Managerial functions and skills in Wal-Mart Stores – Managing Diversity, Globalization & Rapid Change

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Table of content
1. Corporate background of Wal-Mart Stores 2
2. Managing workforce diversity 3
2.1 Literature review of workforce diversity 3
2.2 Managerial functions in Wal-Mart Stores 4
2.2.1 Planning 4
2.2.2 Organizing 4
2.2.3 Staffing 5
2.2.4 Controlling 6
2.3 Managerial skills in Wal-Mart Stores 7
2.3.1 Interpersonal skill- Mentoring at Wal-Mart 7
2.3.2 Decision making – Globally diversity commitment 7
3. Sustain a global growth 8
3.1 Literature review of globalization issues 8
3.2 Managerial functions in Wal-Mart Stores 9
3.2.1 Planning function – strategic expansion globally 9
3.2.2 Leading skill – Open door policy & MBWA 9
3.3 Managerial skills in Wal-Mart Stores 10
3.3.1 Interpersonal skill – Communication in daily standup meetings 10
3.3.2 Political skill – Lobbying in governments 10
4. Managing Rapid Change 11
4.1 Literature review of change issues 11
4.2 Managerial functions in Wal-Mart Stores 12
4.2.1 Planning – Vision for sustainability 12
4.2.2 Motivation skill – Promotion of “intrapreneurship” 12
4.3 Managerial skills in Wal-Mart Stores 13
4.3.1 Technical skill – Reprice products electronically 13
4.3.2 Diagnostic skill 13
List of reference 15

Managerial functions and skills in Wal-Mart Stores
– Managing Diversity, Globalization & Rapid Change

1. Corporate background of Wal-Mart Stores

Wal-Mart was only founded in 1962 but soon become the U.S. retail industry leader since the middle of 1990s by adopting a broad combination of retail innovations such as the introduction of the hypermarket format and logistics management (Gibbon & Ponte 2005, p.101) and also with the help of the marketing strategies such as the “low price strategy” among the trend of rapid change and globalization. Now, Wal-Mart already established it global leadership in the retail industry and it serves customers and members more than 200 million times per week at more than 9230 retail units under 60 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs 2.1 million associates worldwide. Despite being content with the current position, Wal-Mart continues to invest its efforts and money in three major directions that show the future blueprint of the retail giant: The management of Diversity, Globalization and Rapid change. In term of diversity, Wal-Mart has already use the global labor forces diversity management to build up the core human capital that it could rely on to develop its core competitiveness; and in the field of globalization management, the company has kept the strategic expansion strategy to increase the business scale global wide; and in term of the management of the rapid change in the business environment, the company had lead the industry and still want to lead the industry by promoting changes as part of the company’s routine business practices.

2. Managing workforce diversity

2.1 Literature review of workforce diversity

Figure 1 A multi-meaning phenomenon of workforce diversity
Source: Arredondo, P. & Arredondo, P. M. 1996, p.16

Diversity refers to the differences among people in terms of dimensions such as age, ethnicity, gender, race, or physical ability. And workforce diversity depicts a workforce made up of people with different human qualities or who belong to various cultural groups (Daft & Lane 2008, p.16). While many of the definitions of workforce diversity focus on the human differences of many forms, Cummings and Worley (2008, p.473) claimed that such definitions are too narrow and focuses attention away from the broad range of issues that a diverse workforce can pose. Instead, they proposed that diversity in workforce brings different resources and perspective to the organizations and so companies have to design the human resource systems to build up a productive workforce and integrate diversity into a competitive advantage. This point of view corresponds with Patricia Arredondo and Patricia M. Arredondo (1996, p.15)’s claim that workforce diversity is an indisputable fact, a catalyst for organizational change, a composite of multicultural human resources, a business objective and a learning opportunity as the figure above shows. So we can see that it is of strategic importance for any organizations to well manage the diversity issues which could become part of the asset and contribute to the business success to the companies.

2.2 Managerial functions in Wal-Mart Stores

2.2.1 Planning

It is obvious that Wal-Mart has integrated the concept of diversity in the workforce long ago since its establishment as a small discount store in 1962 with Sam Walton’s three basic beliefs, and the first of them is to “Respect for the individual” with backgrounds and personal beliefs (Haig 2004, p.314). In the recent few years, Wal-Mart has made progress in the journey to become a leader in diversity and inclusion through ambitious plan and goals in diversity management. The company’s long term plan on diversity and inclusion could also been seen from company’s budgeting. For example, according to the most recent company Diversity and Inclusion Report (2010) released by Wal-Mart, to help increase independent living, post-secondary training and employment opportunities for people with disabilities, the Wal-Mart Foundation donated $3 million dollar to The Arc of the United States (The Arc) to create job opportunities for the disable people .

2.2.2 Organizing

While setting a goal and vision is important to better manage the workforce diversity, it is also critical to ensure that the company is doing an appropriate job in organizing the business in such a way that it facilitates the process of integrating diversity into the company culture and invisible asset. And the organizing managerial function in Wal-Mart to implement the workforce diversity plan can be seen from a lot of events and two major ones are stated here. The first big event that is considered as a milestone in the company’s history is the establishment of the Global Office of Diversity which was set up in November of 2003 under the leadership of Charlyn Jarrells Porter with the initiative of fostering a high-performance culture based on inclusion. And soon after the establishment of the global diversity office, Wal-Mart had been recognized as the top corporation for multicultural business (Graen, G. B. & Graen, J. A. 2007). The second event is the establishment of the President’s Global Council of Women Leaders in 2009 by the CEO, Mike Duke. Though the management of workforce diversity could still be done before the set-up of the offices, but there is no doubt that the establishment of the offices had placed the diversity issues in a higher priority in the daily management work and it provides a structural support to the diversity management.

2.2.3 Staffing

In term of meeting the company’s strategic human resource needs especially in the long run, Wal-Mart has used special ways to make sure that diversity in the workforce has been integrated into the strategic recruitment and human resource planning process. For example, Wal-Mart has built up long term cooperation relationship with various colleges and organizations such as the National Black MBAs ( 2004). Rather than merely focusing on hiring the minorities, Wal-Mart also has integrated the concept of diversity into other staffing human resource activities: diversity training, career advancement system and compensation scheme setting. In term of the diversity training, the company has been managing diversity and inclusion training for new and newly-promoted management associates for them to increase the inclusion of different identity groups, and promote better teamwork by increasing the participants’ cultural awareness, knowledge and relative skills (Boone & Kurtz 2008); and the second kind of relative staffing activity is the design of the career advancement system. With the business expansion of Wal-Mart globally, the company has offered a lot of job opportunities at all levels for internal promotion and external openings, this career advancement system has enabled all employees including the minorities to advance along their career path rather than just providing the lower end job opportunities; the third human resource relative skill is the compensation scheme setting for the officers, it is known to the public that Wal-Mart has long establish the link between the bonus pay and the managers’ performance in achieving the various diversity goals such as the Good Faith Efforts goals and Home Office and/or Field Management Placement Diversity Goals. For instance, if the managers do not hit the set target of their individual diversity commitment relative goals, their bonuses pay could be suppressed up to fifteen percent of the total bonus pay they should have received ( 2010).

2.2.4 Controlling

To ensure that the diversity in the workforce is respected and the minorities obtain the Equal Employment Opportunity (EEO), Wal-Mart enforces effective EEO policy by adopting three major controlling mechanisms: monitoring of gender disparities, evaluation of managers and evaluation of feedback from employees. The first approach is the monitoring of the gender disparities and race disparities by analyzing the patterns of segregation and differences by gender and race in pay and career advancement on a regular basis in term of several reports such as the Vice President of the People Division reviews and quarterly issued People Update on the gender composition; the second controlling system is through explicit evaluation of managers and supervisors regarding the degree of their contributions to an organization’s EEO objectives in comparison with the written anti-discrimination policy; and the third controlling system is the monitoring employees’ perception of discriminatory barriers through surveys such as the annual Grass Roots Survey program which has been conducted annually since the year 1994 (Nielsen & Nelson 2005 p.407).

2.3 Managerial skills in Wal-Mart Stores

2.3.1 Interpersonal skill- Mentoring at Wal-Mart

There are several fundamental motivators that keep Wal-Mart with a high momentum to use the mentoring as an interpersonal skill in a long time in the practical management practice: Knowledge sharing, motivating associates and developing internal talents. And mentoring at Wal-Mart has played an important in term of diversity management in the work place (Wal-Mart 2009 Global Sustainability Report). Through such mentoring efforts, the most important significance the mentoring has to the diversity management is that is facilitate the sharing and exchange of the diverse knowledge, experience and perspectives owned by different people with different background and life experiences.

2.3.2 Decision making – Globally diversity commitment

Decision making skills are frequently used by manages to determine and form up the strategic consideration and policy that a company should focus and the degree to which such focus should be in term of resource allocation and strategic importance, example of using decision making skills include the decision about whether the particular business should expand and the pricing strategies should be changed or maintained (Madura 2007, p.262). As for Wal-Mart, it has a global business as mentioned in the beginning in term of owning more than at more than 9230 retail units and hiring more than 2.1 million associates in a world wide scale, it would be off great difficulty to manage the diversity commitment relative issue in such a global manner with all these diversities factors such as ages, ethnicity and sexual orientation and obesity in different countries in term of deciding how much efforts should be made to a particular diversity issue in a particular market. To facilitate the diversity relative decision making process, Wal-Mart not only established the Global Office of Diversity to manage the diversity tasks in the highest management level but it also establish local country based program or diversity council to facilitate the local decision making regarding the diversity issues. For example, in 2007, Wal-Mart Canada had established its first diversity council participated by employees and executives and also management of different levels to discuss and make decisions regarding their interests in the diversity commitment issues ( 2010).

3. Sustain a global growth

3.1 Literature review of globalization issues

Economically speaking, the concept of globalization describes the increase in international trade at a faster growth-rate than the world economy itself as the increase in the international capital-flows including foreign direct investment due to the lower barriers of trade, increased speed and density interdependence (Braun 2005, p.2). In another definition, the term can also be referred as the transnational circulation of ideas, languages, or popular culture through acculturation (Qi 2011, p.84). With the direct confrontation and interaction of different cultural, economy and technological systems from different countries and economies, there are several issues that come together with globalization in the retail industry, increased competition from the global competitor, cultural shocks, political impacts such as government intervention and increasing labor division in a global scale, and all these issues have significant impact and also provide opportunities for Wal-Mart to achieve its target of internationalization of its business and in the long run sustaining a global growth.

3.2 Managerial functions in Wal-Mart Stores

3.2.1 Planning function – strategic expansion globally

Probably due to the strategic positioning of Wal-Mart as the price leadership, the sale volume or the scale of its business has direct link with the profitability of this business mode, since its establishment Wal-Mart has been keen on expansion. As quoted by Wal-Mart’s previous CEO, Lee Scott, in replying to the question that “whether Wal-Mart would like to take over the world” that “I don’t think so, all we want to do is grow” (Carroll & Buchholtz 2008, p.777). In term of carrying out this expansion strategy, the company has been long using the plan functions to achieve the goals. And Wal-Mart had been expanding the business in markets that were considered to be important though anticipated difficulties are large in numbers. For example, the company had been trying very hard to establish its market presence in Germany and Japan, but cultural shocks and other factors had made its effort of no use. And in 2006, it is even forced to close business in Germany. But still other markets with difference cultural background are still target markets that the company would try to enter due to the strategic importance of the expansion in a global scale which is the company’s long term plan.

3.2.2 Leading skill – Open door policy & MBWA

As just mentioned, the management of Wal-Mart believes that communication is one of the key strategies to cope with internal conflicts, misunderstandings and align the culture difference under the company’s own culture, to achieve the communication target the leaders in the company are expected to get out from behind the desks and spend time with the associates. And the MBWA, i.e. Management by Walking or Wandering Around is practiced by all of the company’s leaders. And also another leadership strategy is the open door policy which encourages the associates to directly walk into the managers’ office to bring up the issues that they or the customers concern and thus address the issues in an efficient way (Bergdahl 2004, p.81). The leadership skills by addressing the conflict and facilitating communications help reduce the resistance to the internationalization of the business.

3.3 Managerial skills in Wal-Mart Stores

3.3.1 Interpersonal skill – Communication in daily standup meetings

With the various forms of cultural shocks happen in different markets during the global expansion, one strategy that Wal-Mart adopts in its daily management practices to battle the cultural shocks and culture relative conflicts is through communication of the company’s vision and culture carried out by the management. The assumption that Wal-Mart holds in dealing with the cultural issues is that employees from different cultural background would be unionized under the company’s culture rather than under the U.S. culture or the local culture. To perform the communication function, store managers are requested to communicating constantly the most updated news about the company and the company’s vision and beliefs to the staffs through holding daily standup meetings (Bergdahl 2004, p.80).

3.3.2 Political skill – Lobbying in governments

As proposed by Chambers and Humble (2011, p.47) that the contribution of government is important at all levels – international, national and state in term of using approaches such as regulation, legislation, tax and rewards. Business is not always business itself alone without intervention from the political forces, this is validated by Wal-Mart during its way to grow its business globally. One precipitating event that made the company ramp up the efforts at lobbying in the Washington, D. D. is the agreement made by the U.S negotiators when they agreed to support China’s entry in the WTO (World Trade Organization) that there was a limit of 30 stores on retailers operating in China. To sustain its business growth in one of the fastest and largest retail market with the continual economy growth, Wal-Mart broke the tradition and policy created by the founder Sam Walton that the company should stay out of politics by getting into lobbying in the government (Carroll & Buchholtz 2008, p.779).

4. Managing Rapid Change

4.1 Literature review of change issues

Exposure to the global economy has initiated revolutionary change in many organizations in term of intensified competition for capital, markets, technology and skilled labor (Stone 2011, p.568). When even daily life has been accelerated, the increasing changes and globalization trend have had a higher demand to the organizations because with fast changes in business mode, technology and management methods, all organizations especially those in large scale are more challenged with the request of the effective management of change which is about balance—balance between short-term and long-term, profits and people , overview and detail, continuity and transformation and between the feasible and the desirable (Ramnarayan 2006). This means that leaders in the industries would have to seize the leadership again in the management of the changes in order to maintain their leadership in the industries. And it is believed that the history of Wal-Mart Stores is one relentless change management in which the company continually refined basic retailing skills – merchandising, pricing, and location and especially the supply and distribution (Durbin & Doerscher 2010, p.5). Below we will examine how the management of Wal-Mart uses their competencies to cope with the changing environment and even source its competitiveness from the management of change.

4.2 Managerial functions in Wal-Mart Stores

4.2.1 Planning – Vision for sustainability

Though lowest price strategy has always been the core strategy of the business of Wal-Mart, but such low cost pricing strategy had gone through some adaptions in the new century with the increasing awareness of environment protection and greener products. For example, a joint survey done in the end of 2007 by Packaging Digest and the Sustainable Packaging Coalition (SPC) suggested that sustainability is a hot button for the retail industry as well as in the packaging business with 46 percent of the respondents rated themselves “very familiar” with the issues of sustainability in packaging and only 10 percent of them were not very familiar at all (Jedlicka 2010, p.38). To maintain the leadership within this increasing trend of preference of greener good and environmental protection, Wal-Mart had strengthen its environmental protection efforts and also released the long term plan of sustainability with three ambitious broad environmental goals:

* To be supplied 100 percent by renewable energy;
* To create zero waste;
* To sell products that sustains people and the environment.

And the sustainability plan had been made know to the public clearly with a report in a piece of news named “Wal-Mart to pay more for ‘Greener’ goods” in 2007 in which the company promised to pay more for products that last longer and hurt the environment less if there is a necessity ( 2008).

4.2.2 Motivation skill – Promotion of “intrapreneurship”

To cope with the raid changes in a global scale, the management of Wal-Mart again source the solution from its most valuable asset, the employees at all levels by introducing the concept of “intrapreneurship”. And at Wal-Mart, intrapreneurial leadership is not restricted to the management level, and all associates are encouraged to act like business owners regardless of the job description to encourage new ways of doing things and risk taking, and many new ideas of business management are originated from the most low level employees and become widely used globally (Bergdahl & Walton 2007). By empowering every employee with the leadership functions, employees are highly motivated to work as a team and contribute constantly to the business growth in a rapid changing environment.

4.3 Managerial skills in Wal-Mart Stores

4.3.1 Technical skill – Reprice products electronically

Managers’ computer technology knowledge together with the company’s smart investment in the computer system had contributed to the company’s fast growth in the retail industry. Back at the time when Wal-Mart was still fought for a toehold in the Denver market with the low cost strategy in a price war with K-Mart. It was said that the management teams of Wal-Mart became relentless in shopping K-Mart’s stores and change the price of the products that they found out were in higher price than those on the shelves of K-Mart and reprice the products electronically. The lack of such technology in K-Mart resulted in Wal-Mart’s eventual win in the price war (Bergdahl 2004, p.237). And the computer technology skill of the management teams had absolutely contributed such success and growth of the business in a fast changing environment.

4.3.2 Diagnostic skill

Diagnostic skill is usually used when problems occur or to respond a particular and special situation. And in 2004 when the company was facing criticism about the plenty of waste and energy inefficiency together with the large business with the growth in awareness about environment protection, the company started a entrepreneurial team joint by managers from almost every major department and environmental consultants and NGOs (Non-governmental organizations) to diagnose the company’s business operation procedures with the aim to find out opportunities to improve the business practices using the perspective of restoration and sustainability (Jedlicka 2010, p.39).

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