Organizational culture of Wal-Mart January 30, 2007Posted by Lady in Organizational Culture, Retail.
Basically this was an article that stated that Wal-Mart just recently settled a
U.S. federal lawsuit about overtime paid to its’ employees. Wal-Mart agreed to pay $33.5 million to its’ employees for overtime they had worked without pay. The U.S. Labor Department was accusing Wal-Mart of labor violations which led to this lawsuit. In addition, forty other states had filed lawsuits against Wal-Mart in regards to overtime violations.
Before the lawsuit was settled, Wal-Mart had recently “denied any liability for the accusations in the lawsuit”. But ironically, an associate director in the department’s Fair Labor Standard’s Division, Steven Mandel, commended Wal-Mart for this recent settlement of this overtime issue. He said that Wal-Mart asked for their support because they needed assistance with these “complicated efforts”.
Moreover, Wal-Mart officials are proud of their accomplishment of correcting their errors in overtime calculations. Sue Oliver, senior vice president of Wal-Mart’s HR division, said, “We want our associates to know that the situation has been fixed, that overtime calculations now are being done correctly, and that we’ve added safeguards to our payroll processes to make sure these type of errors don’t happen again”. She also feels that Wal-Mart has acted in good faith because they decided to compensate their employees for five years in back wages although the Labor Department only requires two years of compensation. She also stated, “We are commited to our associates…we work very hard to make sure associates are compensated correctly.” Now that this lawsuit is finally settled, close to 87,000 employees will receive compensation for the overtime that they had previously worked.
I wanted to mention this article to question Wal-Mart’s organizational culture. What does it say about their organizational culture–is it good or bad? Sue Oliver’s statements make it seem as though they are committed to taking care of their employees and in that sense, I guess that would speak highly of their culture. However, another question could also be–should this issue have even occurred in the first place? What type of organizational design does Wal-Mart have where employees are working hard and not being fully compensated for their efforts? Might these errors in their organizational structure affect the relationships between the employees and management? I believe that it would. Might the lack of proper compensation lead to management’s loss of trust from employees? Might employees start to question the ehtics of Walmart? I believe that it is possible. Maybe Wal-Mart only agreed to pay out the compensation because they got caught. Wal-Mart is already known for being a “bully” because they have so much power. However, I believe that these errors in overtime compensation displays a weakness in their organizational culture and could lead to increased employee turnover rates.
But on the other hand, one might think that this settlement makes Wal-Mart’s culture look good because they are taking a step towards improvement, looking to make their organizational culture stronger by compensating their employees. Although this is a possibility, I am leaning more towards my former explanation. What does everyone else think?