A Case Analysis on “Wal-Mart’s World”

SYNTHESIS:

Wal-Mart is the world’s largest retailer. It maintains its corporate culture across all of its 4, 000 stores. Further, it promotes and preserves its image as a small-town store where the customer is king. Wal-Mart maintains its culture by conducting the “Saturday Morning Meeting,” “Merchandising Meeting,” and “15-minute shift-change meeting.” Frugality is also one other aspect of Wal-Mart’s culture.

In the course of Wal-Mart’s growth and success, it was having problems in maintaining its culture. In the late 1980s and early 1990s, attendance at Saturday Morning Meetings grew, which made it impossible for everyone to speak and caused failure to address important concerns regarding the business. Further, there was an increased public scrutiny. It was said that in the past, when Walton and Glass ran Wal-Mart, the company had more tolerance for employee mistakes. Today, in the era of CEO Scott, the company adheres to a stricter policy.

Negative publicity also affected Wal-Mart. Controversies regarding the company’s anti-union position, hiring and promotion practices, and treatment of employees adversely affected its image.

POINT OF VIEWS:

This paper will be studied under the point of view of Lee Scott, the CEO of Wal-Mart as the case was written

STATEMENT OF THE PROBLEM:

What should Lee Scott do, to preserve Wal-Mart culture or to alter it in order to bring back its once positive image?

 

OBJECTIVES:

  1. To identify whether Lee Scott needs to preserve or to alter the organizational culture of WalMart (recommendation)
  2. To identify what the type of organizational culture does Wal-Mart operates (analysis)
  3. To find courses of action that will solve the controversies hovering Wal-Mart and threatening its public image (Action Plan)
  4. To solve the negative publicity fired at WalMart (Action Plan)

 

AREAS OF CONSIDERATION:
Assumptions:

  • Wal-Mart is customer-focused, goal-oriented, and competitive. This can be seen through its culture of retail fanaticism, continuous improvement of efficiency, frugality, and being customer-friendly, which have been developed through its regular meeting-practices.
  • As the current CEO, Lee Scott’s main aims for Wal-Mart are: to drive sales up and to preserve the friendly and affordable small-town store image Wal-Mart carries; anything that hinders his goals is intolerable for him.
  • Because Lee Scott focuses on the company’s status only – its growth and its public image – employees’ welfare is not in his priorities, making him unaware that the constant barrage of negatives he eliminates brought the bad publicities and controversies lately appearing in the news. He asks their people, “What are we doing that allows people to perpetuate these kind of negative discussions about Wal-Mart?”
  • Employees’ treatments, conditions, and concerns are not being discussed in the meetings, causing outpours of grievances outside the company’s walls.
  • As much as the meetings are declared to keep the employees closeknit and participative, it is being done so as a strategy to quickly response to the market competition and to know the stores’ performance numbers.

Analysis:

The case pointed our group to a number of problems, such as the controversies regarding Wal-Mart’s treatment to their employees, its policies and procedures on hiring, promotion and termination, and its practices (ie: meetings). Going over the case, we have agreed that the best way to understand Wal-Mart and to properly address its problems is to first understand how it operates its 4,000 stores in the United States, Mexico, Canada, South America, Korea, China, and Europe despite the differences not just in its area of operation but also the diverse culture of its employees.

With the combination of Robert Quinn and John Rohrbaugh’s Competing Values Frameworks (Organic or Mechanistic Processes and Internally- or Externally-focused) to Kim Cameron and Robert Quinn’s Four Quadrant Model of Company’s Features (Collaborate, Control, Create and Compete) comes the Four Organizational Culture Types, namely: Clan, Hierarchy, Adhocracy and Market (see appendix A). Out of the four, through the definitions, we have identified that Wal-Mart falls under the Market Type.

Like a Hierarchy-company, a Market-company values order, stability and control over flexibility, spontaneity, and discretion. This explains the so many meetings Wal-Mart practices, and as such, Wal-Mart operates effectively under a stable, predictable and mechanistic process than under an adaptating, changing, and organic process.  However, instead of an inward focus like a Hierarchy-company, a Market-company has an external orientation and values competition and differentiation over unity and integration. This means that Wal-Mart is customer-focused; it excel not mainly on its internal processes but on what they can offer differently to their customers.

Understanding the quadrants delivered us to the realization of how and why Wal-Mart operates the way it is, and how and why Lee Scott’s goals, by assumption, excluded its employees, putting the company as a consequence in the bad light. Giving the benefit of the doubt, Scott may not have any clue that his decision and action “to eliminate the constant barrage of negatives” are the causes of it all. As it happen, the company focuses its efforts towards the benefits of the customers, and its culture of retail fanaticism, continuous improvement of efficiency, frugality, and being customer-friendly are all molded to quickly respond to competition.

As a result, little or no attention is being given to the employees, causing outpour of grievances outside the company wall.

 

ALTERNATIVE COURSES OF ACTIONS:

ACA #1: Sustain the organization culture introduced.

PROS

·         The company will be able to maintain and keep their traditions and values

·         Management would not need to put in extra effort and resources in trying to introduce a new culture

·         The company will be able to keep their small family spirit which they have been known for.

CONS

·         The company would not really be able to address the problems that a growing company like them is presenting.

·         Sustaining the organization’s current culture might hinder the organization’s possible growth.

ACA#2: Change the organizational culture

PROS

·         Changing the culture would help them deal with the issues posed by their growing organization.

·         It would make them better equipped and apt for the current times

·         This might give the company a better image more suited to their current stature as a corporation

 

CONS

·         The values and traditions instilled by past leaders might be modified

·         Management would have to put in a lot of time and resources to meet their goal of changing the culture

·         Some members of the organization might be reluctant to change

·         The public image of the company might also be altered.

 

RECOMMENDATION:

The group recommends that ACA #2: Change the organizational culture, be implemented. Lee Scott as a third generation leader is diligently and desperately trying to preserve the friendly small-town store image and atmosphere Wal-Mart carries. However, his methods in preserving and strengthening the organizational culture of Wal-Mart thru a category called “Selection and Socialization” have led to employment and employee complaints that in turn is giving a negative feedback to the Wal-Mart image. It is the analysis of this group that Lee Scott has been doing a great and difficult job in preserving the Wal-Mart image at the same time improving sales, given the fact that the Wal-Mart network is growing at an increasing pace and size. It is this group’s analysis that the organizational culture that the founder of Wal-Mart have made is still effective up to this time and generation, however, this group’s analysis on the organizational culture at that time was made for a small and starting company and have not considered the effectiveness of the organizational culture of Wal-Mart in an expanding large company, not locally but also internationally. Hence, the recommendation to change in the organizational culture does not necessarily means that the current organizational culture of Wal-Mart be stopped and create an entirely new organizational culture to the core but rather to change the organizational culture by adjusting the necessary rituals and workflow in order to cope up and adapt with the current generation and size of the company, while keeping the core values that ensured and made Wal-Mart well known to its customers and the entire world.

 

ACTION PLAN:

Action Plan for changing the culture and addressing the root cause of negative public perception:

“Unfair Labor Practice”

In the case presented, the underlying cause of the negative public perception towards Wal-Mart is the alleged unfair labor practice of the company.  Efforts at improving this image may have been undertaken, (noted in the case that there Lee has been spending time talking about all the negative publicity) but these do not address the root cause directly.  These attempts, at the most, are only temporary solutions to the increasing outrage by most people in the communities where Wal-Mart operates.

To be more competitive, and to ensure the long-term profitability of the enterprise, Wal-Mart should employ a more ethical approach to solving the issues confronting it. Addressing the root cause may not have an immediate effect on the public perception, but it will positively affect the employees, which in turn will make them more productive. This will then translate to better earning for the company.

It is thus recommended that Wal-Mart will adjust the necessary rituals and workflow in order to cope up and adapt with the current generation and size of the company, while keeping the core values.

Improving their image will then be only a by-product of the company’s ethical treatment of their partners in doing business—their workers (employee oriented).

The following are the recommended activities to implement this course of action, and the time corresponding timeframes within which the same should be implemented.

Planned Activities Time Frame
Townhall Meeting to replace Saturday Morning Meeting Immediately
(Townhall Meeting is not always to voice employees opinions, but to hear responses from
officers and public officials. If the
turnout is large, and in particular case
the objective is to give as many people
as possible an opportunity to speak,
then the group can be broken down
into smaller discussion groups. Each
group in the case appoints someone to
summarize discussion of their group)
Discontinue the practice of hiring illegal immigrants as these are worker groups that are most vulnerable to exploitation. Immediately
Formulate and implement a policy that will avoid discrimination in terms of salary increases, promotions, career advancement, and opportunity for further education. Immediately
Implement an improved salary scheme, which at the minimum complies with labor regulations and industry standards. Adjustments to be done over the next
12 months to give the company enough
time to comply with the financial
requirements, without having significant
effect on its operations.
Offer more generous benefits
(e.g. overtime pay, medical
benefits, incentives, housing,
retirement packages,
scholarships, etc.).
Adjustments to be done over the next
12 months to give the company enough
time to comply with the financial
requirements, without having significant
effect on its operations.
Provide better working
environment.
Adjustments to be done over the next
12 months to give the company enough
time to comply with the financial
requirements, without having significant
effect on its operations.
(human right to rest and relax) – working
7 days a week is no no
Sponsor training programs for employees. After a year, priority should be given to
addressing the issues on wages, benefits,
and working conditions.
Organize outreach programs / community work involving employees After a year, priority should be given to
addressing the issues on wages, benefits,
and working conditions.
Open the factories to “unannounced
” audits by independent groups.
After 18 months, to ensure that reforms
undertaken by the company are already
in place.

Should the amount that is being spent for the cost-cutting or pay cuts on the company’s key executives and top management be not sufficient for implementing the activities listed above, slight price adjustments to the merchandise sold may also be made to cover for the cost of implementing the steps outlines. The said increase will be negligible to customers but will have a great impact on the workers that will be benefited by this course of action.

If public perception does not improve despite the company’s efforts aimed at improving the employees’ welfare, press releases and advertisements showing what the company has done may be published or broadcasted. Simultaneously, internal and external feedback mechanisms should be implemented to better meet the objective.

 

 

LEARNING POINTS:

Organizational Culture plays a major role in the life of a company for enduring time. Organizational culture dictates how the employees are connected as a whole and ensures a holistic pace and direction. This sole responsibility of creating and retaining an organizational culture lies in the executives and president of the company. The CEO must envision on how the company should achieve its goals efficiently, and one of the best methods is by making the employees work together harmoniously. In order to achieve such harmony and togetherness in a company, an organizational culture acts as a guide and connection between these employees in which this organizational culture gives a unique persona and identity compared to others. However, creating and implementing an organizational culture is completely different. The CEO, in order to implement an organization culture must execute some actions and frameworks in order to make sure that the envisioned organizational culture be accepted and implemented by the employees. Moreover, upon implementation of an organizational culture, the CEO must take feedbacks from time to time in order to decide whether the said organizational culture can be maintained or change. Maintaining an organizational culture is as tasking as implementing one. At the same time, changing an organizational culture is like implementing a new one. The decision must be from the analysis of the CEO on how the company performs in accordance to its vision and mission.

 

APPENDIXES:

  1. Deshpandé, Farley and Webster Model of     Strengthening Organizational Model

Organizational Culture Types (Racelis, 2005)

 

  1. Formation of an Organization’s Cultures Cultural Change Model (Robbins & Coutler)

 

 

 

REFERENCES:

Organizational Behavior Book

Robbins/Judge, ESSENTIALS OF ORGANIZATIONAL BEHAVIOR, 13e, (Prentice-Hall, 2009)

Racelis, A. D. (2005). AN EXPLORATORY STUDY OF ORGANIZATIONAL CULTURE IN THE PHILIPPINE FIRMS. Retrieved from UP Diliman JOurnals Online: http://journals.upd.edu.ph/index.php/pmr/article/viewFile/1830/1736

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About marvzmartinez
an Engineer

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