Walmart: A Good Leader?

Wal-Mart is known for its low prices and great sales just as much as it is known for its poor labor practices and lack of social consciousness. In the economic downturn Wal-Mart has continued to prosper and their sales remained strong despite competition suffering from a significant loss in revenue. I had to ask myself, was there any viable downside to Wal-Mart personally from lacking these key attributes to what is supposedly essential to be a good leader?

According to a 2005 survey commissioned by WakeupWalmart.com, a union funded group, a Zogby International survey showed that 56% of US consumers identified Wal-Mart as bad for America. (Kaiser, 2005). Asked to describe the impact this would have on the retailer, David Strasser, a managing director and a senior equity research analyst covering the hardlines retail sector with Banc of America Securities, LLC, made the following prediction in a Bloomberg article: "Union opposition to Wal-Mart is hurting its sales and efforts to open new stores in a "meaningful" way." (Coleman-Lochner, 2007). Keep in mind, this statement was made after Wal-Mart's attempt at expanding into Europe failed miserably due to their poor labor relations. Norway disinvested Wal-Mart from their stock market and made the decision to not allow Wal-Mart to be publicly traded after what Norway's finance minister Kristin Halvorsen called, "Serious and systematic violations of human rights and labor laws." (Berglund, 2006) In Germany Wal-Mart had to sell 85 of their chains to German rival Metro partially due to the company's poor image in the German culture which was much less able to accept poor employee relations and a poor ethical code which Germany's labor council challenged in court. (Norton, 2006) It was generally viewed as Wal-Mart's ignorance to not look into the culture of the countries into where they were bringing their stores but to try to force their practices which worked in the US on other cultures.

In addition to Wal-Mart's poor labor practices the company came under fire in the US after it was revealed that the company was taking out life insurance policies on employees and upon their death collecting the proceeds. Wal-Mart was saving more money on tax breaks than they were making collecting on the policies. After it was revealed what the company was doing the government ordered the retailer to repay $1.3 Billion in back taxes in addition to many of the deceased families suing to recover the monies owed under the policies. (Renyolds, 2005). The debacle in this case took a large hit on both Wal-Mart's PR and their wallet.

Another recent case which cost Wal-Mart face as well as money involved a federal raid on 60 Wal-Mart stores in 21 states for illegal immigrants. Wal-Mart was employing 250 illegal immigrants as contract janitors. It was later revealed that Wal-Mart was aware that the contractor was employing mostly eastern European immigrants with no green cards. The fines for their actions costs both companies as much as $10,000 in fines per uncarded worker. (Green, 2003). The examples could go on forever. Wal-Mart has committed so many there are entire interest groups against their policies and regulations. Clearly this shows the PR nightmare on hand in addition to the inability to expand globally that has hurt Wal-Mart's long term viability directly a result of their lack of ethics and inability to model the way.

References

Berglund, Nina. "Norway dumps Wal-Mart stock - Aftenposten - News in English - Aftenposten.no." Forsiden - Aftenposten.no. 6 June 2006. 10 June 2009 .

Coleman-Lochner, Lauren. "Wal-Mart Labor Issues Affect Consumer View, Poll Says." Bloomberg.com. 16 Apr. 2007. 9 June 2009 .

Green, Cynthia. "Federal Grand Jury Investigating Wal-Mart's Use of Undocumented Immigrants (Nov. 12, 2003) - Working Life." Home Page - Working Life. 12 Nov. 2003. 9 June 2009 .

Kaiser, Emily. "Majority Says Wal-Mart Bad for America: Poll." Reuters. 2 Dec. 2005. 9 June 2009 .

Norton, Kate. "Wal-Mart's German Retreat." BusinessWeek - Business News, Stock Market & Financial Advice. 28 July 2006. 9 June 2009 .

Reynolds, Frank. "Wal-Mart Gambled, Lost $1.3B on 'Dead Peasant' Policies, Insurers Say." Andrews Publications. 29 Sep. 2006. 9 June 2009 .