Question

One of the most successful discount department stores in America is known as Wal-Mart stores and is named after its founder Sam Walton. Because of the phenomenal success of these stores, Sam Walton became one of the richest men in America. Also, because of his leadership, the stores have enjoyed continuous growth and expansion, so that by mid 1980s, the chain had over 700 stores and was increasing at the rate of an additional 100 stores per year. Its sales increased annually by over 35% and the profits have soared close to 40% per year every year since 1975.

Sam Walton, until he died in 1992, took personal interest in his employees. His managerial philosophy was to get the right people in the right places and then give them the freedom to be innovative to accomplish their tasks. He called his employees as associates and treated them as associates. As per company policy, all associates are eligible for profit sharing plans that motivate the employees further. The managers of the stores are required and encouraged to meet with their employees in a social setting to discuss their concerns as well as issues of organizational interest, and this makes the employees feel that their input is taken seriously by the management.

Sam Walton himself led a simple life. He did not exhibit any aura about himself, giving the employees a feeling that he was one of them. He and his executives regularly travelled in company owned planes to visit Wal-Mart stores situated at various sites across the country. He met with sales clerks, stock boys and sales managers to find out what items were popular. He knew most of them by their first names and addressed them so. He initiated "employee of the month" in all categories and created honour roles for more successful stores. This created inner competition requiring extra effort to improve sales and service. This policy gained high respect for him as a leader.

Case Questions:

a. How would you describe Sam Walton as an effective leader? What leadership theory is consistent with his leadership style?

b. How important it is for a leader to mix with the employees? How does this leadership style of "being one of the boys" affect the motivation of the employees?

Answer 1

A)

Walton was an enthusiastic business owner who wanted to get involved in every aspect concerning the business. He believed in what he was doing. He shared his profits with associates and made them partners. He believed in men and always aimed for high goals. He was an advocate of not taking everything seriously. This helped his employes to loosen up in a stressful time. All of these are the reason why Sam Walton is considered as an effective leader.
We could say that Sam Walton has followed a style of Transformational leadership. As he always was keen to motivate his followers for achieving a shared vision.

B)

It is always important for a leader to know his employees and their nature. Mixing with employees enable the leader to understand their problem and needs, as well as, the kind of motivation they require. He can also understand the conflicts between them and can bring a better conclusion to them.
Being one of the boys as Sam Walton did will positively motivate the employees. They feel that there is no difference between employee and employer and that they have to work together to achieve organizational objectives. There will be a feeling of togetherness and teamwork among the employees. Thereby creating a healthy relationship with the employees themselves and the management. The hierarchical conflicts can also be avoided.