processes are fivefold; performance planning, feedback evaluation,
employee input, performance evaluation and performance review (Pulakos, 2010). These
processes are intertwined with each other such that the feedback process can only be relevant if
all the input from the employees are evaluated and reviewed hence the results are channeled for
feedback evaluation where critical decisions like employee appraisals and recommendations take
place. Other determinants like the ratings also apply in the process hence making it effective and
successful. These processes can be summarized into just three processes i.e. Objective setting for
the performance management, task performance and development and performance review.
Financial or extrinsic rewards in performance management relate to merit and which depends on
performance when it’s linked to employee compensation. In PM the decisions on reward
allocation depends on the appraisals from the feedback system. Non-financial or intrinsic reward
systems includes other forms of rewards that may include development through training,
recognition, career guidance and improved quality of working life. Application of non-financial
rewards to performance management is challenging as employees have to be consulted on what
they value unlike when dealing with financial rewards consultation is not necessary (Tolan,
2011). Performance measurement is a tool that is utilized in performance management to
evaluate the performance of individual employees when conducting appraisal for employee
recommendations. Performance measurement techniques are critical to the success of the
performance management process as they determine the nature of feedback that the system
PM.ASS.W6 & W7 5
generates. Processes like BSC are applied to ensure that the PM system is effective and
Bhave, D.P., & Brutus, S., 2011, A macro perspective to micro issues, Industrial and
organizational psychology, 4(2): 165-168
Broadbent, J. & Laughlin, R., 2009, Performance Management Systems: A conceptual Model,
Management Accounting Research, 20, 283 – 295.
Buller, P.F. & McEvoy, M.G., 2012, Strategy, Human Resource Management and Performance:
Sharpening Line of Sight, Human Resource Management Review 22 (2012) 43-56
Ferreira, A. & Otley, D., 2009, The Design and Use of Performance management Systems: An
Extended Framework for Analysis, Management Accounting Research. 20, 263 – 282.
Guest, D.E. (2011) Human Resource Management and Performance: Still Searching for answers,
Human Resource Management Journal, 21(1) 3-13.
Jirjahn, U, & Poutsma, E., 2013, ‘The Use of Performance Appraisal Systems: Evidence from
Dutch Establishment Data’, Industrial Relations, 52, 4, pp. 801-828, Business Source
Complete, EBSCO host, viewed 26 June 2015.
Kaplan, R.S. & Norton, D.P., 2004, The strategy Map: A Guide to Aligning Intangible Assets,
Strategies and Leadership, Vol. 32, No. 5, pp. 10 – 17.
PM.ASS.W6 & W7 6
Kumari, N, & Malhotra, R., 2012, ‘Effective Performance Management System For Enhancing
Growth’, Global Management Journal, 4, 1/2, pp. 77-85, Business Source Complete,
EBSCO host, viewed 26 June 2015.
Pulakos, E.D. & O’Leary, S., 2010, Why is Performance Management Broken, PDRI, A
PreVisor Company, Retrieved July 2, 2015 from
Pulakos, E.D., 2010, Performance management: A roadmap for developing, implementing and
evaluating performance management systems, Society for Human Resource
Tolan, M., 2011, ‘Developing Performance Appraisal Systems for Academicians’, Proceedings
Of The Northeast Business & Economics Association, pp. 474-477, Business Source
Complete, EBSCO host, viewed 26 June 2015.