Organizational Change Management at Wal-Mart Inc.
Introduction
Every organization undergoes change at some point of time. It may be a tactical change or a radical one- however, the key to successful change management lie in the effective identification of personal attribute of the stakeholders involved in the change process. Once individual employees are motivated enough to embrace the change, it paves the way for change happening at the group and organizational levels (Bennett 2000). Wal-Mart- the leading retailers in the world is undergoing such change by proposing team-based work structure to foster collaboration, team work, and independent thinking and problem solving in the workforce. The analysis of this proposed change on the basis of Kotter’s 8-step change model (Kotter 1996) is undertaken in this research paper. The company overview is provided and the factors demanding change are identified, followed by theoretical underpinning.
Company overview
Wal-Mart Inc. is the world’s largest retailer with several unique management practices and processes that the company revealed to the business world. Its everyday low pricing (EDLP), intense technology advancement through continuous research and development, collaborative forecasting, use of RFID, and pioneering works in business operations had made it enjoy unprecedented success over the decades. It started as a local retail store but its cost leadership strategy and optimum locations in the heart of cities soon made it a global chain of supermarkets with thousands of products to choose from. Founded by Sir Sam Walton in 1960, Wal-Mart is one of the largest companies in the world.
Wal-Mart’s vision is to become the best retailer in the world which it has almost achieved through cost-based differentiation. Its mission is to help people save money and live a better life, hence its slogan- ‘Save Money, Live Better’. This mission is translated in its low pricing which allows buyers to save money on their retail shopping. Wal-Mart achieves this by streamlining its value chain and optimizing the supply chain costs to pass on the savings to the buyers. As such, the retailer enjoys high degree of customer satisfaction, repeat business, word-of-mouth, and increased market share as compared to its rivals in the retail segment. The cultural values at Wal-Mart, namely respect for people, exceptional customer service, striving for excellence, and integrity in business activities help it uphold an ethical, rational, and sustainable stance that garners competitive advantage to the company.
Change Management Background
Change is inevitable and organizations ought to respond to the external and internal changes in their environment to remain relevant, profitable, and sustainable. There are new events happening around companies that may affect one or more of their surrounding factors like economic, social, political, technological, environmental, or legal. In order to stay current and adapt to these changes, the organizations are also supposed to bring concomitant changes in their structures, strategies, practices, processes, and systems. In layman terms, change management is similar to a strategy undertaking “planned and systematic change, which is achieved by the influence of the organizational structure, corporate culture, and individual behavior, under the greatest possible participation of the employees” (Kneer, 2006, p. 5).
Going by this definition, it is understood that change management takes place at organizational, group, and individual levels. The most complex form of change is at the individual level where people have to be convinced to envision and accept an anticipated future condition, and come out of the current state to achieve the desired future state (Hiatt & Creasey, 2003). In between the two states, there are processes, activities, and stages encompassing new directions, new policies, and new behavior that the individual employees should respond to favorably.
The people are supposed to adopt new mindset and opinion, and display altered behavior which may not fit into their existing set of beliefs or cultural values. Hence, resistance and disagreements are an indispensable part of change management (Kotter 1996). The role of an organization’s culture, leadership, systems, and structure is to remove the multiple layers of resistance in a smooth fashion to allow its people embrace the new vision and perform in the anticipated manner with the same, or even enhanced degree of commitment, motivation, and mutual respect.
It is often not possible for organizations to identify crystal clear change moments as most of the organizations crave for stability. However, too stable an organization would not be able to facilitate effective change as coming out of its comfort zone would be extremely difficult and the degree of inertia would be high. Therefore, organizations need to strike a balance between movement and stability, that is, undergoing small tactical changes every now and then to maintain the momentum and be ready to embrace a transformation or radical shift when the business conditions demand so. Organizations balancing the two continuums are found to be more flexible, adaptable, and productive since the people are able to embrace change easily and with less resistance. Adapting with the environmental requirements and letting go of the current practices is a routine thing for them which does not cause much of emotional or psychological pain.
Effective change management is achieved with the help of certain elements like two-way and clear communication, focus on the change vision, leadership skills (Beerel, 2009), democratic change management, participative decision making, stage-wise monitoring and control, people-centric change management activities, doubt clarification, and continuous improvement. Change management is a dynamic process which needs refinement at each step. Organizations understanding these intricacies are better positioned at managing change and helping people embrace the new vision and organizational system/practice/process/structure.
What factors call for change at Wal-Mart?
The global retail segment is witnessing tectonic shifts as online business models are getting more popular and organizations are supposed to align their offline businesses with their online activities to offer complete shopping experience to the customers. Lately, the company had encountered stiff competition from other supermarket chains, retailers, and local mom-and-pop stores that pressurized it to revisit and redefine its systems and strategies. Earlier too, Wal-Mart had undertaken multiple change endeavors to adapt to the market requirements and sustain its brand image and market share, such as employees layoff (McKay, 2020). Despite, there have been issues to address as its rivals are adopting new technology, government regulations are changing, consumer demand and buying patterns are altering, and new business practices and norms are emerging.
In this light, it is essential for Wal-Mart to redesign its core or the main organizational system/structure that fosters new set of values in the workforce. Previously, Wal-Mart had been charged for some strategic loopholes and shortcomings in its human resource management function that reduced its popularity as a worthy employer. Hence, the change management initiative recommended for Wal-Mart falls in the category of strengthening its organizational culture and values through a newly developed and well-executed organizational system and structure that helps bring the people together, reinstate its employer branding, and regain its losing competitive advantage (Wheeler, 2001).
Undertaking change management at Wal-Mart
The beginning of any change management program or initiative is undertaken with the help of needs assessment of the primary and secondary stakeholders associated with the change. In this case, the stakeholders are the employees, the vendors, the customers, and the overall community. To bring about an improvement in its internal work culture and people-oriented functioning, Wal-Mart needs to assess the existing skill set of its workforce to determine the areas in which critical skills are lacking, and where improvements can be accounted for. Developing more skills and making the employees more productive and competent is enabled by helping them realize their weaknesses and prepare them to accept the need for training and development. It has to be done at the individual level first so that people are ready to embrace the mentioned changes that bring them closer to becoming a better personality, better values, and a better professional.
The company had been operating under the top-down approach which had proved detrimental to innovation and responsiveness (Loeb, 2020). This approach, though useful in maintaining control over the workforce, is unsuitable because it slows down the decision making process and does not include the opinion and perspectives of the employees, especially the front line managers at Wal-Mart that possess key customer insights relevant for optimum decision making.
Further, most of the rival organizations in the retail space and even others in different industries have abandoned the use of the top-down approach due to its inherent challenges and ineffectiveness in the modern business and management scenario. As a result, Wal-Mart initiated the team-based management approach in its supermarkets and other subsidiaries as a means to increase employee productivity and commitment through independent decision making and creative problem solving (Walmart, 2020). The use of Kotter’s 8-step change management model (figure 1) can be effective and beneficial in realizing the true potential of the change management program at Wal-Mart.
Figure 1: Kotter’s 8-step change model, Source: Management Study Guide (n.d)
According to the model, a change should be initiated and proceeded through in a sequential manner with the following steps and the mentioned activities, strategies, and tactics in each of them:
Create urgency
Creating a sense of urgency means that the company actually wants something to happen and this has to be shown to the people. It is important to open up clear and feedback-oriented communication channels to spark the first wave of motivation and let people talk about the new agenda, new issues identified, and the ways in which the company proposes to resolve them. Once discussions and gatherings start taking place, urgency will automatically build up. In this case, Wal-Mart needs giving convincing reasons for the change, such as positive work culture, innovative decision making, democratic management style, independent middle- and lower management, and bottom-up problem solving.
Though employees would find it hard to believe initially as Wal-Mart had been associated with much of employee harassment and discrimination in the past, developing scenario s around how new things could help employees in the future would help them think about the proposal and start talking and discussing about it. Displaying panic or losing hope in this step would reduce the chances of success as this is the most important step in establishing trust and making it believable for the employees.
Form a powerful coalition
Sustained convincing cannot happen unless powerful coalitions are formed. These coalitions refer to the associations between the key stakeholders and the constant guidance of the leaders in the organization. Once people start talking about the change, it is important for the leaders to clarify their doubts, listen to them patiently, manage their emotional turbulences, and offer them support throughout their understanding process. Influential people who are listened to, who can mentor others, and who are seen as effective leaders, should be appointed as the change agents to make others feel comfortable and get themselves involved with the change agenda and management. In the case of developing a team-based working model, Wal-Mart has to realize that people may be scared of this new way of working, or they may be doubtful of their roles, job security, or other aspects of employment, compensation or performance management. They have to be combined with people having emotional stability and strong change commitment to help them overcome their fears.
Create a powerful vision
When people start talking and discussing about change, they have their own opinions and views about it. Some might want their perspectives to be included in the change agenda as it may make them feel valued in the organization. The development of a powerful vision takes note of this psychology wherein people should be involved in the vision formulation stage and key opinions and ideas should be validated. How the people are viewing the future in the light of the proposed change matter a lot when designing the final change vision.
For Wal-Mart, it is important as team-based work culture is effective only when mutual trust, understanding, cooperation, and empathy are present. This could begin with the inclusion of the individual values and visions into the proposed change to make more sense of the to-be-values in the work culture of the organization and letting the employees feel more valued and powerful (Dittmar, Jennings & Stahl-Wert, 2007).
Communicate the vision
There are hundreds of routine messages floating within an organization and the change-related communication may easily disappear in this clutter. Hence, a more powerful and frequent communication program for the change agenda has to be devised to make sure that it is not off-the-track. Most organizations undertaking change management are found to fail because of having a meeting-based communication approach. While this may seem practical given the routine workload, it is important to note that extra efforts have to be put into keeping the change fresh in the minds of the people.
Hence, in addition to meetings, personal discussions, daily email reminders, open problem solving and doubt resolving sessions, training, mentoring and coaching, and performance reviews may be necessary. This will demonstrate the company’s seriousness towards the change and will be adequately replicated by the employees. For the development of the team-based structure, Wal-Mart has to constantly remind the employees of this approach as compared to the previous one, and how each of them can prepare to get aligned with the new model of working.
Remove obstacles
Obstacles in the way of effective change usually refer to resistance, ego, and inability to come out of comfort zone, insecurities, fear of the unknown, and so on. While the previous steps are capable of removing one or more of these obstacles through constant communication and doubt resolution, it may happen that some employees are particularly problematic or paranoid about the proposed change. Their own insecurities may make others demonstrate the same behavior and the entire effort may go in vain. Thus, by this time, Wal-Mart should be able to segregate people supporting change and those who are not.
It will help design appropriate management strategies for the two categories. The first set may even help the second one in altering their opinion about the change. There may be non-human barriers like the existing structure, system, or practices that do not fall in line with the proposed change. Wal-Mart needs linking the change with these practices, for instance, the new team-based structure would call for concomitant changes in employee performance appraisal and review criteria, compensation plans and benefits, redefined roles and duties, and so on. Before these elements create doubts in the minds of the employees, Wal-Mart should take note of these aspects in a proactive manner to remove hindrances in the later stages of change.
Create short-term wins
Quick and early wins serve as great motivating factors during times of uncertainty. Wal-Mart needs to applaud its employees in their efforts and create short-term wins for them that help them celebrate their success and gain intrinsic motivation. In this light, the company can assign sure-shot projects to certain teams which can be handled without much of supervision or interference. It will help the team members manage the team agenda and performance and become independent problem solvers, while understanding team dynamics.
Employees performing well in embracing the change should be rewarded to keep up their momentum and help them spread the positivity. Much complex or expensive projects should be avoided as it may lower the morale of the employees when stuck with challenges. The key here is to help the employees manage smaller tasks and celebrate success in each of them to gear up for the next with increased enthusiasm, confidence, and motivation (LaClair & Rao, 2002).
Build on the change
It often happens that success in one or two projects is considered eternal by organizations that lead to the long-term failure of the change effort. For Wal-Mart, it is necessary to continue the momentum and build upon the change as it has been suffering from poor employer branding and low image as a good employing organization. Hence, declaring its change management victory too early may lead to increased chaos and strategic issues. Instead, the company should proceed slowly and steadily with small tasks celebrated with success and headed on to explore the bigger opportunities. For instance, smaller internal projects can be assigned to the employees to work in teams and get accustomed to the team-based culture.
As and when the workforce gets familiar to this culture and finds it comfortable to work in, the company should assign client projects at a bigger scale to challenge their creativity and help them apply their learning. During this entire process, each member has to be mentored about what went well and how things can be improved. Individual employees have to be taught to set their personal goals that align with their team and professional goals. This will help them strike synergies and avoid any issues like poor time management, conflicts, stress and depression, etc. Continuous improvement must be the highlight in this step that every employee should follow religiously.
Anchor the changes in the corporate culture
It is important to incorporate the new values and the system into the culture of the organization so that the future employees automatically become a part of this. To achieve it, leaders have to play a significant role in telling the success stories of the change every now and then and relate it to the structure and system of the company. New recruits and the existing staff should periodically be made aware of these changes and how they have helped redefine the bottom line of the business.
The changed values and beliefs should be included in the mission and vision statement and communicated to all stakeholder groups through public disclosure. Key change agents should be acknowledged and rewarded for their contribution and exemplary performance should be highlighted. Employees should be informed that change is the only constant and employees willing to adapt to the organizational needs during all times would be applauded, rewarded, and supported.
Force Field Analysis
Kurt Lewin’s Force field Analysis is a powerful strategic tool used to understand what is needed for change in both corporate and personal environments. Kurt Lewin views culture as being in a state of equilibrium. According to him “a culture is not a painted picture, it is a living process, composed of countless social interactions. Like a river whose form and velocity are determined by the balance of those forces that tend to make the water flow faster, and the friction that tends to make the water flow more slowly. The culture pattern of a people at a give time is maintained by a balance of counteracting forces. To bring about any change, the balance between the forces which maintain the social self-regulation at a given level has to be upset “ (Lewin, K. 1948. Resolving social conflicts, P.46. and P.48).
For change to happen the status quo, or equilibrium must be upset – either by adding conditions favourable to the change or by reducing resisting forces. Whenever driving forces are stronger than restraining forces, the status quo or equilibrium will change. It is useful if we apply this to understanding how people move through change and why they resist change.
There will always be driving forces that make change attractive to people, and restraining forces that work to keep things as they are. Successful change is achieved by either strengthening the driving forces or weakening the restraining forces.
Conclusion
From the above analysis,it is apparent that Wal-Mart is on the right way to revamping its work culture through a system that is the most needed right now. The focus should be on individual training and skill development to make sure that every employee is motivated and embraces the change to its fullest and contributes the maximum to organizational productivity and profitability. The learning from previous failures and employee feedback should be incorporated when devising change strategies and communication plans. It will help address specific concerns in a timely and responsive fashion.
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