Organizations hire, train and deploy employees in different business functions to ensure that the overall objective of the business is achieved. In this process, organizations spend significant funds to ensure that they have the right team for carrying out various activities in the best manner. In order to recognize efforts by employees and to ensure that employees continue to perform their duties in the manner expected by the management, they need to be compensated sufficiently. In this paper, the case of Wal-Mart has been evaluated to explore and evaluate the compensation strategy that it follows and the structure that it follows for compensating employees at different levels of hierarchy. The company’s compensates employees according to their position and level of experience. It could be noted that the company has a clear policy and appraisal system that allows employees to be recognized for their efforts and commitment to the company’s mission statement and objectives.
The paper aims to discuss the about an organization and its type. The mission statement of the organizations is very crucial for the organization and if followed correctly then they will it can lead an organization to greater success. The mission statement usually defines the objectives of the organization, and many essential activities of the organization are recognized with the help of powerful mission statement of the organization. For an organization, it is very necessary to improve their working condition and make sure that the performance of the employees is not affected under any circumstances. If the employees are satisfied, then their performance will be better and the outcomes of the organization will also be improved. From past studies and different models of motivation it is observed that to enhance the working capability of an employee, management needs to motivate that employee. The motivation of an employee will lead the employee to work efficiently. Usually, the employees are highly motivated by incentives so proper incentives must be given to the employees so that they can work better.
The organization needs a good working staff as human capital is an important factor that can lead an organization to success. All the organizations must know how to allocate their resources properly and for that purpose efficiently working human capital is required. If the employees of the organization are good in their work, then the organization will get a competitive advantage over others. Organization hunts for people who can make effective changes in the organization and improve the working activities of the company. To get such employees, an organization must have a compensation package that is attractive in monetary terms. The compensation package of the employees is also one of the factors that influence the employees to work in an efficient manner and produce productive outcomes. Many organizations use big compensation packages to have the best people working for them. Different managerial staff and other employees of the organization have a big difference in the compensation package that is acceptable, but organizations do not strive hard to make compensation packages for the initial entry level employees. Most of the organizations have a standard set of compensation package for the particular posts but at times the organizations alter or make adjustments in the compensation package for the company (Martocchio, 2011; Balsam, 2002).
The organization selected for fulfilling the purpose of the business is Wal-Mart. Wal-Mart is the biggest American multinational retail store. In 2014, as per the revenues it was termed as the world’s largest company by Fortune Global 500. The company has around 2.2 million employees all over the world. The middle management and upper management employees are only 20 % and as compared with the entry-level employees the ratio of the pay scale is very high. The middle management and upper management employees of the Wal-Mart are paid a handsome amount of compensation, but they entry level employees are not paid much amount. The issue has always been discussed but Wal-Mart still pays it initial level employees more than the minimum amount of compensation set by the government. The organization provides services all over the United States and in several European countries (Deb, 2009).
The main mission of the company is save the money of the people so that they can live in a better way. Wal-Mart is one of the biggest retail stores in the world, and people get products at a cheaper rate. Wal-Mart is considered to be in the hearts and minds of people who shop there. The store provides its customers with all the products under one roof. The company had an aim of providing products to the consumers at a cheaper rate so that they can save money on purchasing. The company wants its customers to lead a better life by saving money by shopping at a retail store. The company had the vision to make its place not only in the hearts and minds of the customers but also its employees. Every company cares for its customers, but the Wal-Mart also cares about its employees and provide them better working conditions (Culture, 2014).
The company believes that all the individuals that are or are not a part of the company must be respected and should not be judged on the basis of their ethnicity, gender or religion. The company eliminates these racism barriers while dealing with the employees, customers, and suppliers. Wal-Mart takes special care of its employees as the employees are an important part of the company. All the employees are equally treated and are given their due rights (Caruth & Handlogten, 2001).
Compensation of Employees at Wal-Mart
The initial entry level at Wal-Mart can be divided into two levels, and it is differentiated on the basis of compensation packages. The initial entry level employees can either be workers that are at the stores to assists the customers or they can be at the managerial level. The company does not hire entry level employees for the managerial positions. Only a few people have been hired for managerial purposes at the initial level, and they are provided with the same compensation package like others. For working staff, the compensation package is same for all the employees.
The working staff is paid on an hourly basis; the company pays $ 13 per hour for full-time workers and pays up to $ 10 per hour for part- time workers. The company plans to improve further its wage rates so that its employees can benefit from it. The company also has some policies related to the bonuses that the employees will get. The quarterly bonuses that the company plans to give to its employees are based on the performance of the store.
There are several benefits that are attached along with the salary of the employees. Wal-Mart provides its employees with several benefits so that they can meet their needs. The company provided its employees with health care facilities. The health benefits offered by Wal-Mart are almost $ 22 per pay period which is almost half the national average of a sick person. The company also gives its employees paid sick leaves and has set a standard of rules for it. The company also offers education benefits to its employees are also studying. Wal-Mart provides benefits for college credit, GED and skill building courses so that the students are given a better opportunity to work and study together.
The middle management at Wal-Mart has a better and deserving compensation package. The basic salary of the employees differs depending upon the position they hold and the experience they have. They have several benefits and allowance that are not available for the workers or the entry level employees.
The senior management employees earn big salaries and have excellent compensation packages. According to the Wal-Mart Inc. for the fiscal year 2015 the annual proxy statement included the total compensation of the employees to be $ 19,070,249 which included total cash of $ 4,079,202 and equity of $ 14,597,374 and other benefits included $ 393,673. Many executives of Wal-Mart are paid in millions.
Initial Entry Employees
The compensation plan for the initial level employees must be properly made and maintained for the betterment of the employees. The compensation package of each initial level employee must include some essentials that every employer must pay to its employees. At the initial entry level, a minimum salary of $ 13 per hour should be paid to every employee. The government has set a minimum wage of $ 9 per hour which should be a minimum amount that must be received by every initial entry level employees. A bonus of 8 % of the basic salary should also be given to the employee once a year. The compensation package must include health care benefits to the employees as well. The employees must be provided with a healthcare facility that can be utilized all over the year and should be at least 15 % of the basic salary. A retirement plan for every employee must be made so that after retirement the employee should have some money to live an easy life. 10 % of the basic salary of the employee must be invested in a fund so that the employee can avail a huge amount of money at the end of his career. All the employees working in an organization must be given paid leaves that should be around 13 % of the basic salary. The employees must be allowed 18 days of annual leaves with pay (Chingos, 2004).
The compensation plan for the middle management employees must be properly made and maintained for the betterment of the employees. The compensation package of each middle management employee must include some essentials that every employer must pay to its employees. For management level, there is no minimum salary fixed for the employees by the government. The organizations are not bound to pay a certain amount to a middle management employee but reputable organizations pay basic salary of $ 25,000 - $ 60,000 per month to its middle management. A bonus of 12 % is also provided to the employees once a year. The organizations provide health care facilities to their employee that is around 20 % of the salary and can be availed anytime during the year. All the organizations have properly maintained retirement plan for its employees so that the organization can give its employee a good amount of money at the end of their services. A middle management person must get the retirement amount that will be in accordance with the number of years they worked and 15 % of their basic salary. The employees will get a 25 days of annual leave and if not availed may get 15 % of their salary. Every employee of this level will get rent and conveyance allowance of 10 % and 6 % respectively. 8 % of an employee salary will be spent by the organization for its training and development. In addition to it, he middle management employees will also get paid vacations that are equivalent to 6 % of their salary.
The compensation plan for the senior management employees must be properly made and maintained for the betterment of the employees. The compensation package of each senior management employee must include some essentials that every employer must pay to its employees. The employees working at these levels have a higher level of income and have more additional benefits in their compensation package. The basic salary of the employees at this level is usually $ 150,000 and more per month. These employees get a bonus of 20 % of their salary. The health care facility provided to the senior management level is not only limited to them, but it can also be availed by their family (wife and children). They get 25 % of their basic salary for the healthcare facility. The retirement plan of this level of employees will be determined according to 18 % of their salary. The senior management level employees will get 45 days of paid leaves per year. In addition to it, the senior management also gets a furnished home with at least one car. These employees get full utility allowance of their home and fuel allowance that is 8 % of their salary. The employees who have a position in the senior management also avail the facilities of paid vacations that are 6 % of their salary. Moreover, some special allowances that are around 30 % of their salary are also available to them, and they also get 5 % of dearness allowance.
It is concluded that the senior management level employees are paid more, and the initial level employees are paid very less but it can be justified because the senior management takes the major decisions that are beneficial for the employees. If wrong decisions are taken at this level, then the entire organization can be affected therefore highly experienced people are hired at a high wage rate so that the organizations can avail maximum benefit from them.
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