Walmart For Ethical Management – Critical Evaluation

Walmart’s approaches towards Sustainability

Discuss about the Walmart for Ethical Management.

21^st Century has made “Ethics”, an integral priority of any Organization. Ethics refer to values and principles followed by the employees of an organization while delivering services or taking decisions for the firm. Since Sam Walton founded Walmart stores, it has always been a value-based organization, ethically catering the needs of the people. Global ethics have been held responsible for promoting Walmart’s Culture of Integrity. But in the recent times, the firm has constantly been questioned on its ethical practices. This piece of work below is written to attain three pivotal objectives: Firstly, to critically evaluate the sustainable practices of the firm and their validity; Secondly, to unveil the ethical issues of the firm, its stakeholders and company’s measures to combat them and; Thirdly, to assess the authenticity of the CSR activities of the brand.

Walmart has always tried to provide the best standards of living to its consumers by offering them the products at a lower price than the competitors. The company has been able to maintain a good relationship with all its reliable customers, but, at the same time it has failed in meeting the needs of other stakeholders in the brand i.e. the employees. The firm has been criticized a lot because of its policies and business practices. The firm is offering very low wages to its employees and with this have a low- benefit employment model across all its branches. Apart from this the firm has also failed in providing a good working ambience by compelling its workers to work overtime in this minimum wage (Sachs & Goldsmith, 2016). The cheaper health- insurance plans introduced by the firm were also questioned by the critics as the firm by these plans was trying to avoid the deteriorating health conditions of the employees. Even the firm has also been criticized for punishing the union activities which were organized to fight for the rights of the employees. Another instance revealed that the firm was not able to provide adequate safety to its workers who worked in the factories. The workers suffered inhuman conditions because of the Machines, Toxic Glues, Dust and Chemical Solvents. This has raised several questions over the Health-Safety and Maintenance Policy of the brand. The company has also faced a great criticism over violations of certain ethical laws and regulations prevailing in the society. For instance, a critical report was released by the department Labor’s Settlement Agreement that accused Walmart over Child-Labor Violations (Fairness, 2016). The report revealed that over 200 children, below the age of 11 years, were involved in sewing clothes for the firm. These children were found to be beaten, forced to work for 12- 14 hours a day, often seven days a week and for wages as low as 6.5 cents an hour. In the year 2003, it was also unveiled that the Walmart’s Cleaning Contractors are hiring illegal immigrants in order to arrange cheap workforces from other developing countries. Although Walmart was not successful in creating a sustainable relationship with its employees and the society members, yet, towards the environment, the firm has been able to fulfill its responsibilities. The firm’s factories have major of its energy sources as renewable ones (Everblue Training LLC, 2011). According to Walmart, renewable resources give the most affordable and cleaner form of energy. The company also aims to achieve Zero waste across the global operations (Wal-Mart Stores, Inc., 2016). In the US, more than 81% of the materials obtained from company’s stores are being diverted from Landfills. In addition to this, the company’s outlets are also banning Plastic bags and promoting bio- degradable one time use bags to avoid accumulation of land wastes. In Japan, the company started an initiative to use non-tray packaging for meats and sea foods and also introduced a “corn- based” bio- plastic wrap for nearly half of its packaged products. Hence, in terms of Sustainable practices, Walmart has to work over its strategies related to employees and societies because human resource is a major asset for any leading firm and if a brand fails to create a good image in front of these resources then it ultimately fails to expand its customer bases in the coming future (Pendola, 2014).

Ethical Issues of the firm and their addressal

As Walmart is a leading giant with strong position in almost all the markets across the globe, hence, its executives are supposed to   high sense of values and conduct honesty and fair practices with all the shareholders. Although, the brand has succeeded in providing products at a lower price than the competitors, yet, it has been accused for a number of unethical issues (CNBC News, 2016). At present the company is considered as the world’s largest employer with over 2.1 billion employees and simultaneously they have their fare share of opportunities to indulge in activities like fraud, bribery, ill-treatment of the employees, Gender and Sexual Discrimination, Child Labor Violations, etc. The company is known to underpay the overtime workers. Above all this, the employees were not even given a proper ambience to work neither so they have a possession to the minimum wages set by the country. According to a statistics, an average Walmart worker makes between $12,000 and $17,000 which is not enough for leading life in a developed nation (Stavros, 2014). The company has adopted this strategy because it wants to cut on its operational costs to keep the prices of its products low as compare to the competitors. To cope up with this and retain the employees for a longer duration, the company has smartly introduced an Insurance cover for health issues. This strategy also acted as a compensation for the negligence of the health and security of the employees at the workplace. Walmart is also known for manipulating other countries where the company seeks foreign markets, with their market power and even control the environmental laws and other legal obligations of the country. To get away with this, the firm sells its products at a very low price, hence, it is highly acknowledged by the customers of the foreign as wells as domestic markets. This is the only defense f the firm and somehow succeeds in justifying all its sins. So, particularly the firm isn’t doing anything out of their way to combat these issues (Banjo & Trottman, 2014). The marketing policies and strategies are strong enough to maintain the firm’s popularity in the markets. According to a report of the New York Times, the company was also found to be involved in suspicious payments to Mexican officials in 2012. This bribery amount accounted up to $24 million and the officials were paid to sneak into things that were prohibited by the country’s laws. This is only a single case; the firm is found guilty in a number of unethical cases every year, but its power and position never lets it to face any hindrance in its business activities. The firm is failing in recognizing the potential problems and they are probably going to pay for this negligence (Mascarenhas, 2013).

Company’s Corporate Social Responsibilities

Carroll (1991) organized myriads of CSR activities as a four-layered pyramid model and designated it as a “pyramid of responsibilities”. This model describes these activities as four interrelated aspects of responsibilities. In Global Responsibility Report 2013, Walmart declared that it has a responsibility to lead and opportunity to make a difference on the giant issues prevailing all over the world. Walmart is among those countries that have started a number of initiatives towards implementing CSR activities in all the operations it performs, whether it is towards the stakeholders of the company or towards the economy and environment of a country. While exhibiting its roles in this field, the firm majorly focuses on four key regions, which includes: Social Responsibility, Local Responsibility, Environmental Responsibility and Responsibility towards its own Company (Gunther, 2011). In the direction of its first field, Walmart has been consistently working for the empowerment of Women across the globe and for this the firm foundations are providing education, training and career opportunities to around 1 million women worldwide. Apart from this, Walmart has given a number of citizens as access to healthy food and helped in relieving hunger problems. For this, the company has till now given over $1 billion in charitable contributions at the global level. At the Local level, the company is known to introduce the facilities of micro- loans and promoting local farming. For instance, the brand is committed to purchase additional $50 billion UD- produced goods in the coming decade. Walmart is counted among the best employers of the world and has succeeded in providing jobs to millions of talents across the globe and to add more to this, the company at present plans to hire more than 100,000 US veterans over the next five years (University Alliance, 2013). Walmart’s commitment to diversity enables the company to better serve its customers and to provide a positive ambience to its workers to deliver their best. The dual impact of both Women empowerment and diversity promotion is seen in another fact for the company that at Walmart, Women account for almost 30% its corporate offices and this number is double the average for Fortune 500 companies. The responsibilities of any leading firm are not restricted only towards the society and to its stakeholders. In order to achieve and retain sustainability in all the operational areas, a firm needs to show its responsibilities towards the environment and its elements too. Walmart has turned its garbage into a useful asset by diverting around 80% of the wastes away from the landfills. The firm is also reducing energy use and plastic shopping bag use. At present, to reduce its contribution in the environmental pollution levels, Walmart has made its energy sources to be derived from renewable sources like Coal and Natural gas (Ukessays Team, 2015). The company is also investing in solar energy and hydrogen cell powered vehicles. Although the company is seen being engaged in numerous CSR activities, yet, Walmart’s unethical activities show that they are unable to implement the elements of CSR in a well manner. To avoid the ill consequences of this, the firm needs to abide by laws, behave ethically and even comply with international customs. Just focusing on productivity and profitability will not allow the firm to attain its aim of sustainability in all possible operations (Hooper, 2010).

Freeman (1984) defines Stakeholder as a group as an individual who can affect or is highly influenced by the organization’s activities, policies and objectives. Mitchell, Agle and Wood collaboratively have given “The Stakeholder Salience Theory” which unveils the three main categories of Stakeholder’s attributes as: Power, Legitimacy and Urgency. The Power attribute says that Stakeholders posses all sorts of powers that can influence the working methodologies and outcomes for a company (Kirilova, 2014). The Legitimate element says that all the Stakeholders have a legal relationship with the company and Urgency elements impart the Stakeholders with a capability of urgent claim on the company. Walmart’s stakeholders can be grouped based on their shared interests. Stakeholders for this or any other firm could be divided as internal (managers and employees) and external (Investors, customers and suppliers). The managers and employees form a strong internal backup for the firm. The manager recruits the best possible talent for the firm and motivates them to deliver the best of their abilities. In managerial decisions of the company, the employees are the prime considerations (Meyer, 2016). The major assets for any company are its human resources and employees form a major proportion of this resource. The major interests of employees are job security, continuity in the job and higher wages. The job security offered by the firm guarantees the recruited talents that they will be the part of the company till they want to deliver their services. As Walmart has always been criticized for providing low wages to its employees, hence higher wages become another crucial interest of these Stakeholders. Investors are the most prioritized stakeholders of the company as they are only interested in the profits and thus want Walmart to make more and more profit with time. The interest of the investors is to lower the operational costs of the firm as low costs of a firm leads to higher profits for the investors. The primary objective of Walmart is to generate profits and thus the company minimizes the wages in order to lower their operational costs. The position of the customers is second to the Investors among the Stakeholders. These are not an individual, but a whole Stakeholder group that is meant to be attracted towards the offers and lower prices of the products set by the company (Hayden, et al., 2002). However, these stakeholders remain attached to the company only when the low prices of the products are accompanied by acceptable qualities of the same. The least prioritized stakeholders for the Walmart are the Suppliers. These are those people who want to sell their products at the Walmart stores and make a profit by the same. Hence the ultimate profit is earned by the suppliers and not by the company itself. The suppliers provide the goods that would be displayed in the stores and they want Walmart to sell their products at a higher price. But as the bargaining power of the suppliers is not too strong in the case of Walmart, hence, the suppliers actually do not get what they want. The firm has effectively addressed the needs of the customers and investors, but, Walmart partly satisfies its employees as they are not getting the wages according to their work. Thus, it has to improve its strategies to satisfy all the stakeholders (Jeena, 2012).

When Sam Walton founded the Walmart, he established the “Three Basic Beliefs” to which the firm remained committed but only for a short period. These beliefs were, Respect for the individual, Service to the Customers and Strive for Excellence. Walmart is able to adhere to the last two beliefs, but has not been able to respect the major stakeholders of its company, i.e. its employees. Conducting ethical business practices and motivating the employees to do the same brings a number of benefits for a firm (Walton & Scott, 2005). On the other hand, unethical business has the capability to hurt the stakeholders and tarnish the firm’s reputation in the current as well as in the potential markets. Without ethical grounds the companies often shift towards committing some illegal offenses where bending and breaking laws lead to lawsuits and indictments. Even the public acceptance of such companies becomes impossible as in today’s transparent era, unethical behavior is intolerable. For Walmart, the investors are the most prioritized stakeholders for maximizing the company’s profit; however, if the firm continues with its unethical practices then the investors will definitely avoid the future relationships (Seattle Pacific University, 2009). The recent market declines have partly resulted from concerns about unethical accounting practices. The leading researchers in the marketing world have suggested that people tend to deliver their best in an open, creative, ethical environment. But Walmart has failed to provide this kind of ambience to its employees and even they are not being paid according to their efforts. Hence, with this poor reputation among the job seekers, Walmart is facing a great difficulty in attracting and retaining the top talents across the globe. Ethical and sustainable practices are also a matter of personal pride. The company’s leaders feel proud of their accomplishments knowing that they didn’t compromise over their responsibilities while working for the firm. The recommendations for Walmart in such cases are quite candid as it needs to work upon the policies for its employees. The firm has to show that it cares for its employees and they are a crucial asset for the company. Moreover, the wages issues could only be resolved if the firm offers them with perks and benefits at regular intervals (HaloScan Team, 2004). This will make them feel more motivated and they will perform to their best. To attract and retain more and more suppliers, Walmart could build trustworthy relationships with them and for the customers the maintenance of quality would be enough. Ethics and CSR activities are the only two crucial solutions for the company in order to strive in the competitive business world while maintaining a sustainable relationship with all the major and minor stakeholders of the company (Paswan, 2012).

Conclusion

Walmart should implement some credible changes in its strategies and operations. No company across the globe is immune to ethical issues. However, only those firms succeed that identifies these problems at the initial level and develop strategies to combat them. Walmart is not able to address the needs of its major stakeholders and thus is unable to provide a sustainable working environment to its employees at the workplace. The firm has although working a lot to attract and retain the customers and the investors and thus they both form the most prioritized stakeholders of the firm. But at the same time, the firm needs to show that they care about ethics by treating employees in a justified manner. This will for sure improve the reputation of the firm in the markets and people will have no reasons for complaint and criticize the company. Above all this, Walmart needs to work on its CSR activities to deliver eco- friendly services in the environment and abide by the legitimate standards set by the country.

References

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