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Background of Walmart Stores
In the recent past, Walmart Stores has been making massive progress in its online retail business, thanks to its elaborate and operational organizational design and structure. The big box regulatory approach, coupled with the company's resilience in determining the way in which employees respond to inevitable challenges in the workplace has placed Walmart Stores as the second largest retail entity in the U.S regarding returns and liquidity, right after Amazon. Furthermore, the salient manner in which human resource is harnessed at Walmart Stores worldwide speaks volume of operational, organizational design and structure put in place. Nonetheless, the exceptional long history of success and continuous growth internationally that Walmart Stores has that the company's corporate plan and construction are bearing fruits in bringing significant competitive benefits and success.
Operation wise, Walmart Stores uses a hierarchical structure which comprises of a team of CEO for its five subsidiary stores located in the U.S namely Walmart Stores Inc., Walmart U.S.A, Walmart International, Sam's Club and Global eCommerce. From the CEO's at the helm are several more vice presidents who head various business divisions. Below the vice presidents lies the management team which comprises of 16 individual directors tasked with overseeing the operations and compliance with the business laws as well as supervisors and subordinate employees. Therefore, Walmart's corporate design and structure are not any different from that of other international corporations composed of numerous subsidiary and business divisions.
However, Walmart Stores has given all her employees raises vis a vis investing heavily in technology. For instance, in U.S divisions only, the rise in the workforce has improved customer service thereby increasing sales revenue for each quarter in 2015. By offering stationed order pick-ups, the company hopes to build a significant retune of its online retail goods accounting for more than half of the company sales with much focus laid on fresh and organic foodstuffs. Additionally, the company has proven to hold its tech investment with other tech giants in the industry by rolling out Walmart Pay across its subsidiary stores in the U.S. despite roll-out of a mega Walmart Pay service, and the company still faces the challenge of e-commerce growth lag as compared with Amazon, its chief rival. For example, Sam's Club, a conglomerate business entity continues to struggle to keep up with Costco. Such challenges, coupled with the strong U.S dollar has affected Walmart's profit margin as sales fell below par for the first time in the company's history.
Today, virtually all established organizations around the world have adopted an organizational design and structure. Morgan, (2015) defines an organizational structure as a program that displays the reporting relationships of an organization regarding communication, the line of authority and employee rights and duties. An organizational structure is imperative for any fast-growing entity in providing employees with the essential guidance and clarity regarding specific reporting relationships which govern the workflow of an organization. Ideally, a formal outline of an organizational structure will tend to provide a more straightforward policy of creating new positions, in addition to enabling a flexible working relationship within an organization. Without a formal organizational structure in place, working relationships in an organization will be jeopardized due to the unclear reporting schedule for employees.
According to Morgan (2015), there are five major types of organizational designs and structures; functional structure, hierarchical structure, divisional structure, flat structure and a blend of two known as matrix organizational structure. Many organizations have adopted the hierarchical organizational structure, with employees reporting directly to managers, all following in a vertical line of command and authority. Walmart Stores uses a hierarchical functional organizational structure. The hierarchical structure helps Walmart to determine its business activities apart from imposing limits on how Walmart addresses the problems it faces as a mega online retailer in the U.S. While the hierarchical structure has a hoard of benefits, too much-concentrated power in its design could practically lead to reduced teamwork. The purpose of this report, therefore, is to analyze and discuss the hierarchical organizational structure adopted by Walmart Stores as based on the corporate design, implementation, and efficiency.
How Hierarchical Functional Structure Affects the Efficiency of Walmart Stores
Walmart Stores uses a hierarchical functional organizational structure. Ordinarily, a company ought to adopt either hierarchical or functional organizational structure for its operations. However, in the case of Walmart Stores, the company passed hierarchy combined with functional organizational structure because of its delocalized nature of business operations. Given the firm view of the hierarchical functional structure, Walmart Stores found it so reliable in maintaining the status quo. Furthermore, the vertical lines of authority and command that are associated with the fabric makes it more convenient for employees at Walmart Stores to know who to report to.
More so, communication within the hierarchical structure flows from top to bottom. In this way, authority comes from excellent management, implemented by the middle-level managers and communicated downwards to the rank-and-file employees in Walmart Stores thus giving room for active monitoring and control to be achieved. The functional part of the structure, on the other hand, involves employee groups tasked with the responsibility of fulfilling specific functions. For instance, there is a human resource department, an information technology department as well as a marketing department all tasked with different departmental-based tasks that positively affect the efficiency of Walmart operations.
Consequently, the top to bottom communication strategy often stagnates innovation efforts within the rank-and-file of employees due to its resilient management structure and design. Ideally, the aspect of lower levels employees having to wait for decisions to emanate from the top leadership is bureaucratically manifested and as such makes collaboration virtually non-existent and leaves engagement to suffer the most. This perfectly explains as to why the hierarchy model is, but it is own the most significant vulnerability because it clears the way for new incumbents and potential competitors in the industry to marshal their efforts and overtake the company.
Six Key Elements of Organizational Structure Involved in Hierarchical Functional Structure
However, the hierarchical functional organizational structure involves all the six critical elements of an organizational structure. These elements include the chain of command as witnessed in the hierarchical structure where communication flows from top to the bottom of the hierarchy as authority is passed from senior-level managers to subordinates. The second element is a span of control where top managers can easily monitor and control all the work being performed by rank-and-file employees in Walmart Stores. Thirdly, the part of work specialization in the organizational structure is also achieved by the hierarchical functional structure where each employee is now fully aware of his or her responsibility which helps them to perfect in areas assigned.
Regarding the centralization element, the hierarchical functional structure offers the best when the top leadership made various decisions regarding daily operations and communicated after that to company employees down the hierarchy for implementation. Additionally, the departmentalization element of the organizational structure is also achieved when Walmart stores are placed under the human resource department, an information technology department, as well as a marketing department all, tasked with different departmental-based functions that positively affect the efficiency of Walmart operations. Finally, the formalization element of the organizational structure is manifested in this type of organizational structure through instituting an executive arm at the helm which is tasked with the responsibility of developing and sustaining a successful business enterprise (Nedal M. Elsaid, Ahmed E. Okasha & Abdalla A. Abdelghaly, 2013).
Availability of Problems or Issues with the Hierarchical Functional Structure
There are quite some business problems and issues emerging in the design of the hierarchical functional organizational structure. The issues have shown a persistency tendency to the extent that they pose a significant challenge to the normal operation of Walmart Stores. The problems include;
Slow decision-making- the aspect of having the top leadership making all the decisions about day-to-day operations in the hierarchical functional organization like Walmart tend to slow down the process of decision-making. This, in turn, hampers sales revenues and stagnates innovations along the departmental levels in the organizational hierarchy.
Stagnation in innovation - an organization with distasteful organization structure may find it difficult to foster innovation. For example, a typical hierarchical structure does not provide room for change due to poor communication that often blocks the ideas from reaching the relevant personnel for modifications to existing.
Low levels of productivity - another critical metric for a thriving business enterprise is productivity. Ideally, the presence of low levels of productivity implies that the organizational structure adopted by the company is weak.
Unclear lines of communication - organizations that adopt poor organizational structures will always have the type of employees who bypass the standard chain of command. For instance, a hierarchical organizational structure will leave company employees unable to voice complains and or suggestions to be heard.
Recommendations to Alleviate the Problems
In as much there exist myriad problems and issues within an organization which are brought about by the poor organizational structure put in place, the management of the organization can still alleviate these problems through;
Performing a complete overhaul of the organizational structure to a better one to improve direct decision-making authority to the relevant personnel in which decisions will have to travel through several layers of management for a leaner process.
Enhancing resource allocation mechanisms and improving employee empowerment programs to increase productivity levels in all departmental units. Though these original programs, organizational structure will be strengthened.
Change of the organizational structure too help in encouraging innovations whereby employees who may have the capability to develop and help implement new ideas will be reached out to showcase their talent.
Nonetheless, ensure that a new organizational structure is put in place to help accommodate the voice of those employees who may have suggestions and or complaints concerning a particular line of production. This will help to foster clear communication lines between departmental heads, employees, and their respective managers.
In conclusion, almost all the fast-expanding organizations across the world have adopted an organizational design and structure that help provide a more relaxed policy of creating new positions, in addition to enabling a flexible working relationship within an organization.
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