WAL-MART'S BIG ANNOUNCEMENT WAS JUST ANOTHER DISAPPOINTMENT
Randy L. Harrington
October 26, 2006
October 26, 2006 — I received an e-mail late Wednesday evening telling me that Wal-Mart had an exciting announcement Thursday morning that would have a significant impact on 9 states. Finally after months of disappointment from declining sales, slowing customer traffic counts, labor problems, and just a bunch of sad facts I though that Wal-Mart was finally going to do something positive to reverse its negative impact on the American society. As usual I was disappointed—Wal-Mart's big announcement? They are expanding their $4 generic prescription medication program to another 12 states in the South. Why do I fall for it every time? I guess it's because I want to have faith that Wal-Mart will eventually start to do the right thing, which will eventually reverse its negative trends.
Wal-Mart's October 19 press release announcing their accelerated roll out of their $4 generic prescription drug program was touching if it could be believable. In Wal-Mart's press release it portrayed an elderly Florida woman who broke down in tears when she found out she could buy her medication for $4. She said that Wal-Mart's new drug program would save her $75 a month, and said that for the first time in a long time she would be able to buy her grandchildren Christmas gifts.
Touching as the elderly woman's story might be, it's a shame that the majority of Wal-Mart's 1.39 million employees can't afford Wal-Mart's cheap generic drugs, and many of them won't be able to give their families a good Christmas this year, much less shop Wal-Mart's new revamped Web site.
A year ago this week the New York Times revealed Wal-Mart's greed to the world when they disclosed an internal secret memo written by Wal-Mart Executive Vice President Susan Chambers to the Board of Directors that outlined a range of aggressive plans to check growth in its employee benefit expenses. Chambers suggestions were designed to make long-term full time employment with Wal-Mart unattractive, and to exclude a work force that was getting older with health problems for a work force that was younger, healthier, and cheaper.
The Chamber's memo expressed her opinion that “the least healthy, least productive Associates [Wal-Mart's employees] are more satisfied with their benefits...and are interested in longer careers with Wal-Mart.” She suggested that the company “dissuade unhealthy people from coming to work for Wal-Mart” and that all jobs should be designed to “include some physical activity” with the purpose of making Wal-Mart less appealing to those employees that could not handle the physical aspects of the job.
The Chambers memo also laid out a plan designed to correct what she felt was a problem with “increasing Associate tenure...given the impact of tenure on wages and benefits, the cost of an Associate with 7 years of tenure is almost 55 percent more that the cost of an Associate with 1 year of tenure, yet there is no difference in his or her productivity.” She told the Board that “because we pay an Associate more in salary and benefits as his or her tenure increases, we are pricing that Associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart.”
Sam Walton realized the importance of Wal-Mart employees to the continued success of the company, something that Chief Executive Lee Scott seems to have forgotten. Wal-Mart who claims family, and community values has implemented the most family-unfriendly scheduling policies, changed its health care benefits to penalize those employees that use the benefits, and has imposed new wage caps to discourage employees from making a career at Wal-Mart. Long term employment with Wal-Mart has become increasingly difficult.
Chief Executive Lee Scott seems to be part of the problem instead of part of the solution. Scott earned over $5 million dollars last year, and will receive over $7 million dollars in compensation this year as his employees are struggling to make ends meet on wages that are below the poverty level, and paying almost two times the national average for health care.
When a manager asked Scott in an e-mail why “the largest company on the planet cannot offer some type of medical retirement benefits” Scott replied “Quite honestly this environment isn't for everyone. There are people who would say, 'I'm sorry, but you should take the risk and take billions of dollars out of earnings and put this into retiree health benefits and let's see what happens to the company.' If you feel that way, then you as a manager should look for a company where you can do those kinds of things.”
There are changes at Wal-Mart which are beginning to have an impact on their performance. October sales have been off, and there has been a decline in store traffic. On October 16, 2006 200 Florida employees walked off the job to protest the changes to certain workplace policies which are seen as a sign that Wal-Mart is acting on the ideas to reduce payroll outlined in a leaked internal document last year. Employees in Arizona, a traditionally pro-business, and right-to-work state are talking about organizing a union for its 20,000 employees.
Wal-Mart executives are blaming many things for their sudden Wall-Street bearish position, and they are trying stop gap measures short of recognizing the real problem.
They changed employee uniforms, and that hasn't worked; they've remodeled their Supercenters, and that hasn't worked; they've offered $4 generic prescription medication, and that hasn't worked; they've revamped their online store – WalMart.com, and that hasn't worked.
Increased public, and political scrutiny and anger over Wal-Mart's failure to do what is right for its employees and pay them a decent wage, offer truly competitive benefits, and give them the recognition that they deserve is beginning to take its toll on Wal-Mart's bottom line.
Wal-Mart portrays itself as family oriented, and community driven. It gives billions of dollars to charitable causes annually, but when it comes to their employees its a wholly different story.
While on one hand Wal-Mart brags how they support families, and communities then imposes highly restrictive “open availability” policies on its employees that detract from them spending time with their families. While Wal-Mart donates billions of dollars to charitable causes, and increases their executives billion dollar annual compensation packages, they plunder employees wage and benefits to fund their generosity. Over half of Wal-Mart employees can't afford health care, and are on welfare and public assistance. The majority of Wal-Mart employees earn below the poverty level, and they are now being forced out of the labor market by Wal-Mart.
Other retailers like Target are right on their seasonal projections. The high cost of gas, and store remodeling haven't negatively impacted them. Target's September sales were up a healthy and robust 13.4 percent. Of course Target isn't being sued by hundred of thousands of employees, and is not going to have to pay millions of dollars in judgments to current and former employees. So what's the problem Wal-Mart?
Lee Scott has forgotten the lessons that Sam Walton taught about taking care of your employees. Instead of investing in its employees, Wal-Mart has invested millions of dollars, and perhaps billions of dollars, in a campaign to get rid of its hard working employees, limit the benefits it provides to the remaining employees, and engaging in a public relations campaign that tells the world, and its employees just how “competitive” their benefits package is, without providing any reasonable definition of “competitiveness.”
Mr. Scott you have to be held accountable for the mess that you have created. In order to reverse the negative spiral of Wal-Mart it is important that Wal-Mart begin to recognize its 1.39 million employees with decent wages, affordable health care, and leaders who are less greedy, and more aligned with Sam Walton's dream of taking care of the employees. While that fictitious elderly lady in Florida cries that she can now buy her grandchildren Christmas gifts, the nation should be crying for the 1.39 million Wal-Mart employees who have made it possible for her to pay $4 for a generic prescription, and buy her grandchildren Christmas gifts, because Wal-Mart employees certainly won't be able to afford such luxuries.
SOURCES/CONTRIBUTORS: WalMartWatch.com; Reuters' SEC; www.freewebs.com/WalmartArizonaUnion; www.ArizonaWalMartUnion.blogspot.com; WalMartFacts.com; WalMart.com
Copyright 2006 Randy L. Harrington. ALL RIGHTS RESERVED.
Wal-Mart's October 19 press release announcing their accelerated roll out of their $4 generic prescription drug program was touching if it could be believable. In Wal-Mart's press release it portrayed an elderly Florida woman who broke down in tears when she found out she could buy her medication for $4. She said that Wal-Mart's new drug program would save her $75 a month, and said that for the first time in a long time she would be able to buy her grandchildren Christmas gifts.
Touching as the elderly woman's story might be, it's a shame that the majority of Wal-Mart's 1.39 million employees can't afford Wal-Mart's cheap generic drugs, and many of them won't be able to give their families a good Christmas this year, much less shop Wal-Mart's new revamped Web site.
A year ago this week the New York Times revealed Wal-Mart's greed to the world when they disclosed an internal secret memo written by Wal-Mart Executive Vice President Susan Chambers to the Board of Directors that outlined a range of aggressive plans to check growth in its employee benefit expenses. Chambers suggestions were designed to make long-term full time employment with Wal-Mart unattractive, and to exclude a work force that was getting older with health problems for a work force that was younger, healthier, and cheaper.
The Chamber's memo expressed her opinion that “the least healthy, least productive Associates [Wal-Mart's employees] are more satisfied with their benefits...and are interested in longer careers with Wal-Mart.” She suggested that the company “dissuade unhealthy people from coming to work for Wal-Mart” and that all jobs should be designed to “include some physical activity” with the purpose of making Wal-Mart less appealing to those employees that could not handle the physical aspects of the job.
The Chambers memo also laid out a plan designed to correct what she felt was a problem with “increasing Associate tenure...given the impact of tenure on wages and benefits, the cost of an Associate with 7 years of tenure is almost 55 percent more that the cost of an Associate with 1 year of tenure, yet there is no difference in his or her productivity.” She told the Board that “because we pay an Associate more in salary and benefits as his or her tenure increases, we are pricing that Associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart.”
Sam Walton realized the importance of Wal-Mart employees to the continued success of the company, something that Chief Executive Lee Scott seems to have forgotten. Wal-Mart who claims family, and community values has implemented the most family-unfriendly scheduling policies, changed its health care benefits to penalize those employees that use the benefits, and has imposed new wage caps to discourage employees from making a career at Wal-Mart. Long term employment with Wal-Mart has become increasingly difficult.
Chief Executive Lee Scott seems to be part of the problem instead of part of the solution. Scott earned over $5 million dollars last year, and will receive over $7 million dollars in compensation this year as his employees are struggling to make ends meet on wages that are below the poverty level, and paying almost two times the national average for health care.
When a manager asked Scott in an e-mail why “the largest company on the planet cannot offer some type of medical retirement benefits” Scott replied “Quite honestly this environment isn't for everyone. There are people who would say, 'I'm sorry, but you should take the risk and take billions of dollars out of earnings and put this into retiree health benefits and let's see what happens to the company.' If you feel that way, then you as a manager should look for a company where you can do those kinds of things.”
There are changes at Wal-Mart which are beginning to have an impact on their performance. October sales have been off, and there has been a decline in store traffic. On October 16, 2006 200 Florida employees walked off the job to protest the changes to certain workplace policies which are seen as a sign that Wal-Mart is acting on the ideas to reduce payroll outlined in a leaked internal document last year. Employees in Arizona, a traditionally pro-business, and right-to-work state are talking about organizing a union for its 20,000 employees.
Wal-Mart executives are blaming many things for their sudden Wall-Street bearish position, and they are trying stop gap measures short of recognizing the real problem.
They changed employee uniforms, and that hasn't worked; they've remodeled their Supercenters, and that hasn't worked; they've offered $4 generic prescription medication, and that hasn't worked; they've revamped their online store – WalMart.com, and that hasn't worked.
Increased public, and political scrutiny and anger over Wal-Mart's failure to do what is right for its employees and pay them a decent wage, offer truly competitive benefits, and give them the recognition that they deserve is beginning to take its toll on Wal-Mart's bottom line.
Wal-Mart portrays itself as family oriented, and community driven. It gives billions of dollars to charitable causes annually, but when it comes to their employees its a wholly different story.
While on one hand Wal-Mart brags how they support families, and communities then imposes highly restrictive “open availability” policies on its employees that detract from them spending time with their families. While Wal-Mart donates billions of dollars to charitable causes, and increases their executives billion dollar annual compensation packages, they plunder employees wage and benefits to fund their generosity. Over half of Wal-Mart employees can't afford health care, and are on welfare and public assistance. The majority of Wal-Mart employees earn below the poverty level, and they are now being forced out of the labor market by Wal-Mart.
Other retailers like Target are right on their seasonal projections. The high cost of gas, and store remodeling haven't negatively impacted them. Target's September sales were up a healthy and robust 13.4 percent. Of course Target isn't being sued by hundred of thousands of employees, and is not going to have to pay millions of dollars in judgments to current and former employees. So what's the problem Wal-Mart?
Lee Scott has forgotten the lessons that Sam Walton taught about taking care of your employees. Instead of investing in its employees, Wal-Mart has invested millions of dollars, and perhaps billions of dollars, in a campaign to get rid of its hard working employees, limit the benefits it provides to the remaining employees, and engaging in a public relations campaign that tells the world, and its employees just how “competitive” their benefits package is, without providing any reasonable definition of “competitiveness.”
Mr. Scott you have to be held accountable for the mess that you have created. In order to reverse the negative spiral of Wal-Mart it is important that Wal-Mart begin to recognize its 1.39 million employees with decent wages, affordable health care, and leaders who are less greedy, and more aligned with Sam Walton's dream of taking care of the employees. While that fictitious elderly lady in Florida cries that she can now buy her grandchildren Christmas gifts, the nation should be crying for the 1.39 million Wal-Mart employees who have made it possible for her to pay $4 for a generic prescription, and buy her grandchildren Christmas gifts, because Wal-Mart employees certainly won't be able to afford such luxuries.
SOURCES/CONTRIBUTORS: WalMartWatch.com; Reuters' SEC; www.freewebs.com/WalmartArizonaUnion; www.ArizonaWalMartUnion.blogspot.com; WalMartFacts.com; WalMart.com
Copyright 2006 Randy L. Harrington. ALL RIGHTS RESERVED.
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