Strategic Human Resources Analysis

Human Resource Management consists of duties that deal with training, acquisition, organizing, developing, maintaining and motivating employees in the work place.  Approaches to human resource management include the contingency theory- also known as the systems theory and the hard approach.  The contingency theory argues that human resource management policies are combined with strategic needs and organization’s strategy and these practices and policies relate with each other.  The implementation of human resource policies according to this theory lies with the line managers.  The hard approach on the other hand is famous in the United States and common in organizations that mostly adopt a cost strategy the comprises of low labor.

Strategic human resource is a philosophy that deals with the management of people and it is based on the principle that human resources are distinctively vital in sustaining the success of any business (www.icmb.org.bd).  It involves the process of relating the various functions of human resources with an organization’s strategic objectives for the purpose of enhancing performance. Therefore, strategic human resource management needs to put together human resource strategies, policies and objectives in order to attain the needed abilities and skills in the fulfillment of an organization’s objectives (www.uth.tmc.edu/ut-general/admin-fill/hr/perplan/reward.html).

This paper will focus on Wal-Mart Inc, and my discussion will be based on reward management in this company.  Wal-Mart Inc is one of the largest retailers companies in the world and it was founded in 1962.  In United States it has an estimated 20% of the retail grocery and 45% of the retail toy business.  This makes it the largest grocery retailer that exists in the United States.  It has more than 4,750 stores with an estimated 138 million shoppers who visit these stores weekly.    The company has managed to conquer almost conquer almost every corner of America increasing its strong holds in both the rural south and Midwest and also urban America.  The company’s market place is powerful such that it is estimated that 82% of the households in America purchase an item from Wal-Mart yearly.  Household’s staples are controlled at 30% of the market, 15% and 15 – 20% of all magazines and all CDs are sold respectively.  Wal-Mart is also behind the importation of 10% of all goods from China to United States (www.asctulatch.org/issues-walmart -us. asp).

Reward management or system involves the understanding of factors that motivate individuals through the identification of the level of their pay including bonuses with other rewards that they may receive.  Intrinsic and extrinsic rewards are a source of employee motivation, hence these reward systems should be able to retain, motivate and attract people.  Organizations mostly incorporate reward systems so as to accelerate both international and domestic competition as seen through the processes of restructuring, boosting performance as well as reducing costs.  Rewards to employees could take the form of both financial and non-financial mechanism (www.uth.tmc.edu/ut-general/admin-fin/hr/perplan/reward.htm._).

There are various forms and ways that organizations apply in rewarding their employees namely: praise/recognition from supervisors, challenging work assignments, provision of professional growth and developing opportunities progression through the salary range, merit increases, promotions and lateral moves as well as the administrative salary supplements.  Praise / recognition from employers’ crucial motivators in human resource since employees always want recognition of their contributions made to an organization.  Other organizations offer challenging work assignments in order to reward any good performances in the organizations.  This form of reward is also beneficial to employees since they are in a position to develop skills, increase their contribution to the organization and increase their knowledge.  A professional growth and development opportunity is a form of organizational reward that allows employees to expand their knowledge and capabilities through taking part in educational programs.  This proves beneficial to both the institution and employees as the institution is in a position to gain expertise and the individuals on the other hand benefits by acquiring new skills.  Employees may also get rewards through salary increments.  This could be as a result of increased responsibilities or competencies they could also receive rewards based on performance merit or even completing a project successfully.  Promotions are long term type of rewards that are awarded to employees to display their growth which is professional and their ability to contribute to their organizations at various capacities.  Lastly administrative salary supplements may be issued to employees who have been issued with new and additional responsibilities.  These supplements are an addition to their base salaries (www.uth.tmc.edu/it0general/admin-fin/hr/perplan/reward.htm).

Wal-Mart Company through its reward system and management has managed to maintain its success and outstanding performance.  This has been as a result of the combination of its strong strategy, culture and management.  There exist a number of reward strategies that Wal-Mart applies to its employees.  It uses the cost/price leader strategy by offering low priced products and services than their competitors.  The products offered by Wal-Mart are similar to those of its competitors but it has managed to gain retail dominance by offering goods and services at prices that are low (Wilson, 2003).  Wal-Mart has also managed to provide quality goods and services hence improving its reputation and competitive advantage.  Regarding compensation between base pay, incentive pay and executive officers at Wal-Mart are the most paid and they usually get their incentive payment that are mostly based onto a minimum target.  For instance in 2005, Wal-Mart’s President and chief Executive officers received a base salary of approximately $1.3 million.  His incentive payments was $3,941,561 which was thrice his basic salary all totaling to over $10 million.  In addition, these executive officers are also entitled to benefits that include the personal use of the organization’s aircraft and it also caters for any security surveillance of the homes of these chief executives.  However, the associates of Wal-Mart receive their incentives that are based on the maximization of pre-tax profit set by Compensation Nominating and Governance Committee – CNGC (www.asdamatch.org/issues-Walmart-us.asp).

The reward management supports Wal-Mart’s strategies hence enabling it to be one of the most competitive retailer organizations of the world.  Human resource strategy may be defined to be one of the most integral areas of the entire business strategy for companies.  Today, the business environment is highly competitive and fast-paced and for a company to be considered successful, it needs to select a competitive business strategy that should be based on the available competencies that include resources.  The business strategy also needs to be aligned with the company’s human resource strategies. Wal-Mart company has various defined Human Resource strategies that have been the sources of competitive advantage to the other companies.  The first strategy that Wal-Mart applies is the staffing strategy.  Under this strategy, Wal-Mart carries out its recruitment for people at both the managerial and entry level.

The employees at the entry level are known as the associates and usually paid on hourly basis whereas managerial level employees are referred to as managers at Wal-Mart and they receive salaries (www.icmab.org.bd). Secondly, Wal-Mart uses training as one of its strategy through provision of training programs for its managers, department managers and the assistant manager.  The managers have to complete this training program that is structured which is made up of both book work and on job training.  However, associates are not provided with any formal training. Promotion strategy is also carried out at Wal-Mart.  The company promotes those people in the organization and this gives the associates opportunities to advance themselves.  These associates also get opportunities to learn more through the management trainees programs available at Wal-Mart and this gives them some basic skills that they could use to advance themselves to senior positions in the organization.  The compensation strategy at Wal-Mart Inc is competitive and extensive.  The store managers are given additional compensation depending on how much profit is earned by the stores, assistant managers’ compensation is based on the amount of profits the company makes and all those persons in management positions receive salaries.  Associates and other personnel are given bonuses and incentives depending on the current static of the company’s profitability and productivity (www.icmab.org.bd).

The common human resources policies include recruitment, performance appraisal, selection, compensation and leadership.  These human resource policies combine effectively with the strategic objectives at Wal-Mart since these strategies are meant to increase productivity, competition and profitability of the organization.  Management philosophy is concerned about the choices that are made while managing people in workplace and this depends on the beliefs, values, and how an organization perceives people.

The management philosophy at Wal-Mart Company is participatory in nature.  The company allows various contributions from employees regarding its planning and management, views and other opinion that enhances profitability and productivity.  Therefore the human resource strategy integrates well with the strategies at Wal-Mart (en.allexperts.com/q/human-Resources- 2866/Rewardsystem.htm).

Rewards systems, whether financial or psychological convey powerful messages to employees of any business institution or company and this allows them to know the type of organization that the management is running.  In addition, the employees are able to determine who the heroes are, quality, and value among other things.  The effectiveness of reward system could be evaluated using the 4Cs namely: cost-effectiveness, competence, commitment and congruence.  Cost-effectiveness involves the evaluation of costs of turnover, wages and benefits, absenteeism, training and strikes.  Competence focuses on the human resource policies with regards to its attractiveness skill development and also the future knowledge that needs to be known in the organization.  Commitment focuses on employee turnover rate.  If the rate is low, it could result in the increased performance and loyalty, identity and self-worth of employees and the company.  Lastly congruence looks at an organization’s objectives and policies as a result of an agreement between the management of an organization and other stakeholders.  The reward system therefore works well when employees are motivated and an organization has properly laid down strategies both business and human resource that will be able to give a company a competitive advantage over and other organizations.  The reward system intends to increase productivity, performance and profitability in an organization but the system can fail to work when there are no proper guidelines, rules and regulations in an organization.  According to 4Cs (Cost-effectiveness, competence, commitment and congruence), the reward system in Wal-Mart fulfills all the requirements.  The reward system is cost-effective as it focuses on employee development through training by offering training programs and competent as seen by the employees skills that enhances competition and growth (Hackman, 2002).

An effective reward system is that system that aligns with an organization’s objectives and he evaluation of performance of employees.  The measurement of performance for every employee in an organization should be able to reflect the financial goals and business strategies for the organization.  Employees’ degree of performance and various contributions made to an organization should be reflected by compensation made.  This enables the system to be driven by the business strategy.  The reward system could be improved by focusing on the needs of customers, valuing rewards by the performer since they need to know and see the opportunities directly linked to the effort.  The system can also be improved through enhancing competition by providing opportunities in which everyone can win.  For the system to be proactive, it requires management that centers on providing people good strategies (human resource and business strategies) (en.allexperts.com/q/Human –Resources-2866/Reward-System.htm).

Reward management could also be enhanced through effective leadership.  Since human assets contain uncertainties, it is essential that an organization managers them in order to enhance the overall performance and productivity of the firm.  The various options that the Human Resource Department on an organization can take include efforts to maintain or establish the culture of the organization among others (Amran & Kulatilaka, 1999).

The nature of leadership is an important phenomenon that is required to implement this strategic focus in developing the human assets in an organization.  In this case the organization needs leaders who are both motivational and operational in nature.  Motivational leaders have a vision of strategy and the ability to exert their energy to their workers, friends or even partners.  These types of leaders acquire ideas that are energized.  Operational leaders on the other hand are leaders by action as they posses the ability to organize team or an organization and the objectives needed to achieve a particular vision since they mostly do not question a vision but instead focus on how the vision can be achieved and very effective in communication (www.brandonwhichchard.com/2006/11/12).

In conclusion, effective human resource strategies as well as business strategies should be able to reflect the contribution and performance of individual employees, increase productivity, provide a link to the business goals and strategic direction of an organization, increase the engagement of customers and employees, reward those employees who achieve good results as well as focus the employees objectives and outcomes.  Reward systems and compensation should be able to integrate with the objective of strategic business.

Strategic human resource management therefore requires that the professionals in human resource management have the skills, credibility and knowledge in order to be involved in the implementation and planning of the organizational strategy.  Human Resource Strategy on the other hand is determined by the business strategy and conditions, labor market and the work force characteristics.  The business strategy determines the type of business together with its customers or clients.  The relationship between corporate strategy and the human resource management is notable because it is easier for change to be designed rather than achieving it.  Reward systems are meant to motivate employees and also show the recognition and appreciation that organizations give them.  It is therefore important that the reward system becomes an integral part of an organization’s management system www.opm.gov/perform/articles/026.asp).

Competition in the global economy has continued to be complex, full of competitive threats and opportunities which are ever challenging.  This therefore calls for an effective and strategic type of leadership that is able to enhance an organization’s performance level.

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