Wal-Mart Ethics Case
Wal-Mart is the largest grocery chain in the world, second largest company on Fortune’s 500 2012 list, and the largest employer in North America. Wal-Mart is faced with many dilemmas and issues that can be expected of such a large and imposing organization. These problems include environmental issues, employee’s issues, leadership issues, supplier issues and creating an uncompetitive market. This is not an exhaustive list, and Wal-Mart has other dilemmas as well, but this paper will concentrate on the issues involving Wal-Mart interaction with employees and the problems Wal-Mart faces with them.
Wal-Mart employees’ relations have been a dilemma for various reasons. One reason is that Wal-Mart has been criticized for not paying a decent wage or providing enough benefits. Another issue that Wal-Mart has with employee relations is Wal-Mart’s stance as not allowing any unions in Wal-Mart stores. Wal-Mart has also faced problems with discrimination and the allowed hiring of illegal immigrants. All of these are a dilemma for Wal-Mart because it is such a large employer and is well respected by other employers.
This puts Wal-Mart in a corporate leadership position and the way in which Wal-Mart handles situations with employees is viewed by other corporations as potential solutions to their employee problems. This is also dilemma for Wal-Mart because it is such a large employer and its decisions affect a great number of people. Wal-Mart employs over 1. 4 million people in the United States alone, encompassing 1% of the U. S. work force. At the same time Wal-Mart wants to remain the low-cost leader in the grocery and box stores market.
The conflicting forces that Wal-Mart must try to balance are maintaining their leadership aspect while maintaining healthy relationships with employees and customers. There are many stakeholders involved in this dilemma. These stakeholders include Wal-Mart’s employees, Wal-Mart customers, Wal-Mart’s competitors, and the unions. All of these stakeholders have the ability to influence decision concerning employee welfare, within the organization, as well as being influenced by those decisions. The first stakeholder mentioned is the employees for Wal-Mart.
Employees are considered supportive stakeholder for the most part, although they can also be considered mixed. This stakeholder is important because Wal-Mart employees so many people, but it is also important because Wal-Mart wishes to stay competitive in the market place. One way to stay competitive is by recruiting good and hardworking employees who are invested and engaged in their work. Otherwise the employee retention will be low, and the work performed will be substandard. This stakeholder is important also because Wal-Mart’s reputation and commitment to low prices.
One way to maintain low prices is by maintaining costs that permit these low prices. One way to keep costs down is to keep wages down and provide lower costing benefits. At the same time, one significant way to retain employees and ensure they are invested in their work environment is by paying them fair wages and providing essential benefits. Wal-Mart employees are also an important stakeholder because Wal-Mart has developed a reputation as being discriminatory in their hiring practices and use of illegal workers.
This is important for Wal-Mart, because once again a negative reputation can make it hard to recruit and retain workers. It is also important because a negative reputation can spur litigation and lawsuits that can be initially somewhat costly and end up becoming a burdensome expense, as out of court settlements tend to large. These legal proceedings also garner new headlines and the negative publicity can negatively affect sales, and recruiting efforts. The publication of these problems can also embolden the unions who want to break into and unionize Wal-Mart’s employees.
The problem with illegal aliens being used in the work force is a dilemma not only because Wal-Mart can face the cost of fines for breaking the law, but also because Wal-Mart already has a reputation as being bad for the American worker. It has been shown that Wal-Mart is the reason that some companies that supply Wal-Mart with goods, have moved their manufacturing overseas to keep labor and production costs down, and to be better able to maintain their supplier relationship with Wal-Mart. This has caused the loss of jobs in the United States, with the perception that Wal-Mart has no concern about the American worker.
Wal-Mart using illegal workers could be perceive as Wal-Mart being only concerned about saving money, and once again denying American workers from jobs. This is also looked on negatively in the current political environment where illegal workers are such a hot topic and unemployment is high. Another stakeholder in these situations is the Wal-Mart customer. The Wal-Mart customer is considered supportive, and Wal-Mart tries to keep it this way. The customer is an important stakeholder because essentially they are the reason that Wal-Mart exists.
Wal-Mart basically provides the facility of easing customer access to goods and services. Customers have a choice in this very competitive market environment and can find the same goods and services elsewhere, as Wal-Mart offers few exclusives on either of these. Wal-Mart does provide a presumed lower cost marketplace, and will match cost of competitors which is viewed as desirable traits from consumers. Still consumers will not continue to patronize organizations they feel are mistreating their employees and are using discriminatory practices in hiring and advancement.
Wal-Mart has to maintain a reputation as being a good employer that has genuine concern about it employees and that is also dedicated in being fair in its labor practices. Otherwise customers will go elsewhere for their goods and services, even if they pay a little more. Consumers will no longer support companies that they feel are lacking in proper ethics, because the consumer feels that it will only be a matter of time before the company manages to treat them unfairly.
Current consumers are especially proficient at the decision between saving money with one company, and supporting a more sustainable company even if it means spending more. This proficiency comes from facing this decision on a daily basis, and the ease of accessing information. So far, even with some well publicized discriminatory cases, Wal-Mart has been able to retain a strong customer base. Consumers will tend to give companies some benefit of a doubt, especially when it comes to saving money, but this cannot be viewed as a reason to willfully negligent in employee hiring practices.
After all, a consumer boycott is only one corporate scandal away. Therefore, the customers can be considered the most important stakeholder, because without them Wal-Mart would cease operations. Another stakeholder involved in this case are Wal-Mart’s competitors, like Target, Kmart, Home Depot, etc. , who look at Wal-Mart as a leader in their market. Wal-Mart competitors are neutral because they are more concerned with their own operations than with Wal-Mart’s operations.
The decisions that Wal-Mart makes concerning their employees are seen as opportunities to exploit or as problems. These decisions could be opportunities because decisions made in a positive light could be reviewed and possibly adopted by the competition. Whereas decisions made that reflect Wal-Mart negatively can be criticized by the competition and as a recruiting tool. Wal-Mart decisions with employees can also be problematic to competition because their decisions can force unwanted changes into the competitor’s organization. For example, if Wal-Mart changed ts viewpoint about unions it could have great impact throughout the box chain world giving unions leverage to be able to break into other store brands. The final stakeholders in Wal-Mart’s employee welfare situation are unions. Unions are considered an unsupportive stakeholder. The unions have a stake in this situation because their existence is based on membership, their fees, and continued support. Wal-Mart is very opposed to ever accepting a union in their work environment. Wal-Mart feels that it treats it employees fairly enough and a union would only complicate things.
Unions see Wal-Mart as the great mountain to climb, and getting Wal-Mart workers to unionize would give the unions a large base of employees to their membership ranks, and leverage through the retail industry. Unionizing Wal-Mart would not necessary be all positive, as the unions would now be presented with a relationship with large market and an adversarial attitude towards them. The relationship between these stakeholders can be contentious. Consumers want to support organizations that treat workers fairly, but public support for unions is rather low (2010 Pew Poll places it at 41%).
Wal-Mart also does not view unions favorably. The relationship between Wal-Mart and employees can be difficult at times also, but the relationship is mostly mutually beneficial for the majority of employees. The stakeholder with the most power is the customers because they still hold purchasing power over Wal-Mart. Customers could easily find other places to go to and buy goods, and therefore customers hold the most leverage over Wal-Mart. The stakeholder with the most to win would be the unions, because breaking the Wal-Mart wall would greatly heighten the power of the unions.
The stakeholders with the greatest potential to lose are the employees because at this time and point Wal-Mart has the leverage of possible employment during such tough economic times. Employees may actually lose out on potential wage and benefit gains because of the economic downturn, and Wal-Mart has jobs and is one of the few companies with expansion plans in these times. To improve the situation with the employees and the public perception of Wal-Mart, the organization could attempt two corrective measures.
The first proposal would be for Wal-Mart to start an employee appreciation and welfare camps in their stores. This would be through employee only contests or having a shopping day where employees get extra markdowns. This would make Wal-Mart a more popular place to work at, and could be considered a cheaper alternative to raising wages and improved benefits. Some employees might see these as cheap ploys to improve employee morale, but it could be quite popular. Another corrective measure would be a public relations campaign in which Wal-Mart explains to the public the benefits of working at Wal-Mart.
This P. R. campaign would show Wal-Mart as an employer of choice, that people enjoy working for the company, and that Wal-Mart is a great place to work at. This campaign could help sway the public in favor of Wal-Mart and also convey the message that Wal-Mart doesn’t need unions and employee unrest is unfounded. The campaign could also show employees of differing backgrounds, gender, ages, ethnicities, capabilities and colors, thus displaying that Wal-Mart employs all types of people. My recommendation would be to go with the public relations campaign.
This could prove to be the most beneficial, because the customers are the most important stakeholders in this situation. Also good public relations could help the bottom line of the company, but also make employees feel good about working there. It would keep the union at bay, and keep competitors on their toes because they would now have to compete with a Wal-Mart that people actually liked.
- Blodget, Henry. “Wal-Mart Employs 1% of America. Should it be Forced to Pay it Employees More. ” BusinessInsider. om. Business Insider, Inc. 10 Sep 2010. Web. Accessed 24 Nov 2012. http://articles. businessinsider. com/2010-09-20/news/30081785_1_minimum-wage-real-wages-employees
- Ferrell, O. C. et al. “Wal-Mart: The Future of Sustainability. ” Business Ethics: Ethical Decision Making and Cases. Carnegie Learning. South-Western:Mason, OH. 9th ed. 2011.
- Surowicki, James. “State of the Unions. ” New Yorker. Conde Nast. 17 Jan 2011. Web. Acessed 26 Nov 2012. http://www. newyorker. com/talk/financial/2011/01/17/110117ta_talk_surowiecki