Introduction
Change management helps an organization in times of deep strategic changes. A good change management process helps an organization successfully plan, communicate and implement a change process to the employees. There are several types of changes that an organization goes through. Change management is required for strategic, visionary, operational, technological and cultural changes. Change Management is a process that involves a planned shift from the way a company is operating to the way it hopes to operate for better performance, productivity and increased output (Cawsey, Deszca and Ingols, 2012). As the overall business process in this global environment is evolving, the organizations are required to change a lot of old business processes and make some big strategic shifts in the way their organizations operate. Change Management process is, therefore, becoming a major requirement for any organization to manage change in the most effective way. Walmart is no different, and it is also going through a lot of changes in recent years. This essay focuses on the change requirement for Walmart and how a change management process can help Walmart in that regard.
Walmart
Walmart is the largest company in the world in terms of sales volume. It has over 11,000 stores spread across 27 countries. It operates under many different banners in several countries. In the retail industry, which is fragmented in almost all countries in the world, Walmart is a rare exception (Walmart, 2014). It has a huge market share in the USA as well as some of the international markets.
Current Policies
Walmart has a HR policy that is definitely not the best in the industry. Walmart pays almost close to the minimum hourly wage to its store associates. It also does not offer health insurance coverage to all the employees. In fact, only 70% of the employees are covered under the health insurance policies offered by Walmart (Walmart, 2014). It also does not offer any retirement benefit program. Even if an employee retires after serving the company for 20-30 years, Walmart does not pay any retirement benefit to that employee. In the USA, the company shows a gender disparity with most of its associates being male. Also, Walmart is increasingly facing difficulty to do business in many places as its discount superstore model is getting out of favor for many governments, because as it affects the local small grocery stores.
What Should Change?
Walmart should introduce some major organizational changes to improve its poor employee and labor relations. The working environment of Walmart is not bad, but the overall remuneration package should be overhauled for benefits. Also, the communication hierarchy should be removed. Currently, the top down model of communication has created an authoritarian climate in many Walmart stores (Walmart, 2014). This will help reduce the 70% turnover rate annually. Walmart also should introduce processes like the recruitment of veterans in its workforce. This will help improve its public image.
Why Change?
Walmart is stagnating in the USA not because of its poor business process, but because of the state laws and regulations and bad public image. Although Walmart contributes heavily every year as part of corporate social responsibility, but it does not reap any benefit for the company in terms of image building. If it can create a better employee friendly environment, then its more than 2.2 million employees will become the brand ambassadors of the company. Also, taking initiatives like recruiting veterans will also help the company improve its image to the public and enhance its relationship with the state and federal governments.
Strategy for Change
Figure 1: Kotter’s 8 Step Change Management Model
Apart from its low cost product model, employees are the main backbone of Walmart. The company should follow Kotter’s 8 Steps of change model as a strategic theory for change. First the CEO should create a sense of urgency (Step 1) among the other top management that an organizational culture change is required. Once management is convinced, search out strong leaders within the organization who are liked by many and build a management team that has variety and balance (Step 2). The vision will be to create an environment where employees will be happy and highly productive (Step 3). The strategy will be to relook at the remuneration structure and make it more performance based, and match base salaries with other retail chains. The core team should be passionate about the change and should walk the talk. Communication through positive action is more believable than just saying something (Step4). Hierarchical structure in Walmart should be replaced by more autonomy at the store level and floor level (Step 5). The initiative should start at places like California and Oklahoma where Walmart is highly criticized (Walmart, 2014). Success in those stores will help gain confidence and gain the momentum for the change (Step 6). Then other initiatives like veteran recruitment and health benefit should be introduced to boost up the change process and build on the initial gains (Step 7). Once the company is able to change an environment for change it should make sure that change is seen in all aspects of the organization through efforts like integration of new values within the organizational culture, recognizing supporters and hiring keep talking about progress and change benefits (Step 8).
Potential Resistance
The main resistance may come from the top managers who enjoy authoritative power. They may not be willing to give up the hierarchical structure as they will feel powerless (Weal, 2014). Also, they may not like the overall review of salary structure as it will decrease the profitability, and they will be under more pressure from the top management and shareholders to perform harder to improve the bottom line (Cawsey, Deszca and Ingols, 2012). Employees will also be resistant to change if a performance based process is introduced as many will feel that Walmart is making the hire and fire practice of employees easier.
Change through Communication Strategy
The management must be taken into confidence by the CEO and top management before starting any initiative. The management should be made aware of the long term benefits of the process through management meetings and HR communication sessions. HR should ensure that each communication event and tactics are documented and referenced in the future meetings for continuity and transparency. Two-way feedback system needs to be developed for understanding the employee pulse about the change process (Cawsey, Deszca and Ingols, 2012). Simplification of internal communication should be done. Simple and transparent communication process should be employed.
Tools for Change
There are many diagnostic tools for change. A Beckhard and Harris tool for change is one of the most used by the organizations as this is a comprehensive tool that not only helps identify the change requirement, but also provides guidance for the whole change management process (Cawsey, Deszca and Ingols, 2012). Peters and Waterman’s 7S model is another model that compares the business context with shared values, systems and strategies to find out the gap and understand the change gap for the organization (Leong, 2014).
Recommended Strategy
Different tools and framework of change address some specific situation better than others. In the case of Walmart, the major change impact is felt among its 2.2 million employees. It is, therefore, important to implement the following two change strategies for a successful change management in employee policies:
- Communication simplification through training, direct leadership involvement and communicating the strategic plants internally for transparency and alignment.
- Two way feedback system for understanding the employee pulse and satisfaction (Cawsey, Deszca and Ingols, 2012).
Conclusion
Walmart needs to change to keep up with the ever changing global environment. Walmart already is managing its external factors well, which can be seen from its revenue growth and profit, but the employee dissatisfaction and attrition rate is one of the highest. Walmart needs to start initiatives to improve its employee satisfaction. Running employee initiatives with a proper change communication process and engaging all the managers in the whole process can improve the situation effectively.
References
Cawsey, T. F.; Deszca, G. and Ingols, C. (2012). Organizational Change. SAGE Publications, Inc.
Leong, C.T. (2014). Why Creating Organizational Change Is So Hard. Gallup. Retrieved on 12th December 2014, from <http://www.gallup.com/businessjournal/168992/why-creating-organizational-change-hard.aspx>
Walmart. (2014). Walmart 2014 Annual Report. Retrieved on 12th December 2014, from <http://cdn.corporate.walmart.com/66/e5/9ff9a87445949173fde56316ac5f/2014-annual-report.pdf>
Weal, R. (2014). Creating a Basic Internal Communications Strategy. LinkedIn. Retrieved on 12th December 2014, from <https://www.linkedin.com/pulse/20140323234100-50813842-creating-a-basic-internal-communications-strategy>
