Wal-Mart Answers Its Critics

By Gretchen Weber

Oct. 29, 2004

Wal-Mart is playing aggressive defense these days in an effort to polish its battered reputation, which has been taking increased fire from all sides in recent months. A rash of negative publicity, which stems from a class-action discrimination suit, a variety of wage disputes and vocal opposition in California to the retail giant’s ambitious expansion plans, has amplified familiar criticisms related primarily to the company’s treatment of its 1.5 million employees.

    The company has taken action on a couple of fronts. Last month, it hired Lawrence Jackson as executive vice president of its People Division. Jackson, 51, was most recently president and chief operating officer of Dollar General Corp., which has been described as a sort of pocket Wal-Mart, operating small stores in rural areas or in poorer neighborhoods of midsize cities.

    Jackson, who grew up in Washington, D.C., is a graduate of both Harvard University and the Harvard Business School. He comes to his new job with a widely praised background in operations and, according to one book, an up-front approach to confronting issues of bias in organizations. In 2002, Jackson was No. 29 on Fortune’s list of the most powerful black executives in America. And, interestingly, there’s no human resources title on his résumé. His hiring could signal potential changes in the employment practices that have served as a lightning rod for Wal-Mart’s critics.

   Meanwhile, in California, Wal-Mart has launched what it calls “an unprecedented effort to communicate the facts.” In an open-letter-style advertisement in 15 newspapers across the state, the company characterizes itself as a “target for negative comments from certain elected officials, competitors and special-interest groups” and calls criticisms of the company “half-truths and misinformation.” Wal-Mart’s California spokeswoman Cynthia Lin says the company decided it was time to strike back. “For years various special-interest groups have engaged in a campaign of misinformation against Wal-Mart, and we simply couldn’t let it go unanswered anymore.”

   Wal-Mart’s ad disputes widespread claims that it pays employees lower wages than comparable retailers and asserts that, contrary to some media reports, health benefits are available to both full- and part-time employees. It highlights the tax revenue that the stores generate for local communities, the business Wal-Mart brings to California suppliers and the corporate donations given to charities.

    Although Wal-Mart has not singled out any particular source, the chain was criticized in a study released in August by researchers at the University of California at Berkeley’s Labor Center. They estimated that California taxpayers provide $86 million a year in public assistance to Wal-Mart employees who cannot make ends meet on company wages.

    “Wal-Mart has had to take an uncharacteristically strong reactive stance recently because the criticisms have gotten that much more serious,” says Michael Belch, a marketing professor at San Diego State University. “They are really feeling the heat all over the place, and from a PR standpoint, you can only ignore things for so long.”

    It’s no coincidence that the company rolled out its new counteroffensive in California. The state has been home to some of Wal-Mart’s most high-profile public relations challenges. During a five-month strike last year, California supermarket chains blamed competition from Wal-Mart for their need to slash wages and health benefits to employees.

    In addition, Wal-Mart’s plans to open 40 Supercenters, which are combination discount stores and supermarkets, have been met with vocal opposition, particularly in Inglewood, a Los Angeles suburb. Residents there rejected a ballot initiative that would have cleared the way for one of the colossal stores, effectively canceling the project. Opponents argued that Wal-Mart stores destroy communities by bankrupting competitors and, in doing so, displacing good positions with low-wage, low-benefit jobs.

Workforce Management, November 2004, p. 22Subscribe Now!

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