What HR can learn from Amazon and Walmart

You might be wondering what the connection between HR & these 2 giants, so now that I have got your attention, allow me to elaborate.

Wal-Mart is world’s largest retail giant with annual revenues of USD 482 billion and profit of USD 14.7 Billion in the year 2015. Their profit margins have been in the range of 3% to 3.6% for the last 21 years. Now that’s one consistent business for you. The business model is fairly linear, where you grow the number of stores to increase the business. In this linear growth model you perfect the store and its supporting mechanism so well, that you know how this is going to add to your growth. Many other retail businesses like MacDonald’s also follow a very similar business model. So what changed for Wal-Mart?

Enter Amazon. Now as compared to Wal-Mart, Amazon is bit of mix of businesses and business models. Amazon is essentially a technology company — which has presence in Retail, Services and Products. Amazon had annual revenues of USD 107 Billion and profits of USD 596 Million. In contrast to Wal-mart, Amazon’s profit margins have been declining and have remained flat for last 4 years in the sub 0.5% range. So why should Wal-Mart still worry about Amazon? And given a choice today which company would you like to work for? The latest Forbes list of America’s most reputable companies have Amazon on top while Wal-Mart does not figure in the list of 100 companies. Mind you Wal-Mart is No 1 in Fortune 500 list for 3 years in a row while Amazon is ranked No 29 currently.

Lesson 1: Linear Business model where you would add more HR staff to take care of increasing employee needs is being disturbed.

If you are not making strategic investments in building processes and technology capabilities to address increasing needs of your customers then you are going to take a hit on multiple accounts. Just like Amazon automated the whole process online while Wal-Mart has automated parts of the process within the store, you would have to look within your HR processes to critically identify what processes can be handled more efficiently and effectively by technology. So before you go to your executive for asking for addition of staff in HR, ask yourself what have I done to improve efficiency and effectiveness of existing HR staff? Where does my best opportunity exist?

Lesson 2: Your customer’s habits and expectations would be changed by forces other than you have your sights on

One of the reasons why Amazon is a threat to Wal-Mart apart from many other direct competitors in the physical store space is that Amazon has set the bar in terms of consumer experience and expectations when it comes to online buying. Most of us who buy online almost by default expect the same level of convenience, ease, quality, & service as we get from Amazon. Just like it took years for Wal-Mart to build its nearly perfect model for offline store business this model has taken a long time for Amazon and it wouldn’t be easy for anyone to replicate the same.

So when you are designing policies and processes for your organization do not just look at people within the organization but also go above and beyond. There is an increasing talk of consumerization of organizational services and it’s just natural for people to expect the same level of convenience, ease, quality, and service within the 4 walls of the organization as they experience it outside.

Lesson 3: Learn to Experiment and Fail — but Fail Fast

One of the hallmarks of companies that lead the markets or even create market changing forces like Amazon is the relentless focus on innovation and experimentation. In its pursuit of change Wal-Mart is also adopting this culture. As an HR professional more often than not you would find yourself in “don’t fix it if it isn’t broken” situation and the temptation to “maintain” the harmony is very high. However the real “empowerment” would happen when you move out of the comfort zone and experiment with ideas and new ways of doing things. Start small, collect data, create a proof of concept and you would find that getting the all necessary executive approval becomes that much easier.

Lesson 4: Make technology work for you or else technology will soon make you redundant

In its pursuit to grow or even maintain its revenues, one of the key investments being made by Wal-Mart is, yes you guessed right, technology. Taking advantage of its gigantic style combined with its online presence Wal-Mart can change the game via its “omnichannel” strategy. In HR it’s a reminder for us to look at what’s working and how do we make it even better or awesome for our customers by use of technology. It’s a very “customer first” approach and it’s high time HR adopted. HR work is increasingly about solving real business problems while giving the best employee experience. I am sure all of us are reading a lot of Bots, Artificial Intelligence, Neural networks and Machine learning, the idea here is not do uni-dimensional thinking any longer. HR needs to think about process standardization, scale, automation, employee experience while also exploring how this can be delivered in the most efficient manner using technology. It’s no mean task and all HR leaders will have to make friends with technology and its impact on the business of HR or perish.

Just as we watch this battle of titans play out in the business world, I am sure that HR professionals who are willing to make mistakes, focus on innovation and are able to transform themselves are going to survive and succeed in the long run.