Kudos to … Wal-Mart!

There’s a lot I don’t like about Wal-Mart.

    It’s a huge American success story, but I have always found the stores to be crowded, cheap and tacky. Yes, prices are low, but the customer experience is terrible. There never seems to be anyone who can answer a simple question, and the checkout lines are always Disneyland-long and airport-slow.

    Despite Wal-Mart’s great success over the years, it’s a place I try to avoid at all costs because it has always seemed to me that the company’s top leadership has been singularly focused on growth and profits at the exclusion of anything else.

    Clearly, I’m not a big fan of Wal-Mart or its management—and that’s why I’m surprised to find myself rooting for Wal-Mart CEO Lee Scott.

    Last month, Scott gave his annual start-of-the-year address to about 7,000 Wal-Mart employees and suppliers at the Kansas City Convention Center in Missouri. There’s nothing surprising about him doing that, but the tip-off that this might be a little different presentation was that fact that for the first time ever, Wal-Mart let the press in to hear him speak.

    And what a speech it was. The New York Times called it a social manifesto, a “lofty address that at times resembled a campaign speech,” and as our staff writer Jeremy Smerd reported on Workforce.com, “Scott [said] the company would redouble its efforts to improve the efficiency and reduce costs in health care, make environmental-friendly technologies affordable to customers and businesses and exert greater pressure on its supply chain to meet higher ethical standards in the way it produces goods.”

    What surprised me most about Scott’s speech was that his approach was different from that of, say, Bob Nardelli, the current Chrysler CEO and former Home Depot chief. A few years ago, Nardelli famously presided over a Home Depot annual meeting where he not only forced the board of directors to stay away, but where he also refused to answer any shareholder questions and used NFL-size guys in Home Depot aprons to intimidate anyone who tried to speak.

    Although Wal-Mart’s past approach hasn’t been quite as pugnacious as Nardelli’s, the company’s philosophy has been to stonewall the press when the questions get tough: The Washington Post charitably described Wal-Mart as “traditionally reclusive,” and CEO Scott surely signed off on that policy. Despite the company’s business success, Wal-Mart has been the target of a lot of people who felt that the world’s largest retailer could use its size and clout to do better, for both its employees and for the world in general.

    That Lee Scott is now talking about how Wal-Mart can help be ethical and more environmentally friendly and health-care-focused represents a sea change in the company’s traditional approach. It also shows that Scott and his management team have finally heard what a lot of people have been saying—that Wal-Mart’s scale and scope give it a unique opportunity to leverage its relationships for the common good just as it has leveraged them in the past for business efficiency and lower costs.

    Not everyone, however, buys what Wal-Mart and Scott are now selling. David Nassar, executive director of Wal-Mart Watch, a group funded by the Service Employees International Union, told The Washington Post: “Certainly Wal-Mart has made some progress in a few areas, but the progress is not what we can and should expect from the largest company in the world. In typical Wal-Mart fashion, [Scott] takes credit for ‘leading’ and doesn’t do it.”

    Nassar and Wal-Mart Watch are right to be skeptical, but absolutely wrong to not give Lee Scott his due. Yes, this is just the first step for Wal-Mart, but it is a huge first step for a company that in the past has famously failed to listen or react to critics much at all.

    In fact, I would add this: Scott should be applauded for stepping forward and laying out all the positive things that he is pushing Wal-Mart to do. It’s clearly just talk at this point, but inviting in the press and publicly making a big deal out of the company’s “social manifesto” is not unlike Hernando Cortez burning his ships when he first landed in Mexico. In other words, it’s a clear signal that there’s no going back.

    Will Scott and Wal-Mart carry through on these ambitious initiatives? Will Wal-Mart Watch and the company’s critics be patient and pipe down for a bit while the company tries to follow through?

    Only time will tell, but Lee Scott seems to have learned that although growth and profits are at the core of any successful business, a huge market leader like Wal-Mart needs to do more than just that to be successful.

Workforce Management, February 4, 2008, p. 34 — Subscribe Now!