Sam Walton, Wal-Mart’s founder, placed so much value on his employees that he called Wal-Mart’s HR department, The People Division, rather than the HR department.
So how does the people division at Wal-Mart help to reduce the risk of business failure, and help drive the company’s success through people?
HR at a strategic level:
The answer is employees are the common organisational bridge that ties all of Wal-Mart’s strategies and tactics together to insure the achievement of the company’s aggressive goals. The only way the company’s executives can accomplish their seven overriding strategies (price, operations, culture, key item/products, expenses, talent, and service) is by aligning their business strategies with their HR practices.
Here’s my opinion on how they do it:
Strategy 1: How does HR help protect Wal-Mart’s price advantage?
Wal-Mart’s pricing strategy is simply put: ‘to provide value for its customer’s hard earned money’. The HR strategy is to focus Wal-Mart’s employees to do everything they possibly can to hold down costs… and, they do.
Whenever Wal-Mart is successful in lowering its expenses, it passes those savings along to its customers in the form of lower prices putting even more pressure on its competitors.
Strategy 2: How does HR focus people to insure operational success?
HR’s role is to focus Wal-Mart’s leaders and employees on continuous learning, continuous improvement, superior execution, employee empowerment, and employee ownership all designed to create synergistic teamwork.
Wal-Mart teams are highly productive but at the same time the staffing levels are lean. HR insures employees are held operationally accountable for keeping a balanced focus on customer service, expense control (theft prevention) and keeping products in stock.
Strategy 3: How does HR foster a culture committed to business success?
At some point early on in their career managers attend a week of cultural training at The Walton Institute at the University of Arkansas. The Wal-Mart culture, carefully maintained by HR, is a diverse collection of entrepreneurial-minded people who by design all have a stake in the success of the company. Acting like business owners they look for opportunities to solve problems that help eliminate business risk.
Strategy 4: How does HR connect Wal-Mart’s people to products?
At Wal-Mart Sam Walton expected everyone to think and act like retail merchants. Everyone in the headquarters, no matter what job they held or what department they worked in, was expected to focus on how to help the stores improve service to customers.
Walton pushed the decision-making process downward, empowering local managers and associates to make business decisions on behalf of customers as quickly as possible.
Strategy 5: How does HR focus employees to reduce expenses?
The philosophy on expense control at Wal-Mart is quite simple: as sales go up expenses as a percentage of sales must always go down. At many companies, once an expense budget is set, expenses rise as sales rise. The risk with this approach is that if sales fall a weak expense structure is exposed immediately. Wal-Mart’s approach protects the company, if sales were to fall, and allows it to drop expenses savings to the bottom line as sales rise.
Strategy 6: How does HR’s talent strategy drive results at Wal-Mart?
Simply having the right talent in place to match the growth of the company may be the biggest risk Wal-Mart faces. Wal-Mart hires aggressively from more than 100 colleges and targets the colleges with Retail Institutes.
People have always been the company’s greatest asset. Their self-professed talent goal at Wal-Mart is to hire the best, provide the best training and to be the place to work.
Strategy 7: How does HR align every functional area with service?
Sam Walton always said the biggest risk to his business was that his customers would stop shopping at his stores. That fear translated into customer fanaticism is reinforced by HR to this day. Culturally, everyone is focused on improving every aspect of customer service, because they know the biggest risk of all may depend on it… their own job.
Minimising risk by aligning business strategies with HR practices
The successful management of business risks at Wal-Mart is reliant upon the success of people. Wal-Mart’s leaders credit their employees around the world who make the difference every day by achieving sales goals, serving customers, controlling expenses, and by doing so they help to eliminate business risks.
Michael Bergdahl (SPHR) a professional international business speaker, author and turnaround specialist. Bergdahl worked in Bentonville, Arkansas for Wal-Mart, as the director of people for the headquarters office, where he worked directly with Wal-Mart’s founder Sam Walton. It was Sam Walton who gave Bergdahl the nickname, Bird Dawg. Prior to Wal-Mart he worked in the FMCG industry for PepsiCo’s Frito-Lay division in HR in the sales organisation and headquarters staff assignment