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Wal- Marts

World

OB case Study

Rahul Tharwani, 726

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Case SummaryAs the worlds largest retailer, its difficult for Wal -Mart to maintain its corporateculture across all of its 4000 stores, 1.5 billion employees. In the past, Sam Waltonwho is the Wal-Mart founder started the Saturday Meeting, which was helpful forWal-Mart to operate the company and maintain its corporate culture, close-knit,

solidarity, efficient, high formalization, frugality. However, with the development ofWal-Mart, tremendous attendance at the Saturday Meeting made it bored and difficultto maintain its culture. Also the increased public scrutiny brings to the biggestobstacle to Wal- Mart being the worlds largest company. For example, controversies over Wal- Marts a nti-union position, its hiring and promotion practices, and itstreatment of employees make it increasingly difficult for Wal-Mart to maintain itsfriendly, affordable image. So how to deal with the negative things may be the keyproblem for Wal-Mart to enjoy continued success.

Wal- Marts Culture The seven primary characteristics are: innovation and risk taking, attention to detail,

outcome orientation, people orientation, team orientation, aggressiveness and stability.Then let me use the seven characteristics to capture the essence of Wal- Marts culture.

Innovation and risk taking. Wal-Mart is encouraging employees to be innovativeand take risk. Risk comes with innovation, but people don't giving up innovationfor the unknown risk. Attention to detail. Many companies can keep advantage in the market because of

paying great attention on details. So does Wal-Mart, such as the greeter'sperformance while smiling ,how many teeth will be exposed. Outcome orientation. Management focuses on the results or outcomes rather on

the processes to achieve those outcomes. But if too much paying attention onoutcome can result some bad thing, because the process sometimes is important,

and never should be ignored. People orientation. Wal-Mart is a service organization, and the employees mustget along well with customers. Only when all employees know how themanagement decisions come from and affect, they can do their job well. Team orientation. In Wal-Mart, employees don't call staffs rather partners. Every

employee can take part in the management decision. Team decision makes manygood ideas to make progress of Wal-Mart's feet. Aggressiveness. Wal-Mart's leader will ask why they don't have them when he

found some products are selling well in other competitors' stores, and at once asktheir stores to sell this kind of products. The leaders make decisions quickly, andtake actions fast. Stability. In Wal-Mart, there are a lot of products coming or going into his store,

so it doesn't keep stability in the sale plans for a long time. When some productsare selling in other stores, Wal-Mart will get the information at first time, andmanagers have a meeting together and makes decision to change the sale plan.The more employees accept the organization's key values and the greater theircommitment to those values, the stronger the culture is. So Wal- Marts culture is strong. The strong culture of Wal-Mart has some functions to contribute to its longtermperformance.

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Firstly , Wal- Marts managers respect everyone, and think abouttheir advices. So employees' working hard can be praised and rewarded, and theyform a positive value concept. Secondly , strong culture can condense the employees.Wal- Marts frugality culture affect many its employees. Thirdly, strong culture leadsto organizational goals. Fourthly , it is more helpful to standardize employees,because it is intangible and informal. Fifthly , it moderates the relationship in Wal-Mart between people and people, relationship and relationship, people andrelationship.

Question for discussion

1. Based on this case, would you characterize Wal- Marts culture as strong or weak? Why? Howmight Wal- Marts culture contribute to its long -term performance?

2. As an upper manager of Wal- Mart, what steps could you take to either maintain or enhance theculture of Wal- Mart?

3. What are some aspects of Wal- Marts culture that has preserved, but yet may bedisadvantageous in todays economy?

4. How might Wal- Marts negative press affect employee morale, job satisfaction, andorganizational commitment? As a manger, what step would you take to improve employeeattitudes?

5. Characterize Wal- Marts organizational structure. Is it mechanistic or organic? Does it have ahigh degree of centralization or decentralization? How might Wal- Marts struct ure affect itsemployees in terms of their productivity and job attitudes?

Each company has a unique culture and its own personality. Each company has its own folklore

that illustrates company values, and its own ways of dealing with problems, making decisions,

doing things. Ingrained in Wal-Mart culture, for example, is dedication to customer satisfaction,

pursuit of low costs (nurtured by stories of the founder's frugality), and employee empowerment

Wal-Mart culture emphasizes religion, patriotism, a classless collective identity, science,

rationality, ecology, progressiveness, and low costs. The companys values are embodied in the

life and myth of Sam Walton

The strong culture of wal mart lies in its three basic beliefs

1. Respect for the Individual

2. Service to the Customer

3. Strive for Excellence

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Respect for the Individual

Every associate's opinion is respected. Managers are considered "servant leaders" who help new

associates realize their potential through training, praise and constructive feedback. An "open door"

management philosophy encourages associates to raise questions and concerns in an open atmosphere.

Service to the Customer

The customer is the boss. Everything possible is done to make shopping at Wal-Mart and SAM'S CLUB a

friendly, pleasant experience. The "Ten-Foot Attitude" means that associates are to greet each person they

see. The "Satisfaction Guaranteed" refund and exchange policy allows customers to be fully confident of

Wal-Mart and SAM'S CLUB's merchandise and quality.

Str ive for Ex cell ence

Wal-Mart and SAM'S CLUB associates share an exceptional commitment to customer satisfaction. At the

start of each day, store associates gather for the Wal-Mart or SAM'S CLUB cheer and review sales from

the previous day, as well as discuss their daily goals. "The Sundown Rule" requires a continual sense of

urgency, with questions asked in the morning answered before the end of the day.

One of the key factors to keep business culture is to define the culture you want to create from the

beginning, and integrate it into how you hire people, how you treat employees, the type of customer

service you provide, and the general environment of your organization.

As you grow it is important to integrate old employees who understand your values, concepts, and culture

with the newer employees who will learn to implement them and bring some of their own culture.

To ensure a culture that lasts through growth and change, the upper managers should take following steps

Define the culture and how it is different from other concepts.

Develop a strategic plan for implementing that culture.

Make sure employees at all levels know what the culture is and that they buy into it.

Have seasoned employees train new employees and develop a system where new employees learn

the written and unwritten parameters of the culture.

Constantly evaluate progress and success as you grow.

Be open to change and inform employees and customers of any changes and how they will

benefit.

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In spite of being generally applauded for its culture, Wal-Mart was also severely criticized for certain

aspects of its culture.

Overtime Woes

Although Wal-Mart had a very strict policy on overtime and the company's rules forbade it, it was

observed that, at most of the stores, employees worked between 5 and 15 hours overtime per week.

(The company had a 40 hour work week). Since the company was very strict about not allowing

overtime (there were instances where store managers who paid overtime were demoted and in cases,

even dismissed), it was usually done on an unofficial basis.

Wal-Mart has been criticized for its policies against labor unions. Critics blame workers' reluctance to

join the labor union on Wal-Mart anti-union tactics such as managerial surveillance and pre-emptive

closures of stores or departments who choose to unionize

With close to two million employees worldwide, Wal-Mart has faced a torrent of lawsuits and issues

with regards to its workforce. These issues involve low wages, poor working conditions, inadequate

health care, as well as issues involving the company's strong anti-union policies. Approximately 70% of

its employees leave within the first year.

The key to unraveling the mystery of a morale slump is to determine the cause or source of the

decreased morale. Some of the usual suspects are:

a negative event, such as a firing,

a promotion of an employee when others are overlooked, or

Arguments between staff and/or management.

Steps to Improving Morale

Ask what the cause of poor morale is and what the employee believes can be done to turn it around.

Obtaining information directly from the person who's experiencing the poor morale can often be an

important key to solving this mystery.

http://en.wikipedia.org/wiki/Labor_unionhttp://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Wagehttp://en.wikipedia.org/wiki/Occupational_safety_and_healthhttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Occupational_safety_and_healthhttp://en.wikipedia.org/wiki/Wagehttp://en.wikipedia.org/wiki/Wal-Marthttp://en.wikipedia.org/wiki/Labor_union

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Show concern. If the employee believes the boss doesn't care about the task at hand or doesn't care about

the employee, then the employee probably won't care about the task, the employer or the company

Provide appropriate feedback. The employee needs to know two crucial variables in this morale

equation: what's expected of them and how well they're doing. Without this crucial information, theemployee will inevitably overwork or under work, think of their work as above average or below average,

and may stray from achieving the supervisor's goal.

Offer recognition of the employee's efforts. employees can be given performance awards or have their

name mentioned at staff meetings, posted on a bulletin boards or in employee interoffice e-mail to say

that someone did a noteworthy job. All of these simple modes of pointing out individual, team or group

behavior serve as very strong methods of improving productivity, self-worth and morale.

Mechanistic organizations have clear, well-defined, centralized, vertical hierarchies of command,

authority, and control. Efficiency and predictability are emphasized through specialization,

standardization, and formalization. This results in rigidly defined jobs, technologies, and processes. The

term mechanistic suggests that organizational structures, processes, and roles are like a machine in which

each part of the organization does what it is designed to do, but little else.

Mechanistic structures are highly formalized, which simply means that nearly all processes and

procedures have been administratively authorized. The organization considers processes and procedures

out-side these established protocols as variances that must be brought under control. Such formalization is

driven by efficiency; reduction in variance increases predictability, and increases in predictability allow

for improvements in efficiency.

Where as an organic organization is a fluid and flexible network of multi-talented individuals who

perform a variety of tasks. This form of organizational structure was widely sought and proposed, but

never proved to really exist

An organic organization is when the organization exist dependently, meaning that the organization takes

into consideration the needs of their employees. Since in an organic organization the ideas and opinions

of the employees are taken into consideration, this leads to group leadership and teamwork.

From the differentiation of these two structure one can clearly see that wal mart follows a mechanistic

organizational structure.

http://en.wikipedia.org/wiki/Organizational_structurehttp://en.wikipedia.org/wiki/Organizational_structure

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Decentralization also called departmentalization is the policy of delegating decision-making authority

down to the lower levels in an organization, relatively away from and lower in a central authority. A

decentralized organization shows fewer tiers in the organizational structure, wider span of control, and a

bottom-to-top flow of decision-making and flow of ideas.

Centralization is said to be a process where the concentration of decision making is in a few hands. All

the important decision and actions at the lower level, all subjects and actions at the lower level are subject

to the approval of top management. According to Allen, Centralization is the systematic and consistent

reservation of authority at central points in the organization. The implication of centralization can be :-

1. Reservation of decision making power at top level.

2. Reservation of operating authority with the middle level managers.

3. Reservation of operation at lower level at the directions of the top level.

Under centralization, the important and key decisions are taken by the top management and the other

levels are into implementations as per the directions of top level

Hence wal-mart follows a centralized structure

http://en.wikipedia.org/wiki/Decentralized_decision_makinghttp://en.wikipedia.org/wiki/Decentralized_decision_making