Recently Wal-Mart has come under fire for there ethical practices to their employees. Specifically, Wal-Mart has been accused of taking lunch breaks away from their employees. (Kravets, 2005) This essay will give three view points, referencing this article, as to why Wal-Mart does such practices. The first view point is how Wal-Mart's priority on employee welfare is unrealistic. The second view point discussed is how Wal-Mart's only interest is on profit. The final view point discussed is how Wal-Mart's hiring practices lead to such situations.
Wal-Mart priority on employee's welfare is unrealistic
To begin with, where is Wal-Mart's priority on employee's welfare? Is it realistic? Everyone loves bargains and"the always low prices" of Wal-Mart draws, millions of people to its store. But the company continues to treat its employees unfairly. Wal-Mart has been understaffing its stores and refusing to allow workers to stay on the clock for the full time required.
In 2000, an internal audit found that in 128 stores, 127 of them were not in compliance with company policies for work breaks. As a result Wal-Mart had to pay "$50 million to settle a lawsuit by a number of its employees who were forced to work off the clock" (Kravets, David).
Since then 38 more federal and state lawsuits have been filed in 2003, for unpaid overtime. Wal-Mart only provides health insurance for less than half of its employees, and it does not cover a significant fraction of the total premiums. Wal-Mart's behavior has affected its competition because of its low-wages, meager benefits, which has driven down wages for workers everywhere, even its competition. In rural areas it has been driving out its competition with its buying power and pricing strategies.
Wal-Mart's anti-union history and philosophies.
Wal-mart stores operate according to their "Everyday Low Price" philosophy. There approach is simple Wal-Mart offers the lowest prices to their customers because they go to manufacturing companies and make deals to buy entire product lines for less than wholesale price. This gives the company the ability to sell the product for a lower price than another store would be able to sell the same product for. When Wal-Mart buys a product line from the manufacturer they are able to sell the product solely in their stores, and no one else can have access to that particular product.
Wal-mart has given large grants to the anti-union National Rights to Work Legal Defense Foundations. In 2004, a Wal-Mart "butcher department in Jacksonville, Texas became unionized and within two weeks, the company closed down the department" (Stone, Kenneth: Wal-Mart Watch). And in Canada, employees formed a union at a store in Quebec, and Wal-Mart closed it down stating "low Profitability" (Stone, Kenneth: Wal-Mart Watch). At orientation employees are shown two videos, the first is on general information on the company. The other video is about why Wal-Mart should be union free.
Wal-Mart goes International.
A resent lawsuit has been filed against Wal-Mart from six countries with charges of labor abuse at factories which are run by its suppliers. "Charges consisting of paid below minimum wage in their country, forced to work unpaid overtime, and even
beatings by supervisors" (retailworkers.com). Such company's involved in the lawsuits are from Bangladesh, Switzerland, Indonesia, China, and Nicaragua.
Another lawsuits out of California raised last year charges Wal-Mart with discrimination against women in pay, promotions and training, this will be "the largest workplace bias lawsuit in the United States history and is set to cover 1.6 million current and former female United States employees" (retailworkers.com). Wal-Marts priorities are clearly on profit alone. Its treatment of its employees trying to unionize, its attitudes to customers injured in there store, and its attitudes to people who live near their huge complexes are appalling and needs to change.
Interest in Profit: Wal-Mart is the king of the hill.
Secondly, Wal-Mart's only interest seems to be in how much money they can make. As of January 2005, Wal-Mart had racked up an impressive $285.2 billion dollars in sales, which is especially impressive when compared to the performance of its closest competitors. "Wal-Mart sold $244.5 billion worth of goods last year. It sells in three months what number-two retailer Home Depot sells in a year and in its own category of general merchandise and groceries, Wal-Mart no longer has any real rivals. It does than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined." (Fishman, 2003)
Wal-Mart's strategy for staying on top
Wal-Mart's strategy is two-fold: Bring the lowest possible prices to the consumer while at the same time increasing the corporate powerhouse's own profit margins. For many suppliers, Wal-Mart is a double edged sword. On one hand, Wal-Mart has the coverage and the clout to market and sell the products to millions of eager customers. This vast Market coverage can put a company on the map, but the reality is that doing business with Wal-Mart can also destroy a company just as fast.
The real cost of low-prices
While Wal-Mart takes great care in ensuring its own profitability, the profits and financial wellbeing of its suppliers are not at the top of Wal-Mart's priorities. Wal-Mart feels the higher priority is to bring the absolute lowest prices to the consumer. While this seems like a good practice, in reality it is forcing companies to slash jobs and cut corners on productivity and in some cases quality in an attempt to meet Wal-Mart demands for low prices. This inflexible stance on consumer pricing has led many companies to outsource their production to oversee companies in Asia and Mexico. Ironically, making prices lower for the consumer this way has put more and more Americans out of work. As low as these prices may be as Wal-Mart, without a job or income nobody can shop there.
How to beat the giant
Unfortunately, the only way to stop the cycle of outsourcing and massive job loss caused by Wal-Mart's incessant price dropping is to shop at merchants who charge more for their services. The savings we see at the register are a direct reflection of the money being lost from suppliers and their workers. We have to be willing to pay more at the register to ensure the American workers get fair compensation for their products, but in today's society I think very few of us are willing to pass up a good deal no matter what the ultimate price may be.
Wal-Mart's hiring practices.
Aforementioned was the fact that Wal-Mart will under staff a store (Kravets, David) to
keep the labor costs down. What kind of strategic staffing plan is that? Mentioned earlier in
this essay was the staggering financial success of the retail giant. Based upon the covered data, it is apparent that the salary of employees and having enough staff to operate a store effectively seems to be inflated from a corporate standpoint. Janet Reed, a retired Store Manager from Wal-Mart said that, "Wal-Mart focus on getting the right personnel fro the right position has no significance at all to them. They seem more eager to get a body on the floor, rather than get a person who can actually speak English and do the job effectively" (Reed, J., personal communication, October 3, 2005). Janet also went on to say that she was "instructed to not worry about if the employee cannot speak English; just make sure they can do manual labor"
(Reed, J., personal communication, October 3, 2005). What kind of expectations is Wal-Mart
setting for employees who want to grow in the company? When an applicant comes into a
interview and cannot even communicate, is the applicant actually interviewed at all? This goes to maybe questions other aspects, can the applicant write English? Is there any reference checks or background checks at all? Wal-Mart has some suspect hiring practices and it is no wonder that they are suffering from so many lawsuits of late.
Wal-Mart making unethical decisions concerning their employees is an unfortunate track
record that can be documented. This essay has covered some view points that can be a valid argument that Wal-Mart needs to change its way on how it looks at business ethics. Wal-Mart is an American icon in the retail industry and one would assume that they would lead the pack in the creation and implementation of business ethics and how they treat their employees.
Retail Worker (2005) International Class Action For Wal-Mart To Face!!!
Stone, Kenneth. Missouri Small Business Development Centers. (2005).
Competing with Mass Merchandisers. Missouribusiness.net/docs/competing_Mass_merchandisers.asp Retrieved 9/30/05.
Kravets, David. Associate Press. (2005).Wal-Mart accused of denying lunch breaks.
Fishman, C (2003, December) The Wal-Mart you don't know
Retrieved Sunday, October 02, 2005 from