Wal- Mart’s worldJust how does Wal- Mart, the world’s biggest retailer, maintain its corporate culture across all of its 4,000 stores? How does this giant, with sales a staggering $288 billion in fiscal year 2004, promote and preserve its image as a small town store where the customer is king? Part of the answer lies in Wal- Mart’s legendary Saturday morning meeting.

The Saturday meeting started with Wal- Mart founder Sam Walton, who thought it unfair that he could take off on the weekends while his employees worked. So, in 1962, Sam Walton began arriving at his store, Walton’s five &Dime, in Bentonville, Arkansas, each Saturday between two and three in the morning. There, he would scrutinize the previous week’s record to determine which merchandise was selling and which was not, as well as how sales were faring. However, Mr. Walton didn’t stop there. When his store “associates” (Walton called his workers associates to emphasize that they were his colleagues as well as his employees) arrived, he would hold a quick morning meeting to openly share the store’s information with them. He would also ask for their opinions on matters such as what items he should put on sale and how he should display certain products. Such meetings served not only to use the store’s employees in multiple ways but also to convey to his employees that he valued their input and wanted them to learn the business.

Even as Wal- Mart grew into a multibillion dollar company, the Saturday morning meeting continued. Ever since, Wal- Mart has held them at the home office in Bentonville. Each Saturday morning, some 600 managers, many of whom live in Bentonville and make weekly trips to their respective territories, pack the 400- seat auditorium, waiting for their fearless leader to arrive. First it was Sam Walton. Then, it was CEO David Glass. Now, at 7:00 am sharp, current CEO, Lee Scott heads the meeting. As usual, Scott starts off the meeting by leading the crowed in a Wal-Mart cheer: “Give me a W! Give me an A! Give me a L! Give me a squiggly!....”

Tough Saturday morning meeting topics typically include the company’s financial performance, merchandising, and areas of improvement, the meeting is, above all else, a means to keep the company and it’s employees as close knit as possible. Such solidarity is imperative to Wal-mart’s strategy of quick market response. When new idea or problems surface, managers are comfortable sharing them with others. Decisions are made quickly, and action is taken.

For example, while discussing merchandising mistakes during a meeting, Paul Busby, regional vice president for the northeastern United States, was concerned about a particular item that Wal- Mart was not carrying. “I went into a Kmart near one of my stores to look around and found an item that made me wonder why we don’t have it.” With a Kmart bag next to him,

Busby pulls out a poker table cover and chip set that Kmart is selling for $ 9.99. “We should really have this product because it’s a much better value than ours.”

In response to Busby’s concern, Scott McCall, the divisional merchandise manager for toys, replied, “We’ve got a pretty nice poker set in our stores, but I’ll check with our sources and get back to you.”

A mere 10 minutes passed before McCall asked for the microphone again. With cheers from the crowed, McCall stated, “Paul, I just wanted you to know that I’ve arranged for those Kmart poker Sets to be acquired and to be on the trucks rolling out o all the stores next week.” Examples such as this illustrate the trust that Sam Walton had in his staff to make decisions. Instead of going through layers of red-tape, Wal- Mart’s managers can have their ideas implemented quickly. Of course, not all decisions are beneficial; however, those that are can result in immediate gains.

Such quick responses are difficult, if not impossible, for other large companies to execute. As former CEO David Glass explains, “the Saturday morning meeting was always a decision- making meeting to take corrective action, and the rule of thumb was that by noon we wanted all the corrections made in the stores.” Glass clarifies, “Noon on Saturday.” Glass further explains that since no other companies could even come close to the speed at which Wal- Mart execute strategy and change, Wal- Mart developed and sustains a competitive advantage. Wal- Mart’s vast distribution network and purchasing power allow it to move products efficiently and sell them at low-price. For example, following the devastation of hurricane Katrina, Wal- Mart, rather than FEMA (federal emergency management agency), was one of the first organizations to distribute food and other goods to hurricane victims.

The Saturday morning meetings serve other purposes as well. Perhaps due to Wal- Mart’s culture of retail fanaticism and continuous improvement of efficiency, the culture of Wal- Mart has been described as “neurotic”. According to one Wal- Mart insider, “Mechanisms like meetings keep that neurotic tension alive even at this enormous scale.

In fact, the Saturday morning meeting is not the only meeting Wal- Mart uses to maintain company culture. On Friday there is a merchandising meeting, where regional vice- presidents get together to discuss what products are selling well. And not all meetings are for managers. Consistent with Sam Walton’s emphasis on employee involvement, every Wal- Mart store has a 15 minute shift change meeting three times a day. During these meetings, managers go over the stores performance numbers as well as ask their associate whether they have specific idea that they might improve sales. Managers send what they think are good ideas up to the regional vice president, who then propose the idea t the Saturday morning meeting. The Wal- Mart greeter was one such idea, which a rank-and-file employee suggested. The greeter helps

to put a friendly face on what might be viewed as a large, impersonal organizations. Such structure helps to ensure that Wal- Mart’s upper manger, who oftentimes are responsible for 100 or more stores, keep in touch of the daily happenings of their business.

One other aspect of Wal- Mart’s culture is its frugality, a characteristic of Sam Walton that has endured even through Wal- Mart’s tremendous growth and financial success. Walton began his strict focus on keeping costs low early on to gain an advantage over competitors such as Sears and Kmart. Walton was known to make executives sleep eight to a room on a company trip. He himself drove a modest old pick up truck and if flew coach whenever he travelled. Amazingly, these characteristics have reminded ingrained in Wal- Mart’s culture. The CEO, Lee Scott, drives a Volkswagen Beetle and has also shared hotel rooms to reduce costs.

But maintaining Wal- Mart’s culture has not always been easy. In the late 1980’s and early 1990’s, attendance at the Saturday morning meeting grew tremendously, which made it impossible for everyone to speak. David Glass, CEO during that time, recalls complaints of Boredom. So some of Wal- Mart’s suppliers (who often attend the Saturday morning meeting), eager to impress and ingratiate them with the top brass, began bringing in entertainers such as singers Grath Brooks and former football player Montana. However, the meeting began to focus. As Glass recall of the entertainment, “you had to be careful how you did that because it becomes more fun to do that then fix the problems.” By the late 1990’s the company began inviting guests who had more educational value such as Bill Clinton and CEO’s Jack Welch and has Warren Buffet. These speakers were able to share their success stories with Wal- Mart’s manager giving them new idea on ho to conduct business and run the organization.

Perhaps the biggest obstacle to Wal- Mart’s in the increase public scrutiny that comes with began the world’s largest company. In the past, the company had more tolerance for employee mistake. It would strongly reprimand an employee who made an offhand sexiest remark, for example, but if the employee altered his or her behavior, then the company let the employee stay. Today however, Wal- Mart adheres to stricter policy. As Mr. Scott explains, Wal- Mart is “not mean but less kind. Today, when you find somebody doing something wrong, you not only have to let them go, you have two documents it so it is covered and people understand. That is a bit of culture change. It’s a company that operates in a different context then when Sam Walton was alive and when David Glass ran the company. Management cannot allow extraneous issue to bleed over. My role has to be, besides focusing on driving sales, to eliminate the constant barrage of negatives that causes people to wonder if Wal- Mart’s will be allowed to grow.”

Indeed, Wal- Mart frequently finds itself in the news, through lately in stories that paint the company in a negative light. Controversies over Wal- Mart’s anti-union position, it’s hiring and promotion practices (such as outsourcing the cleaning of it’s stores to illegal immigrants and

working them seven days a week) and it’s treatment of employees (including accusations of discriminations and under payment of employees (all make it increasingly difficult for Wal- Mart to maintain the image of friendly, affordable retailers that Sam Walton had in mind when he founded the company. On this topic Scott says, “over the last couple of years, I’ve been spending much of the time talking about all the negative publicity we’ve been getting, not from the standpoint that we hate the press, by asking our people what we are doing that allows people to perpetuate these kind of negative discussions about Wal- Mart.”

If Wal- Mart is to enjoy continued success, it will have to find solutions to the above problem and the negative publicity that result. Perhaps the company should go back to Walton roots? Or may be it should alter its culture and market position to match its growth. For a company that has over 4,000 stores operating in United States, Mexico, Canada, South America, Korea, China and Europe; 1.5 million employees; and over 100, 000 different products for sale, sustaining or changing the company’s culture is a tremendous challenge. Thus far, however, Wal- Mart appears to be handling the challenge well.

Question for discussion

1. Based on this case, would you characterize Wal- Mart’s culture as strong or weak? Why? How might Wal- Mart’s culture contribute to its long-term performance?

2. As an upper manager of Wal- Mart, what steps could you take to either maintain or enhance the culture of Wal- Mart?

3. What are some aspects of Wal- Mart’s culture that has preserved, but yet may be disadvantageous in today’s economy?

4. How might Wal- Mart’s negative press affect employee morale, job satisfaction, and organizational commitment? As a manger, what step would you take to improve employee attitudes?

5. Characterize Wal- Mart’s organizational structure. Is it mechanistic or organic? Does it have a high degree of centralization or decentralization? How might Wal- Mart’s structure affect its employees in terms of their productivity and job attitudes?

Each company has a unique culture and its own personality. Each company has its

own folklore that illustrates company values, and its own ways of dealing with

problems, making decisions, doing things. Ingrained in Wal-Mart culture, for

example, is dedication to customer satisfaction, pursuit of low costs (nurtured by

stories of the founder's frugality), and employee empowerment

Wal-Mart culture emphasizes religion, patriotism, a classless collective identity,

science, rationality, ecology, progressiveness, and low costs. The company’s

values are embodied in the life and myth of Sam Walton

The strong culture of wal mart lies in its three basic beliefs

1. Respect for the Individual

2. Service to the Customer

3. Strive for Excellence

Respect for the Individual

Every associate's opinion is respected. Managers are considered "servant leaders"

who help new associates realize their potential through training, praise and

constructive feedback. An "open door" management philosophy encourages

associates to raise questions and concerns in an open atmosphere.

Service to the Customer

The customer is the boss. Everything possible is done to make shopping at Wal-

Mart and SAM'S CLUB a friendly, pleasant experience. The "Ten-Foot Attitude"

means that associates are to greet each person they see. The "Satisfaction

Guaranteed" refund and exchange policy allows customers to be fully confident of

Wal-Mart and SAM'S CLUB's merchandise and quality.

Strive for Excellence

Wal-Mart and SAM'S CLUB associates share an exceptional commitment to

customer satisfaction. At the start of each day, store associates gather for the Wal-

Mart or SAM'S CLUB cheer and review sales from the previous day, as well as

discuss their daily goals. "The Sundown Rule" requires a continual sense of

urgency, with questions asked in the morning answered before the end of the day.

One of the key factors to keep business culture is to define the culture you want to

create from the beginning, and integrate it into how you hire people, how you treat

employees, the type of customer service you provide, and the general environment

of your organization.

As you grow it is important to integrate old employees who understand your

values, concepts, and culture with the newer employees who will learn to

implement them and bring some of their own culture.

To ensure a culture that lasts through growth and change, the upper managers

should take following steps

Define the culture and how it is different from other concepts.

Develop a strategic plan for implementing that culture.

Make sure employees at all levels know what the culture is and that they buy

into it.

Have seasoned employees train new employees and develop a system where

new employees learn the written and unwritten parameters of the culture.

Constantly evaluate progress and success as you grow.

Be open to change and inform employees and customers of any changes and

how they will benefit.

In spite of being generally applauded for its culture, Wal-Mart was also severely

criticized for certain aspects of its culture.

Overtime Woes

Although Wal-Mart had a very strict policy on overtime and the company's rules

forbade it, it was observed that, at most of the stores, employees worked between 5

and 15 hours overtime per week. (The company had a 40 hour work week). Since

the company was very strict about not allowing overtime (there were instances

where store managers who paid overtime were demoted and in cases, even

dismissed), it was usually done on an unofficial basis.

Wal-Mart has been criticized for its policies against labor unions. Critics blame

workers' reluctance to join the labor union on Wal-Mart anti-union tactics such as

managerial surveillance and pre-emptive closures of stores or departments who

choose to unionize

With close to two million employees worldwide, Wal-Mart has faced a torrent of

lawsuits and issues with regards to its workforce. These issues involve low wages,

poor working conditions, inadequate health care, as well as issues involving the

company's strong anti-union policies. Approximately 70% of its employees leave

within the first year.

The key to unraveling the mystery of a morale slump is to determine the cause or

source of the decreased morale. Some of the usual suspects are:

a negative event, such as a firing,

a promotion of an employee when others are overlooked, or

Arguments between staff and/or management.

Steps to Improving Morale

Ask what the cause of poor morale is and what the employee believes can be done

to turn it around. Obtaining information directly from the person who's

experiencing the poor morale can often be an important key to solving this

mystery.

Show concern. If the employee believes the boss doesn't care about the task at

hand or doesn't care about the employee, then the employee probably won't care

about the task, the employer or the company

Provide appropriate feedback. The employee needs to know two crucial

variables in this morale equation: what's expected of them and how well they're

doing. Without this crucial information, the employee will inevitably overwork or

under work, think of their work as above average or below average, and may stray

from achieving the supervisor's goal.

Offer recognition of the employee's efforts. employees can be given performance

awards or have their name mentioned at staff meetings, posted on a bulletin boards

or in employee interoffice e-mail to say that someone did a noteworthy job. All of

these simple modes of pointing out individual, team or group behavior serve as

very strong methods of improving productivity, self-worth and morale.

Mechanistic organizations have clear, well-defined, centralized, vertical

hierarchies of command, authority, and control. Efficiency and predictability are

emphasized through specialization, standardization, and formalization. This results

in rigidly defined jobs, technologies, and processes. The term mechanistic suggests

that organizational structures, processes, and roles are like a machine in which

each part of the organization does what it is designed to do, but little else.

Mechanistic structures are highly formalized, which simply means that nearly all

processes and procedures have been administratively authorized. The organization

considers processes and procedures out-side these established protocols as

variances that must be brought under control. Such formalization is driven by

efficiency; reduction in variance increases predictability, and increases in

predictability allow for improvements in efficiency.

Where as an organic organization is a fluid and flexible network of multi-talented

individuals who perform a variety of tasks. This form of organizational structure

was widely sought and proposed, but never proved to really exist

An organic organization is when the organization exist dependently, meaning that

the organization takes into consideration the needs of their employees. Since in an

organic organization the ideas and opinions of the employees are taken into

consideration, this leads to group leadership and teamwork.

From the differentiation of these two structure one can clearly see that wal mart

follows a mechanistic organizational structure.

Decentralization also called departmentalization is the policy of delegating

decision-making authority down to the lower levels in an organization, relatively

away from and lower in a central authority. A decentralized organization shows

fewer tiers in the organizational structure, wider span of control, and a bottom-to-

top flow of decision-making and flow of ideas.

Centralization is said to be a process where the concentration of decision making

is in a few hands. All the important decision and actions at the lower level, all

subjects and actions at the lower level are subject to the approval of top

management. According to Allen, “Centralization” is the systematic and consistent

reservation of authority at central points in the organization. The implication of

centralization can be :-

1. Reservation of decision making power at top level.

2. Reservation of operating authority with the middle level managers.

3. Reservation of operation at lower level at the directions of the top level.

Under centralization, the important and key decisions are taken by the top

management and the other levels are into implementations as per the directions of

top level

Hence wal mart follows a centralized structure