Wal-Mart and Its Associates: Efficient Operator or Neglectful Employer
Abstract
The modern society has different expectations and strict unspoken rules on how companies should operate. The society largely expects corporations to operate with keenness and not violate what they consider ethical and moral. Organizations are thus under pressure to please communities but many have failed to do since the public continues to uncover outrageous scandals reflecting violation of their moral obligations to communities, workers rights, discrimination laws among others. Wal-Mart is among the organizations that have been in the headlines for failing to meet specified societal expectations. This paper intends to discuss Wal-Mart’s unethical behavior together with giving recommendations on how they can bring to an end some of their scandalous practices.
Introduction
Wal-Mart was listed among the world’s top and largest public conglomerates in terms of sales and revenues by Fortune in 2008. With more than one million workers it is one of the largest commercial employers and is in fact also perceived as the most powerful capitalist worldwide. Other than the United States where it runs more than 3300 stores, the company in addition operates in the United Kingdom, Argentina, Mexico, Japan, Puerto Rico, Brazil, Canada and China. Nonetheless in spite of Wal-Mart’s enormous profitability and aggressive growth, its reputation has not been without flaw and controversy especially regarding the impact it has on communities eliciting a lot of resistance from grassroots organizations.
Facts about the case
While Wal-Mart has argued that it benefits communities by offering affordable and lower prices for vital consumer commodities and needed jobs, several organizations have questioned these claims. They argue that Wal-Martization of life has led to major ethical issues and in reality has adverse economic effects on community, work, small merchants and generally the American Dream. Most stakeholders feel that Wal-Mart has ethical and moral obligations that it has failed to live up to. The assumption therefore is that Wal-Mart does not behave ethically while it operates in communities. This implies that it has usually not made decisions that wholly ensure societal wellbeing and betterment.
For instance critics state that the low cost strategies adopted by Wal-Mart ruthlessly target competitors and suppliers. Their obsession to slash commodity costs combined with its popularity, force competitors and rivals to do the same or perish. Consequently where it establishes its retail stores most small merchants are usually forced to close down or lower the benefit rates and wages of their employees which has unpleasant effects on local communities. They oppress manufacturers and suppliers such that they have to cut their items costs to Wal-Mart’s satisfaction if they are to make any profits at any one time. Hence, while the main stockholders enjoy huge profits, stakeholders comprising of local communities, employees, suppliers, manufacturers and even some customers suffer. The corporation has thus been generally criticized for eroding social capital, quality jobs and healthy communities and being a major barrier and hindrance to domestic expansion.
Major overriding issues
However in the recent past Wal-Mart has not only been in the limelight for destructive pricing behavior. The recent overriding issue has been that, despite the company creating the illusion that it has happy smiling employees the reality is different. Wal-Mart has been repeatedly accused of poor human resource and labor practices. Its employees are said to earn way less than the average hourly wage set for grocery and retail workers. The wages are thus not sufficient to adequately sustain employees’ and their families often making them to live below federal poverty and become dependent on food stamps.
Additionally Wal-Mart has faced not less than thirty eight federal and state lawsuits that have been filed by workers from different states accusing the corporation for forcing them to work for long hours. In a recently concluded case against Wal-Mart, a Minnesota Judge ruled that Wal-Mart pays millions of dollars to its employees for requiring them to work overtime or off the clock while denying them meal breaks or full rest.
Having Wal-Mart workers work overtime was and is unethical especially since the workers still do not get paid for all the hours worked insinuating that it is the company’s economic objectives that are satisfied at the expense of employees’ wellbeing. A look at salaried employees that work longer hours in other companies reveals that they are usually paid attractively to work overtime hence as the company benefits, the employees also profit from their extra efforts.
Besides, Wal-Mart has been condemned for suppressing its employees’ democratic right of unionization through labor busting teams, unfair intimidation among other management techniques. While Sam’s desire to have the company function as a big family need be respected the employees quest for unionization should as well be considered. Union opposition is not advisable because employees that have their own voice work better and the result would also be a good work environment, better customer service, benefits and paychecks that reflect the employees’ hard work that has made Wal-Mart the richest and biggest company in America. All this labor practices display Wal-Mart’s wicked and unethical management actions, as the sole objectives of the practices is to protect their personal financial position and advance their profit goals.
Sub- issues and related issues
Another related issue that Wal-Mart has been condemned for is sex discrimination. Research indicates that while a large number of its female workers work as hourly employees only a small percentage are in management positions. In addition female workers on average earn less than their male counterparts for the same type of work. In the Dukes case, Wal-Mart is accused of discrimination in promotions and pay. Using actual statistics to showcase the gender differences in terms of promotions and pay the plaintiff did build a strong case against the corporation. Although it would have been more appropriate to have Wal-Mart simply defend themselves at the store level instead of letting the case go on as a lawsuit, Wal-Mart are to be blamed because they did not early enough put in place strategies that would ensure such work place discrimination does not occur. Even then claiming that the company has violated sex discrimination laws may be an overrated accusation given that it is true that most times women are not as aggressive as men in seeking promotions and prefer fewer responsibilities in order to accommodate for example family priorities or because their income is usually a family’s secondary source of revenue.
Analysis and Evaluation
Stakeholder Analysis
Stakeholders are very important individuals in ensuring the success of any business. In this case, the affected stakeholders as earlier mentioned include employees who do not receive fair wages, face discrimination and poor treatment; competitors and suppliers who have to reduce their commodity costs to accommodate Wal-Mart’s interests; and local communities who have lost their small businesses as a result of Wal-Mart’s entry in their localities. Below is a figure showing Wal-Mart and its stakeholder relationships:
Stakeholders map
The company’s failure to appropriately address stakeholders’ interests is continuing to damage its reputation which is one of its most important assets and thus they must be prepared to face profitability challenges in future if they do not take the necessary remedial measures. The stakeholders’ characteristics at work include power, because to some extent they have the ability to influence the company’s decisions; and legitimacy as their actions are appropriate and are specifically as a result of Wal-Mart’s proceedings.
Corporate social responsibility
Wal-Mart needs to acknowledge that they essentially do not run their business or operate it in a vacuum meaning that the business heavily impacts on the surroundings of its stakeholders, in fact exposing some of them like employees to various risks. Therefore their ethical obligations and responsibilities go beyond stockholders’ interests and wealth maximization objectives to additionally accommodate stakeholders. After all it is the stakeholders that play a major role in ensuring that the business prospers and successfully conducts its profit making activities.
Conducting ethical business requires carrying out corporate social responsibility and Wal-Mart is not excluded. Corporate social responsibility revolves around the company carrying out economic, moral, philanthropic and legal expectations placed on it by members of the society at any time. While Wal-Mart’s economic responsibilities entail profit maximization; legal responsibilities include paying taxes to the government, observing employment laws or protecting employee welfare; philanthropic responsibilities are for instance fundraising for local communities, building hospitals, schools among other facilities to generally improve social conditions; and ethical responsibilities encompass environmental protection, protecting small merchants, promoting healthy competition and local products among others.
Recommendations and implementation
Despite the bad publicity brought by accusations of unethical practices Wal-Mart can make a few changes and save its public image which plays a crucial role in sustaining its profitability and ensuring its success. It is unarguable that even though it is an efficient operator, to the public it comes across as a neglectful employer. While there is little Wal-Mart can do regarding its low cost pricing strategy since this is its source of competitive advantages, the corporation can improve its human resource practices. Reviewing their human resource practices is imperative and in fact needs immediate attention because whereas Wal-Mart still continues to enjoy excessive power and control over communities and especially consumers they now have fickle power over their employees making issues concerning workers more delicate and serious. Wal-Mart must additionally take action because the allegations by the employees are not mere reflections of changing social contracts between workers and their companies or free-enterprise system but instead depict the existence of unscrupulous management actions. Generally instituting labor changes should address most issues raised regarding the corporation.
For starters since Wal-Mart’s opposition to unionization has elicited negative responses from its most valuable asset, the employees, it would be wise to yield to their demands and allow them to be part of legitimate unions. It is as well critical that they constantly review their human resource policy to include appropriate standards of promotions and pay. It would furthermore be essential for them to carry out intensive public campaigns that will rebuild their relations with stakeholders and make communities perceive and acknowledge the benefits that they present to societies.
