Introduction to Organization
The name of Walmart, Inc., formerly known as Wal-Mart Stores, Inc., is an American discount retailer that was once one of the biggest firms in the world. The company’s main office is in Bentonville, Arkansas (Song, 2018). Sam Walton established Wal-Mart in 1962 in Rogers, Arkansas, concentrating its early expansion in rural areas to stay out of direct rivalry with retailing behemoths such as Sears and Kmart (Song, 2018). As it expanded, the business created fresh retail models, including Sam’s Club bargain warehouses and Wal-Mart Supercenters. Wal-Mart became one of the biggest grocery retailers in the U.S. within ten years of launching the Supercenters, which combined grocery and merchandise (Song, 2018). According to Walmart (n.d.), “we are providing customers and communities all over the world with opportunities and value. Walmart runs around 10,500 shops, clubs, and eCommerce websites worldwide under 46 banners. Nearly 1.6 million of our 2.3 million associates worldwide work for us in the United States” (para. 1). Walmart has expanded its operations to the global market and has opened several stores outside of the United States. The main risks that the company faces are the differences in the legal system of the United States and other countries, employment laws, regulations regarding sustainable practices, and minimum wage regulations.
Legal Compliance
Walmart’s key stakeholders are the customers of its megastores, employees, management, and shareholders. Additionally, since Walmart Inc. is among the biggest companies in the United States, the community members in the areas where these stores are located are also a stakeholder group because they are affected by the pollution and waste that these stores produce. Considering Walmart’s history, the current risk of the organization in regards to its Board of Directors is minimal at this time.
Walmart offers training to its new Board of Directors, and all current members have undergone a thorough vetting process. The company currently has a Code of Conduct for its Board Members and Corporate Governance Standards that all stakeholders are entitled to adhere to in their work (“Corporate Governance Standards,” n.d.; “Code of Conduct,” n.d.). All of the violations of these standards are managed by H.R. and the leaders of Walmatt Inc.
Walmart has made substantial investments in the creation of its Enterprise Risk Management (ERM) system. Strategic, operational, financial, legal, reputational, and other risks are differentiated (U.S. Securities and Exchange Commission, 2020). Moreover, part of Walmart’s ERM has an H.R. team that oversees these risks and is responsible for mitigating them. Over 550 specialists work as a team to recognize, stop, and handle those (Song, 2019). The business frequently receives recognition for utilizing cutting-edge technologies to enhance its risk management. Thus, Walmart’s primary advantage is the use of technology and investment in the development of new means for mitigating risks.
Risk Mitigation
The main focus of any company should be on mitigating legal risks. Companies, their boards, and general counsels deal with a difficult business environment that could result in losses in money and reputation (Song, 2019). One may anticipate predicting legal hazards individually identified and included in an enterprise’s risk management framework as firms grow more adept at identifying and managing legal risk. With a new strategy in place, the H.R. and legal departments will be better equipped to meet escalating demands and create a competitive advantage by managing legal risks that arise across the company’s operations. An ethical way to manage risks is to evaluate the impact of a risk on the main stakeholders and ensure that these risks are addressed.
Walmart is perceived as being powerful in the commercial environment due to the company’s obvious strength as this is a large organization with plenty of resources and influence. According to Song (2018), “Walmart reported a net revenue of over $11 billion last year, which is undoubtedly enough money to address certain dubious working practices, yet tales of wage law infractions, subpar healthcare, worker exploitation, and the retailer’s anti-union position continue to circulate” (p. 50). This company does not pay its part-time workers wages that are competitive with those of its full-time workers, who have a limited chance of earning similar benefits. Thus, part-time employees have few to no possibilities for promotion. This allows the business to mitigate the financial risks associated with additional benefits for part-time workers.
According to Walmart’s Code of Conduct for the Board of directors, the company aims to present the image of a business that values the moral and ethical leadership they demonstrate. Walmart’s leadership believes in everyday low costs and everyday low prices, but only if achieved through our everyday honesty, according to CEO Doug McMillion in the company’s worldwide declaration of principles (Song, 2019). These objectives are reached through the H.R. policies and handbooks, as well as training for the Board of Directors members. Given that Board Members are trained to meet the needs of our employees as H.R. majors and professionals, there is a strong relationship between this issue and our reading materials. The platform for managing human resources was created by Walmart to accumulate all the training and resources required to mitigate potential risks.
However, despite these measures that aim to decrease the impact of risks on Walmart’s operations, the company has faced several risks. Walmart’s audit system has not been operating smoothly for the past few years, despite major investments in risk management (Harrison, 2019). For instance, Walmart did not evaluate its contract with the Indian firm that was allegedly providing Walmart and Target with low-quality cotton until the Wall Street Journal published the findings of their study (Harrison, 2019). Such incidents may significantly harm the business’s brand and impair customer loyalty. To prevent such circumstances in the future, Walmart should enhance audit and research as part of their supply chain risk management program.
Potential Impact
Legal issues with Walmart’s current practices may lead to lawsuits and fines that will damage the company’s reputation and its financial state. The lack of environmental safety standards leads to the company violating its CSR standard and reputational damage. In terms of finances, Walmart’s management has created a strategy that will allow this business to increase its revenue, which also requires the leadership to invest in innovation and changes actively. Walmart’s current strategy is to expand operations, invest in technologies, and focus on online retail, which provides new challenges for the H.R. department. Walmart CEO Doug McMillon recently updated shareholders on his five years in the position and stressed the value of adhering to the guidance and values set by founder Sam Walton (Song, 2018). He emphasized that despite the fast pace, there would be false turns and that it is crucial to keep in mind that the journey is long.
The CEO claimed that for merchants wanting to stay relevant, adopting the long view while still being nimble and taking risks is essential (Song, 2018). By remaining segregated and not making top-down investments in technology, a company on the scale of Walmart may commit deadly errors. According to McMillon, Walmart is in the process of evolving into a technology corporation (Song, 2018). Organizations that do not maintain flexibility and a unified top-down vision will vanish. McMillon had accomplished a difficult job by successfully communicating his vision to his vast army of people. A technology-based firm has to address different risks and challenges; for example, there are more warehouses as opposed to physical stores, and employees face the risk of being injured during their work in the warehouses.
Over the past five years, revenues had increased by 5.9%, surpassing the $500 billion mark for the first time in fiscal 2018 when they reached $514.405 billion (Song, 2018). According to Walmart’s annual report, top-line sales grew to $510.329 billion, an increase of 5.82% over the previous five years. Operating income has decreased 19% over the previous five years, but the gross profit margin has stayed constant at around 24.5% (Song, 2018). Investments in technology and keeping prices low to remain competitive are responsible for a large portion of that.
Walmart has continued to close some of its mediocre operations in Brazil throughout McMillon’s tenure as CEO. The British merger of Asda and Sainsbury’s encountered a snag, and the retailer is now looking at other options for this business segment. Walmart’s global store count has decreased to 11,361 units, a decrease of 92 units over the previous five years, as well (Song, 2018). Walmart U.S.’s scale-up has halted despite the retail behemoth building a net of eight outlets last year. Sam’s Club decreased the number of its locations to 599 clubs from 647 in 2015 (Song, 2018). Additionally, the number of stores in the international market has decreased from 6,290 in 2015 to 5,993 today (Song, 2018). The decrease in the number of stores is an indicator that the expansion of Walmart into the international market has not been successful, and the company has faced financial ramifications due to this. Thus, some of the employees had to be fired as the stores were not profitable. Walmart’s public relations strategy is to communicate the message of Walmart being a one-stop place for shopping where consumers can buy produce, clothes, home items, and other goods at a very affordable cost. According to Song (2018), Walmart’s scale of operations allows the business to negotiate prices with suppliers and create a brand image of affordable shopping space.
Fewer stores are being opened, and the function of the ones that are already open is increasingly crucial because it also covers the costs of the company’s significant expenditures in e-commerce, which is still not cash positive (Song, 2018). Walmart will need to get more out of its existing locations while also striving to increase online sales and support that digital commerce company. Thus, this company currently faces a significant financial risk due to the unsuccessful operation of some stores, the investment in online retail, and the consequences of COVID-19.
Public Relationships – Societal
Walmart Inc.’s public relations plan is to ensure that this business operates following sustainability standards. Societal support is any major or advantageous improvements that end social injustice and problems or at least address them, which are considered to have a social influence. Through conscious and intentional efforts or activities in their operations and administrations, businesses or organizations can attain these aims.
Walmart provides essential products and produce to people in many communities and is an employer for thousands of people across the United States. Therefore, this company has to be responsive to societal pressure and opposition to some practices. For example, the opposition to inequality or low-wage jobs is among the societal pressures that Walmart, as well as other employers, have responded to in recent years. Moreover, more consumers pay attention to the use of sustainable practices in the manufacturing of products, requiring Walmart to create a set of standards for its suppliers (Song, 2018). Thus, Walmart has to respond to the societal opposition and support to maintain its operations.
Public Relationships – Cultural
The cultural implications of H.R. and risk mitigation require companies to provide training on cultural competence and promoting diversity in the workplace. For example, Walmart can provide training on understanding how different cultural beliefs and values influence people and their decision-making. According to Trung and Van (2020), “traditional cultural education is an oriented, organized activity aimed at forming cognitive capacity, a sense of right behavior with national cultural values, and perfecting good qualities and virtues for students in the context of promoting industrialization, modernization, and international integration today” (p. 5). Walmart aims to create a diverse environment and provide training on cultural competence to its employees to address this element of risk management.
Public Relationships – Political
Political support and opposition for Walmart are associated with the employment laws and the plans of the government regarding minimum wages and employees’ rights. The Board of Directors has to understand the impact of the political situation on the financial state of the company. The non-compliance with these regulations leads to fines and legal troubles for the business (Rahman & Aydin, 2018). Therefore, the political factors in the country where the business operates are essential for the business.
Trends – Health
Workplace health has become an essential concern for employees, employers, and labor unions in recent years. Health can be defined as a combination of physical, emotional, and cognitive traits of a person (McCartney et al., 2019). In this regard, Walmart has invested much effort into the implementation of technology-based strategies that ensure workers’ health, primarily in its warehouses. Additionally, H.R. training can help substantially reduce the risks linked to health hazards in the workplace (McCartney et al., 2019). The practices in the workplace that target health that mitigates risks are the measures to protect the employees from harmful substances, specific hours of work and work breaks, and health-related benefits. According to Elfein (2021), 79% of employees believe that company wellness and health programs contribute to their health. Therefore, the current trends show that employees not only expect health-related benefits and programs but evaluate these as a positive element of work. It is projected that in the future, more employees in the entry-level positions will expect benefits related to health from their employer (McCartney et al., 2019). Thus, Walmart should focus on expanding its health-related programs.
Trends – Safety/Security
Walmart has documented some safety and security data of its employees. According to Boustras and Waring (2018), “security incidents have dramatic short- and long-term effects on the workplace” (p. 104). At the governmental, corporate, and professional levels, the twin issues of safety and security have traditionally been treated as distinct and separate entities. Security in its broadest sense is now “addressed differently and by different functions, disciplines, protocols, and outlooks than those dealing with safety and health due to this conceptual separation into de facto silos, which is typically reinforced by legislative boundaries as well as by practical issues, professional interests, and dominant experience” (Boustras and Waring, 2018, p. 104). This separation has had the effect of regularly omitting numerous effects on both public and workplace safety and health from major security threats, such as the effects of global warming, terrorism, radicalization, hate crimes, white collar crime, cyber-crime, economic crime, and trafficking.
For Walmart, the safety and security of the employees are established through the work of the Global Investigation and Security Team. In Walmart’s (2016) most recent report on safety and sustainability, the company notes that the number of incidents per 100 employees has decreased from 5.98 in 2009 to 5.04 in 2015. Therefore, the trend shows a reduction in adverse incidents and indicates that Walmart should continue to support the work of the Global Investigation and Security Team.
Identification of Employment Laws
The most significant employment laws for Walmart in the United States are the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and the Uniform ServicesEmployment and Reemployment Rights Act (USERRA). FLSA specifies minimum pay, overtime compensation, record-keeping, and youth employment rules that apply to workers in public and private sectors of national, state, and local governments. As of July 24, 2009, covered nonexempt workers have the right to a minimum wage of at least $7.25 per hour (U.S. Department of Labor, n.d.). After 40 hours of labor in a workweek, overtime pay at a rate of at least one and a half times the ordinary rate of pay is necessary. Therefore, Walmart’s H.R. standards have to comply with FLSA and guarantee employees the minimum wage as well as have specific rates for overtime work. The H.R. risk management strategy should include a statement of how overtime pay is managed and the standards of overtime work to avoid risks.
FMLA, qualified employees of covered employers are entitled to unpaid, job-protected leaves of absence for qualifying personal or health reasons, with the right to continue their group health insurance coverage under the same terms and circumstances as if they had not taken the leave. Each individual is eligible for taking a leave of twelve workweeks each twelve months if they have to care for a newborn child or a member of a family (U.S. Department of Labor, n.d.). USERRA is meant to protect the rights of servicemen as civilian employees. Therefore, each organization is required to train the employees, and the H.R. department is engaged in hiring new workers to ensure that a business does not discriminate against the serviceman. The goal of USERRA is to ensure that servicemen can return to civilian life and have their rights protected, and have an equal opportunity at employment as any other individual.
Walmart’s H.R. management continuously faces situations in which the applicable laws and regulations must be enforced. For example, a shortage of workers requires the management to leverage the overtime work and, therefore, provide an additional payment for such work. Moreover, it is natural that employees choose to take sick leave or maternity leave to care for themselves and their families, and the company is obliged to provide this time to the employees. These standards are reflected in Walmart’s work practices and rules that each H.R. manager uses in their work.
Employment Law Compliance
Walmart has faced legal ramifications for its compliance with employment laws; in one lawsuit, the former employer claimed safety violations by the company, and the court ruled in their favor (Song, 2018). Therefore, there is a risk in Walmart’s compliance with the laws on employment in the U.S. Compliance with employment laws is linked to the company’s policy on wages, which should not be less than the standard set in FLSA. Moreover, the worker’s rights to have additional payment for overtime and take leave in case of need are essential. Compliance with these standards can be achieved through the H.R. handbooks and other tools that outline the company’s stance on a specific issue and the step-by-step process that managers and employees should use in case of a necessity (Song, 2018). Moreover, employee and board member training should be used as tools to communicate the social and cultural values of the brand, as well as the standards of safety and health.
References
Boustras, G., & Waring, A. (2020). Towards a reconceptualization of safety and security, their interactions, and policy requirements in a 21st-century context. Safety Science, 132, 104-120. Web.
Corporate Governance Standards. (n.d.). Web.
Code of Conduct. (n.d.). Web.
Elfein, J. (2021). Workplace health and wellness in the U.S. Web.
Harrison, V. (2019). Legitimizing private legal systems through CSR communication: A Walmart case study. Corporate Communications: An International Journal, 24(3), 439-455. Web.
Rahman, M., & Aydin, E. (2018). Political benefits, barriers, and risks of e-hrm implementations in Bangladesh public sector organisations: An institutional perspective. Business & Management Studies: An International Journal, 6(3), 619–633. Web.
Song, X. (2018). A study on management model of human resources in multinational companies based on cultural differences — Taking Walmart as an wxample. Proceedings of The 2018 International Conference on Sports, Arts, Education and Management Engineering (SAEME 2018). Web.
Trung, N. & Van, V. (2020). Educating traditional cultural values in Vietnam universities. South Asian Research Journal of Humanities and Social Sciences. 2, 5. Web.
Walmart. (n.d.). About. Web.
Walmart (2016). Supporting the safety and dignity of workers everywhere. Web.
U.S. Department of Labor. (n.d.). Wages and the Fair Labor Standards Act. Web.
U.S. Securities and Exchange Commission. (2020). Reports and publications. Web.