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HR.600
Course Project
Strategic Human Resources Plan
For
Fern Creek Walmart Supercenter Number 3294
David A. Miller
18 June 2009
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Table of Contents
Executive Summary
pg. 3
Purpose and Scope
pg. 5
Organizational Business Strategy Review
pg. 6
Organizational Staffing Strategy
pg. 11
Training and Development
pg. 17
Performance Management
pg. 23
Compensation and Benefits: Total Rewards
pg. 30
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Human Resource Strategic Services
pg. 37
Conclusions and Recommendations
pg. 39
Appendix
pg. 40
References
pg. 45
Executive Summary
This human resources management plan is intended to address
issues relating to the staffing, training, performance, and total
rewards (compensation and benefits) of Walmart Supercenter 3294.
It compares the current business situation, procedures and
practices of the supercenter and proposes solutions that will
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yield improvements in associate engagement, workforce performance
and strategic benefits for the supercenter as a whole.
In the issue of staffing, the recommendation is to adopt a
portion of the workforce differentiation model proposed in 2005
by Huselid, Becker and Beatty in their book, “The Workforce Scorecard:
Managing Human Capital to Execute Strategy”. The recommendation pertains
to differentiating positions within the store, with importance
given to those positions that have a decisive impact upon the
strategy of selling merchandise at the lowest price. The
importance of these positions will mean that staffing efforts
will concentrate on keeping these jobs at full strength compared
to the secondary and tertiary positions within the store.
For training issues, the store needs to classify as many
nighttime associates as possible to hold a secondary job code to
operate a Point-of-Sale cash register. These associates need to
train in POS operations and procedures, and then call upon them
to work the front end when needed. This will help expedite the
crowds of shoppers that press upon the front end during the hours
of darkness. The store also needs to mentor the newly promoted
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department managers and other hourly supervisors, giving them the
support they need to prosper in their new positions and reduce
the number of leadership failures.
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In performance management, associates should be able to
submit performance plans in advance of their rating periods.
This is important to establish in advance, the standards to be
met or exceeded over the course of the rating period. There is
also a need for an established rating chain, a relationship
between the rated associated and his or her rater, which should
be preserved by means of a “Change of Rater” evaluation,
submitted before the original rater departs. This extra report
will establish a record of accomplishment for the associate prior
to his or her regular report date, so that any new reports must
either support or contradict (with just cause) the previous
rater’s report.
With respect to Total Rewards, I propose that the facility
starting pay rate be pegged to 130% of the Federal minimum wage
(this would make the FSR $9.40/hr. on July 24, 2009). This
strategy would make Walmart more competitive compared to other
retailers in attracting talent, while giving ambitious associates
a start point to seek further responsibilities for more pay. I
also propose a weekend differential pay (covering Friday through
Sunday) and a separate bonus program for the Store-Within-A-Store
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project, rewarding departments that contribute to the overall
success of the organization.
A more complete tabulation of recommendations and their
expected results is at Appendix B.
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Purpose and Scope
This is a plan to make significant improvements to the human
resources strategy of an individual Walmart Supercenter. It will
apply some of the principles of the workforce differentiation
strategy described by the work of Huselid, Becker and Beatty
(2005) to Walmart, as far as the organizational culture will
allow. The tallest obstacle to a total adoption of workforce
differentiation will be the idea of making some associates more
valuable than others, based on the positions they hold and the
duties they perform. One of the strongest cultural traits of
Walmart is the idea that all associates, no matter what job they
have, are instrumental to the total success of the company
(Bergdahl, 2004).
This plan also incorporates ideas from “Human Resources
Management: Gaining a Competitive Advantage” (5th edition) by
Noe, Hollenbeck, Gearhart and Wright (2006) and information from
Walmart’s wide-area network, “The Wire”.
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Organizational Business Strategy Review
Business Environment
Walmart Supercenter number 3294 is located in south-central
Jefferson County, in the village of Fern Creek, sited near the
junction of US highway 31E/150 (Bardstown Road) and Interstate
265 in the Commonwealth of Kentucky (Illustration at Appendix A).
It opened for business in August 2002 and has dominated the area,
not only attracting business for itself, but also bringing
traffic to the surrounding fast food and family-style restaurants
plus a professional oil change shop. The supercenter is open 24
hours every day except between 6 pm December 24, and 6 am
December 26. The supercenter sells a full range of dairy, dry
groceries and produce; a bakery and delicatessen, men’s, women’s,
children’s and infant’s clothing; shoes, household items,
eyeglasses and contact lenses, pharmaceuticals, health and beauty
aids, pet supplies (including tropical fish), gardening
equipment, hardware, sporting goods, automotive merchandise
(including tire sales and installation as well as oil changes),
toys and electronics. The supercenter also leases space to
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independent businesses such as a McDonald’s restaurant, a banking
center, and a hair salon. The independent businesses keep
regular hours, even as the remainder of Walmart stays open
continuously.
This store primarily serves residents of south suburban
Louisville and Mount Washington, a bedroom community located in
northern Bullitt County. Its nearest grocery competitor is a
Kroger supermarket that sits in an adjacent strip mall that also
offers all-hours access to food and other items. There is a
Meijer store located about 1.7 miles northeast, whose layout, a
combination of grocery and traditional discount department store
and 24-hour availability is very similar to a Walmart
supercenter. The supercenter is part of the largest chain of
retail stores in the world. Sales totaled 90 million dollars and
the store showed a profit of 4.8 million during fiscal year 2008.
The next closest Walmart Supercenter is seven miles north along
Bardstown Road in Bashford Manor. It ceases operations at
midnight. Therefore, the Fern Creek supercenter not only serves
the residents in its immediate vicinity, but also customers
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coming from a radius of up to ten miles, especially after the
Bashford Manor supercenter has closed for the night.
One facility manager and two co-managers lead the store.
The co-managers are responsible for the two halves of the
supercenter. One co-manager is in charge of all produce, dairy
and grocery items, while the other supervises general
merchandise, including clothing, household items, hardware,
sporting goods, and all other non-food merchandise. The store
has eight salaried assistant managers, in charge of specific
areas of the store such as hard-line goods, clothing, front-end
cash register operations and merchandise restocking. The
assistant managers exercise direct leadership over the hourly
supervisors and associates. They are also responsible for
recruiting, training, coaching and evaluating the hourly
associates within their areas. The assistant managers rotate
their responsibilities, sometimes working in grocery, hard-line
merchandise, etc., gaining experience that will serve them as
they move up to co-manager and eventually, store manager.
Overview of Business Strategy
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The mission of Walmart Supercenter 3294, along with the
mission of Walmart Stores, Incorporated is, “To help people save
money” (Walmart, 2009a).
The supercenter, like all other Walmart stores, practices a
strategy of offering everyday low prices on its merchandise by
buying in bulk, then controlling operating costs and passing the
savings onto consumers. According to Bergdahl (2004), there are
tactics that underlie the execution of this strategy. Build the
supercenter at an important road junction, easing access for both
the trucks bearing goods and the carloads of shoppers. Schedule
the majority of the associates to work the store during peak
periods of shopping activity, and then reduce staffing during the
slow periods, thus saving on labor costs. Invest heavily in
private label merchandise and carry a selection of national and
local brands of products that complement the private label
products. Control costs by eliminating unnecessary expenses and
limit other expenditures, then pass the cost savings onto the
consumer. Foster a culture of teamwork and efficiency that makes
it possible to perform more work within a given time interval.
Always provide superior customer service when compared to the
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competition, in order to keep shoppers coming back repeatedly.
Finally, staff the store with the best-qualified talent
available, and then train them and inculcate into them the
culture
Strengths and Weaknesses
The greatest strength of this supercenter is its location at
a crucial road junction. Unlike two other Walmart Supercenters
located near the interstate highway, the one at Fern Creek is
easily visible from the road. Consequently, many customers often
cruise to the store either as a diversion of their normal
activities or on a quest for a particular item Walmart may carry.
Therefore, there is a great deal of activity within the store.
The workers from the nearby UPS warehouse center, the Ford truck
assembly plant and others on a late night schedule also visit the
supercenter to pick up groceries or general merchandise before
heading home.
The chief weakness is the high turnover of associates. One
must expect a certain amount of personnel turbulence in retail.
For many associates, the job is a temporary one as they pursue
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career training in other fields. Others are in their first real
job experience and will commit mistakes such as poor attendance
or shoddy work habits. Ultimately, the goal will be to attract
and retain quality associates who will be engaged with the
organization and contribute to its success.
Human Resource Activities
In 2007, Walmart established a dress code that requires a
distinctive color combination of top and bottom garments.
Associates may dress in blue shirts and khaki, tan or brown
trousers (optional skirts for women). Cart Pushers and the
overnight associates may wear blue denim jeans or work pants.
Associates who work outdoors substitute shorts during the warm
seasons. Salaried managers must “dress up” to fit the part as
authority figures. Male must wear a collared shirt and tie;
females may wear a “classier” blouse.
Every associate wears a Walmart name badge with his or her
given name or preferred nickname and a yellow tab with a duty
title; Cashier, Sales Associate, Assistant Manager or Store
Manager. Even the CEO of Walmart wears a name badge. The back
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of the name badge holds a bar code that “punches” the time clock;
a laser beam reads the bar code and recognizes the associate as
scheduled for work. Associates have a fifteen-minute grace
period in which to clock-in because crowds of workers gather to
punch in or out, making the requirement to be at work at the
strike of the hour nearly impossible. While salaried associates
do not punch the clock, they also have a bar code that permits
them to override the schedule and allow unscheduled associates to
come to work. Associates under special instructions are required
to clock in to perform any work activities.
Walmart’s policy is that any associate performing work must
be paid for that work, even if called at home. If an associate
is called at home, the caller, usually a member of management
must prepare a time adjustment worksheet detailing the length of
the call, so that the associate be paid for the time spent on the
telephone.
The Human Resources office is located in the backroom area
of the store, divided onto a training room and the HR. manager’s
office. The staff consists of an hourly HR. manager and a
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Training Coordinator. The current HR. manager had once been a
salaried member of management and the Training Coordinator was a
successful department manager. Their activities include
associate recruiting, application screening, preparing job
offers, initial training and personnel administration. They have
recently begun quarterly briefings on shrink management (reducing
the amount of inventory lost because of theft, misappropriation
and improper accounting procedures) and have taken a stronger
strategic role within the store. However, when compared to the
function of Human Resources management described by Noe,
Hollenbeck, Gerhart and Wright (2006), the store’s human resource
function serves largely as a personnel administrator rather than
a strategic partner. This arrangement also means that the store-
level HR. office does not have its own budget, information system
or other means of establishing its value to the store other than
the role of personnel administrator.
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Organizational Staffing Strategy
Enhancement of Organizational Performance
The staffing level of hourly associates at the store
averages about 430 personnel. Hourly associates are divided into
seven position pay grades, according to the Non-Exempt Field
Associates Pay Plan (2009b) as follows:
Level 1 associates are People Greeters, Cart Pushers and
those who work in the fashion center Fitting Room (and who work
as the store’s telephone operators).
Level 2 associates work in the receiving areas, unloading
the trucks that bring new merchandise from the warehouse.
Level 3 associates are the front-end cashiers and ICS
(Inventory Control System) associates who scan the new
merchandise into the Point-of-Sale system.
Level 4 sales associates work in the secure departments such
as Electronics and Sporting Goods (because of firearms and
ammunition).
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Level 5 associates are found in the support roles as office
staffers or as lead associates in the bakery, delicatessen and
grocery departments.
Level 6 associates are hourly supervisors such as customer
service managers and department managers in grocery and general
merchandise, except;
Level 7 associates work as department managers of
Electronics and Sporting Goods
According to the Personnel Handbook (2005), a reference that
is available only on the company’s Local Area Network (LAN),
staffing is a key function of the store assistant manager, in
concert with the store’s personnel manager and the department
manager with a position vacancy. Nearly all applications are
electronic submissions, either through the internet or from
automated kiosks that are located at the customer service lobby
up front and in the Site-to-Store area at the rear of the
supercenter.
The Human Resources Manager and Training Coordinator sort
applications by skills or experience, and carefully review then
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for desirable qualifications. Previous service in a retail
environment is a plus. Experienced retailers receive up to 5
years credit for performing work at a different store. Each year
of creditable retail experience increases the starting wage from
20 cents up to 90 cents above the facility starting pay of $7.20.
Nevertheless, Walmart also hires qualified minors for positions
as cart pushers, front-end cashiers or as merchandise handlers in
the receiving area, a common way for many young adults to begin
their work history with the company.
Applicants that pass the initial application screening are
invited by telephone for the interview phase. Interviews are
conducted first with the department manager, then a store
assistant manager. The standardized interview format with a
script prevents illegal questions from being asked. They are
based on a behavioral interview model that follows the S.T.A.R.
(Situation/Task, Action and Results): given a situation or task,
ask what action the candidate had taken to handle the situation
or perform the task, then reports the results. Candidates who
give acceptable answers on the interview questions are granted a
final interview with the personnel manager, who tenders the job
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offer. The offer is conditional upon passing a background check
and drug-screening test.
“Onboarding”, as defined in the personnel handbook, is the
process of integrating the new associate into the organization
and preparing him/her for success. During the first few days,
the new associate watches a video on the history and culture of
Walmart, tours the store with an assistant manager, and then
receives an overview of the work area from the department
manager. Classroom training is rare and limited to special
occasions from the store manager or his deputy. Most training is
through the Computer-Based Learning system or “CBL”. Each
associate receives a user ID and password to access the system
and take classes on a variety of subjects. Most classes occur
once during Onboarding, but some have yearly refresher
requirements that are closely monitored by corporate
headquarters. All associates must be 100 percent complete in all
mandatory CBLs in order to be rated satisfactory or higher on the
annual performance review.
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All associates learn that they contribute to the success of
the supercenter and to Walmart by helping ensure that customers
find what they want, one of Walmart’s strategic goals. Initial
training takes place during the first five weeks after hiring.
This training includes the thr.ee basic beliefs (We practice
respect for the individual, we exist to serve our customers and
we strive for excellence) and the 10-Foot Rule (all customers
within 10 feet of an associate must be greeted and offered
assistance). New associates learn basic tasks of “zoning” the
department and doing a “safety sweep” of the work area. Zoning
refers to straightening merchandise on shelves and hooks, neatly
arranging the goods in proper alignment with their shelf labels.
A safety sweep seeks out and removes all slip and trip hazards
such as trash, fallen merchandise items, spilled liquids and
other obstacles to customer traffic.
Current Staffing Forecast
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Data from the Bureau of Labor Statistics (2009) states that
the unemployment rate for the city of Louisville and Jefferson
County stands at 10.2% as of April, a figure slightly greater
than the nationwide average of about 9%. The high figure
suggests that many currently unemployed persons may apply for
positions at Walmart either as a temporary measure to support
themselves as they await recall to their old jobs, or as a change
of careers. However, turnover among store staff is still quite
high. Pay rates, while competitive with other retailers, cannot
completely replace the higher wages once paid by manufacturers or
other unionized positions. Even though the market area
headquarters recently closed a Walmart Discount Store and
dispersed the associates from that location to the surrounding
supercenters, a number of critical positions, including front-end
cashier and some department manager slots remain vacant.
Key metric measures
Key metrics for strategic staffing include:
1. Number of applicants with/without previous retail or
other work experience
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2. Number of candidates who pass the screening process and
are eligible for job offers
3. Number of candidates who accept the job offers
4. Number of new associates brought “on board”
5. Percentage of minority and female associates, “on board”
6. Percentage of associates who are legal minors (they are
prohibited from working the overnight shift and operating
powered equipment.)
Key Action Items
An effective staffing strategy must consist of recruiting
new workers as well as retaining good associates. In addition, a
workforce differentiation program, as proposed by Huselid, Becker
and Beatty (2005) will identify critical positions that promote
the store’s strategy execution. I propose the following:
“A” positions are the most important to the execution of the
strategy, as they involve customer contact on the sales floor.
These positions include the Facility Manager, Co-Managers and
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Assistant Managers. Hourly associates in the “A” category
include Department Managers, Customer Service Managers and
Support Managers, Sales Associates, Front-End Cashiers, Fitting
Room Associates (These associates are in charge of the clothing
department and also answer the phone for the store) and the
People Greeters (Associates who guard the doors and scan
returning merchandise to go to the customer service desk).
“B” positions are those that support the store’s operations
behind the scenes. These include the inventory freight handlers
and control staff, cash office accountants, asset protection
associates, claims office personnel (These associates account for
lost and damaged inventory items.) and the current incarnation of
the human resources staff as personnel administrative
specialists.
“C” positions, while non-essential to the store’s strategy
execution, are important for safety and many in-store services.
These positions include floor maintenance associates, shopping
cart control associates and the bicycle and furniture assemblers.
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This method of workforce differentiation will help ensure that critical positions are identified and kept filled, through either recruitment or promotion of qualified and eligible associates.
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Training and Development
Enhancement of Organizational Performance
Walmart University (2005) is the term that encompasses the
company’s overall training activity, from POS operations for
cashiers up to managerial skills training to enhance leadership
ability and job performance. Walmart’s site on store careers
(2009) describes how associates, from hourly employees up to
market managers (salaried managers in charge of several stores
within a district or “market”) train for skills commensurate with
their responsibilities in order to gain and sustain individual
and team performance. Training and education continues up to the
senior executive ranks by means of the eCornell certificate
program (2008) and the Walton Institute at the corporate
headquarters in Bentonville, Arkansas.
Currently, Walmart directs new associates’ training and
development in thr.ee phases. The first phase is to acclimatize
the new accession to Walmart’s history as a retailer, inculcating
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the thr.ee basic beliefs, the ten-foot rule and basic in-store
safety. The next phase is on-the-job training, where every new
associate learns the skills inherent in his/her position. The
third phase is one of continuous self-improvement as an associate
and as a citizen. Associates may learn job-related skills that
can enhance their utility, such as operating power-loading
equipment, key cutting, paint mixing or fabric cutting. Those
associates who come to Walmart without a high school diploma can
get funds to help defray the cost of the GED exam. There are
even scholarships and financial assistance programs for
associates who wish to attend college or graduate school.
Strategy and Tactics
Walmart relies heavily upon the computer-based learning
system (CBL) to train most required subjects. The new associate
will often spend the first two or thr.ee days on a workstation,
completing CBL courses on ethical conduct, anti-harassment
training, the Thr.ee Basic Beliefs, the Open Door Policy and
other subjects that the company deems important for the position.
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The company also uses the CBL system to disseminate important
documents that all associates must read, such as a recent
directive that hourly associates may indicate a desire to advance
to salaried manager positions on their personal career preference
“dashboard” page on “The Wire”, Walmart's wide-area computer
network. This method of disseminating documents ensures that
associates receive and read important corporate messages without
interference or censorship by local managers.
Walmart Stores’ training system initiates CBL courses to
comply with state and federal regulations or to meet new training
requirements. Associates are individually responsible for
completing CBL training within 60 days that the course is loaded
onto individual training pages. Assistant managers are to ensure
that their associates with CBL courses that are due are given
opportunities during the workday to complete these courses in a
timely manner. Consequently, the store’s CBL completion rate is
over 95%. Associates with late CBL courses are publicly exposed
and rated “below standard” on training evaluations.
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New associates complete on-the-job training with the help of
a sponsor (usually an associate in the same grade as the
trainee), the hourly supervisor and the assistant manager over
the department. Training consists of learning the department’s
layout, “zoning” the merchandise (creating neat, attractive
displays and ensuring that the items are aligned next to their
correct prices on the shelf or hanging peg) and conducting basic
sales interactions. Cross selling (offering accessories with a
basic item) and up-selling (offering more expensive merchandise)
is also emphasized during on-the-job training.
Front-end cashiers are often the only associates in constant
contact with Walmart shoppers. Sam Walton pioneered the concept
of self-service shopping in his earliest retail stores (Bergdahl,
2004) and counted cashiers as the first line of his customer-
focused strategy. Fully trained cashiers are not only courteous,
but also efficient transaction processors. Cashiers must be able
to handle a wide variety of financial instruments, cash, checks,
credit or debit cards and Walmart gift cards.
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Leaders out In Front (LOIF) is a program begun in 2004 that
trains salaried managers (Assistant store managers up to market
managers) in the skills to succeed in their positions. Managers
learn to deliver effective presentations, handle associates’
conflicts, write performance appraisals and employ leadership
techniques.
Key Metric Measures
Key metrics for training and development would include these
measures:
1. Number of POS-register trained associates, including
front-end cashiers, sales associates, managers and former
cashiers promoted to other positions: this latter
category can help drive the strategy by pitching in
during very heavy shopping periods, especially during the
Blitz (day after Thanksgiving).
2. Number of cashiers who meet or exceed the standard for
“items scanned per hour”: this is a measure of efficiency
for the front-end. The minimum is 475 items per hour.
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Well-trained and experienced cashiers can scan over 1500
items per hour.
3. Number of associates who meet or exceed the standards for
stocking hours in their grocery aisles or merchandise
departments: in stocking merchandise, associates have a
set time to put merchandise on the shelves. This time
stamp metric assesses each associate’s efficiency in
shelving new merchandise.
4. Number of associates who have completed CBL courses: the
company requires that associates complete all courses
within sixty days after arriving in each associate’s
training plan.
Key Action Items
The current training system is adequate to the task of
inculcating and acclimatizing new associates into the working
structure, but the training system could attain additional
strategic value through several improvements.
Add a feedback mechanism, using open-ended questions to
solicit suggestions for improving the training and development
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system. Walmart employs millions of associates within the US and
in other foreign countries with many experiences that can be
incorporated into the company’s training and development
strategy. Bergdahl (2004) wrote that Sam Walton constantly
sought out new suggestions and initiatives from his managers,
associates, even his competitors and rivals. No ideas were ever
wasted and even if the initiative failed, the lessons learned
became part of the knowledge base.
Most hourly associates do not fully understand the company’s
business strategy. Management shares meeting notes with the
associates at the start of a shift, giving them performance
metrics such as the increase in sales over the previous year,
top-selling departments and the change in the stock price. While
this information is important, we do not know how we are
performing against Meijer, Kroger, Target or other big box
competitors. The store recently reset its electronics department
to permit customers to try out notebook computers first hand,
just as Best Buy does. Going up against Best Buy will take more
than the ability to touch the computers, but also an improvement
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in product knowledge and customer service techniques that will
force the store’s staff to stretch beyond current levels. The
store may even set up a technical department comparable to the
Best Buy Geek Squad if it is to have any hope of matching Best
Buy’s marketing strategy, much less beating it.
Every associate has a primary job code that designates his
or her duties according to the human resources management system.
These primary job codes often determine who can or cannot use the
Point-of-Sale (POS) cash register. At night, especially on
weekends, there is a shortage of register-trained associates,
often forcing customers to wait on the one or two cashiers on
duty to check out. A workable solution is to issue a secondary
job code of “cashier” to all nighttime stockers or inventory
control associates in the same position pay grade, or “sales
associate” to those in the next higher pay grade. These
secondary job codes can allow these associates to take POS
training and operate additional registers as needed to speed up
customers’ checkout.
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Finally, the store lacks a development program for hourly
supervisors that support them in learning their new jobs. Many
associates promoted to CSM or department manager have quit a few
weeks later because they were struggling and failing. Bergdahl
(2004) wrote that it is a common practice for associates promoted
beyond their level of competence to step down without injury to
their job security. This “sink or swim” developmental approach
is not good for the store, because critical vacancies such as
customer service manager, department manager or support manager
can go unfilled while suitable candidates hesitate to take the
jobs for fear of failure. Mentor newly appointed hourly
supervisors in their positions for at least six months before
evaluating them. If unsuitable because of the increased
responsibility, the associate may step down without prejudice.
The longer lead-time should give management the opportunity to
identify replacement candidates if the new supervisor should not
succeed in the position.
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Performance Management
Enhancement of Organizational Performance
Each hourly associate receives a performance evaluation
after the first 90 days of employment, then once per year, about
thirty days before the anniversary of the hire date. The
evaluation measures the associate’s conformance with the thr.ee
basic beliefs, basic skills such as “zoning “the department, safe
work practices, punctuality and timely completion of CBL
(computer-based learning) training. The ratings are ranked
“Exceeds”, “Meets” or “Below” standards. There is a provision on
the back for the associate to comment upon the ratings and to
share any developmental plans for self-improvement. Any
associate that scores “Below” standards is reevaluated after 90
days. If the rating improves, the associate can be continued in
the position. A typical hourly evaluation form is illustrated at
Appendices C and D.
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Managers award a 60 cent per hour pay increase for ratings
that exceed standards. Meeting standards earns 40 cents and
falling below standards merits no pay raise. If an associate
improves his or her performance in a reevaluation after 90 days,
the raise is tendered from the date the new evaluation is
approved.
Salaried managers prepare performance plans in advance of
the rating period. These performance plans use in-store metrics
such as department sales, associate absences, associate
efficiency scores, the store manager’s inspections as well as
subjective rating criteria. Managers may also earn raises, but
pay caps are in place to require more ambitious assistants and
co-managers to seek promotion. The bulk of the managers’
compensation is an annual bonus based on store performance.
Individual rewards are in the form of enameled pin badges
attached to name tags and neck lanyards. They usually have
slogans such as “Teamwork” or “This is a GREAT associate”.
Managers hand them out as impact awards to associates for
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exceptional job performance. Appendix E illustrates how these
are worn.
Progressive discipline takes the form of "Coaching for
improved performance". Coaching has become a euphemism for
“reprimand”. It might have meant something more positive in the
past, but it has devolved into a dreaded confrontation between a
manager, a disinterested witness (usually an hourly supervisor)
and the alleged miscreant. Coaching addresses violations such as
excessive unapproved absences, gross inefficiency,
insubordination, safety violations, customer complaints, or
failure to perform duties properly. A violation of serious
interest to Walmart is the “meal exception”, when an associate
fails to clock out for the meal break within five hours of
clocking in to work. This is a state-level legal requirement
that may subject the store and the company to punitive fines,
even though some associates do not fully understand the rule
(Yahoo, 2008).
Coaching may be both oral and written. Thr.ee oral coaching
sessions on the same subject result in one written coaching for
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the record. If an associate receives thr.ee written coaching
memos on record, he or she goes on a “D-day" (decision day). This
is paid time off for the associate to reflect upon his/her chance
for continued service with Walmart. If the associate continues
with the company, the result is a 90-day probation in which the
associate has a chance to improve all areas of job performance.
If the associate makes another error that would mandate a
coaching session, he/she is terminated. If the associate
survives the D-day probation, the "clock" is reset to zero. Any
future missteps are regarded separately from the previous record
of mistakes.
Strategy and Tactics
The strategy behind Walmart’s performance management system
is common to any organization that must motivate their workers to
achieve business success. The forms are simple and need minimal
explanation, easing the evaluation process. Forced rankings are
not used. The bulleted list of duties and responsibilities and
the layout of check boxes makes it easy to determine how the
rated associate stands relative to the demands of the position.
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Additionally, a salaried manager and the store manager must
review and approve the appraisal before filing it. An associate
who believes that the report is biased or unfair may appeal the
report to the store manager or the market manager using the Open
Door policy (Walmart, 2009)
Each year, associates report their satisfaction with the
management by means of the “Associate Grassroots Survey”
(Walmart, 2005). Associates respond to questions about the
quality of management, whether or not friends or acquaintances
would be referred as potential associates, if rewards or
recognition programs are fair, as well as other questions that
relate to treatment and working conditions. Managers who have
excelled in store performance metrics have been demoted or even
terminated for scoring poorly on the Grassroots survey (Bergdahl,
2004). Store managers must successfully balance the metrics of
store performance such as sales to expenses, while keeping
associates satisfied by maintaining a proper climate and culture
that encourages the Three Basic Beliefs: Respect for the
Individual, Service to the Customers and the Pursuit of
Excellence.
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Key Metric Measures
These are key metrics that can be used to evaluate the
effectiveness of the performance management process employed by
Walmart. They are suggested by the work of Huselid, Becker, and
Beatty (2005) on the subject of aligning the workforce to achieve
the successful execution of business strategy. These metrics
include:
1. Numbers of associates in key positions (department
managers, people greeters, sales associates and front-end
cashiers) receiving “Exceeds”, “Meets” or “Below”
expectations on performance appraisals.
2. Numbers of associates in secondary positions (ICS,
receiving associates) graded as “Exceeds”, “Meets” or
“Below” expectations on performance appraisals.
3. Numbers of associates in tertiary positions (floor
maintenance, cart pushers) receiving “Exceeds”, “Meets”
or “Below” expectations on performance appraisals.
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4. Numbers of associates promoted to hourly management (CSM,
Department Manager, Support Manager)
5. Numbers of associates meritoriously appointed to key
positions from secondary or tertiary positions,
6. Numbers of associates meritoriously appointed to back
office positions (e.g., from front-end cashier to
accounting office).
7. Numbers of associates undergoing progressive discipline
(“Coaching” and “D-Day”)
8. Numbers of associates rehabilitated after coaching,
versus numbers of associates terminated after coaching.
Key Action Items
The performance appraisal process for most hourly associates
is regarded as little more than a paperwork drill. Many rating
officials, including salaried managers have had little time to
observe and comment upon their subordinates’ performance. I have
had an appraisal prepared by a manager who had arrived in the
position one day before the deadline for the evaluation. He had
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to contact the managers that had supervised me for enough input
to prepare a complete assessment of my performance for the
previous year.
I recommend creating two additional categories of
performance appraisals. The outgoing rater can submit a special
“change of rater” report to maintain in the associate’s local
personnel file. The incoming rater can review the report and
verify if the appraisal continues to reflect the associate’s
performance observed by the new rater. A raise, if awarded, can
take effect on the normal anniversary. Then the incoming rater
and the rated associate can start a new rating period together in
a secure rating chain.
I would also create a special laudatory report, for
maintenance in the local file. This report would add to the
existing contents in a way similar to an award citation, except
that it would concentrate on a sustained period of superior
performance, such as during a special merchandise promotion.
Such reports would be very useful to associates seeking
promotion, as this report would demonstrate that the rated
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associate has accumulated a record of accomplishment that
demonstrates a readiness for further responsibilities. The
military services use similar types of reports to prepare leaders
for advancement to higher grades.
To make the appraisal process more useful, I would propose
that each hourly associate, regardless of position or pay grade
submit a performance plan at the start of a rating period. The
associate and his/her rater can decide upon performance
objectives that are Specific, Measurable, Action-oriented,
Realistic and Time-bound (Bergdahl, 2004). At the end of the
rating period, the rater and rated associate can agree whether or
not he/she met or exceeded those SMART goals. This not only
links the business strategy and the workforce performance, but
also ensures that there is an agreement concerning good, better
and best levels of performance and reduces subjectivity.
The coaching process, highly spoken of in business
literature, had devolved into progressive discipline that has all
but ruined what should be a positive experience for both the
manager and associate. Even the word carries a connotation of
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“reprimand” rather than a helpful exchange. To repair this, I
would call a reprimand and progressive discipline exactly as what
they are. I would make coaching an exercise between manager and
associate on best practices to get the work accomplished, or to
encourage positive behaviors, or as a part-year meeting to
discuss performance as spelled out in the SMART goals discussed
above.
Workforce Scorecard
The workforce differentiation strategy espoused by Huselid,
Becker and Beatty (2005) states that workers should be classified
into “A”, “B” and “C” performance ratings. This also requires
that “A” rated performers work in “A” rated positions, and that
lower classifications be slotted in the appropriate position
relative to the execution of the store’s strategy. However, this
is in direct opposition to Walmart’s philosophy of, “Respect for
the Individual”. Many responsible jobs are filled with
associates that have succeeded in the seemingly minor positions
such as cart pusher or floor maintenance associate. Some of the
“B” positions in claims or asset protection represent a promotion
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from “A” positions such as cashier. In addition, while exiting
“C” performers is a viable strategy for an organization such as
General Electric, it represents a leadership setback for Walmart,
as a human asset has been allowed to fail (Bergdahl, 2004).
The workforce scorecard strategy allows for a
disproportionate share of the employee rewards to be given to the
A” players compared to the “B” and “C” players in the workforce
(Huselid, Becker and Beatty, 2005). While “C” players are
already denied a raise, it could be more burdensome, perhaps even
illegal, to omit them from the My Share or other team-based
bonuses that are awarded to other associates. Consequently, this
aspect of the workforce scorecard strategy is not in keeping with
Walmart’s culture and is not recommended.
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Compensation and Benefits: Total Rewards
Enhancement of Organizational Performance
“Associate” is the preferred title for employees of Walmart,
as this implies that the workers and managers of the company
share in the benefits of the store’s (and the company’s) success
(Bergdahl, 2004).
The corporate headquarters assigns each store its minimum
pay or facility start rate. This is position pay grade one. The
step increase to pay grade two is 20 cents, 40 cents to pay grade
thr.ee and 60 cents to pay grade 4. Pay grade 5 is the
calculated at 90 cents above the facility start rate and is the
minimum pay grade for office associates such as claims clerks and
the accountants who count the daily cash receipts. Pay grades 6
and 7 are the hourly supervisors (CSM, Department managers) who
earn $1.30 and $1.70 above the starting rate. The pay is capped
in each pay grade; so that a long-serving hourly associate will
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peak at just over $16 /hr. in grade one, up to $18/hr. in grade
seven (Walmart, 2009).
A night differential adds $1/hr. to associates serving the
night shift from 2200 to 0700 and the Sunday premium is an
additional $1/hr. from midnight to 2359 on Sundays, separately
itemized on the pay stub.
The pay of salaried managers is variable, depending upon the
previous experience of the manager within retail or prior service
to Walmart as an hourly associate. According to my facility’s
HR. manager (who was once a Co-Manager), the starting pay for an
assistant manager is about $45K and peaks at $55K. Co-Managers
can start at $55K and peak at $65K. Facility Managers start at
$65K and top out at $80K in the rural locations or peak at $90K
in the urban stores. The bulk of the compensation is in the form
of annual bonuses that can equal a year’s pay for assistants and
Co-Managers and up to a half-million dollars for highly
successful facility managers.
The compensation package includes bonuses based on the
store’s performance. My Share bonuses are paid quarterly, up to
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450 dollars per person. All hourly associates share equally in
this award, sales floor staff, back room staff and
maintenance/courtesy staff. The bonus is based on metrics such
as sales revenue (40%); profits (40%), inventory turns (10%) and
customer experience (10%). Customers answer experience surveys
as they slide their credit cards at the POS terminals.
Associates qualify for the My Share after six months’ service
with Walmart, and then serve within the fiscal quarter that the
bonus is earned. For example, I joined the store at the start of
October; I qualified at the end of March. The next fiscal
quarter elapsed from April to June, and the bonus payout happened
in August.
All associates qualify for an additional bonus after twenty
years with Walmart. The company awards every associate, hourly
or salaried, a lump sum equivalent to a full week’s pay on the
anniversary of the date of hire. There is also a program called
“Race for a Million”, where the top ten highest performing stores
within a region (an area comprised of up to a hundred stores in
many markets) share a bonus of one million dollars. That would
50
work out to a cash award of about two thousand dollars per
associate.
Since 2008, all associates qualify for health benefits from
day one (there used to be a six-month waiting period). All
associates have a choice of PPO health plans, health savings
accounts and flexible spending plans with varying levels of out-
of-pocket deductibles. As for retirement, associates have a
choice of 401(K) savings plans (fully vested after 4 years’
service) or a stock purchase plan. Other benefits include paid
holidays, vacation hours, personal and sick time, and bereavement
leave with pay.
With respect to vacation, associates earn a number of
vacation hours on each anniversary of their hire date. This is
the opposite of many firms where vacation time accrues over the
course of the year. New associates begin with zero vacation days
until their first anniversary, then the vacation balance advances
to 40 hours (about one workweek or 5 days). On the second
anniversary, the associate begins the next year with 80 hours.
Vacation time does *not* carry over. If the associate does not
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fully consume the previous year’s vacation time, only enough
vacation hours are added to bring the start balance to 80 hours.
On the fifth anniversary of the date of hire, the vacation
balance is set to 120 (thr.ee weeks). After 20 years,
associates max out at 160 hours of vacation.
Sick hours accrue in a manner for familiar to most other
workers, at a rate of about 8 hours per month. Unlike vacation
time, sick hours carry over from year to year. An unusual
feature is that sick hours are not claimed until the associate is
absent for at least thr.ee days. This prevents expending sick
pay for an associate’s casual call-in who returns to work the
next day.
Associates receive “points” on their attendance records for
failing to come to work, even for legitimate reasons. A
computerized time clock automatically tracks attendance. Points
are tracked within a rolling six-month period, so that absences
over six months old are dropped from consideration. One point is
assessed for an absence of up to thr.ee days for illness, even
with a doctor’s excuse. Coming late to work more than fifteen
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minutes after the scheduled time, or leaving work more than ten
minutes early, is a half-point. After getting thr.ee points on
record, the associate has reached the maximum amount of leeway
allowed by the attendance standard. A manager counsels an
associate after four attendance points. At five absence points,
the associate is placed on a D-day. The associate will be
terminated after six attendance points.
Key Metric Measures
I derived these measures from the work of Huselid, Becker
and Beatty (2004) in creating useful metrics that link workforce
compensation with business strategy.
1. Number/percentage of associates receiving large, typical
and zero raises during a fiscal year: this illustrates
those whose daily work habits contribute to
organizational success.
2. Number/percentage of associates reaching pay caps in
their current position pay grades: this is indicative of
associate retention programs as well as a pool of future
managerial talent.
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3. Number/percentage of associates who participate in the
VPI sales contests: this reflects associate engagement as
well as an entrepreneurial mindset.
4. Number/percentage of associates qualified to receive My
Share bonuses: this is a combination of short-term
retention and a promise of the company to share its
success with the workforce.
5. Number of managers earning performance bonuses during a
fiscal year: this program is also a promise to reward the
Assistant Managers that are in frequent contact with the
hourly staff and are the backbone behind the store’s
strategy execution.
Key Action Items
At present, corporate headquarters is solely responsible for
assigning the facility start rate to the store. This start rate
is based on a statistical analysis of the average starting pay of
other retailers and is intended to be competitive. To ease the
manner with which the facility start rate is calculated, I would
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base it on 130% of the Federal minimum wage. This will give the
store an automatic rate adjustment, as the facility’s start rate
is now $7.20, which is about 110% of the current minimum wage of
$6.55. This rate will fall below minimum wage on July 24, when
the minimum wage reaches $7.25. The store has not yet received
its new facility start rate from the corporate headquarters. A
more generous stating wage will also put the store at a strategic
advantage over other retailers in the area in attracting new
talent and compensating the workforce in what will be an
increasing workload as other retailers continue to collapse.
Weekends are a critical period when customer traffic
increases, yet a portion of the workforce “works the system” and
finds/makes excuses to call in and avoid showing up. Managers
are responsible for monitoring attendance and most associate
discharges are for reasons related to not showing up as
scheduled. I would also institute a weekend differential pay in
lieu of a Sunday differential. My idea would have the entire
weekend covered by a differential premium, to encourage more
associates to come to work on Fridays and Saturdays, a time that
is busier and strategically significant.
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Successful execution of the Walmart everyday low price
strategy depends on the success of each department in the
supercenter. While the My Share bonus rewards the total store
staff, I would also institute a SWAS (Store-within-a-store)
bonus, calculated on the performance of each department,
encouraging excellence in those departments that never seem to be
given due credit for their consistent, steady performance. The
same metrics used for the total store’s My Share calculation can
also support a SWAS performance bonus. Forty percent of the
total bonus is to reward the department manager as the strategic
planner for the department and the balance is shared with the
members of the department. This program will also encourage more
associates to seek promotion to department manager.
I would also change some hourly supervisors to salaried
positions, based on the example used in the military services.
If the store manager is similar to an Army battalion commander in
charge of 400 to 600 soldiers, these supervisors would become
Warrant Officers; specialists in their respective positions,
rather than the Assistant Managers and Co-Managers (lieutenants
and captains) who perform more general duties. This initiative
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will ensure that would be additional authority figures available
for customer service. There is a plan to add additional Co-
managers on the night shift, but I believe that by making the
support manager and CSM salaried staff, there would be the
required decision-making power at lower management costs. If the
SWAS bonus is adopted, this will also compensate the CSM and
Support Managers who would otherwise not qualify for the
department manager’s reward program
Reward associates who regularly exceed attendance standards
by converting some unused sick time to vacation time. In this
way, it becomes an incentive to practice good health habits as
well as to show up ready and willing to work. Because associates
cannot collect sick time until thr.ee days have elapsed, the
conversion ratio can be one day of vacation gained for every
thr.ee days of sick time not used. This actually saves on costs.
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Managers should also make judgments concerning associates
who come to work so unhealthy as to spread disease throughout the
store. Working through personal illness may be admirable, but
counterproductive if the disease is contagious. An associate
sent home by a manager should not be assessed attendance points.
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Human Resource Strategic Services
Enhancement of Organizational Performance
The Human Resources office is the primary point of contact
for recruiting efforts. Job seekers place their calls here to
learn of any openings. Associates use the computers in the
Training Room to complete CBL training, perform actions with the
SMART system or use the corporate network to gather information
from the Wire. The HR office is where associates pick up their
paychecks, and apply for benefits, leaves of absence and many
other personnel and administrative actions. However, some
personnel actions take place through a self-service mechanism
known as the SMART system. Associates can edit the time clock
“punch-in”, apply for paid time-off using vacation or personal
hours, or check to see if their requests for leave have been
approved.
HR. Key Metric Measures
The Human Resource office’s effectiveness can be measured by
means of the following:
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1. Organizational turnover: the loss and replacement of
associates, both hourly and salaried
2. Absenteeism: the number of associates who fail to show
for work
3. Percentage of CBL courses completed on time
4. Number of reportable accidents and injuries to associates
and customers
5. Number of associates signing up for health insurance
benefits
6. Number of associates participating in 401(k) and stock
purchase plans
7. Number of associates participating in the Associate
Grassroots Survey
Key Action Items
I recommend that the Human Resources Manager become a
salaried member of the management team. This would give the HR
manager the authority to investigate issues relating to receipt
of pay, changes in job codes, promotion and demotion and other
issues now referred to the salaried manager at the market level.
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In addition, the HR manager, as a member of the salaried staff,
can more easily approach the store’s leaders with difficult
issues concerning associates that an hourly associate cannot.
I also recommend that the HR staff include additional
associates who would work during all three shifts to provide
round-the-clock support. They can be responsible for
distributing paychecks after hours, clerical support for
performance appraisals, assistance with SMART terminal operations
and training support. These changes will give the Human
Resources Office greater strategic importance than it has now.
The Human Resources Office should also be the chief
spokesperson for the store manager and the company, issuing
newsletters and communicating the seasonal strategies and the
overall performance of the store. The HR office operates a
computer screen with some news items such as associates’
birthdays and anniversaries, but this information does little to
advance the store’s strategy. Associates need to know in
advance, the dates of changes to the modular shelf displays,
seasonal promotions, and My Share bonus results. I would add
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performance data about where the store stands relative to the
performance of other Walmart stores as well as the competition.
62
Conclusions
Walmart stores in general and this supercenter in
particular, have succeeded because of a strategy that offers
consumers the lowest prices on everything from staple foods to
luxury items. To pursue this strategy, Walmart lowers its
operating costs using high technology systems, minute-to-minute
analysis of sales data, an in-house distribution system larger
than any other retailer and a strong corporate culture that
demands a high level of performance from its workforce in
exchange for shared rewards.
The Human Resources office in Walmart Supercenter number
3294 currently operates as a personnel support system for the
associates, but is capable of providing a greater strategic
impact. The Human Resources function can link associates’ job
performance with the overall performance of the supercenter when
it is properly integrated into the execution of strategy.
Many of the recommendations I have proposed are based upon
what I have observed at this one supercenter, but can be applied
to any Walmart store that needs the same focus on similar issues.
63
Additionally, other Walmart stores can benefit from strategic
initiatives that will help the total organization maintain its
advantages in the marketplace. The ultimate goal is to give
Walmart Supercenter number 3294 the ability to stay ahead of the
competition in its mission to help people, “Save money, live
better”.
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65
Appendix A: Aerial map of Walmart Supercenter # 3294, from
Yahoo (2009)
RECOMMENDATION EXPECTED RESULTSAdvance the HR. manager to salaried manager rank
Provides the HR. Manager with moreauthority to act
Add more associates to the HR. office
Provides “round-the-clock” supportfor all shifts
Workforce differentiation of strategically important positions
Identifies critical jobs that mustbe staffed to maintain the store’sstrategy
Solicit feedback on training and development, similar to the Associate Grassroots Survey
Informs HR. of the state of skillstraining and development more effectively
Keep associates informed of store strategy and performance
Associates must know, “Why we work”
Secondary job code of “cashier/sales associate”
Allows more associates to operate the POS for better customer service
Development program for new department managers/hourly supervisors
Improve their chances for success after promotion
Add “Change of Rater” and “Meritorious” performance appraisals
Ensure consistency in the appraisal program and put meritorious performance on record
Performance plans for hourly associates
Reduce subjectivity and measure achievements via performance goals
Call progressive discipline what it is and separate it from “coaching”
This will make “coaching” an uplifting experience again
Pin the facility start rate to 130% of the Federal minimum wage
Allows for automatic wage adjustments without waiting for corporate headquarters to act
Convert Sunday premium to Weekend premium
Encourages more associates to workon weekends during heavy customer traffic
SWAS bonus program Makes all departments equally
66
responsible for total store success
CSM and Support Manager to become salaried members of management
Makes these hourly managers authority figures at less cost than additional assistant mgr./co-mgr.
Convert unused sick time to vacation time
Rewards associates who stay healthy
Do not assess attendance points onassociates sent home for illness
Does not penalize the “willing, but incapacitated” associate
Table of Recommendations and Their Expected Results
Appendix B: Concise table of recommendations and their
expectant results
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Appendix C: Front side of a typical hourly appraisal form
68
69
Appendix D: Reverse side of an appraisal is the same for all
positions.
70
71
Appendix E: An illustration of associates wearing award
pins.
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%2C%20KY%2040218&q2=7400%20New%20Lagrange%20Rd%2C
%20Louisville%2C%20KY%2040222-4870&q3=7101%20Cedar%20Springs
%20Blvd%2C%20Louisville%2C%20KY%2C%2040291
