Rate of Employees
Wal-Mart stopped publicizing its turnover rate but information pieced together from the firm’s union and other external sources continue to show that the firm has a high turnover rate relative to its competitors. The average turnover rate for the entire retail industry in 2006 is 34. 7 percent but at Wal-Mart, some stores have experienced turnover rates of as much as 85 percent and 104 percent (Henderson, 2007). Although the turnover rate varies per store, the large disparity between the average turnover rate in the industry and the turnover rate at Wal-Mart stores supports claims of the unprecedented level of turnover at Wal-Mart.
Three major reasons explain the high turnover rate of Wal-Mart employees. First, the firm pays an hourly wage barely above the minimum wage. Wal-Mart management disclosed that its average hourly rate is $9. 63 for all its stores in the United States but the workers union states that the average wage is actually $6. 35 per hour for the workers (Wal-Mart Workers Association, 2006). The higher per hour rate reported by the firm was due to the inclusion of the hourly wage of managers and executives. As such, low wage continues to be a justification for the high
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Second, Wal-Mart continues to move against the complete unionization of its workforce (Wal-Mart Workers Association, 2006). Although Wal-Mart workers have a union, there is little room for the development of industrial relations, more so when the firm has a high turnover rate, resulting to a rapidly changing workforce that prevents collective action much less collective bargaining. Third, the firm prefers to employ workers part time, which prevents workers from achieving regular employment that lessens firm responsibility for legal benefits (Wal-Mart Workers Association, 2006).
The uncertain status of employees also contributed to high turnover rate whether Wal-Mart intended this or not. Addressing High Turnover Rate of Wal-Mart Employees Dealing with high turnover rate of Wal-Mart involves multi-dimensional change involving change in management culture and better wage rates and benefits. While it is true that Wal-Mart’s value offering to customers is low prices, which means it has to manage costs, this implies that it has to weigh the cost of providing higher and standardized wage with the cost of turnover. A look at Costco Wholesale Corp.
shows that it has established standardized wages for its nationwide employees at a higher rate than Wal-Mart. It has also established healthcare insurance and other benefits for employees. It carries a more accepting attitude towards unions. Although less than 20 percent of its workforce belongs to the union, this has created a better working relationship between the workforce and employees. With more satisfied employees, Costco not only has a more efficient workforce but also incurs lesser human resource management and operating cost to allow it to offer low prices to consumers.
However, Costco admitted that reaching this was not easy since it had to look into the concerns of its workforce and made adjustments. (Herbst, 2005) Wal-Mart also needs a change in its attitudes towards its workforce. At present, the company has not established a cooperative working relationship with its employees. This was the case of Best Buy in 2001 when it experienced problems low employee productivity and decline in sales. What the company did was to collaborate with its workforce by providing them with the knowledge and tools they need to innovate on ways of building long-term relationships with customers.
By considering employees as partners, performance and productivity improved. (Everitt, 2008) Although these involve different situations, the Best Buy case shows that firm attitudes towards employees is a solution to both low productivity and high turnover rates. In addition, positive attitudes of employees of the firm translate to good customer service.
Everitt, L. (2008). How Best Buy slays the turnover beast. Retrieved April 20, 2008, from http://industry. bnet. com/retail/2008/04/16/how-best-buy-slays-the-turnover-beast/ Henderson, B. (2007).
Employee turnover. Retrieved April 20, 2008, from http://brockhenderson. wordpress. com/2007/07/09/employee-turnover/ Herbst, M. (2005). The Costco challenge: An alternative to Wal-Martization?. Retrieved April 20, 2008, from http://www. workinglife. org/wiki/index. php? page=The+Costco+Challenge%3A+An+Alternative+to+Wal-Martization%3F+(July+5%2C+2005) Wal-Mart Workers Union. (2006). Wal-Mart: Real wage and turnover study. Retrieved April 20, 2008, from http://www. aflcio. org/corporatewatch/walmart/upload/walmart_wagestudy_fla. pdf