Wal-Mart and the Real Truth About Corporate Values
Dateline: Beijing. July 31, 2006.
Headline: Wal-Mart Workers form 1st Union
For those who didn't see this piece, compiled by the The Chicago Tribune news service, Wal-Mart is under fire in yet another global theatre. This time, it's China, where the government-controlled All-China Federation of Trade Unions has campaigned to set up branches in a country in which Wal-Mart employs 30,000 people at 60 outlets. In case the words didn't convey it, I'll say it more strongly: the Chinese government has demanded that the company allow organized labor in its stores.
In a book titled Stonehouse, a Chinese monk has written these poetic lines:
"Dense fog and clouds you can't push apart
suddenly appear and suddenly depart
clever people can wear themselves out
sun lights the rocks the same as before."
"Pushing the clouds away to let the sun shine through," one interpreter has written, is an old Chinese metaphor for accomplishing something impossible. In markets throughout the world, Wal-Mart is now trying to push the clouds away.
The Bentonville, Arkansas, company that Sam Walton founded in 1962 has transformed retailing. It has changed how manufacturers package and sell their products to retailers. It has brought fame and fortune to some suppliers, incredibly small margins of return and business challenges to others, and even ruin for some who've failed to crack the Wal-Mart code. Through its colossal purchasing habits, it has forced among its suppliers a greater sense of corporate stewardship influencing their employment, supply chain and even their environmental practices. (Wal-Mart's decision early in its corporate history to force the elimination of paper packaging for personal products has helped save millions of trees globally.)
Wal-Mart has brought retailing to urban and rural communities that otherwise would have seen a dearth of options where boarded up properties, burned-out "big boxes" and bankrupt mom-and-pop retailers riddled the landscape. It has brought jobs, energy, activity, new options and, of course "Always Low Prices" to people who can't afford anything more.
As the company has grown, however, pushing the clouds away has become more than a metaphor.
The Wal-Mart some praise is for others an adversary. In his book titled The Wal-Mart Effect: How the World's Most Powerful Company Really Works - and How It's Transforming the American Economy, author Charles Fishman examines the good and the bad of the iconic retailer. The story of Wal-Mart, he writes, is about more than price-cutting and hard-nosed business. It's the story of how the American economy has changed over more than two decades and Wal-Mart's place at the epicenter of the globalization of business.
Wal-Mart was never expected to do battle with prospective neighbors, community leaders, elected officials, organized labor and competing retailers who have sought in skirmishes world-wide to contain this giant - and who portray its employment, pay and benefits practices as sub-standard. It has sent some suppliers into bankruptcy and forced jobs into overseas markets like China to ensure low prices, according to published reports. When Canadian employees sought to organize a Wal-Mart location, the company didn't negotiate; it simply closed the store and put embattled workers on the street. Wal-Mart recently shuttered in the dark of night an underperforming Sam's Club Warehouse in Natick, Mass., less than 12 hours after giving employees notice.
So now comes the first labor union in China; the sale of Wal-Mart operations in South Korea and Germany after the company miscalculated these markets; the adoption in states like Maryland and Illinois of a "big box" tax to impose penalties on companies like Wal-Mart that they believe may not provide adequate wages or benefits coverage for its employees; the guerilla-styled tactics of smaller, regional grocers and retailers doing their best to survive and wage war on Wal-Mart in key markets; and the marriage of activists, religious leaders, labor unions, community leaders and others to create initiatives such as "Wake Up Wal-Mart," a campaign to fight for improved conditions for employees.
There's a lesson here: Corporate values matter. Experience has taught us that corporations must carefully balance their business practices and decisions with the interests and values of the communities they serve - customers, employees, third party groups and others who have a voice or a vote that may determine their future. In this New Age of Corporate Social Responsibility, the pathway to progress is littered with the tattered brands of Enron, Snow Brand, Worldcom, Arthur Andersen and others that lost their way as clever people tried to push the clouds away and failed.
Trust is a fragile commodity. Once lost, it may never be reclaimed, no matter the value proposition or the legacy of past achievements.
Wal-Mart understands this lesson. Today, it is working actively to assert new wage and benefit standards for its army of 1.3 million employees that ultimately will lift all boats in a rising tide. The Washington Post reported its response to the areas battered by Hurricane Katrina - $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers - turned the company into "an unexpected lifeline for much of the Southeast and earned it near-universal praise at a time when the company is struggling" with its public image. Through its Wal-Mart and Sam's Club Foundation efforts, the company has contributed hundreds of millions of dollars in recent years to the communities it serves, with a special emphasis on supporting Hispanic and African American communities. On the sustainability front, the company has committed to investing $500 million in reducing greenhouse gas emissions; to being supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain natural resources and the environment - lofty goals, to be sure.
As Wal-Mart works achieves its goals for social responsibility and sustainability, new perspectives should emerge to balance its place among world leaders. Only time will tell whether the sun lights the rocks the same as before.
