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Aligning HR and Business-Level Strategy:
employees are key to creation of sustainable competitive advantage Q: For Wal-Mart. retention. in what way does HR contribute to creation of sustainable competitive advantage? .Human Resource Management HR’s focus is on attraction. and motivation of employees In many organizations.
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.
7/31/06 . average ones in mission-critical jobs Not people-management results into dollars Adopt “I think” or “I believe” but “I know” re: cause and effect Causes “fact-based” decision-making of turnover What motivates workers to produce more Which HR actions can turn business unit around Source: Workforce Management.Listening to HR’s Critics Quantify Productivity of workforce Cost of vacant position Cost of keeping bad manager Dollar impact of hiring and keeping top performers vs.
Effective HR Strategy Formulation and Implementation Organizational Organizational Strategies Strategies Fit Consistency Fit Environment Environment Consistency Consistency HR Strategies Improved Improved Firm Firm Performance Performance Fit Consistency Fit Organizational Organizational Characteristics Characteristics Organizational Organizational Capabilities 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. 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 .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.
700 89.747 78 100.500 177.100 14 105.731 36 1.300 23.“Women vs.800 15.500 21.500 13.400 23.400 $279.800 10 239. OF % OF MALE FEMALE JOB EES* WOMEN SALARIES SALARIES REGIONAL V-P DISTRICT MNGR STORE MANAGER ASST MNGR MNGT TRAINEE DPT HEAD SALES ASSOC CASHIER 39 10% 508 3.200 22.987 $419.800 37. Wal-Mart” AVERAGE ANNUAL EARNINGS** IN 2001 ----------------------------NO.700 68 16.100 * Full-time ** Including bonuses Data: Richard Drogin .500 93 14.203 41 63.003 50.300 39.241 18.
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. but until current suit. e. 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. convert them to principles: respect for individual. job posting Bring Ees into org. autonomy. 7/21/03 .g. customer service. excellence. Wal-Mart” Wal-Mart culture built on inspirational leadership. 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. 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. experience. trust But practices also may create barriers.
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. 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. 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. 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. Wal-Mart district mngrs have encouraged store mngrs to send hourly ees home before shift is over.“Big Retailers Face Overtime Suits As Bosses Do More ‘Hourly’ Work” Retailers such as Wal-Mart. RadioShack. 5/26/04 .
in 2004 Co initiated new wage structure to increase pay of some hourly Ees. 1/14/05 .com Amid criticism of labor practices. Wal-Mart Counters Public Image as Harsh Employer” “It’s Co said ads are attempt to set record straight on labor issues becoming clear that we have to do more and be more aggressive in telling our story. The purpose is to be proactive and initiate debate.walmartfacts.” New web site: www. Wal-Mart bought full-page ad space in January 2005 in more than 100 newspapers nationwide “In Ad Blitz. 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.
shoppers who were emotionally connected to supermarket spent 46% more than shoppers who were satisfied but lacked emotional bond w/ store Source: Fortune. cf. cf. 1/24/05 . 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.“The Wegman’s Way” Wegman’s labor costs run between 15% and 17% of sales. 12% for most supermarkets Annual turnover rate is 6%.
but not the seven that were unionized Wal-Mart EVP of People: “Where associates feel free to communicate openly with their management. which was disbanded two weeks after election Co announced plans to phase out butchers and use prepackaged meat in 180 stores. “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” .Current Developments in Union Organizing Wal-Mart has won all but one of seven union votes in U. said timing of decision was a coincidence When Wal-Mart acquired Woolworth’s operations in Canada.S. (as of 10/02) One U win was butcher’s dept in TX store. why would they need a third party to represent them?” Co gives managers 56-page guide. it bought 120 stores.
Current Developments in Union Organizing “In the 1970s.68/hr UFCW counters that it’s only $8.23/hr (based on independent statistical analysis) BLS estimates average hourly wage for all non-supervisory retail ees is $12. and it is lowering standards for everyone. Nowadays it is the nation’s largest corporate employer. it not only set the standards. and that Wal-Mart’s pay scale is competitive Source: CNNMoney. and thanks to its contracts with the UAW. General Motors was the nation’s largest corporate employer. 7/27/05 . Wal-Mart is doing the exact opposite.34 Wal-Mart spokesman says BLS data inflated by overtime.” Organizing director for UFCW Wal-Mart says its average hourly pay for FT ees is $9. but it raised the standards for all workers.
11/8/02. IN store (N of Louisville) after he started talking to workers there Co says the 15 cameras installed there “have nothing to do with union activity” Other former managers say that when they telephoned Co hot line to report U literature was being distributed in their stores.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 “You can speak for yourself” (Some ees started wearing “I can speak for myself” buttons) “The union only wants your money” Former Wal-Mart manager. New York Times. 10/28/02. Business Week. now UFCW organizer. reports surveillance cameras “sprouted” at Scottsburg. LR specialists were flown in on Co jet that afternoon Other complicating factors include turnover. 10/6/03 . which may be 100% annually at some stores Source: Business Week.
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. although they have works councils Labor officials hope development will put pressure on other MNCs to follow suit In March.“Wal-Mart Says It Would Allow Unions in Its Chinese Operations” Wal-Mart said it would allow trade unions in its Chinese operations. ~20. an apparent response to pressure from Chinese authorities Wal-Mart has 42 outlets in China. 11/24/04 .000 ees Wal-Marts in Germany aren’t unionized per se.
Closing Case Wal-Mart hiring more than 1 million ees over next five years Advancement opportunities 65% of store managers began in hourly jobs College recruiting Diversity Management trainee program for college students Networking Students recruiting Internships in pharmacy and merchandising in Free Enterprise Case questions What corporate.and business-level strategies is WalMart pursuing? Discuss how Wal-Mart’s growth plans affect and are affected by its HR strategy SWOT analysis .
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