Improving Wal-Mart’s Employee Relations
GM591: Leadership and Organizational Behavior
April 20, 2010
The Organization that we selected as our topic of discussion in our Project Paper is the Wal-Mart Corporation. Sam Walton is the founder of Wal-Mart. He opened his first store called Wal-Mart Discount City in Rogers, Arkansas in July of 1962. Their corporate office is currently located in Bentonville, Arkansas. Wal-Mart Stores Inc. incorporated its stores on October 31, 1969. In 1972, they started selling stock on the New York Stock exchange. Although, though the company has had controversial operational business practices they have grown to be the largest Retail Corporations in the world. In 1997, Wal-Mart was able to become the largest private employer in the United States. In that same year, their annual sales totaled over $105 billion. In 2010, Wal-Mart has over 2.1 million employees worldwide. There 2010 fiscal year sales exceeded $400 billion dollars (Wal-Mart About Us, 2010). I have been a loyal customer of Wal-Mart for years. Therefore, I was shocked when I found out about some of Wal-Marts questionable unofficial policies through talks with friends and family members who worked for them in the past and some who currently employed by them. My mother in law worked for them from 2006 thru 2008. She was required to work 8-hour shifts without a lunch break on a regular basis. One of my cousins was required to clock out because he was about to be in overtime and continue to work to keep labor cost down. I decided to Google Wal-Mart, to see if other people experienced the same injustice. I was stunned to see some of the practices of this company I loyally supported. According to an article released by the Associated Press on 12/24/08 called Wal-Mart to Pay Workers Up to $640 Million it will pay as much as $640 million to settle 63 lawsuits over wage-and-hour violations, ending years of dispute. Wal-Mart faced 76 similar class action lawsuits in courts across the country as of March 31, 2008. These violations range from having employees clock out and continue to work without pay, denying them with lunch breaks that they are entitled to by law, non-payment for overtime worked. They have also had issues with discrimination against women, resulting, from denying them promotions and paying them less then their male counterpart even though they held the same position, and in some cases, women had seniority over the men (Associated 2008). It is widely known that Wal-Mart pays its associates below the average retail wages. In 2008, the average full time Associate (34 hours per week) earns $10.84 hourly for an annual income of $19,165. That is $2,000 below the Federal Poverty Line for a family of four. In 2007, Wal-Mart CEO Lee Scott earned $29.7 million in total compensation, or 1,551 times the annual income of the average full time Wal-Mart Associate. Consequently, large portions of their employees qualify to receive Government Assistance to support their families. They are well aware that they pay their fulltime employees below the poverty level. In fact, Wal-Mart actually encourages their employees to take advantage of the Government Assistant Programs (Wake Up Wal-Mart, 2008). Wal-Mart does not offer its associates affordable healthcare insurance benefits. According to Wal-Mart employees, when they complained about high the cost of the insurance and lack of coverage it offers their managers would simply suggest that they try to qualify for Medicaid or Medicare. According to Wal-Mart Facts.com, If an average full-time Wal-Mart employee chooses the least expensive family coverage plan, they would have to spend over 20% of their income before the health insurance provided any reimbursement. An average full time Wal-Mart Associate faces a serious family health issue. They have to pay the entire out-of-pocket maximum for the least expensive health plan, which adds up to pay 53% of...