Compensation and benefits

From a moderately successful retailer to one of the largest retailers in the world Wal-Mart has grown right before our very eyes. As America’s largest employer, Wal-Mart employs over “1.6 million employees” (Wakeup Wal-Mart, 2010). With that said one would assume that this Fortune 500 Company would have a respectable compensation and or benefit plan for their hard working employees, but sadly this is not the case. Unfortunately although Wal-Mart is famously known for their ridiculously price they are also well known for providing disastrous healthcare coverage plans to their employees.

For instance Wal-Mart offers low premiums to their employees for their family coverage. Even though this may seem like a dream come true for many, the fact of the matter is that their high annual deductable cancels low premiums out. In fact, theses annual deductibles are so high that most employees find themselves having to pay thousands of dollars before Wal-Mart’s insurance decides to kick in to pay. Regrettably because of this many employees are forced to seek government help in the form of Medicaid and other subsidized care in order to obtain and afford their medical needs.

What is even more alarming though is the way Wal-Mart plans to right their employee healthcare wrongs. To offset their current health care plans, Wal-mart executive are proposing the cutting of “retirement benefits by at least $200 million (by eliminating flat 401(k) retirement contributions, which would cut the company’s retirement benefit cost from four to three percent of wage”(West, 2005). The reasoning behind why Wal-marts executives implement such ridiculous and unethical plans are unknown, but there is no question their sense of logic is more than a bit disturbing.

As mentioned earlier, being one of if not the most successful super-market chain in the United States, Wal-mart (with more than “5,000 stores and $285 billion in sales worldwide”) could easily afford compensation and benefit programs that would serve the needs of their employees (Wakeup Wal-Mart, 2010). But for this to happen it is imperative for Wal-mart to bluntly re-evaluate their ethical values, their mission and begin investing on their number one asset…their employees. A good place to start is by looking at your competitors as a source for guidance.

For instance Costco is an excellent example of a corporation that manages to stay competitive but manages to efficiently provide excellent wages and healthcare benefits to their employees. What makes Costco such an exemplar module is the fact that they don’t forget about their employees in the process. For instance, Costco employee’s average around “$17 an hour in pay”, making it “42 percent” higher than their fiercest rivals Wal-mart/Sam’s Club. But it doesn’t stop there Costco also contributes generously to its workers’ 401(k) plans, starting with 3 percent of salary the second year and rising to 9 percent after 25 years.

In addition, when it comes to healthcare the company ensures that their ITS insurance plans absorb most dental expenses, and part-time workers are eligible for health insurance after just six months on the job, compared with two years at Wal-Mart. Eighty-five percent of Costco’s workers also have health insurance, compared with less than half at Wal-Mart. And right when you think it can’t get any better once an employee enrolls in a medical plan, Costco employees are then automatically covered under the prescription drug, vision, mental health and substance abuse plans as well…at no extra cost (Costco Wholesale, 2010). It is no wonder Costco has such an extremely low turnover and employee theft rates.

Yes, Wal-mart and Costco seem to be on total opposites of the healthcare/salary spectrum and although it may be almost unrealistic for Wal-mart to follow Costco steps, Wal-mart can certainly learn more than a thing or two from Costco’s employee healthcare coverage. But how can Wal-mart overhaul their sad benefit plan into something more substantial? The following are some recommendation Wal-mart would need to follow. First and foremost Wal-mart needs to get out of corporate denial, stop defending and start examining. This could be done by accepting responsibility, acknowledge difficult truths, and constructing a plan for productive change.

Once Wal-mart takes this first step then they need to leverage their size to help their 1.6 million employees, this could be done by raising Wal-marts coverage portion of health care premiums for employees. Wal-mart also needs to lower insurance enrollment waiting periods for both full and part-time employees or even something unexpected such as focusing their cost-cutting skills on HMOs could easily make a vast improvement to Wal-marts health-care program. With that said Wal-mart cannot forget about their employee’s income. Even the most modest of pay increases to their employees’ wages would make a vast improvement.

In all, it is quite apparent that changes need to be made therefore if Wal-mart is serious on making amends and creating an appropriate benefit program then they need to pursue the following recommendations. By doing so, this will enable Wal-Mart’s employees to finally obtain the wages, benefits and treatment that they so rightly deserve.

Reference

Wakeup Wal-Mart. (2010). The real facts about wal-mart: walmart’s healthcare. Retrieved from http://wakeupwalmart.com/facts/healthcare.html

West, D. (2005, October 26). Wal-mart and health care: condition critical. Retrieved from http://www.wakeupwalmart.com/research/CFCW-healthcare.pdf

Costco Wholesale, (2010). Health benefits. Retrieved from