Background Of Wal Mart

Published Date: 02 Nov 2017

1.0 INTRODUCTION

Motivation represents the forces that affect a person direction, intensity, and persistence of voluntary behavior. Motivated employees are willing to exert a particular of effort (intensity), for a certain amount of time (persistence), toward a particular goal (direction). (McShane, 2010) Employee engagement was the employee’s emotion and cognitive motivation, self-efficacy to perform the job according to organization’s vision that improves organizational effectiveness. To engaged and motivated workforce, employee drives and needs are important to motivational "force" within people.

Background of Wal-Mart

Wal-Mart is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores. It’s also the world’s third largest public corporation, largest retailer and valuable companies in the world. Wal-Mart remains a family-owned business that control by the Walton family who own a 48% stake.

The company was incorporated on October 31, 1969 and founded by Sam Walton in 1962. It’s publicly traded on the New York Stock Exchange in 1972 and its headquartered was in Bentonville, Arkansas. Wal-Mart has 8,500 stores in 15 countries that under 55 different names and employs over 1.6 million people. Wal-Mart’s investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful.

In 1940, when Sam Walton was franchising a Ben Franklin’s variety store in Newport, Ark., he had a simple but momentous idea that always looking for deals from suppliers. This is because a retailer who managed to get a bargain from a wholesaler would leave his store prices unchanged and pocket the extra money. This extra money can pass on the savings to his customers and earning his profit through volume when he launched Wal-Mart in 1962. Therefore, the quest for low prices came naturally to Walton.

Walton understood that a major requirement for keeping costs down was controlling the payroll as payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you to maintain profit margin.

In 1970, Wal-Mart was using computers to link its stores and warehouses. Sales data allowed Wal-Mart to keep track of specific items and reduce inventory miscalculations. In 1971, he introduced a profit-sharing plan that allowed employees to put a certain percentage of their wages towards the purchase of subsidized Wal-Mart stock. In 1985, Walton launched a "Made in America" campaign that committed Wal-Mart to buying American-made products if suppliers could get within 5% of the price of a foreign competitor. Between 1996 and 1999, sales increased by 78% while inventory rose only 24 %, a feat Fortune lauded as "mind-bending". Between 1997 and 2001, the company’s stock value increased by over 500%, rising by 70% in 1997 alone. Today, with $288 billion in annual revenues and over $10 billion in profits, Wal-Mart became the world’s largest corporation. In 2009, it owns and operates the Sam’s Club retail warehouses in North American and generated 51% of its US$258 billion sales in the U.S. from grocery business.

2.0 CONTENT

LEARNED-NEEDS THEORY

Motivation is one of the factors that can make employees more efficient. In the learned need theory, it is said that needs are shaped, amplified or suppressed through self-concept, social norms and past experience. (McShane, S. L., & Von Glinow, M. A. 2010). It is proposed that needs can be learned by employees, either strengthened or weankened by company through training. According to McClelland The employees motivation and effectiveness can be influenced by the need for achievement(nAch), need for affiliation(nAff), and need for power (nPow). Employees will have different needs according to their own personality.

Need for Achievement (nAch)

Employees seek the need for achievement they need to reach their goal and taking responsibility of their task. It is refer to as"achievement motivated". For the employees with high need for achievement, they would tends to avoid low or high risk situation. This is because of the attained success is not a good challenge and would not be able to satisfy them. They would rather takes calculated risk situation and set it as their challenges. This is because their usually motivated by the challenging goals that being setup for them and although they are always able to work effectively whether alone or within a groups of peoples. In addition, they also like to receive feedback on their work and achievement to know whether they are doing their work in right way or not, so that they can improve.

Need for Affiliation (nAff)

Employees seek for approval by other peoples and try to avoid conflict. It is also refer as "affiliation motivated". Those with high need for affiliation need, they are tend to have a good and harmony relationship with other people. Thus, they will feeling accepted and approved by other peoples. In this case, it is recommended to put those employees that have high affiliation into a group. Employees that motivated by affiliation want to be liked by others; therefore they will often follow the decision made by the group that they situated in. They do not like to take high risk or be in uncertainty when providing feedback.

Need for Power (nPow)

The employees that have high need for powers are desired to control their own environment are referred to as "power motivated". They like to controls peoples and influence the others, which makes them to be able to work best when they are in charge of a group. And since they like to be in competition with the others, they are always self-motivated and are able to do well with those goal-oriented projects. This group of employees always seeks for ways to win the competition and like to being recognize by others from what they had achieve. Besides, they are also effective in a negotiations situation because of their ability to control and influence other people. And when providing feedback to these people, it is good to be direct to them, and they should be kept motivated by giving them opportunity to manage the others.

MASLOW’S HIRARCHY OF NEEDS THEORY

Maslow’s needs hierarchy theory was first introduced by psychologist Abraham Maslow in his 1943 paper "A Theory of Human Motivation" and his subsequent book Motivation and Personality. This hierarchy proposes that people are motivated to fulfill basic needs before moving on to higher needs. This hierarchy is always displayed as a pyramid. It consists of five levels. The lowest levels of the pyramid are made up of the most basic needs, while the more advanced needs are at the top of the pyramid. Maslow suggested that these five levels of needs play an important role in motivating behavior. Physiological, security, belongingness, and esteem needs are categorized in deficiency needs (also known as D-needs), meaning that these needs arise due to deprivation. Maslow termed the highest-level of the pyramid, self-actualization need as growth need (also known as being need or B-need) because it continues to develop even after fulfilled.

The five different levels in Maslow’s hierarchy of needs are arranged in sequence of the most basic needs at base of pyramid:

Physiological Need

The most basic needs that is vital to survival, such as the need for water, air, food, and shelter.

Security Need

This includes needs for safety and security. Security need includes a desire for steady employment, stable environment, safe neighborhoods and health insurance.

Belongingness Need

The need for belonging involves love, and affection, interaction and relationship with others.

Esteem Need

The need for self-esteem involves personal worth, personal achievement, social recognition, and respect from others.

Self-actualization Need

This is the highest level of Maslow’s hierarchy of needs. The need for self awareness involves self-fulfillment, self-contentment, personal growth, and personal potential realization.

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2.1 APPLICATION OF THEORIES

LEARNED-NEEDS THEORY

According to The New York Times' Stephanie Clifford and Stephanie Rosenbloom report, Wal-Mart offering its U.S. employees to obtain discounted college degrees through an online university, American Public University, a for-profit school located in Charles Town, West Virginia. The purpose is to motivate them by using the theory of Need for Achievement (nAch). Under this partnership with American Public University, those eligible employees will receive 15% price reduction on tuition and they must had worked full time for 1 year or part time for 3 years in the corporation and ability to scoring "above target" on his/her recent job evaluation by their respective supervisors. According to the New York Times, the executives from Wal-Mart said that although the initial point of the program was to help employees become more educated and increasing their workforce quality, but also using in helping them to deal with the high employee turnover problem that had plagued them for years. (The company notes in a Security and Exchanges Commission (SEC) filing: "Similar to other large retailers, the company has a large number of part-timers, hourly or non-exempt employees and experiences significant turnover in employees each year.").

Furthermore, Wal-Mart also developed motivational program for their employees that match with the theory of Need for Affiliation (nAff). This strategy refers to the strategy of Wal-Mart in using the term of "associate" instead of "employee" on their workforce. This strategy had been started since the time Wal-Mart agrees with J.C.Penny to refer their workforce as associates. Moreover, the founder of Wal-Mart, Mr. Sam Walton also suggested a new way of treating his associates by calling all levels of them by the first name. This strategy not only had created a sense of belongingness to the employees of the company but also created a family-oriented business for the corporation. The successfulness of this strategy has been proven, where Mr. Donald G. Soderquist, former senior vice chairman of Wal-Mart Stores, Inc, was visiting the Wal-Mart store in Bartless, Tennessee, it was really unbelievable for him to see all the associates and department managers, had stood up with ovation to Gracie, who was a cleaner lady for the store for many years (The Wal-Mart Way, Donald G.Soderquist, 2005).

Besides that, some of their employees also have the Need for Power (nPow), and there is also a need for their corporation to train the leadership of their managers from time to time in order to keep the management running smooth. Despite of this, Wal-Mart always involve their employee in all level of associates to developed learning and training programs. As reported by Mr. Donald G. Soderquist in his book, about more than three-quarters of the stores managers had started as an hourly association (The Wal-Mart Way, Donald G. Soderquist, 2005). And in his book, Mr. Donald G. Soderquist also provided a case of one of his associate, Mr. Kevin Turner. Mr. Kevin Turner had started his job in Wal-Mart as a temporary cashier at one of Wal-Mart store in Ada, Oklahoma in 1986, and after he had graduated from the East Central University, he decided to work full-time in the company as an auditor. Later on, he was then transferred to the technology department at the entry-level position and after going through some gradual promotions, he eventually becomes a senior vice president and the Chief Information Officer (CIO) of Wal-Mart in year 1999. Lastly, Mr. Kevin Turner was promoted to become the president and Chief Executives Officer (CEO) of Sam’s clubs, a $30 billion division of Wal-Mart (The Wal-Mart Way, Donald G.Soderquist, 2005). This case of Mr. Kevin Turner had proved that Wal-Mart is a corporation that knew that some of their employees really want to be a leader and have power on their hand.

MASLOW’S HIERARCHY OF NEEDS THEORY

1. Physiological

According to Associate Stock Purchase Plan, Wal-Mart enabled all employees to access company’s shares by selling stock to them at a discounted price and without brokerage fee. Wal-Mart implemented a cash incentive plan for employees to get additional income depend on company’s performance. In addition, associate break rooms are provided to tired employees to take a rest. By implementing Associate Discount Card, Wal-Mart employees have the privilege to enjoy various discounts in-store and online at Walmart.com, including 10% off fresh fruits and vegetables. Moreover, employees are granted exclusive discounts on travel and entertainment.

2. Safety

Wal-Mart motivates employees through health and well-being benefit. All employees at Wal-Mart and their immediate family can get a health insurance at a very low price which includes primary doctor, pharmacies, vision, and dental. Wal-Mart also gives free confidential counseling and health information service to employees such as Quit Tobacco program which is specially designed for smoking employees. 401(k) plan is established by Wal-Mart as a retirement plan for employees to secure their benefit after retirement.

3. Belongingness

Sam Walton, founder of Wal-Mart had suggested a new way of treating his associates by calling their first name and displaying only the first name on the ID badge. Everyone in the company is getting more intimate by calling the other’s first name because it can create a family-oriented business instead of boss-oriented one. Wal-Mart had also renamed its human resource department as a "people department" to create a big family working atmosphere.

4. Esteem

According to "New York Time Archives", Wal-Mart has expanded their gender antidiscrimination policy as well as new definition of "family" that included same-sex partners. In order to solve gender imbalance in management of Wal-Mart, CEO Mike Duke announced a President's Global Council of Women Leaders to help boost the share of female managers at Wal-Mart. This is a good way to motivate female employees because they feel respected by others in workplace. In 2011, 53% of associates promoted in Wal-Mart U.S. were women.

5. Self-actualization

Wal-Mart is targeting college graduates and those completing their MBAs by offering leadership development program. The Leadership Internship Program is an opportunity for full-time MBA students to realize their potential and talent. It provided by Wal-Mart to associates through mentoring programs, sponsorship programs, various leadership courses and Associate Resource Groups. Through Diversity Goals Program, nearly 60,000 managers are held accountable for elevating the standards of diversity and inclusion throughout our company, with up to 15% of management bonuses and 10% of performance evaluation scores tied to their diversity goals achievement. As a part of women’s economic empowerment initiative launched by Wal-Mart, 234 female associates at Wal-Mart Mexico completed taking the Stage, a program focused on developing large numbers of women into organizational leaders.

2.2 IDENTIFICATION AND ANALYZE OF PROBLEMS THAT WILL BE ENCOUNTERED BY WAL-MART

LEARNED-NEEDS THEORY

Firstly, in applying that strategy that based on the Need for Achievement (nAch), Wal-Mart needs to select the person that responsible in evaluating the achievement of their employees carefully. This is because different personnel has different perspectives that may lead to give different evaluation result to the same employee. The qualification of the responsible personnel must be being admitted and trusted by the employees to prevent the employees feel dissatisfy of the evaluation result. Otherwise, this kind of dissatisfaction may brings along the problem of high employees turnover rate at Wal-Mart.

Next, Wal-Mart also need to pay attention when using the strategy that based on the theory of Need for Affiliation (nAff) especially the attitude of the new employees that are still have not feel themselves as one member of the big family of Wal-Mart. This attitude must be observed carefully by the management to prevent they take advantage on their superior personnel. This problem must be put attention by Wal-Mart, so that it would not ruined the family-oriented culture that had exist in the company for years.

Lastly, the problem that lies in the current strategy of Wal-Mart that related to the theory of Need for Power (nPow) is the amount of time needed for promotion from one level to another. Although it is good for the corporation to have its associates to be promoted slowly so that they really have the capability to handle the pose that being given to them, but nowadays, the new generation of the workforce, Generation Y (Gen-Y) speaks more on the capability than experience, they thinks that if they already able to handle a higher pose, they should be given the chance to do so. People of Gen-Y tend to leave if they have a better alternative for them.

MASLOW’S HIERARCHY OF NEEDS THEORY

When Wal-Mart applies Maslow’s Needs Hierarchy Theory in motivating employees, it is hard to meet the needs and requirements of every employee. In physiological need, employees prefer higher minimum wages and paid overtime hours. If Wal-Mart takes approach to increase minimum pay, it will add cost to the operating expenses and inflict adverse effect to profit margin. This approach is contradictory to Wal-Mart slogan "Save money. Live better" and will burden consumers due to the price rise in goods. Consumers may easily switch to other competitor such as Costco Wholesale, Target, and J.C. Penny and so forth.

Employees who involve in gender antidiscrimination campaign will strive more for esteem need than other needs. Female employees prefer their work recognition and promotion to management department. After fulfilling the female employees’ self esteem need, it seems unfair to male employees. Wal-Mart will face gradually gender imbalance in workforce and have to monitor this case from time to time.

At Wal-Mart, a district store manager earns more than ten times of an average full-time basis employee. This income inequality arises from esteem need and self-actualization needs fulfillment may diminish the benefits from fulfillment of belongingness need among employees. As an example, the family-oriented working atmosphere will turn weaker due to argument in income inequality.

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3.0 RECOMMENDATION

Wal-Mart using learned need theory and Maslow’s needs hierarchy theory to motivate their employees so that can improve their work efficiency. Although using this 2 theory, Wal-Mart still has a few problem in motivation their employee. To solve these problems that meet by Wal-Mart, we suggest Wal-Mart use other theory to motivate their employees.

Four–drive theory is a motivation theory based on the innate drives to acquire, bond, learn, and defend that in corporate both emotions and rationality. These four drives are a complete-set-no other fundamental drives are excluded from the model. This theory can solve the problem of new employees attitude that are still have not feel themselves as one member of the big family of Wal-Mart and the selection of person that responsible in evaluating the achievement of their employees.

In the four-drive theory, the drives to bond is to form social relationship and develop mutual caring commitments with others. This drive can help Wal-Mart to slove the selection of person who give the evaluation of the emplyees. If the relationship among the evaluater and employee is good, the employee will feel satisfy with the evalation. The evaluator who is responsible and fair is also can solve the gender discrimination. The evaluating of the employee should be fair to male and female employee and won’t affect their promotion.

While the drive of defend can slove the problem of the new employee attitudes. This drive is to satisfy our curiosity, to know and understand ourselves and the environment around us. This will let the new employee understanding the company and the operation in the workplace among other employees. New employees will more loyalty to company if they have the knowledge of the work.

To solve the problem of the period of the promotion among the employees, Wal-Mart can evaluating the employee performance among a year in the workplace and provides the promotion once a year. Employees like Generation-Y dislike to take long period to promote from lower to upper level of management. So if they performance is good, Wal-Mart can decide to promote them from lower post to upper post to keep their loyalty to company.

Equity theory says that employees determine feelings of equity by comparing their own outcome or input ration to the outcome or input ration of some other person. It is a theory explaining how people develop perceptions of fairness in the distribution and exchange of resources. Input is what the employee provides while the outcome is what the employee receives. Wal-Mart can use it to settle the problem of the income inequality. The higher the services or contribution provide by employee, the higher the pay they will receives. This will let the employee work hard and increase they workforce.

To avoid the product price raise by pay the high wages to employees, Wal-Mart can use the determinant of direct financial compensation. Determinant of direct financial compensation involves many elements, once is the competency-based pay. Competency-based pay is rewards employees for the capabilities they attain. Competencies include skills but also involve other factors such as motives, values, attitudes and self-concepts. Employee have high competency will have high pay while low competency will have low pay.

CONCLUSION

According to McClelland The employees motivation and effectiveness can be influenced by the need for achievement(nAch), need for affiliation(nAff), and need for power (nPow).

Wal-Mart offering its U.S. employees discounted college degrees is to motivate their employees based on theory of Need for Achievement (nAch). For Need for Affiliation (nAff), Wal-Mart using the term of "associate" instead of "employee" strategy on their workforce to make employees feel more engaged with the corporation by calling all levels of them by the first name and displaying only the first name one their respective identity badges. Some of their employees also may have Need for Power (nPow), and there is also a need for their corporation to train the leadership of their managers from time to time in order to keep their management running smooth. Wal-Mart involves all their employees from all level of associates to develop learning and training programs for those qualifies associates to become a leader.

In Maslow’s theory the physiological needs, Wal-Mart enabled all employees to access company’s shares by selling stock to them at a discounted price and without brokerage fee. In safety needs, Wal-Mart motivates employees through health and well-being benefit by providing health insurance at a very low price immediate for their family. Wal-Mart also gives free confidential counseling, health information service and retirement plan to secure their employee’s benefit. In belongingness needs, Sam Walton, founder of Wal-Mart had suggested a new way of treating his associates by calling their first name and displaying only the first name on the ID badge. It helps to create a family-oriented business and makes their employee feel a part of family of Wal-Mart. In esteem needs, Wal-Mart has expanded their gender antidiscrimination policy as well as new definition of "family" that included same-sex partners. In self-actualization needs, Wal-Mart is targeting college graduates and those completing their MBAs by offering leadership development program to realize their potential and talent.

Although the application of the theories had helped Wal-Mart much in motivating their employees, there are still some underlies problems that need to be paid attention by Wal-Mart.

In learn need theory, the problem of high employee’s turnover rate at Wal-Mart is obviously occurring based on the Need for Achievement (nAch). Secondly, Wal-Mart need to pay attention on using the strategy that based on theory of Need for Affiliation (nAff) especially for new employees that are still have not feel themselves as one member of the big family of Wal-Mart. Thirdly, the problem related to the theory of Need for Power (nPow) is the amount of time needed for promotion from one level to another.

Additionally, when Wal-Mart applies Maslow’s Hierarchy Needs Theory in motivating employees, it is hard to meet the needs and requirements of every employee. Employees who involve in gender antidiscrimination campaign also will strive more for esteem need than other needs. A district store manager earns more than ten times of an average full-time basis employee also a problem when applies in Maslow’s Hierarchy Needs Theory. This income inequality arises from esteem need and self-actualization needs fulfillment may diminish the benefits among employees.