One of the most successful discount department stores in Americais known as Wal-Mart stores and is named after its founder SamWalton. Because of the phenomenal success of these stores, SamWalton became one of the richest men in America. Also, because ofhis leadership, the stores have enjoyed continuous growth andexpansion, so that by mid 1980s, the chain had over 700 stores andwas increasing at the rate of an additional 100 stores per year.Its sales increased annually by over 35% and the profits havesoared close to 40% per year every year since 1975.
Sam Walton, until he died in 1992, took personal interest in hisemployees. His managerial philosophy was to get the right people inthe right places and then give them the freedom to be innovative toaccomplish their tasks. He called his employees as associates andtreated them as associates. As per company policy, all associatesare eligible for profit sharing plans that motivate the employeesfurther. The managers of the stores are required and encouraged tomeet with their employees in a social setting to discuss theirconcerns as well as issues of organizational interest, and thismakes the employees feel that their input is taken seriously by themanagement.
Sam Walton himself led a simple life. He did not exhibit anyaura about himself, giving the employees a feeling that he was oneof them. He and his executives regularly travelled in company ownedplanes to visit Wal-Mart stores situated at various sites acrossthe country. He met with sales clerks, stock boys and salesmanagers to find out what items were popular. He knew most of themby their first names and addressed them so. He initiated "employeeof the month" in all categories and created honour roles for moresuccessful stores. This created inner competition requiring extraeffort to improve sales and service. This policy gained highrespect for him as a leader.
Case Questions:
a. How would you describe Sam Waltonas an effective leader? What leadership theory is consistent withhis leadership style?
b. How important it is for a leader tomix with the employees? How does this leadership style of "beingone of the boys" affect the motivation of the employees?
