Walmart Case Study
Perla L. Rodriguez
December 22, 2014
Walmart is the world’s biggest private employer as well as the world’s largest company by revenue. Walmart has established guidelines for setting the pay for employees ranging from their CEO to the store-level employees. Those guidelines however, vary widely when determining incentives for the different employees.
Mike Duke is the Chief Executive Officer for Walmart Stores and is highly paid due to his many responsibilities. Duke’s pay consists of a base salary of $1.3 million, stock awards worth $13.1 million, and a cash bonus of $2.9 million. Duke’s incentive pay is determined by the overall performance of stores on a yearly basis.
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Walmart is choosing to overcompensate its CEO, while not doing the same for its hourly employees. Although the CEO is the one running the company and implementing new ideas, ultimately, it is the employees working at the store level that are the ones that are directly impacting the company’s performance. It would make more sense to have a better incentive program for these employees to help with their retention, since they are the ones that know the ins and outs of the business. Employees looking at the difference in compensations will more than likely feel discouraged and feel like it is unfair. They might not feel motivated to have a better performance thinking that they are not valued by their employer and at the same time, feeling like they are being taken advantage of.
Performance Management Techniques
When evaluating the CEO and hourly-employees, the performance measurements that can be used for both are the results and quality approach. It is also important to have clear job descriptions so that employees are aware of the job expectations, and at the same time they should have a clear compensation model. This way, employees know what type of performance is required to receive a compensation and the type of compensation that they should expect.
Walmart has proved to be a highly successful company throughout the years, however, there is always room for improvement. One of the areas of opportunity for this company is finding a better method for providing compensation for all of its employees and closing the gap between its CEO’s compensation package versus an hourly-employee’s compensation.
Gerhart, B., Hollenbeck, J., Noe, R., & Wright, P. (2009). Fundamentals of human resource management. (3rd ed.). New York, NY: McGraw-Hill.