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STRATEGIC HUMAN RESOURCE MANAGEMENT
PRIYA TALWARSHALINI SINGH
MANISHA GAUTAMTAJINDER KAUR
SOURABH HARJAI
Aligning HR and Business-Level Strategy:
HUMAN RESOURCE MANAGEMENT HR’s focus is on attraction, retention, and
motivation of employees In many organizations, employees are key to
creation of sustainable competitive advantage
Q: For Wal-Mart, in what way does HR contribute to creation of sustainable competitive advantage?
“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
LISTENING TO HR’S CRITICS
Quantify people-management results into dollarsProductivity of workforceCost of vacant positionCost of keeping bad managerDollar impact of hiring and keeping top
performers vs. average ones in mission-critical jobs
Adopt “fact-based” decision-makingNot “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
EFFECTIVE HR STRATEGY FORMULATION AND IMPLEMENTATION
OrganizationalStrategies
OrganizationalStrategies
OrganizationalCharacteristics
OrganizationalCharacteristics
OrganizationalCapabilities
OrganizationalCapabilities
EnvironmentEnvironment
HR Strategies
Consistency
Consistency
Co
nsi
sten
cy
Co
nsisten
cy
ImprovedFirm
Performance
ImprovedFirm
Performance
FitFit
FitFit
FitFit
FitFit
SELECTED HR STRATEGIES THAT FIT PORTER’S THREE MAJOR TYPES OF BUSINESS STRATEGIES
BusinessStrategy
Common OrganizationalCharacteristics HR Strategies
Overallcostleadership
• 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
• 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
SELECTED HR STRATEGIES THAT FIT PORTER’S THREE MAJOR TYPES OF BUSINESS STRATEGIES
BusinessStrategy
Common OrganizationalCharacteristics HR Strategies
Differ-entiation
•Strong marketing abilities•Product engineering•Strong capability in basic research•Corporate reputation forquality or technologicalleadership•Amenities to attract highly skilled labor, scientists, or creative people.
• Emphasis on innovationand flexibility• Broad job classes• Loose work planning• External recruitment• Team-based training• Emphasis on individual-
based pay• Use of performance
appraisal as development tool
“WOMEN VS. WAL-MART” Wal-Mart culture built on inspirational leadership, autonomy, trust
Bring Ekes into org, convert them to principles: respect for individual, customer service, excellence, and imperative to buy and sell at lowest price possible
But practices also may create barriers, e.g., job posting Wal-Mart famous for promotion from within – more than two-thirds of managers started
as hourly Ekes Hourly job posted within stores, but until current suit, Co had never posted openings for
management training positions Not the Wal-Mart way, 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, and other factors to make raises more uniform
Another aspect of culture which may create barrier is willingness to move for the job Single mother Asset Manager involved in litigation moved nine times in eight years across
three states
Key for Wal-Mart is making processes fair without losing culture that makes it special
“BIG RETAILERS FACE OVERTIME SUITS AS BOSSES DO MORE ‘HOURLY’ WORK”
Retailers such as Wal-Mart, RadioShack, Dollar General facing lawsuits accusing them of using low-level managers to do work of non-managers in order to avoid paying overtime Suits claim little difference between job duties of hourly ees and asst mngrs, esp
nighttime asst mangers (“glorified stockers”) RadioShack mangers required to work at least 52 hrs/wk
Under FLSA, 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, cf. 9-10% on average at other large-store retailers Alleged that to stay within budget, Wal-Mart district mangers have encouraged
store managers to send hourly ees home before shift is over, then asst mangers (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 manager compensation is annual bonus pegged to store profit
“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. The purpose is to be proactive and initiate debate.”
New web site: www.walmartfacts.com Amid criticism of labor practices, in 2004 Co
initiated new wage structure to increase pay of some hourly Ees, 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
“THE WEGMAN’S WAY”
Wegman’s labor costs run between 15% and 17% of sales, cf. 12% for most supermarkets
Annual turnover rate is 6%, cf. 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, shoppers who were emotionally connected to supermarket spent 46% more than shoppers who were satisfied but lacked emotional bond w/ store
CURRENT DEVELOPMENTS IN UNION ORGANIZING
Wal-Mart has won all but one of seven union votes in U.S. (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, said timing of decision was a coincidence When Wal-Mart acquired Woolworth’s operations in Canada,
it bought 120 stores, but not the seven that were unionized Wal-Mart EVP of People: “Where associates feel free to
communicate openly with their management, 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”
CURRENT DEVELOPMENTS IN UNION ORGANIZING
“In the 1970s, General Motors was the nation’s largest corporate employer, and thanks to its contracts with the UAW, it not only set the standards, but it raised the standards for all workers. Wal-Mart is doing the exact opposite. Nowadays it is the nation’s largest corporate employer, and it is lowering standards for everyone.” Organizing director for UFCW
Wal-Mart says its average hourly pay for FT eves is $9.68/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 $12.34 Wal-Mart spokesman says BLS data inflated by overtime, and
that Wal-Mart’s pay scale is competitive
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, now UFCW organizer, reports surveillance cameras “sprouted” at Scottsburg, 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, LR specialists were flown in on Co jet that afternoon
Other complicating factors include turnover, which may be 100% annually at some stores
“WAL-MART SAYS IT WOULD ALLOW UNIONS IN ITS CHINESE OPERATIONS” Wal-Mart said it would allow trade unions in its
Chinese operations, an apparent response to pressure from Chinese authorities Wal-Mart has 42 outlets in China, ~20,000 ees
Wal-Marts in Germany aren’t unionized per se, although they have works councils
Labor officials hope development will put pressure on other MNCs to follow suit In March, national legislature began investigation of
compliance w/ country’s labor law Finding: some leading MNCs were resisting efforts to set
up unions within operations
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 recruiting Internships in pharmacy and merchandising
Management trainee program for college students Networking
Students in Free Enterprise Case questions
What corporate- 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
THANK YOU