Walmart Organizational Complexity

1: How complex is your organization internally?

With over 2.2 million employees worldwide (1.4 million in the U.S.), over 11,500 stores in 28 countries, and $483 billion in revenue (Walmart Corporate, n.d.), Walmart utilizes a strict divisional organizational structure which is designed for maximum efficiency. Walmart’s vertical and horizontal differentiation far exceeds the >5 requirement; making them a symmetric organization internally. Walmart’s Board of Director’s is a 15 panel members. Doug McMillion is the organization’s CEO with Greg Foran (President and CEO, Walmart U.S.), David Cheesewright (President and CEO, Walmart International), Rosalind Brewer (President and CEO, Sam’s Club), and Neil M. Ashe (President and CEO, Global eCommerce and Technology) making up the top level executive leaders of the organizattion. Walmart continues to scan the external environment to determine what organizational structure changes need to be made. Walmart uses a very rigid pay scale that is designed for efficiency and objectivity however, it offers very little in wage increases for lowered tiered workers and creates an uneven pay distribution between hourly employees and salaried management (Hines & Wilkie, 2012). This has led Walmart to be criticized constantly in the media for their pay practices. As a result of the constant media blitz, Walmart created a large public relations division to constantly monitor the external environment, counter negative communications about the company, and look for creative ways that Walmart may be seen in a positive light. Walmart’s organizational structure creates a strong top to bottom informational flow and allows management to effectively control all aspects of their area of responsibility.

Organizationalcomplexity diagram

2: Locate your organization on the figure, what is the complexity?

Walmart’s complexity is symmetric. They have high vertical and horizontal differentiation. Walmart’s employees have specialized tasks, although most of the tasks require very little to no training at all. They separate their employees through pay grades (similar to the military); with the least being cart-pushers and the highest being supervisors. Upper level management is spread across 4 divisions and reports to the CEO of Walmart Stores Inc.

#3: Does your organization’s complexity fit its structural configuration?

Walmart’s structural configuration fit’s the organization’s complexity. Due to the large amount employees worldwide and the number of stores in different countries, Walmart must tailor its strategies to the local culture or they could risk failure. This demands more autonomy than the other structures provide.

Circle one of the types in each of the following categories:

 

  Type 1 Type 2 Type 3 Type 4
Organizational complexity       Symmetric
Configuration     Divisional  
Environment       Turbulent
Strategy types       Analyzer with innovation
Organizational goals       Efficiency and Effectiveness

#4: Is there “fit” across the organization’s components? What do we know now about how our organization aligns across these categories? What would make them more effective? Should your organization change its structure based on its complexity?

All the organization’s components fit all facets of the organizations internal complexity, goals, and operations. Each component has managers that follow strict guidelines/policies developed for their business. This ensures uniformity and objectivity across all units; except when the host nation’s culture dictates a change in the policy. Each component uses objectives developed from the organization’s mission statement that helps to contribute to achieving the organization’s goal. Walmart’s mission statement aligns well with each of the categories. As a low-cost leadership strategist, Walmart structure allows them to operate according to the local environment, thus ensuring that the local culture is taken into account and increasing the chances of success. As a leader in the retail industry they have effectively stayed ahead of their peers by being able to analyze their environment and introduce innovation into their organization. Their supply chain management system is one of the best in the world because of the high-tech informational systems it has implemented. Their sheer size and technological advances in logistics have allowed them to operate efficiently and effectively. Walmart’s focus going forward should be to increase the traffic to their online site. Their revenues were ¼ of Amazon’s for FY15. This new focus combined with a renewed commitment of increasing their hourly employee’s salary should help to improve customer satisfaction and increased revenues; thereby making them more effective. Walmart’s current organizational structure fit’s the current environment however, they must be ready to adjust to the inevitable changes that the future will bring.

References

Daft, R. L. (2010). Organization theory and design (10th ed.). Mason, OH: South-Western                        Cengage Learning.

Hines, A. (2012, November 26). Walmart’s Internal Compensation Documents Reveal                          Systematic Limit On Advancement. Retrieved February 22, 2016, from                                          http://www.huffingtonpost.com/2012/11/16/walmarts-internal-compensation-                      plan_n_2145086.html

Leadership. (n.d.). Retrieved February 22, 2016, from http://corporate.walmart.com/our-                  story/leadership

Lombardo, J. (2015, August 15). Walmart: Organizational Structure & Organizational                              Culture – Panmore Institute. Retrieved February 22, 2016, from                                                      http://panmore.com/walmart-organizational-structure-organizational-culture

Thompson, A. (2015, September 07). Walmart: Human Resource Management – Panmore                  Institute. Retrieved February 22, 2016, from http://panmore.com/walmart-                              human-resource-management-hr-management

Walmart Corporate – We save people money so they can live better. (n.d.). Retrieved                            February 22, 2016, from http://corporate.walmart.com/

 

 

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