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Aligning HR and Business-Level Strategy:
Human Resource Management HR‟s focus is on attraction. employees are key to creation of sustainable competitive advantage Q: For Wal-Mart. retention. and motivation of employees In many organizations. in what way does HR contribute to creation of sustainable competitive advantage? .
5/2/06 .“HR‟s Toughest Challenges for 2006” Ensuring compliance w/ federal and state employment laws Retaining talent in an improving economy Managing performance Developing leadership Dealing w/ rising health care costs Source: Business & Legal Reports.
Listening to HR‟s Critics Quantify people-management results into dollars Adopt “fact-based” decision-making Productivity of workforce Cost of vacant position Cost of keeping bad manager Dollar impact of hiring and keeping top performers vs. 7/31/06 . average ones in mission-critical jobs Not “I think” or “I believe” but “I know” re: cause and effect Causes of turnover What motivates workers to produce more Which HR actions can turn business unit around Source: Workforce Management.
Effective HR Strategy Formulation and Implementation Organizational Strategies Fit Consistency Consistency Fit Environment Consistency HR Strategies Improved Firm Performance Fit Consistency Fit Organizational Characteristics Organizational Capabilities .
Selected HR Strategies That Fit Porter‟s Three Major Types of Business Strategies Business Strategy Overall cost leadership Common Organizational Characteristics • Sustained capital investment and access to capital • Intense supervision of labor • Tight cost control requiring frequent. detailed control reports • Low-cost distribution system • Structured organization and responsibilities • Products designed for ease in manufacture HR Strategies • Efficient production • Explicit job descriptions • Detailed work planning • Emphasis on technical qualifications and skills • Emphasis on job-specific training • Emphasis on job-based pay • Use of performance appraisal as a control device .
or creative people.Selected HR Strategies That Fit Porter‟s Three Major Types of Business Strategies Business Strategy Differentiation Common Organizational Characteristics • Strong marketing abilities • Product engineering • Strong capability in basic research • Corporate reputation for quality or technological leadership • Amenities to attract highly skilled labor. scientists. HR Strategies • Emphasis on innovation and flexibility • Broad job classes • Loose work planning • External recruitment • Team-based training • Emphasis on individualbased pay • Use of performance appraisal as development tool .
OF EES* 39 508 3.500 $279.747 100. Wal-Mart” NO.700 39.500 14.100 89.203 63.700 15.400 21.800 * Full-time ** Including bonuses Data: Richard Drogin .100 13.500 105.800 177.“Women vs.731 1.987 JOB REGIONAL V-P DISTRICT MNGR STORE MANAGER ASST MNGR MNGT TRAINEE DPT HEAD SALES ASSOC CASHIER % OF WOMEN 10% 10 14 36 41 78 68 93 AVERAGE ANNUAL EARNINGS** IN 2001 ----------------------------MALE FEMALE SALARIES SALARIES $419.400 239.800 23.200 23.003 50.500 16.241 18.300 37.300 22.
but until current suit. e. experience. and other factors to make raises more uniform Key for Wal-Mart is making processes fair without losing culture that makes it special Single mother Asst Mngr involved in litigation moved nine times in eight years across three states Source: Fortune.“Women vs.g. convert them to principles: respect for individual. customer service. trust But practices also may create barriers. Co had never posted openings for mngt training positions Another aspect of culture which may create barrier is willingness to move for the job Not the Wal-Mart way. 7/21/03 . and imperative to buy and sell at lowest price possible Wal-Mart famous for promotion from within – more than two-thirds of managers started as hourly Ees Hourly job posted within stores.. job posting Bring Ees into org. excellence. autonomy. Wal-Mart” Wal-Mart culture built on inspirational leadership. thought to be too bureaucratic… Wal-Mart way was to trust that store mngrs will promote those who merit promotion Co now also developing formula for pay increases based on evaluation ratings.
cf. mngrs may be entitled to overtime if more than 40% of their time is not spent supervising or if jobs don‟t include decision making Wal-Mart tries to hold labor costs to 8% of sales. RadioShack. esp nighttime asst mngrs (“glorified stockers”) RadioShack mngrs required to work at least 52 hrs/wk Alleged that to stay within budget. 9-10% on average at other large-store retailers Suits claim little difference between job duties of hourly ees and asst mngrs. Wal-Mart district mngrs have encouraged store mngrs to send hourly ees home before shift is over. then asst mngrs (who are required to work at least 48 hrs/wk) may stay on job for as much as 75 hrs/wk to cover Portion of store mngr compensation is annual bonus pegged to store profit Source: Wall Street Journal.“Big Retailers Face Overtime Suits As Bosses Do More „Hourly‟ Work” Retailers such as Wal-Mart. 5/26/04 . Dollar General facing lawsuits accusing them of using low-level managers to do work of non-managers in order to avoid paying overtime Under FLSA.
1/14/05 .“In Ad Blitz. Wal-Mart Counters Public Image as Harsh Employer” Wal-Mart bought full-page ad space in January 2005 in more than 100 newspapers nationwide Co said ads are attempt to set record straight on labor issues “It‟s becoming clear that we have to do more and be more aggressive in telling our story.com Amid criticism of labor practices.walmartfacts. in 2004 Co initiated new wage structure to increase pay of some hourly Ees. The purpose is to be proactive and initiate debate.” New web site: www. created 40-person compliance team to ensure labor laws adhered to and diversity goals met Also linked percentage of executive bonuses to certain diversity goals Source: Wall Street Journal.
19% for grocery chains w/ similar number of stores Industry‟s annual turnover costs can exceed entire profits by more than 40% Gallup survey found that over one-month period. 12% for most supermarkets Annual turnover rate is 6%. 1/24/05 . cf. shoppers who were emotionally connected to supermarket spent 46% more than shoppers who were satisfied but lacked emotional bond w/ store Source: Fortune.“The Wegman‟s Way” Wegman‟s labor costs run between 15% and 17% of sales. cf.
(as of 10/02) One U win was butcher‟s dept in TX store. which was disbanded two weeks after election Co announced plans to phase out butchers and use prepackaged meat in 180 stores. why would they need a third party to represent them?” Co gives managers 56-page guide. “The Manager‟s Toolbox to Remaining Union Free” “It‟s important for you to be constantly alert for efforts by a union to organize your associates” .S. said timing of decision was a coincidence When Wal-Mart acquired Woolworth‟s operations in Canada. but not the seven that were unionized Wal-Mart EVP of People: “Where associates feel free to communicate openly with their management.Current Developments in Union Organizing Wal-Mart has won all but one of seven union votes in U. it bought 120 stores.
and thanks to its contracts with the UAW. Wal-Mart is doing the exact opposite. Nowadays it is the nation‟s largest corporate employer. but it raised the standards for all workers. 7/27/05 .68/hr Organizing director for UFCW UFCW counters that it‟s only $8. and it is lowering standards for everyone. it not only set the standards.Current Developments in Union Organizing “In the 1970s.34 Wal-Mart spokesman says BLS data inflated by overtime. General Motors was the nation‟s largest corporate employer.” Wal-Mart says its average hourly pay for FT ees is $9. and that Wal-Mart‟s pay scale is competitive Source: CNNMoney.23/hr (based on independent statistical analysis) BLS estimates average hourly wage for all non-supervisory retail ees is $12.
New York Times. LR specialists were flown in on Co jet that afternoon Other complicating factors include turnover. now UFCW organizer. IN store (N of Louisville) after he started talking to workers there “You can speak for yourself” (Some ees started wearing “I can speak for myself” buttons) “The union only wants your money” Other former managers say that when they telephoned Co hot line to report U literature was being distributed in their stores. reports surveillance cameras “sprouted” at Scottsburg. 10/6/03 . Business Week. which may be 100% annually at some stores Co says the 15 cameras installed there “have nothing to do with union activity” Source: Business Week.Current Developments in Union Organizing Legal union avoidance tactics have impact Las Vegas Sam‟s Club held mandatory Ee meetings every week to express anti-U views Former Wal-Mart manager. 11/8/02. 10/28/02.
“Wal-Mart Says It Would Allow Unions in Its Chinese Operations” Wal-Mart said it would allow trade unions in its Chinese operations. national legislature began investigation of compliance w/ country‟s labor law Finding: some leading MNCs were resisting efforts to set up unions within operations Source: Wall Street Journal.000 ees Labor officials hope development will put pressure on other MNCs to follow suit Wal-Marts in Germany aren‟t unionized per se. although they have works councils In March. an apparent response to pressure from Chinese authorities Wal-Mart has 42 outlets in China. 11/24/04 . ~20.
and business-level strategies is Wal-Mart pursuing? Discuss how Wal-Mart‟s growth plans affect and are affected by its HR strategy SWOT analysis .Closing Case Wal-Mart hiring more than 1 million ees over next five years Advancement opportunities College recruiting 65% of store managers began in hourly jobs Diversity recruiting Internships in pharmacy and merchandising Management trainee program for college students Networking Case questions Students in Free Enterprise What corporate.