Reference no: EM133395935
Assignment:
In 2012, Walmart faced an investigation into business practices in Mexico that were thought to violate the U.S. Foreign Corruption Practices Act (FCPA). The FCPA makes it unlawful to "make payments to foreign government officials to assist in obtaining or retaining business" (An overview). The investigation suggested that Walmart made "suspect payments totaling more than $24 million" to expedite the opening of stores in Mexico (Barstow, 2012, p. A1). To make matters worse, it was revealed in the investigation that company executives were aware of questionable practices by employees as early as 2005 and were not diligent with their internal investigations. In the years since the investigation there have been at least eight senior-level executives who have left the company and Walmart has added more than 2,000 corporate compliance employees (Harris, 2014).
Similar types of bribery allegations have been associated with the cosmetics firm, Avon, (Henning, 2014), and the industrial company, Alstom, which was recently acquired by General Electric (Ivory, 2014). It is reported that Avon spent $300 million on internal investigations and establishing monitoring systems (Henning, 2014). Walmart is reported to have spent $439 million on the investigation and new compliance structures (Harris, 2014), with an additional $200 million estimated for the coming year (Berfield, 2014). In addition to fines and penalties against a company, individual employees are at risk for criminal charges.
While not specifically linked to the bribery scandal, the American Customer Service Index, an organization that conducts an annual survey of customer satisfaction in the United States, reports that Walmart's customer satisfaction score consistently ranks in the top 10 worst retailers and the score for 2014 was their lowest since 2007 (Retail satisfaction drops).
In addition to employees and customers, shareholders are an important stakeholder for a company. Since the investigation into Walmart's actions in Mexico, investors have even begun to question their affiliation with Walmart. The New York Times reported the City of Portland, Oregon, decided in October of 2014 that it would no longer invest in Walmart because of "concerns over the company's ethics and labor practices" (Harris, 2014, p. B5).
Yet, Walmart has worked hard over the years to build its core values, develop its communication structure, keep its focus on saving customers money, and perpetuate good intercultural and international relations. Walmart employs 1.3 million people in the United States and has approximately 11,500 retail locations spread across 28 countries (About Us, 2016). The current President and CEO, Doug McMillon, starting with the company in 1984 as an hourly summer employee and has worked his way up through the organizational structure (About Doug McMillon, 2016). In the United States, Walmart was a leader in increasing wages in 2015 for their 500,000 hourly employees
(DiChristopher, 2015). Critics, however, show how an increased hourly wage can become meaningless for individual employees when they are assigned fewer hours in the work week (Tabuchi, 2015). Furthermore, some suggest the wage increase is in response to very low employee morale and an active employee group that has staged protests over the past several years (Lathrop, 2015).
The bribery allegations and investigation make a continuing communication challenge for Walmart. Two years after the initial New York Times report, the company is still being associated with bribery. Reuters recently reported on a change in leadership for the Mexico division of Walmart. The bribery claim, although not cited as the reason for the change in leadership, was mentioned in the news report (Gardner & Gomez, 2014). The New York Times reported the change in leadership "follows a string of high-level departures at Walmart after allegations of widespread bribery at its Mexican unit . . . [which] prompted a flurry of investor lawsuits and a United States government investigation" (Tabuchi, 2014, p. B2).
Walmart-one of the largest employers in the United States-has experienced ethics choices and communication challenges both inside and outside the company. As they, and any organization in today's multinational business environment, will tell you, developing skills at communicating with all types of people in all types of positions using constantly changing technologies requires awareness and practice.
1. Would you feel at home working for Walmart? What could Walmart do to improve its appeal to a wider range of employee groups?
2. What two suggestions would you give to Walmart management that would please employees while still maintaining low-priced products? What would have to happen in order for your suggestions to occur?