Wal-Mart is “the world’s largest company” (Fishman, 2003, para. 5). During periods of economic recession and inflation, Wal-Mart was responsible for 12% of the US economy’s productivity gains and played an integral role in the lowering of inflation rates (Fishman, 2003). The reason behind its continuing success and growth is its unflagging determination to offer customers the lowest price possible for quality goods. To fulfill this objective, Wal-Mart has embarked upon large-scale global outsourcing. For HRM practitioners, the implication of its doing so is that the company has to adopt diversity management programs that would enable it to effectively manage an extremely diverse workforce. The design and implementation of effective diversity management programs are integral to Wal-Mart’s ability to fulfill its key strategy: low-priced quality goods.
Global outsourcing to ensure the continued satisfaction of its objective to provide customers with the lowest possible prices has brought Wal-Mart a multi-national, multi-ethnic, multi-racial, and multi-cultural workforce. The management of such a deeply diverse workforce is a challenging undertaking.
As King-Kauanui, Ngog, and Ashley-Cotleur (2006, p. 80) explain, the prevailing HRM assumption is that “different cultures will respond to human resource management practices differently, making it difficult to successfully move procedures that have worked in one culture to another.” Given that people are products of their culture and that their attitudes, behaviors, and work ethics are shaped by their culture, organizations that employ a multi-national and multi-cultural workforce have to employ HR strategies that account for and tolerate these differences (King-Kauanui, Ngog, and Ashley-Cotleur, 2006). Their failure to do so could lead to decreased organizational commitment, decreased productivity, and high employee turnover levels.
The implementation of diversity management programs has the potential to diffuse the tensions associated with the management of an ethnically and culturally diverse workforce and, indeed, position the organization to benefit from employee diversity. Polzer, Milton, and Swann (2002), HRM scholars and practitioners, argue that empirical evidence strongly suggests that the integration of a multicultural outlook and the embrace of multicultural principles within the organization’s dominant management framework creates group cohesion, enhances organizational commitment, and positively impacts employee productivity levels. The implementation of diversity management, necessitating HR training in cultural sensitivity, diffuses the potential for intra-organizational conflicts and creates the environment necessary for multinational organizations such as Wal-Mart to positively benefit from cross-cultural expansion (Polzer, Milton and Swann, 2002). The implication here is that the embrace of diversity management programs would allow Wal-Mart to more effectively manage its global outsourcing activities and hence, continue to provide customers with high-quality goods at the lowest possible prices. Mismanagement of the said activities would, on the other hand, result in losses which, in turn, would jeopardize Wal-Mart’s continued ability to fulfill its key strategy.
In concluding it is important to question the role of HRM in the implementation of a diversity management program designed to further Wal-Mart’s key strategy. As noted earlier, HRM will play an integral role, not only in the design and implementation of the program but in training employees in cultural sensitivity. Now the question becomes how to ensure that HRM is satisfying the stating role. If one follows the gist of Becker and Huselid’s (2003) argument, this can be done through the implementation of a metrics system that measures pre and post HR-intervention performance, the translation of the difference into monetary terms, and the comparison of the resultant figure with the program implementation and requisite employee training costs. This will provide allow the organization to evaluate the effectiveness of the diversity program and the role of HRM therein.
Becker, B. & Huselid, M. (2003). Measuring HR? HRMagazine, 48(12), 56-62.
Fishman, C. (2003) The Wal-Mart you don’t know. Fast Company, 77, 68-70.
King-Kauanui, S., Ngoc, S. D., & Ashley-Cotleur, C. (2006). Impact of Human Resource Management: SME performance in Vietnam. Journal of Developmental Entrepreneurship, 11(1), 79-95.
Polzer, J.T., Milton, L.P. and Swann, W.B. (2002) Capitalising on diversity: Interpersonal congruence in small work groups.’ Administrative Science Quarterly, 47(2), 296-324.