Managing Talent: How Wal-Mart Is Setting Pay at the Top and Bottom
MT203: Human Resources Management – 02
Prof. Dana Williams
July 28, 2015
“In the highly competitive retail industry, Wal-Mart operates more than 10,000 stores in more than two dozen countries, generating sales in the hundreds of billions of dollars.” (Noe, p.396) When a company makes that amount of money there should be incentive pay. We will discuss the impact of incentive pay of Wal-Mart’s CEO and the employees. We will talk about how store employees might question the difference of their compensation compared to the CEO’s. Then we will compare effective performance management techniques for the CEO and employees.
Mike Duke is the CEO of Wal-Mart. When it comes to executives, their pay is considerably higher than the average worker. As stated by Bonnie Kavoussi, “The Wal-Mart CEO gets pain 1,034 times more than the median Wal-Mart worker, according to a new analysis by PayScale, a salary information website.” (Walmart’s CEO Paid, para. 1) The impact of incentive pay for Mr. Duke is significant because he receives an obscene amount of compensation, whereas the average worker is under compensated. Their compensation was changed in 2011 from being eligible to receive profit sharing up to 4% of their pay and not being able to cash it until retirement, to quarterly and annual bonuses which can be spend immediately as well as medical insurance and 401(k) contributions up to 6%. Thus, the way this incentive program is structured encourages the CEO to be successful but discourages the average worker from going above and beyond. In the business world it is the average workers that need to be encouraged, not the CEO, therefore, this does not make sense.
When you look at the difference between the total compensation of the workers and the total compensation of the CEO you can see where the average workers might get upset with it. Mike Duke’s total compensation is $18.1...