Wal-Mart: unethical business practices

Categories: Business Ethics Walmart Pros And Cons

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Wal-Mart, the big giant, the place where a lot of people usually do their shopping for the low prices and the variety of products was founded by Sam Walton. Walton was an entrepreneur with an innovative vision, started his own company and made it into the leader in discount retailing that it is today. In fact, Wal-Mart is considered to be the biggest company in the U.S. and it has stores worldwide. According to PBS, "Wal-Mart employs more people than any other company in the United States outside of the Federal government, yet the majority of its employees with children live below the poverty line."(www.pbs.org)

In addition, Wal-Mart likes to portray itself as a seller of U.S.

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manufactured goods but in reality the company has products on its shelves made in foreign countries and at questionable workshops. It would seem that Wal-Mart encourages "made in the USA" but it really encourages products made outside the USA.

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As a result, Wal-Mart has forced many manufacturers out of business. As a matter of fact, this big giant is facing a significant amount of controversy for unethical business practices. In fact, some of these unethical business practices include the following.

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.

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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 Hoover's 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."(Hoover's 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's 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 employee's wages. Besides low wages, Wal-Mart's health insurance is so expensive that some of the employees can not even afford to pay for it. So, those employees who couldn't 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 didn't get paid at all for overtime. In fact, according to Wal-Mart's 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" (Hoover's Handbook).

But, the case is still pending. In fact Wal-Mart claimed their policy is against such work. So Wal-Mart's managers who required overtime were disciplined and fired. In fact, it is Wal-Mart's 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."(Hoover's 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 Hoover's Handbook, "Wal-Mart cheated immigrant janitors out of wages and the government out of worker's compensation, social security payments, and federal payroll taxes."(Hoover's 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-Mart's unethical business practices have hurt its company's 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.

Bibliography:

Walton, Samuel Moore. Encyclopedia Britannica. 2005. Encyclopedia Britannica Online

http://www.pbs.org/itvs/storewars/stores3.html

http://kansascity.bizjournals.com/kansascity/stories/2001/11/12/story8.html

http://home.earthlink.net/~local1613/nlra.html

http://www.washingtonpost.com/wp-dyn/articles/A48056-2005Apr12.html http://www.ufcw.org/issues_and_actions/walmart_workers_campaign_info/facts_and_figures/walmartandwomen.cfm

http://www.ufcw.org/issues_and_actions/walmart_workers_campaign_info/facts_and_figures/walmartandwomen.cfm

http://www.flagstaffactivist.org/fan/study.phtml http://www.walmartfacts.com/keytopics/default.aspx

http://www.lieffcabraser.com/wal-mart.htm

http://threehegemons.tripod.com/threehegemonsblog/id57.html

http://www.ufcw324.org/3walmartstoriespage.html