Wal-Mart’s main strategy has been to become a price leader through efficiency and processing, and in doing this it has positioned itself as the world’s largest retailer, accounting for ten percent of the United States’ two and a half percent annual productivity growth over the past decade (Solman, 2004). This success has not come without a cost though. Wal-Mart has faced much criticism, as well as litigation, for its human resource (HR) policies, being accused of underpaying and demanding too much of its associates. Research has shown (Bernardin, 2007) that HR practices are the leading indicators of lagging financial performance measures, but Wal-Mart is making itself an exception to this rule.
The discrepancy between Wal-Mart’s poor HR leading indicators and its high degree of financial success has to do with the introduction and extensive use of technology in its processes. By increasing the level of automation in its warehouses and stores, Wal-Mart has reduced the importance of employee satisfaction. The smooth flow of operations is less dependent on employees, allowing Wal-Mart to hire individuals with low levels of education for minimum wage compensation. This increase in the use of technology also means that very little employee training is necessary for successful execution of job tasks. The minimal training significantly reduces the investment that Wal-Mart has in each employee, which makes them easily replaceable as there is not a large financial or temporal penalty in getting a new person up to speed on their responsibilities.
The reputation this builds for Wal-Mart is not favorable and could result in a reduced customer value proposition and loss in customers, but image and corporate social responsibility are not the only factors driving customer value. Additional factors include price and convenience, two things that Wal-Mart is very good at delivering. Wal-Mart stores all have very similar floor layouts making it easy for customers to...
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