Ethical and unethical issues of WALMART

Ethical 

how Walmart is managing ethics and social responsibility as one of the largest corporations in the world.

Ethical & Social Initiatives:

Walmart has an Ethical Standards Team to monitor the compliance of supplier factories and has dedicated $35 million to new processes and procedures, and developed ethical training sessions for more than 19,000 associates.

In 2006 Walmart raised pay tied to performance in one-third of its stores.

Improved its health benefits package by offering lower deductibles and implemented a generic prescription plan estimated to save employees $25 million dollars.

Raised the employee minimum wage as part of a new employee-oriented initiative that included better training and shift scheduling.

Walmart has set goals to be supplied entirely by renewable energy, create no waste, and sell products that sustain people and the environment.

Walmart started a program to sell more local produce, defined as produce grown and sold in the same state.

Walmart has contributed significantly to disaster management projects and economic empowerment for women.

In 2001 Walmart established The Associates in Critical Need Trust, which provides grants to associates who have experienced unexpected emergencies such as natural disasters or death of a spouse. The trust has given over $100 million in grants.

Walmart has made a commitment and partnered with 150 factories and 60,000 women to teach women valuable skills to help them escape poverty. It has also collaborated with the Women’s Business Enterprise National Council to add a unique “Women Owned” logo to products from women-owned businesses so customers can easily identify and support them if desired.

Walmart has embarked on a health initiative after collaboration with Michelle Obama to lower the prices of fruits and vegetables and reduce the amounts of fats, sugars and salts in the foods it sells to address the growing concern of obesity.

2. Evaluate various ethical issues Walmart has faced and how the company responded to stakeholders.

Walmart’s has attempted to restore its image and relationship with stakeholders after numerous scandals including bribery, poor working conditions, accusations of pay and promotions discrimination against women.

 In 2004 Walmart formed its Global Ethics Office and released a revised Global Statement of Ethics to spread an ethical corporate culture among its global stakeholders. The office provides guidance on ethical decision making based on the Global Statement of Ethics and an ethics hotline.

•  Walmart  has an Ethical Standards Team to monitor the compliance of supplier factories with the company’s “Standards for Suppliers” and local laws. Walmart requires all suppliers to have an independent agency assess the electrical and building safety conditions of their factories. They have adopted a zero tolerance policy and have the right to terminate relationships with suppliers and subcontractors who violate its ethical standards.
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3. What are Walmart’s contributions to improving the well-being of consumers and the economic sustainability of society?

Walmart’s recycling efforts have allowed the company to reduce its global plastic bag waste by over 38 percent since 2007. This has allowed the company to keep 80 percent of its U.S, operational waste out of landfills.

Walmart’s goals of decreasing its waste and carbon emissions, and Sustainability Index has extended to all facets of its operations including suppliers. These efforts demonstrate Walmart’s desire to become a more sustainable company.

Unethical

LABOR UNION OPPOSITION:

Wal-Mart is a non union organization that feels it does not need third party intervention. So, instead of unions, Wal-Mart has an open door policy that encourages employees to take their complaints beyond management. But, according to PBS, the open door policy does little to help its employees but gives the business the leverage it needs to terminate unwanted non compliant help. In addition, Employees start out at lower wages than unionized corporations and end up quitting by the end of the first year. Wal-Mart also prohibits employees from talking to union representatives. It is unethical for Wal-Mart to prohibit employees to talk to union representatives since according to the National Labor Relations Act, employers are not allowed to discourage employees from forming a union for they have that right. Therefore, the United Food and Commercial Workers Union filed a complaint with the National Labor Relations Board against Wal-Mart. The complaint, filed with the National Labor Relations Board, alleges that Wal-Mart violated federal labor law by “bribing” employees to report on co-workers who favored a union. (www.washingtonpost.com). But Wal-Mart denied the charges that were brought against the company. Thus, Wal-Mart is wrong by bribing employees for it encourages dishonest behavior. If Wal-Mart wants to avoid a hearing or a lawsuit in this situation, they need to post notices saying the retailer will not oppose employees talking to union representatives. In addition, if Wal-Mart takes more seriously the employees complaints, it might encourage them not to unionize.

UNFAIR TREATMENT OF EMPLOYEES:

Wal-Mart has been accused of discriminating against women. Women had been denied training and promotion opportunities that are offered to men. In addition women are underpaid. That is, men are paid more than women. According to Hoovers handbook of American business, in June 2001 a group of six current and former female Wal-Mart employees filed a sex discrimination lawsuit (seeking to represent up to 500,000 current and former Wal-Mart workers) against the company.(Hoovers Handbook, pg.907) The suit was filed because Wal- Mart failed to provide equal employment for women. In fact, there are over 70 percent of women working at Wal-Mart, but only a small amount of those women are managers. So, men are holding more management positions than women. In addition, Wal-Mart is the nation’s largest employer of women, but unfortunately they are being treated without dignity and respect.” (www.arkansasnews.com)So it seems then that discrimination is a big problem at Wal- Mart. If Wal-Mart wants to avoid lawsuits they need to give more job opportunities to women and they should get paid as much as male employees. Even though Wal-Mart is such a successful company, they can do better if they put a stop to discrimination for it will save them money on lawsuits. In fact, Wal-Mart recently introduced workplace diversity initiatives, intended to prevent further gender bias.( usgovinfo.about.com)

Another issue that Wal-Mart is facing right now is the fact that employees wages are very low. An average worker makes between $12,000 and 17,000 a year which is not much. As a result employees have to apply for public assistance and this public assistance comes from our tax dollars. Basically, one of the reasons for Wal-Mart low wages is because they want to cut operating costs and they want to continue offering low prices. So, Wal-Mart’s ultimate defense is that it offers lower prices and somehow that justifies all sins.” (www.usatoday.com)It seems that Wal-Mart cares more about keeping its prices low than to increase employees wages. Besides low wages, Wal-Marts health insurance is so expensive that some of the employees can not even afford to pay for it. So, those employees who couldnt afford the health plan will probably have to get their health care benefits through their spouses or the state from our tax dollars. Wal-Mart responded to this problem by offering discounts on health care coverage. Members can save as much as 50% on services not normally covered by medical insurance.(www.ufcw324.org) Discounts is not enough. Wal-Mart still has a moral responsibility to provide affordable health care to its employees not shift the cost onto the American taxpayers. Wal-Mart can also raise employees wages so they can afford to pay for their health plan.

While wages are low at Wal-Mart, too often employees didnt get paid at all for overtime. In fact, according to Wal-Marts policy, they are supposed to pay employees for every minute they work. But, since Wal-Mart is such a big company, there will be cases in which managers might do unethical things. For instance, employees were forced to work unpaid overtime. As a result, they filed a suit against Wal-Mart for not getting paid for overtime. So in February 2004, a federal judge ruled that Wal-Mart should pay workers for overtime hours (Hoovers Handbook).But, the case is still pending. In fact Wal-Mart claimed their policy is against such work. So Wal-Marts managers who required overtime were disciplined and fired. In fact, it is Wal-Marts responsibility to make sure that people get paid. They should settle the suit by paying their employees for unpaid overtime. It seems that Wal-Mart needs to periodically examine its pay practices to make sure that all employees are getting paid for all the hours worked.

Finally, Wal-Mart was under investigation for the use of illegal immigrants as workers. In fact, in October 2003 federal agents uncovered hundreds of illegal immigrants employed by outside contractors cleaning its stores.(Hoovers Handbook, pg907) As a result, the company became the target of a class action suit. So, Wal-Mart was accused of breaking immigration laws. In addition, according to Hoovers Handbook, Wal-Mart cheated immigrant janitors out of wages and the government out of workers compensation, social security payments, and federal payroll taxes.(Hoovers handbook, pg.907) But, Wal-Mart claimed they hired those particular jobs out to contractors and it was the contractors that were at fault for the use of the illegal immigrants. Even if the situation is as they describe it, they hired a contractor who failed to follow United States laws without questioning or researching them first. Thus, Wal-Mart failed to do a thorough background check of any potential employee. A background check would have helped determine the integrity of an employee for it includes job experiences, references, legal documents, etc.

Thus, no company is immune to problems. The companies that survive are the ones that can spot ethical issues and correct them before they become problems. In this case Wal-Mart failed to acknowledge those potential problems and they are probably going to pay for it. Thus, Wal-Marts unethical business practices have hurt its companys reputation. If Wal-Mart wants to survive they will have to try hard to improve their image. That is, they need to show that they care about ethics by treating employees fairly. As a result, it will attract good employees and people will have no reason to complain about the company. In addition Wal-Mart needs to be socially responsible in order to avoid economic harm and in order to maintain the legitimacy granted by society.