Walmart diversity consultation

Company Background

Walmart, founded by Sam Walton in 1962, is the largest retailer and largest private sector employer in the world. It has a market capitalization of about $300 billion, with over a million US-based employees and a similar number in international locations. There are more than 5,100 Walmart stores plus almost 700 Sam’s Club warehouse outlet locations throughout the United States, while the firm also operates in 15 other markets worldwide. Long known as a low-price seller of garments, housewares and electronics, in the more recent past Walmart has aggressively moved into the fresh grocery sector and now accounts for some 20% of retail grocery sales.

Members of the Walton family, heirs of founder Sam Walton, control 48% of Walmart stock. For the fiscal year that ended January 30, 2015, Walmart increased net sales by 1.9% to $482.2 billion and returned $7.2 billion to shareholders through dividends and share repurchases

(Walmart, 2015).

The company exemplifies and has historically led the global transformation of retailing into a low-margin, huge volume and hence high-profit enterprise. A vital part of this business model is high labor intensity along with low labor costs – i.e., many jobs mostly paying low wages. Walmart’s dominance has some controversial aspects. It faces accusations of killing communities’ commercial vibrancy by driving smaller-scale (“Mom and Pop”) stores out of business. Also, many associates, as Walmart prefers to call employees, earn such low wages that they need food stamps and Medicaid to subsist.

Terms of Consultation Walmart has engaged the M. Sowe consulting group to review past diversity initiatives and update its activities in this area. The aim is to provide a smoother-functioning work

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environment that will minimize bad publicity, which has become a problem for the company’s image. The consultation contract specifies a three-month observation period at a statistically representative sample if US stores, followed within 60 days by delivery of a report that willmake general and specific recommendations. Walmart assumes no obligation to accept any of the recommendations. It can either pay the fee and terminate the contract, or renew it for an additional period or periods during which the M. Sowe group will continue to review Walmart’s diversity performance and make further recommendations.

Findings In the realm of gender discrimination, Walmart has been repeatedly sued for unfairly restraining advancement prospects for female workers (Business and Human Rights Resource Centre, 2013). To date, no suit has been granted class action status for final resolution, so no general remedy has been available for all workers alleging discrimination. Nevertheless, this agitation has prompted various diversity initiatives on Walmart’s part for approximately the last ten years. Thus, diversity initiatives are nothing new at Walmart. The concept is now so routine that it is covered in lengthy annual reports, the latest amounting to 32 pages (Walmart Corporation, 2014).

The consultation by M. Sowe group was in part evaluative of past diversity efforts, and in this regard took the advisory position that the firm should avoid easily debunked claims. For instance, a TV spot showing a manager gratefully recounting her opportunity to rise from floor associate readily provokes skepticism among those who realize that the typical Walmart store has 500 hourly associates and a dozen people in some sort of managerial position.

The odds are

against a significant promotion regardless of an associate’s ability to handle higher level responsibility. The diversity of Walmart’s broad workforce in terms of gender, ethnicity and

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sexual orientation is undeniable – a million-strong nationwide workforce could scarcely fail to mirror the national population reasonably closely in these respects. However, representing high-level female or minority individuals as proving a company’s proactive commitment to empower the formerly disempowered can be validly critiqued as tokenism (Marques, 2010).

The wildcat strikes that have broken out in the last few years at Walmart and other low-wage corporate workplaces (e.g., fast food restaurants) have tarnished the image of these firms to a point that even stressing the obvious attraction to customers of affordability is becoming a rather delicate proposition.

The Walmart slogan “Always Low Prices” now has, as an almost automatic rejoinder, “Always Low Wages.” Yet maintaining efficiency through reliable mass- market availability of inexpensive products is exactly what led to Walmart’s success, so continuing this pattern is necessary.

At times, Walmart’s efficiency serendipitously generates favorable publicity. Notably, it  beat the federal government by several days in effectively providing relief supplies, especially food and clean drinking water, to victims of Hurricane Katrina in 2005 (Barbaro & Gillis, 2005). A much more recent example is Walmart’s quasi-unilateral wage increase to $9 and eventually $10 per hour as a floor for all employees (Malcolm & Davidson, 2015). It is not a truly unilateral (self-initiated) action, of course, because it directly counters and seeks to tamp down the rash of wildcat strikes.

Still, many casual observers will upgrade their opinion of Walmart somewhat when they hear about the raise. The difficulty of making all retail sector jobs good quality jobs extends beyond a consultancy’s area of competence. Schedules abruptly shifted on short notice, resulting in well under full-time hours and inability to arrange child care let alone a second job, are an evident problem for many in the Walmart workforce. How willing or able the company is to mitigate this

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source of employee distress is uncertain. A real remedy would have to come at the national policy level. Walmart’s pay increase approximately matches what many analysts expect the federal minimum wage to reach in the near future, or even what some assumed it would have reached already. In this perspective, it is not a remarkable concession. Provision of steadier hours, regular and more generous pay increases based on time with the company, and more meaningful and inclusive benefits would be necessary to achieve significant change.

As long as the current system of impoverished part-time workers getting foods stamps and Medicaid prevails, a partially hidden but extremely high-cost means of corporate welfare will continue to support how Walmart and many other well-known names run their business (Lichtenstein & Johansson, 2011).

The general conclusion of the M. Sowe group in regard to Walmart diversity initiatives is that the firm should do what it can to reduce egregious abuses, especially the practice of imposing extremely large, abrupt, and seemingly arbitrary shifts in weekly hours. But after stating this point, the consultation must acknowledge that no longer bragging about what a great workplace Walmart is makes more sense as a short-term response than taking steps to make Walmart a notably great place to work in actuality.

However, one specific recommendation from this consultation provides a relatively low-cost means to promote inclusiveness among the workforce. Walmart has some 3.25 billion shares of stock outstanding, currently trading at just under $80 per share. Nearly half the shares are not publicly traded but merely serve to enrich the Walton family. We propose that management confer a one-time “bonus” of one share per US-based employee per year worked, and follow this up by annually conferring one share to every full-time US employee from next year forward.

Given the number of shares in existence this would be a feasible and not dramatically large WALMART DIVERSITY CONSULTATION transfer. It would, quite literally, foster a (small) degree of ownership among employees. Interpreting the result as signaling confidence in the financial system would be an extrapolation, perhaps not too far-fetched.

Conclusion

The line between organizational change and public relations is not clear-cut. Walmart has repeatedly launched initiatives on subjects such as employee opportunity, environmental friendliness, local or U.S. sourcing, etc. These have had a rather spotty effect in fostering a favorable perception of the giant chain. Episodes like wildcat strikes or sex discrimination lawsuits can rather easily undo the friendlier impressions promoted by campaigns of this sort.

Conversely, some more or less spontaneous occasions for generating good publicity crop up as well. One example is Walmart’s efficient and effective provision of relief supplies to victims of Hurricane Katrina. Its recent raise announcement was another example, although this was hardly spontaneous since it would not have happened except for pressure from a series of increasingly troublesome wildcat strikes.

The consultation discussed in this paper concluded that past campaigns trumpeting the desirability of Walmart jobs or comparable cases of self-promotion by the company were not impressively effective. Too much evidence to the contrary is available.

To continue in this vein under current conditions could quite possibly backfire to the company’s disadvantage. On the other hand, low prices for consumers and a mammoth but generally efficient global supply chain speak for themselves; customers have ample motivation to gravitate to the store on their own. The consultation closed with a specific recommendation for a modest stock transfer to employees to promote a sense of inclusiveness and even confer actual (if minor) ownership.

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References

Barbaro, Michael & Gillis, Justin (September 6, 2005). Walmart at forefront of hurricane relief.

Washington Post. Available at: http://www.washingtonpost.com/wp-dyn/content/article/2005/09/05/AR2005090501598.html

Business and Human Rights Research Centre (updated 2013). Walmart lawsuit (re gender

discrimination in USA). Available at: http://business-humanrights.org/en/walmart-lawsuit- re-gender-discrimination-in-usa#c9333

Lichtenstein, Nelson & Johansson, Erin (January 2011). Creating hourly careers: a new vision

for Walmart and the country. American Rights at Work.

Malcolm, Hadley & Davidson, Paul (February 20, 2015). Walmart employees to get raises. USA Today. Available at:

http://www.usatoday.com/story/money/2015/02/19/walmart-employees-raises/23666047/

Marques, Joan F. (Dec. 15 2010). Colorful window dressing: a critical review

on workplace diversity in three major American corporations. Human Resouce Development Quarterly 21 (4), 435-446.

Sweet, Stephen & Meiksins, Peter (2012). Changing Contours of Work: Jobs and Opportunities in the New Economy. Sage Publishing.

Walmart Corporation (2015). Walmart Corporation fact sheet. http://news.walmart.com/walmart-

facts/Walmart Corporation (March 2014). 2014 Diversity and Inclusion Report. Available at:http://cdn.corporate.walmart.com/04/50/c9c4367040029f6b2a4aca089d2c/diversity-inclusion.pdf