Walmart total rewards program

Total Rewards Program
Introduction & Purpose
With greater understanding of how key business objectives like employee attraction, retention and motivation contribute to overall business outcomes, human resources departments have been challenged with expanding their scope, and looking at the total rewards experiences of their companies’ employees. When the links between business strategy, people strategy and total rewards are mapped out, it becomes apparent that getting the right workers into the right jobs requires a comprehensive total rewards strategy (Kaplan, 2007). This paper will set out a total rewards program for Walmart, focused on the front line workers who work in the retail stores and make up the majority of the companies 2 million workforce. The distinction here has to be made between the front line retail workers and workers in other parts of the business, who might have more specialized skillsets and for whom the total rewards program might look quite different.
Overview of the Organization
Walmart is the world’s largest company by revenue, its largest retailer and its largest employer. While Walmart has employees who perform just about every job – famously having their own meteorologist – most of the company’s employees are the associates, or front line retail workers. Walmart’s business strategy is to be a low cost provider of household goods, including groceries, and because of this the company needs to control costs in all aspects of the business. Any change to the compensation package for the associates will be rolled out over some 1.5 million people at least, and as a result the company pays close attention to the total rewards package for these workers. In recent years, as the unemployment rate in the United States has dropped to just over 3%, finding and retaining good quality workers has become a challenge, and this has forced Walmart to rethink its total rewards strategy, including finding means to attract different categories of workers. An example of this is the move it made a few years ago to offer tuition benefits as a means of attracting high school aged workers, who not only can work hard, but also want flexible hours, and will stay with the company over the course of their education if they are receiving the tuition benefit and free SAT prep (Meyersoh, 2019).
The total rewards program at Walmart therefore needs to maintain a low cost structure per employee, allow the company to attract a fairly high caliber of worker who can execute efficiently, while still delivering a reasonable customer service level, and helping the company overcome a fairly poor reputation as an employer. A comprehensive total rewards program is highly likely to help meet all of these different criteria.
Segmentation of the Workforce
Walmart’s employs range for senior executives – who are tasked with running the world’s largest company by revenue – to a wide range of specialized professionals, to the associates who form the low-wage core of the company’s workforce. Associates are often part-time, work the flexible hours demanded of retail roles, and perform relatively low-skilled jobs, but do need to perform their tasks well because of the company’s need for a highly efficient workforce. The needs of this workforce may still include things like provision for learning opportunities and a high quality work environment, but these needs are not as intense as in something like highly competitive technical roles (Rumpel & Medcof, 2006).
For the associates, Walmart competes with other low-wage employers for talent, and this includes other retailers, some manufacturing facilities, and a range of service industry employers. Many individuals within this category have needs beyond simply working – they may not be able to commit to a traditional 9-to-5 office role anyway, but even those who want that might find that they benefit from working odd hours, part-time, flexible shifts or other such work situations. Walmart has specific programs to attract retirees and students, for example, as a supplement to workers who might prefer more hours. Store managers benefit from having a large number of flexible employees who can augment a core workforce of full-timers.
Most associates do not have much need for career advancement, and that is not a driver for them to work for Walmart or any other similar role. However, for the workers who do have advancement ambitions, Walmart needs to be able to have opportunities for those employees, either to move up within the stores, or move into roles elsewhere in the company, as there are tens of thousands of more specialized roles that Walmart needs to fill. Its student programs, for example, put the company on the map as an employer of choice post-education. Furthermore, other companies that hire entry level workers, such as McDonalds, have fairly comprehensive programs to identify talent and help that talent advance into higher ranks, and Walmart can certainly benefit from such approaches as well.
Low obligation and easy income, along with flexibility, appear to be two of the drivers for people to work at Walmart. Workers in this category often seek out companies that offer benefits such as health care, as many roles at this wage level do not offer much in the way of benefits, other than where required by law. The social aspect of the work environment is important for many at the associate level, especially because of the high level of customer interaction. Retirees, for example, are specifically attracted to Walmart by the opportunity to get out of the house and interact with others.
Recommendations
Walmart needs to meet the needs of its associates, and continue to attract them, by way of offering a total rewards program. There are four main components of a total rewards program, these being compensation, benefits, development and work environment (Kaplan, 2005). The best total rewards program will differentiate the company from the other companies for which it competes for labor, while not adding significantly to the costs the company faces (Hiles, 2009). Walmart has bumped its pay in recent years in order to remain wage competitive, it is recommended that Walmart should remain competitive with wage floors as they change, but otherwise maintain its wage policies. The reason is that total rewards factors other than wage will be cheaper to roll out across the company’s associates, given the vast size of the workforce.
Benefits are a key differentiator for Walmart, even next to other large companies that employee thousands of low wage workers. One of the reason that Walmart should explore benefits more carefully is because it has the ability to leverage its bargaining power to deliver unique benefits, or to deliver superior benefits packages as a lower cost structure than other firms for which it competes for labor. Walmart can offer things like basic health care through its own network of in-store clinics, and can do similar things for eye care, or even dental care, because of Walmart Health’s commitment to low cost health care provisioning (Group Dentistry Now, 2019). Even offering health care and pharmacy at discounts can allow Walmart to offer better benefits at a lower per-employee cost than other companies, by taking advantage of the fact that Walmart is operating in this space – most labor competitors simply have no ability to provision health care benefits directly to their employees.
Other benefits can specifically attract types of workers, such as the tuition benefits, as these not only attract a new category of worker but one that has a little upward mobility relative to most Walmart employees, helping to fill the leadership pipeline as well as immediate labor needs. Walmart lags a bit on development benefits, but has the ability to be creative in finding ways to offer more development. There is a need, in particular, for people to graduate from associate into higher roles in the stores, as managerial execution and motivational leadership are important success factors for Walmart against its retail competitors.
Furthermore, it is important for Walmart to look at the work environment. Many low wage jobs have sub-par work environments, and Walmart has a bad reputation in this regard. One of the challenges that its human resources department can address, then, is better training for Walmart’s managers and assistant managers, and supervisors, so that the in-store leadership is stronger, and works with the company to create a better working environment for the associates. By removing some of the frustrations that can occur with poor frontline management, Walmart can create a superior work environment and that alone can attract better workers, and help to retain them longer, than might otherwise be the case.
Metrics should be things like turnover rates, length that positions remain open, and the total cost per employee, which will show both the costs and the outcomes of the program, enabling Walmart to calculate its return on investment in this area.
Risks
Not implementing a better total rewards program will put Walmart at a competitive disadvantage. The company is competing for labor in a tight market and needs to cultivate every advantage it can – if it doesn’t have the people to keep its stores running, it will struggle to be profitable. Furthermore, it might end up spending more money increasing wages to achieve the same effect that total rewards can achieve.
Conclusions
Total rewards programs have the benefit of making the company more attractive than companies that offer similar wages, and at a lower total cost to the company. Walmart can improve its total rewards program by focusing on the working environment and development opportunities, and by leveraging its bargaining power to offer superior benefits, such as with health care, or employee discounts. By doing this, it can reposition itself as an employer of choice for anybody in the market for a low wage job, or one that is flexible, part-time or otherwise suited to workers for whom more traditional employment is not viable.
References
Group Dentistry Now (2019) Walmart introduces first-ever health center, which includes a comprehensive dental clinic. Group Dentistry Now. Retrieved May 7, 2020 from https://groupdentistrynow.com/dso-group-blog/walmart-introduces-first-ever-health-center-which-includes-a-comprehensive-dental-clinic/
Hiles, A. (2009) Tough times demand focus – total rewards strategy. Benefits Quarterly. Vol. 25 (4) 44-47.
Kaplan, S. (2005) Total rewards in action: Developing a total rewards strategy. Benefits & Compensation Digest. Retrieved May 7, 2020 from http://staceykaplan.com/pdf/Stacey_Kaplan_Total_Rewards.pdf
Kaplan, S. (2007) Business strategy, people strategy and total rewards. Benefits & Compensation Digest. Retrieved May 7, 2020 from http://www.staceykaplan.com/pdf/Stacey_Kaplan_Total_Rewards_And_Business_Strategy.pdf
Meyersohn, N. (2019) Walmart will recruit high school students with free SAT prep and $1 a day college tuition. CNN Business. Retrieved May 7, 2020 from https://www.cnn.com/2019/06/04/business/walmart-college-tuition-benefit-high-school-students/index.html
Rumpel, S. & Medcof, J. (2006) Total rewards: Good fit for tech workers. Research Technology Management. Retrieved May 7, 2020 from https://www.researchgate.net/profile/John_Medcof/publication/233718407_Total_Rewards_Good_Fit_for_Tech_Workers/links/5b214c87458515270fc6cfdb/Total-Rewards-Good-Fit-for-Tech-Workers.pdf