STRATEGIC HUMAN

RESOURCE MANAGEMENT
Aligning HR and Business-Level Strategy:

PRIYA TALWAR
SHALINI SINGH
MANISHA GAUTAM
TAJINDER KAUR
SOURABH HARJAI

HUMAN RESOURCE
MANAGEMENT
HRs 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?

HRS 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 HRS CRITICS

Quantify

dollars

people-management results into

Productivity

of workforce
Cost of vacant position
Cost of keeping bad manager
Dollar impact of hiring and keeping top
performers vs. average ones in mission-critical
jobs

Adopt
Not

fact-based decision-making

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
Organizational
Organizational
Strategies
Strategies

Fit

Consistency

Consistency

Fit

Organizational
Organizational
Characteristics
Characteristics

Environment
Environment

Consistency

HR Strategies

Fit

Improved
Improved
Firm
Firm
Performance
Performance

Fit
Consistency

Organizational
Organizational
Capabilities
Capabilities

SELECTED HR STRATEGIES THAT FIT

PORTERS THREE MAJOR TYPES OF
BUSINESS STRATEGIES
Business
Strategy

Common Organizational
Characteristics

Overall
cost
leadership

Sustained capital
investment and access
to capital
Intense supervision of
labor
Tight cost control
requiring frequent,
detailed control reports
Low-cost distribution
system
Structured organization
and responsibilities
Products designed for
ease in manufacture

HR Strategies
Efficient production
Explicit job descriptions
Detailed work planning
Emphasis on technical
qualifications and skills
Emphasis on job-specific
training
Emphasis on job-based
pay
Use of performance
appraisal as a control
device

SELECTED HR STRATEGIES THAT FIT

PORTERS THREE MAJOR TYPES OF
BUSINESS STRATEGIES
Business
Strategy

Common Organizational
Characteristics

Differentiation

Strong marketing
abilities
Product engineering
Strong capability in
basic research
Corporate reputation for
quality or technological
leadership
Amenities to attract
highly skilled labor,
scientists, or creative
people.

HR Strategies
Emphasis on innovation
and flexibility
Broad job classes
Loose work planning
External recruitment
Team-based training
Emphasis on individualbased pay
Use of performance
appraisal as
development tool

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
WORK
HOURLY
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 dont 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

Its 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 WEGMANS WAY

Wegmans

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
Industrys 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 butchers 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 Woolworths 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 Managers Toolbox to
Remaining Union Free

Its 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 nations 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 nations 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 its 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-Marts pay scale is competitive

CURRENT DEVELOPMENTS IN
UNION ORGANIZING

Legal union avoidance tactics have impact

Las Vegas Sams Club held mandatory Ee meetings every week to

express anti-U views

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

You can speak for yourself (Some ees started wearing I can speak for
myself buttons)
The union only wants your money

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 arent 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/ countrys 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 WalMart pursuing?

Discuss how Wal-Marts growth plans affect and are
affected by its HR strategy

SWOT analysis

THANK YOU