Walmart has decided to cut hundreds of cooperative employees/layoff in an

attempt to restructure, citing ‘inflation’ as the primary reason for company’s falling
profit. The company warned about the drop in profits in current quarter and fiscal
year a week earlier.

Around 200 jobs are being axed. While recruitment is still being carried in some
parts like supply chain, e-commerce, health and wellness, advertising sale etc.
Where parts like merchandising, global tech, real estate team are adversely
affected.

Company claims that higher prices for food and fuel are causing shoppers to shy
away from discretionary shopping which yield more profit for the retail giant.
We can relate this article to the topic of forecasting.

Forecasting is the process/technique where we use historical data as our main input
to predict the company’s/business’ future trends.

Steps of forecasting (Walmart’s case)

1. Identify the firm’s business strategy

Walmart believes in keeping the price as low as possible, so that the
products are easily accessible to the entire population. Walmart adopts cost
leadership business strategy. It seeks to serve customers with the most
options for products at the best deals, along with the option to pick the
channel which will enable their purchase the most convenient.

2. Identify the firm’s talent philosophy

There are roughly 2.3 million employees working in Walmart who operate
the stores, e-commerce business, online stores, logistics and other customer-
facing services. At Walmart every employee’s voice is kept into
consideration and they have a major contribution to the success of the
company.
At Walmart, every employee is expected to conduct themselves in a way that
upholds the company’s four basic values: "Service to the Customer,"
"Respect for the Individual," "Strive for Excellence," and "Act with
Integrity."
Frontline leaders are expected to make sure that the values are maintained
throughout the company.
 They have also recently created a place called “Walmart Academy”, where
front-line hourly supervisors, department managers, and assistant managers
go through two-to-six week training programs.

3. Conduct workforce analysis

 Forecast the firm’s demand for labour
Due to inflation, costumers have backed off from shopping which has
led to the drop in the sales of Walmart, revenues have decreased,
profits have dropped, customers are spending mostly on basic
necessities and avoiding the purchase of high-margin commodities.
To sell the products which is stocked up at the inventories, the
company will have to cut down the prices of the products.
One of the tools to internally forecast labour demands includes
‘decreasing staffing levels during restructuring’, the Walmart case is
an example of the same. The company as warned about the fall in
profits in current quarter and fiscal year, hence there is no external
demand of labour at the moment.

 Forecast the firm’s labour supply

Strategic staffing requires firm to be cognizant of the availability of

labour in the firm as well as the labour markets. Information about
number and quality of employees is of utmost importance especially
during restructuring of firm as in the case of Walmart.
4. Identify gaps
Studying the labour supply with respect to the forecasted revenue of the firm
Walmart came to a conclusion that there is a labour surplus in the firm and it
is in a dire need for a ‘restructuring’ which requires downsizing for a strong
future of the company.

5. Action plan to address the forecasted talent gaps

The company decided to lay-off employees to bridge the gap between supply
and demand of labour after the company reported hopeless financial outlook
for the fiscal year.
Critique-
It is often seen, particularly among retail businesses that labor cost becomes
easily vulnerable when a cost cutting is required. But this move has some deeper
impacts that needs to be taken into consideration

 Morale damage- Layoff damages the morale of employees even the

morale of employees who survived the layoff is impacted. A sense of
uncertainty grows among the workforce which also hurts the
reputation of the company.

 Psychological impact- Employees that have been laid off experience

self doubt and lack of trust against the firm. They might develop
frustration too. Layoff if not handled carefully might lead to disputes
and protests that may be violent in nature.

 Even the employees who don’t lose job in mass layoff start
developing distrust for the organization and start looking for other
opportunities. This hampers the productivity of the firm.

ALTERNATIVES

Layoff can be avoided in situations like this in which Walmart currently is . As the
spokesperson of Walmart clearly stated that hiring is being actively carried out in
some departments of the firm while some parts have been affected due to
inflation. Instead of laying off a better solution would have been ‘retraining’
employees to fill jobs in other departments of the firm that would help to bring
balance in the labour supply and demand.

Being the largest retail business in the world in terms of employee base, Walmart
could have found a way to accommodate employees in other departments
instead of opting for abrupt mass layoff.