Compensation Plan Outline

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Compensation is what the company pays its human resources to encourage them to keep on working for the company and it is usually a vital aspect of any company’s management system. Compensation consists of many things further than just straight salary and it includes stock options, perks, allowances, and benefits. Compensation plans are determined by the company’s productivity, the number of human resources, the competitiveness of the market, economic factors, such as inflation and the cost of living, and most importantly by the performance of the human resource. Moreover, the government regulations concerning union obligations, discrimination, and employee versus contractor determinations have to be complied with, and all these are reflected in the compensation plan (Employee Compensation, 2009). Wal-mart is a U.S.-centered retail store company and it currently is the largest retail chain company around the globe with more than 4,150 retail amenities around the planet. This paper will examine Wal-Mart’s compensation plan and how it compares to other companies globally (Hines & Wilkie, 2012).

Wal-mart has a detailed compensation plan for its employees, though it is noted that the company presents a low standard plan for human resources. Wal-mart provides quite generous monetary rewards for its employees through the system of profit allotment plans, like stock acquisition options. Moreover, it offers all-inclusive training plans for all of its employees with the aim of creating a victorious culture within the human resources, as well as throughout the entire company for the near future. Even though quite a number of the company’s executives are paid generously, those employees who work at the company’s stores are awarded locally minimal wages and are more so not entitled to any of the benefits available. The part-time employees take over 5 years to become qualified for profit sharing, benefits, or other similar compensation. Therefore, the company experiences a relatively elevated turnover rate amongst its employees, which means that the majority of the workers do not really reach the required rank of seniority. Actually, in numerous cases, the company’s local minimum remuneration is far-off below the country’s poverty line (Hines & Wilkie, 2012).

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The company’s compensation plan also entails unionizing employees with the national union of workers, although the majority of those workers who receive union privileges are those in the executive bracket and therefore the company is actually 30% below the U.S. nationwide intake for the unionized workers. Benefits like medical insurance, paid leave, maternity leave, and retirement benefits are also stipulated in the compensation plan, even though the senior employees seem to enjoy such benefits, unlike their part-time counterparts. In essence, the Wal-mart compensation plan is way below the requirements of the state policies, as well as the national labor bodies and this is evident from the above evaluation of the company’s compensation plan. Therefore, this plan is less appropriate to the company, bearing in mind that it has an international outlook.

Wal-mart retail company possesses some beneficial compensation schemes, whereby any associate or rather worker who is regarded as being non-exempt is usually under the provisions which are documented in the act of Fair Labor Standards and also any pertinent state hour and wage regulations governing the locality where the employee associate is hired. The associate has to be rewarded at least the municipality, state, or federal minimum wage, either way, which is greater, for the entire hours worked, and all of the associates should have the entire worked hours under documentation, and the Wal-mart company has the obligation of paying them. Moreover, the company’s human resource is entitled to have a break and meal periods as stipulated by the company policies, as well as state law and, most importantly, they are entitled to overtime pay.

The Forbes magazine once ranked the Wal-mart company with respect to the business executives amongst the excellent 100 conglomerates to work for but only. This ranking, however, included only the company’s executives and not the entire human resource. Surprisingly, the company’s employees averagely earn less than $250 per week and the earnings for associates commonly referred to as the full-time workers are within the range of $6-$7.50 per hour and the hours vary from 28-40 hours every week, which is closely typical to the U.S. retail discount industry. The sort of pay scale identified above actually places those employees who have families way below the federal poverty line, thus making the majority of workers’ children to qualify for complimentary lunch settlements at school. Carrying out close examination on such pay structure, it amounts to a type of business interests to the company, while the taxpayer promotes low remunerations. The company has one-third of its human resources as part-timers and they are restricted from working for less than 28 hours each week and they are not qualified for obtaining compensation benefits (Hines & Wilkie, 2012).

The low-rank employees normally start at a minimum close salary and possess the potential of earning pay raises ranging from 20-40 cents per hour in the course of the incremental promotions. The pay structure also states that the flawless performance by the personnel guarantees for a 60-cent salary increase annually under the compensation policy, in spite of how long a worker has been in the company or rather has worked for it. Therefore, a hard performer who seemingly starts working at Wal-mart at the position of a cart pusher and making about $8 per hour and fortunately receives a single promotion, with reference to the average wage’s increase rate, supposedly will make close to $10.60 after working for the business retail group for six years. It is evident even though the company’s elementary compensation philosophy revolves around providing benefits and compensation programs required to attract, retain, and reward its human resources, who largely contribute to the overall success of the company, the company merely recognizes the employees’ contribution to its success and becoming the number one retailer globally. Part-time workers do not qualify for many benefits awarded by the company although they work tirelessly hard towards making the company profitable (Hines & Wilkie, 2012).

Wal-mart Corporation offers low wages and compensation benefits to its human resources and therefore it has to uplift its remuneration standards and uphold the prestigious rank it is awarded in the corporate world. The major driving force towards a good compensation plan is a good incentive pay and it is directly related to the overall performance of the employees. For the optional benefits system to be effective, the company ought to carry out an improvement program, generally touching all the employees in raising their wages to an acceptable level, for instance, like offering them $11-14 per hour increase to all the workers would ensure that benefits like those related to the performance of the workers and motivational grants are taken positively and thus increase productivity (Hines & Wilkie, 2012).

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The company holds close to 70% of the workers operate on a part-time basis and it also holds a flexible scheduling strategy, which is basically premeditated to compel the higher remunerated full-time employees to trim down their rank to mere part-timers, as this saves the company massive amounts of funds from condensed salaries, as well as benefits paid. Therefore, I would recommend that Wal-mart should review their employment policies towards absorbing many workers into the full-time program, as this offers them job security and also entitles them to major benefits like health insurance, maternity leave, as well as buying of the company’s stocks.

Wal-mart company provides its employees with stock purchasing privileges by offering a reduction of 15% of the initial $1,800 value of shares purchased annually. For instance, if you are an employee of Wal-mart and post a check indicating to buy stocks worth $1,800, then the company would offer you an extra $270 to purchase more shares totally free. Therefore, this approach gives workers automatically 155% returns in shares even before collecting the first dividends. The company also matches 100% of the opening 6% of wages contributed towards a 401(k) arrangement. This shows strong retirement initiative plans and though the 401(k) plan and profit-sharing, the employees are assured of having a peaceful retirement (Albrecht, & Stice, 2011).

Health insurance has been a challenge in the country, and Wal-mart only offers this type of benefit to full-time workers, even though the package given is extremely expensive in that the employees contribute or rather pay for 35% towards that kitty, which is actually double the country’s average. The company also has excluded those employees who apparently work for fewer than 24 hours weekly. Moreover, the health benefit plan states that those workers who smoke should pay extra fees ranging from $260 to $2,340 annually if at all they need to be covered by health insurance. Nevertheless, the company’s medical plan is seen to be the same for all levels of workers and employees are viable to receive unrestricted insurance coverage for calamitous expenses like cancer and organ transplant treatments (Greenhouse & Abelson, 2011).

Wal-mart competitors include Costco Wholesale Corporation, Kmart, and Target, among others, and they offer similar health insurance and retirement policies. The Costco Corporation, however, has better health insurance coverage for its employees, as for the last year the company had close to 96% of its total workers insured, whereas Wal-mart boasts of insuring about 45% of its workforce. On the other hand, Target Corporation provides various health care policies for its workers and they vary with geographic locality. Also, store employees at Target do not completely receive any calamitous coverage and of interest is that the deductible levels differ in accordance with current and former employees.


Each and every organization has compensation plans for its employees and these policies range from informal to formal. Wal-mart Corporation bears a unique set of compensation strategies in that it is seen to rarely offer its human resources with the desirable benefits and motivational packages, but overall, the company seems to beat all odds and emerge the best in the retail business globally. Increasing the rates of remuneration is a major challenge facing Wal-Mart, resulting in about 70% of employee turnover annually. Nevertheless, there are better ways to ensure that the company attains a milestone towards satisfying both its workers and customers. It has to be initiated by coming up with a strong compensation philosophy, coming up with objectives towards a firm base pay program, performance appraisals, as well as coming up with standard allowances and benefits (Employee Compensation, 2009).

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