Wal-Mart was the biggest company in the world. With sales at a quarter of a trillion and over 1.

3 million employees, it was the biggest retailing success ever. A lot of Wal-Mart's success was attributed to the strong and pervasive culture at the company, which was developed and nurtured by founder Sam Walton. In over four decades of operation, Wal-Mart managed to retain most of the elements of culture it had when it first started out, as well as the entrepreneurial spirit which often drives startup companies to success. The fact that the company's growth rate was often in double digits bears this out. Wal-Mart's culture was characterized by an orientation towards customer service and providing the best value at the lowest prices. Employee well being was also given a lot of importance and the company tried to project an image of a socially responsible entity. However, despite the positive aspects and strength of the culture, there were a number of issues on which Wal-Mart was severely criticized. In the light of the number of law suits filed against the company, the top management realized that there were drawbacks in the culture of the company and began taking steps towards correcting them.

Issues:
Trace the roots of the culture that supports the growth and success of a company; in this case, the largest retail organization in the world Analyze the elements of culture fostered by a company and how they support the company in achieving its basic mission

Contents:
'Good to Great' Background Walmart's Culture - Supporting Success Human Resource Culture The Darker Side of Walmart's Culture Towards a Better Walmart Exhibits Page No. 1 2 5 7 8 11

All associates work for the customers who buy our merchandise. In fact, the customers can fire everybody in our company. And they can do it by simply spending their money somewhere else. The greatest measure of our success is how well we please the customer, 'Our Boss'. " Sam Walton, Founder of Wal-Mart GOOD TO GREAT
In 2003, with sales at a quarter of a trillion, a

double digit growth rate, and employees exceeding 1.3 million, Wal-Mart was one of the most successful companies in the world. Not only was Wal-Mart the biggest retailer in the world, it was also the biggest customer for companies like Disney, Proctor and Gamble, Revlon, Campbell Soup, Gillette, etc. In addition to this, it was the biggest seller of DVDs, CDs, groceries, guns, diamonds and a number of other products in the US. Wal-Mart was a super-retailer where a customer could get whatever he wanted under one roof. The company thrived on convenience and reasonably priced products. Wal-Mart always gave more importance to volumes than margins and promised customers the lowest prices on every kind of goods. Analysts believe that culture is one of the most important determinants in making a good company a 'great' one. The success of Wal-Mart has long since been attributed to the company's strong cultural base. Analyst Jim Collins4 observed that Wal-Mart had the kind of 'cult-like' culture that is shared by all great companies. Even the employees of WalMart were sometimes referred to as "Walmartians" by outsiders, reflecting the distinctiveness of the people who shared that culture. It was a wonder that a company of such a huge size and scope could maintain its entrepreneurial spirit so many decades after it first started, besides achieving admirable growth rates which were poised to make it the first trillion dollar company in the world.

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'Good to Great'
However, over the years, the company became the target of much criticism. It held the record for having been sued the maximum number of times. Its work culture was criticized on various grounds which included gender-based discrimination, its overtime policies, using sweatshop products and 'killing off' small local business.

Background
Wal-Mart was the realization of the dream of Sam Walton (Walton), who wanted to set up a store which provided customers 'high value, low prices and a warm welcome.' Walton was born on March 29, 1918, in Kingfisher, in the state of Oklahoma. While he was in school, he worked parttime in his father's store which gave him his first experience of retailing. In 1940, he graduated with a bachelor's degree in economics from the University of Missouri at Columbia. Soon after graduating, he worked as a management trainee at JC Penney5. In 1942, he joined the US Army as a Captain in the Army Intelligence Corps and worked in that position till the Second World War ended in 1945. On returning to civilian life, Walton decided to start his own store. His father-in-law (Walton got married in 1943), who was a banker, helped him with a loan of $20,000 to set up a Ben Franklin variety store6 in Newport. Walton did not have any business experience. He soon gained the requisite experience by attending

training programs conducted by Butler Brothers for their franchisees. He also visited a competing departmental store across the street, to observe their prices and policies, and derived valuable inputs. Walton's store was very successful. Most of the success came from his innovative ideas. He realized that he could obtain competitive advantage by buying products in bulk directly from manufacturers and offering them at lower prices to customers. He also kept the store open for longer hours than his competitors and took advantage of its good central location. In the very first year Walton earned a profit with his cost-cutting ideas. Within five years his store became the number one Ben Franklin store in a six state region and had earnings between $30,000 and $40,000 per year. Some of the important operational policies adopted by Wal-Mart in later years, such as giving importance to store location, purchasing in bulk and maintaining longer store working hours, had their roots in Walton's first store. Unfortunately, due to carelessness in negotiating the lease agreement, Walton lost his store in early 1950... Excerpts >>

5] JC Penney is a chain of stores specializing in apparel, accessories and home furnishings. The first JC Penney store was opened in Wyoming in 1902 by founder James Cash Penney. JC Penney was the pioneer of retailing, chain stores and of catalogs. 6] Ben Franklin was a franchise of Butler Brothers, which ran Federated departmental stores and Ben Franklin variety stores. Butler Brothers Incorporated was the pioneer of the departmental store setup in the US.

Walmart's Culture - Supporting Success

Analysts attribute Wal-Mart's success to its strong and pervasive culture. In spite of its huge size and tremendous growth rate, the company retained most of the cultural elements which contributed to its success in the early years. Walton believed that happy and satisfied employees performed well and were responsible for happy customers. Towards this end, he store to create a culture which encouraged employees to contribute their best. It also ensured discipline and uniformity in an organization that was growing at such a rapid pace and had been operating for over 40 years. Wal-Mart's culture was essentially customer-centric and service-oriented. It embodied Walton's dream of creating a store which provided the best value at the lowest prices. A unity of purpose and a spirit of oneness was created and maintained across the organization. Some unique features bound the people associated with Wal-Mart together, one of these being that Wal-Mart followed a separate calendar which was based on 'Wal-Mart time', i.e. 'week 1' in the calendar was the first week of the company's fiscal year that started on February 1st every year. The Foundation of Wal-Mart's Culture Wal-Mart's culture was built on three basic beliefs or tenets established by Walton in 1962, when Wal-Mart was first set up. These tenets constituted the foundation of its culture in later years. They were...

Human Resource Culture

Wal-Mart realized that employees played a very important role in the success of a retail business and gave considerable importance to them. To instill a spirit of equality and oneness among employees, the company adopted the practice of terming employees 'associates', thus creating in them a sense of belonging and involvement in

Wal-Mart's activities and success. Walton believed that if he took care of the employees, they would take care of the customers in the same manner. He tried to create a positive and cheerful atmosphere in the company. Wal-Mart was one of the first companies to introduce profit sharing and stock options for its employees. After it went public Wal-Mart began its "Profit Sharing Plan". The plan offered an opportunity to its employees to improve their income depending on the profitability of the store. Employees were also offered stock options and store discounts. This was to motivate them to take an active interest in the working of the company. A system of performance linked compensation and bonus also ensured that employees contributed their best to the organization. One of the unique features of Wal-Mart's human resource policy was that the company did not authorize overtime work. It did not allow store managers to overburden employees with work. The company was also committed to improving the career prospects of its employees. It had a policy of recruiting more than 70 percent of its personnel in managerial positions from the ranks of hourly workers in the stores...

The Darker Side of Walmart's Culture

In spite of being generally applauded for its culture, Wal-Mart was also severely criticized for certain aspects of its culture. Overtime Woes Although Wal-Mart had a very strict policy on overtime and the company's rules forbade it, it was observed that, at most of the stores, employees worked between 5 and 15 hours overtime per week. (The company had a 40 hour work week). Since the company was very strict about not allowing overtime (there were instances where store managers who paid overtime were demoted and in cases, even dismissed), it was usually done on an unofficial basis. Since overtime was not allowed, store managers often asked workers to clock out after their shift was over and then continue working. Sometimes workers were put to work as soon as they came to the stores at the start of the shift, even before they could clock in.

This way, employees sometimes worked a couple of hours before they clocked in. One employee recollected an instance when she had worked for 3 hours in a store before she officially clocked in. Another tactic employed was to lock the doors of the store at the end of a shift (ostensibly to prevent theft) to prevent employees from leaving at the scheduled time. This often enraged employees as well as their families and created a poor image of Wal-Mart. Sometimes the time cards were also edited by the people in charge of payroll to show that employees worked only 40 hours per week. When people clocked in more than 40 hours the additional hours were deleted from the records. This was a regular practice at the stores to control the expenditure on salaries...

Towards a Better Walmart

The problem with Wal-Mart was that, as the largest company in the world, it had three times the number of employees that the second largest company behind it had. Analysts felt that the size of the company itself suggested that the scope of problems was likely to be higher. It was not practically possible for the headquarters or the top management to keep track of everything going on at the store level. Therefore, some stores deviated considerably from the corporate principles. In view of the flak it received, Wal-Mart began some change programs in its stores. It developed a posting system for all management jobs so that all the employees could be informed about them and be given the chance to apply for promotions...