Wal-Mart Ethics

Wal-Mart Stores, Inc. is currently entangled in a legal battle that will decide if the company has engaged willfully in gender-based discrimination. Underlying causes, organizational culture and ethical issues will be examined in determining how the largest private employer in the United States could have fallen prey to unfair labor practices.

"In 1999, women constituted 72% of Wal-Mart's hourly employees, but only 33% of its managerial employees" (Bhatnagar, 2004). This fact and many others are the reasons many people allege that Wal-Mart has unfair labor practices. The Dukes v. Wal-Mart case challenged the hiring, promotion and pay practices of Wal-Mart. The case was filed in June 2001. When the case reached class certification status it became the largest class action civil rights suit against employment discrimination in American history. The case represented approximately 1.6 million women that had worked for Wal-Mart from 1998 to 2001 who felt that they had been discriminated against because of their gender.

Many women involved in the Dukes case alleged that Wal-Mart's policies vary from gender to gender. The managerial staff is comprised mostly of men. The relocation policy in place has a distinct impact on female employees. To become a manager, one must relocate multiple times at each management level. Female employees claimed that this could potentially have a disparate impact on single and married mothers, therefore the policy is not fair to all; favoring the chances of a male getting a promotion over a female.

According to the Berkeley Women's Law Journal (2004), Wal-Mart pays its employees about one-third less than what similarly unionized employees earn. Wal-Mart's slogan is "Everyday low prices," and they accomplish this by keeping wages low and by suppressing any efforts made by unions to unionize Wal-Mart. In addition to paying low wages, some Wal-Mart stores allegedly violate the Federal Fair Labor Standards Act. The Federal Fair Labor Standards Act regulates overtime pay and child labor standards. Many employees have claimed that Wal-Mart makes them work more than 40 hours per week without overtime pay. When management realized how much overtime pay they were logging, they would call in managers to adjust the time sheets. An internal audit exposed the violations of the Federal Fair Labor Standards Act.

Many of the facts stated in the Dukes case were alleged by employees and were not always seen within all Wal-Mart stores or by the public. Employee Cleo Page actually experienced the effects of Wal-Mart's unethical labor practices. Ms. Page began working for Wal-Mart as a cashier in one of their super centers in Tulsa, OK making $6.50/hr. Page resigned from her job three years later from a store in California where she was making $10/hr. Over the three years of employment, she received above standard evaluations, but despite her desire for advancement, she was passed over twice for promotions by less qualified male applicants. Page had also encountered other women who had similar experiences, some who were in the same position for eight years. Three years of earning low wages adversely affected Page's financial situation. She had little savings and as a result, she lost her house in California in addition to the foster children she was caring for. Page declared that she would not have lost her home and children if she had been given the well deserved promotion. The promotion came with many great incentives and better bonuses. This alone would have improved her financial situation.

Wal-Mart is the largest retail store in the United States. The root cause of the problem with Wal-Mart is that they try to increase their profits by minimizing their costs. Many internal policies are used to maintain this philosophy. First and foremost is the strong organizational culture that is dictated from the home offices. Store level managers receive discipline ranging from written reprimands to termination if they do not maintain the high goals set by the Corporate Office. Managers try to cut expenses locally by reducing one of their largest expenses, payroll, especially overtime wages. Another root cause of Wal-Mart's problem is their lack of a formal job posting policy. Associates are not made aware of management level openings. Those who selected to move up in the organization are picked by store and division level management staff without regard to skill or educational requirements. This system is described as a "tap on the shoulder" process (Betty Dukes v. Wal-Mart Stores, Inc 2004).

Another underlying problem for Wal-Mart is the company's policy to promote from within the company. This reinforces the organizational bad culture and practices.

There are many unresolved issues with Wal-Mart that have made the news. The hourly pay scale for employees at the store level is below the Federal poverty level, many of the employees can't afford health care, and inequality of hiring women for management positions. "The average Wal-Mart employee earns $8.00 an hour, with the average work week being about 32 hours. This equates to $256 a week or $13,312 a year. The Federal poverty level for a family of three is $14,630" (Brownstein 2005). Wal-Mart's personnel polices are directed to keep wages cheap. Wal-Mart does this so they can maximize their profits. The health benefits for a Wal-Mart employee costs 20% of the average employee's paycheck. Of their 1.2 million employees, 2/3 of the employees can't afford the health benefits. Over the last 12 years, Wal-Mart has been raising the costs of premiums for the workers by 200%. There are few women in managerial positions in Wal-Mart. Also, women are paid a lot less than their male counterparts. "A female full-time hourly employee, working at least a 45 hours/week at Wal-Mart, made about $1,150 less per year than men in similar jobs" (Bhatnagar 2004).

One of the root causes of problems with Wal-Mart is that they try to minimize costs to raise their profits. They try to buy goods cheap from suppliers so they can sell the same product for less than the competitors. Wal-Mart puts financial strain on the suppliers to give them what they want, when they want. Wal-Mart can suffocate a business into giving them what they want at the price they want it at. The main reason Wal-Mart can do this is because they have a large number of stores in the United States as well as Mexico and Canada. Wal-Mart is the largest retail store in the United States. In 2005, Wal-Mart had a workforce of more than 1.2 million workers. Wal-Mart's total revenue in 2004 was $258.7 billion.

Management has many responsibilities. Many of those responsibilities have to do with keeping the company profitable and its costs low.