Analyzing Walmart's Compensation System: Benefits and Impact BUS 409

This report provides an in-depth analysis of Walmart's compensation system, examining its strategies for employee motivation and retention within the context of competitive pressures and digital transformations. It evaluates the compensation philosophy that guides remuneration and benefits at Walmart, highlighting aspects such as annual raises, hourly wages, and long-term employee compensation. The report compares Walmart's compensation system with industry standards, focusing on elements like salaries, bonuses, stocks, and working conditions. It also discusses various compensation plans, including straight salary, pure commission, salary plus commission, and territory volume compensation, assessing their benefits and drawbacks in relation to organizational goals and employee performance. The analysis considers the impact of compensation on both the company and its stakeholders, as well as the influence of laws, regulations, and market factors on Walmart's compensation practices. The report concludes by evaluating the effectiveness of traditional pay bases and referencing various studies on compensation and performance.

Running head: COMPENSATION PLAN 1
Compensation Plan
Name:
Institution:
Date:

COMPENSATION PLAN 2
Introduction
In recent years, in the face of growing competitive pressures, organizations have been making
the most of every wave of managerial innovation to reach higher levels of performance.
Some have always looked with restrictions on this succession of novelties Hoops, Brasel,
Dewey, Rodgers,Merrill, Hunter & Azarow (2018). However, we are entering a new era
where digital transformations are more complex and disruptive, requiring quick and creative
solutions.
Walmart is a leading player in the retail sector globally. The company can attribute this
success to its ability to retain and attract top talent. This paper will evaluate the
compensation philosophy that guides remuneration and other benefits at Walmart. It will also
look at how the compensation system contributes to motivation and retention of employees in
the company.
Walmart’s compensation system
For a good performance, an employee at Walmart gets an annual raise capped at 60 cents, this
plan applies to workers who work for 200 to 300 hourly. Half of Walmart’s one million
hourly associates make less than $10/ hour. For an employee who has worked over 15 years
at the organization, they get around $19/her which is a hefty amount for a worker who is paid
on hourly. The company’s compensation plan is depended on how long you’ve worked in the
company.

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.
Compensation systems and careers have always been considered strategic factors for
organizational success. However, most companies, even the most innovative ones, still use
traditional pay systems based on jobs and functions.Despite the problems pointed out, the
traditional remuneration still has its place within a mix of strategic remuneration and through
an approach that contemplates the alignment of the individual effort with the organizational
guidelines; orientation to the process and result; favoring participative practices and the
continuous development of the main competencies that connect to careers and their
development process.
There is similarity between Walmarts compensation system with other companies. The
compensation system includes bonuses and salaries, stocks, good working conditions and
other various benefits. The first element of the compensation system is the salary. The
company is one of the best paying as compared to its to the industry standards. The
compensation plan in the company has the second element is providing a good and conducive
working environment thus the employees can fully focus on working Viswanathan, John &
Narasimhan (2018). The company gives its employees free lunch as part of ensuring a
comfortable and conducive working environment.
Within the pay and career logic, the competency system is strongly influenced by the
predominant structure type. If the structure has a high degree of flexibility, with matrix
characteristics and work teams, the compensation system will tend to define specific values
for each competency or set of competencies.

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Therefore, the remuneration and career by competencies can be considered a more advanced
way of managing people, coming closer to the current need of organizations to reward their
employees, in a more exponential scenario.
The present work aimed to develop a study in the area of compensation (compensation) or
reward systems. Although they also deal with fixed remuneration,the majority of research
identified refer to variable remuneration, form of stock options. Bibliographical researches
using scientific articles that had as a basis the determination of the systems of compensation
for executives of companies, seeking to leverage the best performance of these firms. One of
the evaluation criteria used was the frequency with which certain Compensation or reward
systems occur in the corporate environment.
More specifically, the aim of the study was to evaluate compensation of managers of
companies, mainly of medium and large size, without restriction geographical or financial
value limitation. The evaluation was bibliometric through several publications, in view of
what the authors consider to be the most impact on business results. Variable compensation
structures are typically most frequently found in large companies, where governance and the
study of their application is more approached.
Walmart Financials

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Source: https://www.google.com/search?q=walmart+financials+2018&rlz
A clear causal relationship between compensation and performance was not specified, since
in a good moment of a certain enterprise the CEO has more influence for the formulation of a
contract that benefits him. The same effect inverse. These observations do not allow the
establishment of the direct relationship system for the benefit of managers. The doubt
remains: Compensation through bonuses excessive profit is beneficial to the company's
profit, or the greater bonus to the manager is the result of a good time in the establishment of
the contract. Moreover, such a correlation of bonus and profit does not occur in all studies.
A clear causal relationship between compensation and performance was not specified, since
in a good moment of a certain enterprise the CEO has more influence for the formulation of a
contract that benefits him. The same effect inverse. These observations do not allow the

COMPENSATION PLAN 6
establishment of the direct relationship system for the benefit of managers. The doubt
remains: Compensation through bonuses excessive profit is beneficial to the company's
profit, or the greater bonus to the manager is the result of a good time in the establishment of
the contract. Moreover, such a correlation of bonus and profit does not occur in all studies.
Title Account
executive
Seniority
Reports to Director of sales Quota $1,200,000 in
annual recurring
revenue
On target
earning
$ 240,000 Compensation
mix
55%/45%
Base salary $ 140,000 Sales incentives $110,000
Plan
components
Tier 1
Up to $70,000
Tier 2
$ ($70,000-
100,000)
Tier
Above $
100,000
Rate 8% of ACV 12% OF ACV 15% of ACV
Cap No Cap
Compensation plan
A compensation plan is a comprehensive package that consists an employee’s terms of
payment, wages, salaries, benefits and bonuses and possible commissions Hoops, Brasel,
Dewey, Rodgers,Merrill, Hunter & Azarow (2018) Each company should have a documented

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compensation plan that enunciate the organization approach to handling its employee’s
compensation.
There are several types of compensation plans that an organization can consider:
Straight salary compensation plan
This types of compensation structure, employees get their basic salaries. Mostly, each
company has a range of time within which employees get their salary for instance monthly.
Johnson, Friend & Agrawal (2016) The difference in salaries depends on the employees job
description and rank in the company. The salary is likely to change depending on employee
performance.
This structure of compensation plan encourages fairness and equality among representatives
working in teams and also encourage new representatives joining the organization since it
gives them a salary from which they survive on.
Pure commission compensation plan
This plan works on the basis of paying commission to agents of an organization, for instance
sales agent get paid on commission only Viswanathan, John & Narasimhan (2018). Such a
plan, is encouraged for startup companies that want to break even in their territory , if the
employee doesn’t sell, they are not paid, during low sales seasons, employees receive very
little salary since the sales are low.
Salary plus commission compensation plan
With this plan, employees are paid their basic salary and given commissions on sales that
meet or surpasses the set goals although receiving a salary and a commission encourages

COMPENSATION PLAN 8
higher income tax rates, employees are assured of a basic salary even during low sales
seasons when they hardly make any sales.
Territory volume compensation plan
Under this plan, the company distributes the commission evenly among the sales agents. It is
more operational where teamwork has been made significant, however sales agents who may
have put more effort may feel unappreciated while and also encourage laziness in some
agents.
Deciding which compensation plan depends with the organization goals and objective.
Generally a mix of a basic salary and commission is mostly encouraged. With this plan
employees get their prearranged basic salary together with an additional commission that
depends on the sales made that are determined by the company’s goals. Okeke, & Ikechukwu
(2019 The basic salary helps the sales agent cover their day to day living expenses while the
commission encourages them attain more sales to share their employer’s success.
The benefits of using this plan is to encourage employees in the direction of healthier and
better results by rewarding each employee depending on their performance, the more the
sales the more the reward . This plan helps employee work and exceed the basic expectation
in the verge to attain the commission hence increasing the company’s profits.

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References.
Hoops, H. E., Brasel, K. J., Dewey, E., Rodgers, S., Merrill, J., Hunter, J. G., & Azarow, K.
S. (2018). Analysis of Gender-based Differences in Surgery Faculty Compensation,
Promotion, and Retention: Establishing Equity. Annals of surgery, 268(3), 479-487.
Johnson, J. S., Friend, S. B., & Agrawal, A. (2016). Dimensions and contingent effects of
variable compensation system changes. Journal of Business Research, 69(8), 2923-2930
Mapp III, R. C., Peterson, J. M., & Johnson, R. Q. (2017). Qualified and Nonqualified
Deferred Compensation Plans in Small Businesses: Creative Uses and Problem Solving.

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Sahakiants, I., & Festing, M. (2019). The use of executive share-based compensation in
Poland: Investigating institutional and agency-based determinants in an emerging
market. The International Journal of Human Resource Management, 30(6), 1036-1057.
Okeke, M. N., & Ikechukwu, I. A. (2019). Compensation Management and Employee
Performance in Nigeria. INTERNATIONAL JOURNAL OF ACADEMIC RESEARCH IN
BUSINESS AND SOCIAL SCIENCES, 9(2).
Viswanathan, M., Li, X., John, G., & Narasimhan, O. (2018). Is Cash King for sales
compensation plans? Evidence from a large-scale field intervention. Journal of Marketing
Research, 55(3), 368-381.