Walmart : Worldwide Retail Corporation
Walmart is a worldwide retail corporation, with over 8,500 stores in 15 countries, and is the biggest private employer in the world. The company was founded by Sam Walton in 1962 in Bentonville, Arkansas. Walmart became publicly traded on the New York Stock Exchange in 1970 as they started to expand throughout the US.
Walton had a vision for the company to give customers low costs by giving them the greatest shopping experience through his associates. He valued them to a great extent and made them partners in the success of the company as well as acknowledged that they were the key factors in making Walmart successful.
In 1980, Walmart exceeded its net sales by $1 billion which was unheard of by any other company at the time. They began to further expand and diversify themselves by creating membership stores that are most commonly known as Sam’s Club which offers bulk items to customers who purchase warehouse memberships, Neighborhood Markets that are on a smaller scale pharmacy/grocery stores, and Supercenters which offer a wide selection of consumer goods along with a full-line supermarket. In 1991, Walmart became the world’s largest retailer in the world.
Because of his success, Walton received the Presidential Medal of Freedom from President George H.W. Bush in 1992 shortly before his death. He said, “If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life.”
Walmart has the world’s largest revenue as well. The company’s worldwide gross profit margin amounted to be 24.7% in 2018. Their model changed consumer habits and has transformed the American marketplace. Small dry goods stores closed and retailers without the ability to compete on convenience and cost eventually had less sustainable business models. Walmart’s foundational philosophy is “Save Money, Live better.” Sam Walton’s goal was to see a higher volume of goods at a lower price to increase profit margins. He consistently did better compared to other retailers on price. Sam always found the lowest price on all aspects of the supply chain by working with vendors, ordering the largest volume for the lowest prices.
The company currently has an existing network of more than 2,800 diverse suppliers and continue to look for new suppliers with industry expertise and a desire to deliver quality products and services at scale to our customers. The vast majority of its suppliers are in the United States. However, the supply chain for Walmart stores is global, with suppliers in the United Kingdom, Canada, China, Mexico, Taiwan, Hong Kong, France and other countries.
Walmart employs 2.2 million associates around the world of which 1.5 million are in the U.S. alone. About 75% of the store management teams started as hourly associates, and earn between $50,000 and $170,000 a year, similar to what firefighters, accountants, and other professionals make. Last year, Walmart promoted about 200,000 people to jobs with more responsibility and higher pay.
Throughout the years, Walmart has started a Dollar for Day program encouraging employees to further their education. The program offers access to online degree programs through the University of Florida, Brandman University and Bellevue University. Employees receive discounted tuition rates and books, plus access to a coach who helps them navigate the process. The program is open to full and part-time employees who have worked for the company for more than 90 days. The company’s goal is to create a platform for employees where they are able to advance in educational opportunities and personal development.
Today most consumers are well informed about the brands they buy from. This has created a demand for businesses to invest in building a socially conscious profile and to bring in more meaningful social impacts into their company mission. In other words, businesses who invest in the greater good of society and share stories about their social contributions increase brand value and seem to have a better competitive advantage overall.
Walmart is an interesting case study because it has undergone many transformations of corporate ethos, branding, and reputation management over the past few years, but it still has a long way to go. Although the company is dedicated to its mission and principles of providing exceptionally low prices to consumers, the brand has continuously been working towards building a reputation as a global force for good. As the company’s website states, “not just for our customers, or even our associates, suppliers, and their families, but also for the people in our communities and around the world that we will never meet.”
The company has recently revamped this CSR model over the years and are now referred to as a “global legislator.” Although that is not say that Walmart has still faced many challenges in the past and continues to do so. For more than two decades, this retailer has been at its core for controversies over its low wages, overtime pay abuse, few employee benefits, gender discrimination, negative impact on small businesses, and the list goes on. This paper will specifically emphasize the conflict of the Walmart Stores Inc v. Dukes et el lawsuit and child labor in Bangladesh, and how these tragedies have impacted the company. I will also discuss a few solutions and will provide recommendations in reducing these types of issues now and in the future.
Walmart Stores Inc v. Dukes et al
Betty Dukes, a Walmart “greeter” at a Pittsburg, California store, and a few other women filed a class action lawsuit in which they alleged that the company’s policies resulted in lower pay for women than men in comparable positions and long wait time for management promotions compared to men all in violation of the Civil Rights Act of 1964. These individuals were fighting for equal rights and against racial and gender discrimination in the workplace.
This case was interesting in a sense that the lawsuit in 2001 estimated to comprise more than 1.5 million women, including all women employed by Walmart nationwide at any time after December 26, 1998, making it the largest class action lawsuit in US history. Walmart continuously argued that the court require employees to file on an individual basis, opposing that class actions are unmanageable and excessively costly. The case was dismissed and received class certification in 2011. At the time, the supreme court ruling did not make a decision on the merit of the claims made in the lawsuit, but rather it ruled the lawsuit was too large to constitute a class action lawsuit. The decision then led the plaintiffs from the case to file individual, regional lawsuits against Walmart.
Gender discrimination continues to be an ongoing problem. According to a recent study by the Management Institute, more than four in five women and 80% of women report that they have witnessed gender discriminatory acts at work. One big issue in gender bias in the workplace is the belief in stereotypes of what men and women “should be.” Gender stereotypes lead to men in the workplace being deemed as “competitive” and “independent,” while women in the workplace are deemed as “cooperative” (Smith et al. 2018).
Walmart is already in the process of updating its policies against discrimination according to the Utrecht Law Review. Its Global Responsibility Report highlights the importance of gender equality and having a diverse workforce making it attainable for both men and women to reach top management positions. To go even a step further, the company has also incorporated an Advisory Board on Gender Equality and Diversity with a goal to provide equal opportunities in leadership positions.
In a recent published paper in Gender & Society, Shelley Correll, director of the Clayman Institute for Gender Research explains a method in which she found implemented successfully while working with several technology companies over the last few years. Her method focuses primarily on educating managers and workers about bias, diagnosing where gender bias could enter their company’s hiring, promotion or other evaluation practices and working with the company leaders to develop special tools that help reduce discrimination and inequality.
Walmart needs to adopt this “small wins model,” as Correll calls it along with its work towards the Global Responsibility Report. Taking these small steps to change or “wins” will create a path to achieving the larger goal and mission of the company. Therefore, transforming the organization for success.
Research has shown that women are usually subjected to a higher bar, requiring more evidence than men to be seen as “qualified.” Because of this, Walmart needs to invest in resources into reducing the kinds of bias that lead to gender inequality. I recommend having unconscious bias training and formalizing a method for hiring and evaluating employees to that they are based on achievement and measurable related criteria.
Walmart needs use metrics to set goals and inform talent mobility. It will be important for the company to use data to measure inequality and set clear goals to determine how to close gender gaps. They will need to focus on measurements in recruitment, company culture, and similar areas to see how the organization is impacting both men and women and their careers. I believe it will also be beneficial to create firm guidelines for specific performance measures for all employees and to evaluate them the same way. This will be crucial in examining one’s performance and compensating them in return whether it be through increase in pay or promotion to management positions.
The company will also need to provide strong mentorships to strong talents, but before they go there, it is important to provide the essential training to leaders and management dedicated to learning the importance of equality in the workplace. Walmart management should be seeking good talent and offer a mentor program to help associates grow and advance in their career. Along with the Empowering Women at Walmart campaign, the company needs to encourage women to engage in professional development by pairing them with strong leaders who can asses their skills and goals. This will be of a great benefit as it will get more females to take stance in working their way up. Having a good mentor can go a very long way.
If Walmart is able to create a platform where they are able to easily measure one’s performance and reward them for their good work as well as create a mentorship program allowing employees both male and female to be able to grow in their careers, I believe this will be the best formula in improving the company’s CSR policy.
Much of the clothing purchased by Walmart and many other retailers are made in developing countries like Bangladesh. It has been known that it was the intention of preventing abuse in the workplace and the use of child labor, that Walmart introduced its Code of Conduct ‘Standard for Supplier’ in 1992. It specifically states that the company will not deal with any supplier that employs children under the age of 14.
Walmart, the world’s largest retailer is promoting this corporate code of conduct that seems to be of the strictest in the industry. Although in an investigation by Radio-Canada, a French language service of the CBS, doubted the company’s capacity in enforcing the Code of Conduct in dealing with third world countries.
In Bangladesh, many reports were filed for impoverished children working long hours in violation of the country’s labor laws. Children aged 10-14 who had given up school to work were averaging 64 hours a week according to a British think tank. This is below the means of being able to even afford the basic necessities. When the company was caught using child labor in Bangladesh, workers were getting less than $50 a month, to knit, sew, and pack clothes for sale around the world. There are a few things wrong here. For this paper, we will only be discussing the impact of underage children dropping out of schools for jobs.
Walmart has stated as much as it would like, the company tries to inspect all of its factories that work on its order, but with thousands of subcontractors around the world, the company is not able to enforce its own corporate code of conduct and get rid of labor practices it says are unacceptable.
Child labor has been a sad and unfortunate problem worldwide, with 168 million children doing such labor, according to the International Labor Organization. International brands tend to be the biggest users as labor especially in third world countries like Bangladesh is substantially cheaper.
Walmart continues its efforts in ceasing to do business with factories mainly because of underage labor violations. Its zero-tolerance policy for underage workers was changed in 2005 due to NGO Maquila Solidarity Network’s advice. It was beneficial for the company to implement these changes as they were able to regulate strict guidelines in that if two underage workers were found working, the factory would receive a fair warming and were given an opportunity to correct it in a follow-up audit. If the company failed to abide by the rules, they would be permanently banned from Walmart’s production. This policy was adopted and implemented to assure that suppliers were reporting the true essence of the working conditions.
The company may have a strict corporate Code of Conduct that they are working towards putting into place but implementing these policies in developing countries may be a bit more challenging. It is also important to understand that holding factory owners accountable may also not be enough to fix the problem. The essential tool to fight against child labor is education itself. Walmart needs to focus on offering programs directed towards children. Researchers argue that encouraging students to go to school longer and partnering up with schools in the effort of keeping students out of factories, is a necessary step in bringing in change.
Walmart needs to revamp their CSR model in terms of making sure that employees are being properly taken care of and treated fairly. The key consideration here is the effectiveness of stricter labor standard policies. The company needs to be more involved and take part in implementing and observing a common set of minimum standards, enforcing worker protection, and solve the problem of child labor at a more optimal level. This is an important issue. If Walmart wants to improve their CSR, they will need to take ownership and implement change even if it means it will cost the company more. Every business wants to make money. If managers are looking to improve profitability, they will have to improve working conditions in their factories.
Being a big retailer, Walmart has the competitive advantage to be able to make an impact in the country. CSR makes corporations obligated to share the burden of resolving society’s problems. As we know, companies like Walmart have the intention to make the most profit and excel in economic terms and they use that to boost the economy which results to benefiting everyone. I propose the company work with the government in order to impose stricter laws and regulations towards who can and cannot work in the factories and ensuring all employees are being taken care of properly. This way, Walmart will focus around the quality of life of others which will result the company’s CSR to have a strong impact on the way corporations do business. It will set a solid foundation to do things in an ethical way that will not only brings good to the company but as well as the community in its entirety.
Walmart a worldwide retailer with stores all around the world, is continuously working towards bettering its efforts in improving its CSR with integrating it with its business model. The company has several supply chain-focused efforts to improve its economic, social and environmental impact in its recently released 2018 Global Responsibility Report, stating its commitment to meeting consumer expectations and eliminating abuses in the supply chain. Walmart’s report states that the company is working with industry experts, NGOs, suppliers and the company’s own research to address risks associated to social issues specifically in the supply chain. The company also stated a commitment to addressing “major risks to the dignity of workers” within retail supply chains by 2025.
One of the reasons why Walmart’s CSR initiative may be successful is because of the company’s top-down approach. As noted in the report, “Business ownership and accountability for ESG execution starts with the Walmart Board of Directors and leadership engagement and is embedded throughout our business in the business planning and performance management cycle, our operating policies, organization roles and coordinating mechanisms, project governance, and systems and tools” (Kate, Patrick). This is the first step in recognizing a need or problem and creating an action plan to resolve. I believe with the company’s revised Code of Conduct and its involvement with suppliers around the world, Walmart will be able to overcome these obstacles. As companies are growing, it may be difficult to take charge or even know about every issue, but a company like Walmart who has the competitive advantage because of their size as well as network, will and should take a stance in improving their CSR model.
For Walmart, the overall aim should be to achieve a positive impact on society as a whole while maximizing the shared value for the owners of the business, its employees/suppliers, shareholders and stakeholders.
Corporate Social Responsibility is important for all companies whether it be by empowering women, helping the environment, trying to end poverty, or reducing child labor. More companies are incorporating this tactic into their overall business strategy. It is a practice that should be implemented by all as it brings in numerous benefits not just to the company but improves local and global communities overall.
As we have learned in this course, being socially responsible can improve the company’s brand because by projecting a positive image, a company can make its name for itself not just by being financially profitable, but also socially conscious as well. It also engages customers and associates who work for the company on a more personal level. Building a positive relationship by engaging with customers and associates who work for the company as well communities, can lead to increased sales and rising profits. Also, employees such as myself like to feel appreciated for the work we do. Social responsibility empowers employees to leverage corporate resources at their disposal to do good. I believe it is important to be part of a strategy that helps the greater good because it can then boost employee morale and lead to better productivity in the workplace.
We focused on many different aspects of CSR. Each section provided insightful information. I was quite nervous for our weekly debates, but they ended up being my favorite part of the class as they got me to think outside of the box on certain areas that I may not have uncovered on my own. I really enjoyed discussing CSR and the impact it makes on communities as I believe it is important for companies to use the resources they have to make a greater impact in the world. People and communities are struggling everywhere. Companies like Nike, Walmart, Apple, and so on are able to use their resources because of how quickly they are growing. They can use their platforms to create a trend in focusing on the CSR aspect by working with organizations to implement good to society. This will not only reduce the burdens of those suffering, but the company will also be attracting more consumers as people are willing to buy more knowing the brand or company is helping a certain cause.
To conclude, companies whether they be small or large should recognize corporate social responsibility as part of their business model as it can attract positive publicity, help attract and retain top talents, as well as improve relationships with customers, associates, and communities around the world. The benefits are remarkable, including employee and consumer satisfaction, improved sales, and financial success. It simply leads to a win-win outcome.
Thank you for a wonderful class. This was one of my favorite class’s that I have had the opportunity to take as part of my MBA program. Not only was I able to gain more knowledge about CSR, but I hope to utilize what I have learned in the company that I currently work as well as if I plan to start a business of my own one day.