Many companies fail to meet the expectations of all of their stakeholders. Since there are a number of different stakeholders in any company (investors, customers, employees, etc.), it is possible to meet the needs of one or more groups while leaving out the needs of other groups. That is unfortunate for the one group left out, of course, and can also lead to serious problems for the company itself. When companies meet all stakeholder needs, they keep all of the groups affiliated with them happy and content. However, a company that avoids meeting the needs of one or more groups of stakeholders is setting itself up for problems. That does not mean that the company will fail. That largely depends on which group of stakeholders the company is effectively ignoring. Some stakeholder groups are more important to the overall operations of the company than others, and some groups can be manipulated more easily. That is simply a fact of business life.
Not meeting the needs of stakeholders is seen at many retail companies like Wal-Mart, where the employees are often overworked and underpaid. There have been labor disputes, lawsuits, and other issues that have appeared, indicating a deep concern for change when it comes to how retail workers are treated. Wal-Mart will be the focus here, as it is one of the retail companies where employees and the news media have been more vocal about whether employees are being treated correctly. It would appear that the company is not deeply concerned about change, but change does need to take place. With a better model for leadership and an addressing of current challenges, Wal-Mart could better address employee concerns and model higher quality treatment of its workers.
Background of the Company
Wal-Mart was founded in 1962 by Sam Walton, and became incorporated in 1969 (Wal-Mart, 2014). It was not long after that -- in 1972 - that it began to be traded on the NYSE (Wal-Mart, 2014). From that point, the company grew rapidly. During the 1980s and 1990s the company saw most of its growth (Wal-Mart, 2014). It expanded from being regional to the south with its base in Arkansas to being completely national. From there, it moved to other countries with mixed success. It did not do well in Germany and South Korea, but managed to succeed in numerous other countries including Mexico, Japan, and India (Wal-Mart, 2014). The company operates in different countries under different names, but it is all part of the same multi-national corporation. It is the largest retailer of groceries in the United States, and also has more than 11,000 stores in 27 countries (Wal-Mart, 2014). It is truly a giant in the retail and grocery worlds. But that does not mean there are no problems for the company or that there are not things it could be doing better.
Wal-Mart offers a nearly complete shopping experience. Many of the "super stores" contain a full supermarket, bakery, and deli, along with everything that could possibly be needed from a retail store including clothing, shoes, bedding, and more. Stores have auto centers, pharmacies, restaurants, eye doctors, and hair salons, among other things, allowing people to go to one store and do everything that need to do. Naturally, that is a big draw for the consumer. Wal-Mart is especially popular with lower income people, but many people who have more money shop there because they enjoy getting the good deals and lower prices that the company offers.
For all that Wal-Mart offers to its customers and investors, it is facing some challenges. The main area for these challenges is its relationship with its employees. Many employees are unhappy with the wages they receive, the hours they work, and other aspects of their treatment. Because of that, they either quit their jobs and move on, or they complain but get nowhere. It is difficult to fight back against such a large corporation, and employees can feel as though they are not being heard. Additionally, there are always plenty of people willing and able to work at Wal-Mart, so the people who get frustrated and quit are easily replaced by others. For the company, the three main challenges they are facing with their employees, as the largest stakeholder group that is unhappy. These challenges are:
Employees are unhappy with wages they are paid for the work they do.
Employees feel that leadership does not listen to or care about their concerns.
Employees want better overall treatment such as sick days, insurance, time off, vacation days, and other perks that they believe should be offered by such a profitable company.
It is easy to see that Wal-Mart employees do not feel they are being treated or compensated appropriately. The main issue, however, appears to be that employees do not feel their voices are heard when they have complaints or concerns. This is a common theme that is often seen with large companies when it comes to their leadership (Chemers, 1997; Hackman & Johnson, 2009). Among the biggest issues for employees of these companies is a lack of concern for what those employees have to say (Chemers, 1997). This is unfortunate, because employees can often provide leadership with amazing insight and information regarding a company (Vroom & Sternberg, 2002).
Proposed Organizational Changes
In order for Wal-Mart employee stakeholders to feel as though they are being treated fairly, there will have to be changes made. Any company that wants to see real change must listen to its employees and consider how employee concerns will impact the leadership of the company (Spillane, et al., 2004). By paying close attention to the issues the employees have, it is possible to determine areas where the company leaders are being ineffective and/or where those leaders could do more to help the company operate more smoothly (Spillane, et al., 2004; Vroom & Sternberg, 2002). That does not mean that every employee complaint has to be catered to, or that all of those complaints are even valid, but it does mean that companies should look for patterns in their employee complaints in order to discover where more serious issues may be located (Hughes, Ginnett, & Curphy, 2012).
Proposed changes for Wal-Mart can and should include higher wages and better working conditions, but the situation goes deeper than that. There is an overarching air of mistrust between employees and management, and that is what has to be dissolved. In order to be successful with that, the main proposed organizational change would be to move Wal-Mart's leaders from a transactional to a more transformational style of leadership. By doing this, employees and leaders will be better able to work together for the common good of the company, instead of being so sharply divided in their duties and their importance. Leaders who simply give orders to be followed are often not respected (Chemers, 1997). Employees want to feel as though they matter to the company they work for, and they want to be a part of the team (Chemers, 1997). This teamwork approach is easy for companies to say, but much more difficult to do correctly.
The Change Model
The change from transactional to transformational leadership is not always an easy one. Many companies are resistant to make changes in their leadership, especially if they are successful from the standpoint of their profit margin (Chemers, 1997). However, there is much more to the long-term success of a company than how much money it makes (Chemers, 1997). Companies that have good leadership simply operate more smoothly, which is vital to keeping employees happy and performing their jobs adequately. While there are many employees who love working for Wal-Mart, there are also many employees who feel they are not being treated with the respect they deserve. They also feel as though they are not really a part of the team, because they do not get their voices heard and the leadership only gives orders that are to be followed. This makes sense to some degree because of the size of the company, but there are still adjustments that can be made.
Moving Wal-Mart to a more transformational leadership model is certainly possible. Transformational leaders work with their employees (Vroom & Sternberg, 2002). They focus on ensuring that everyone in the company is happy, and they address issues such as pay and benefits directly (Chemers, 1997). If there are reasons they cannot do something, they are more open and honest with their employees about those reasons (Vroom & Sternberg, 2002). The goal with transformational leadership is to show that a company is a team, and that there are many things that a team can do together that could not easily be done by individuals who did not work cohesively (Hackman & Johnson, 2009). The cohesiveness of the work is a big part of transformational leadership, and something that Wal-Mart could move to if it was committed to doing so.