Wal-Mart: What PR Won't Fix 31 comments
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No amount of PR and no number of company blogs can make a bad company look good — or smart. Wal-Mart (WMT) is the poster pig for that lipstick. Again and again, they prove themselves to be mean, greedy, and stupid. Again and again, they and their PR people are forced to apologize. And it’s clear: They never learn. The culture remains venal. Management remains blind to the fact that their moral myopia is bad for the brand and bad for business.
Even the PR company, Edelman, fails to realize that this is bringing them down — who’d want to trust them after they keep throwing themselves on swords for Wal-Mart and who’d want to hire them given Wal-Mart’s horrid reputation — and they’d be better off resigning the account, no matter what it’s worth. Greed is usually such a simplistic explanation for bad behavior but in this case, it explains everything. This wouldn’t be so incredibly apparent if it didn’t keep happening over and over and over again.
The latest of the company’s moral lapses is the story of Debbie Shank, a former employee who was hit by a truck, is severely brain-damaged, and who won a lawsuit to help pay for her very expensive care. Wal-Mart wanted a piece of that suit.
Wal-Mart’s health care plan lets the retail giant recoup the cost of its expenses if an employee collects damages in a lawsuit. And Wal-Mart set out to do just that after Shank and her husband, Jim, won $1 million after suing the trucking company involved in the wreck. After legal fees, the couple received $417,000.Wal-Mart sued the Shanks to recoup $470,000 it paid for her medical care. However, a court ruled that the company could only recoup about $275,000 — the amount that was left in a trust fund for her care.
Who cares what the clause says? The story went on TV and it inspires both heartbreak and rage (much of it in blogs). It’s obvious that Wal-Mart has no moral compass and not even a self-interested sense of priorities given its PR problems, especially over its health care for employees.
People make fun of Google’s righteous vow not to be evil. It’s practically a self-parody. And it’s a shame that any institution should think that it needs to make such a promise; shouldn’t it be presumed?
But imagine if Google took over Wal-Mart and made that one change, posting a sign in every store and every office: Don’t be evil. Imagine if that became the basis of firings and hirings: out with the bad air, in with the good air. Could the culture of this company possibly be reformed? Could they ever see that being evil to employees and customers is bad business? Could they ever train employees to think differently, to factor decency into their decisions? Or has it descended too far into hell?
The contrast between Wal-Mart and Google illuminates Google’s vow in a new light. It doesn’t look so silly to promise not to be evil when you watch the business of an evil company.
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This article has 31 comments:
Keep in mind your words made it clear WMT paid $470,000 in medical expenses in the first place. Any company that pays that type of money for medical help is hardly the "poster pig for that lipstick."
www.cnn.com/2008/US/la...
Maybe next time you should wait until a matter is cleared up.
www.msnbc.msn.com/id/1.../
I would say that muber is very impressive.
As far as Google not 'being evil', I suspect that the target anthesis they had in mind was Microsoft, not Wal-Mart.
but we need a kinder and gentler employer. I guess it
comes down to fairness. We expect our employer to be
fair above all else.
C'mon guys... Wal-Mart was adamant on their position regarding the repayment of the money from the start. They only caved in when they realized that this had become an enormous PR minefield. The regrettable thing here is that Wal-Mart wasn't the real evil here, but rather the idiot attorney who didn't bother to check the insurance policy, allowed a settlement on only $1 Million and took over half of it. Unfortunately Wal-Mart took the hit because it's reputation preceeded it. Life's unfair, karma's a b**** and so on.
As far as the charity goes... chutzpa anyone? I wonder what percentage of their employees (who'd life full-time hours but Wal-Mart's 'keeping costs down') rely on the charities that Wal-Mart contributes to? It's a PR shell game and people are starting to realize that there is nothing under any of the cups.
Also, one assumption here is that Wal-mart is omnipotent. It's a LAWSUIT. They would have to WIN to get damages. If the court found the suit justified, than Wal-mart is actually the one here that's taking the high road.
First, some % of it is a tax write off, but let's not bag on them for that, that is a perk, and lowers their tax exposure.
Second. That was FY2006. Want to know what their revenue was?
money.cnn.com/magazine...
Revenues 315,654.0 (YES, $315.65 BILLION dollars.)
Doing the math
615,654,000,000/272,90... = 0.0443268459231971% of revenue
What is 0.044% of your revenue?
Let's assume you make $75,000/year
75000*0.00044326845923...
That would the equivalent you of giving $33.25 to your favorite charity.
Doesn't seem so impressive, that is 8 lattes.
Ford and GM.
maybe Walmart is smart to be evil.
Nick - that 15% discount you get on the stock didn't help much until the last 6 months. See that HUGE downtrend on WMT stock? Expect it to continue after a few months.
My wife won't even shop at Walmart due to all the bad press and it is closer by half to our house than any other store.
Of course, if you read Jarvis's disclosure he is a recent new stockholder of Google. And, an interesting ad for the SEIU appears on one of his web sites. Just coincidences?
All this IMHO.
Second: I can't believe you would even make such accusations against the company that paid Debbie Shanks medical bills.
Third: It is the insurance company who is supposed to be suing the trucking company to recoup costs -- not Mr Shanks. He is collecting double. I believe this is a felony.
Fourth: You also failed to mention that Mr. Shanks divorced Debbie so that he could also collect from the government . . . I would call this Triple-Dipping.
Fifth: One of the blog comments said you are simply demagoguing Walmart. I agree!
Lets say after taxes and expenses you have 10K from your original 100K in salary (not including what you need to save to feel secure as I will get to that in the next paragraph) and you decide to give away 1k, I would argue that you gave away 10% of your net income as net income is the money you have left over after all your expenses like rent, utilities, daycare etc are paid. So I guess if I wanted to do the math precisely, I would have figured out how much WMT spends on dividends and share buybacks and taken that total and subtracted it from net income. Then I would take that new net income figure and divided it by their charitable contributions. Obviously this would lead to a higher percentage for WMT. Your car payments, rent, daycare, utilities etc are basically equivalent to WMT's COGS and SG&A.
However, I probably need to take the analysis one step further because both you and WMT need to put some money away so you feel secure about the future. Therefore, going with you first, I could say of that 10K you had left after expenses, you need to save 5K every year to feel secure, so if you donate 1K of the 5K you have left after saving enough so you feel secure then you gave away 20% of your "true" disposable income. We could also look at WMT in the same context and see how much they gave away after saving enough from their profits so that they too feel "secure" with a cash position that will help them in both good and bad times.
Wal-Mart realized what their insurance team was doing and decided to let Shank keep the money. They were following a policy set by many insurance companies. I guess he kinda sorta missed that update from yesterday.
Talking about greedy, stupid and mean. Why doesn't Jarvis talk about her attorneys??? Her attorneys were obviously way more greedy by taking more than half her awarded money. They were extremely stupid by failing to check the insurance policy and how insurance policies attempt to recoup money from lawsuits. I'd also say they were mean by not realizing how they messed up and attempt to correct their own mistake. I suppose her attorney was too busy looking for other "deep pockets" to sue instead of taking care of the client, which I understood was the primary mission of a good attorney.
No, I suppose Jarvis doesn't care about how her attorneys messed up and target them. Instead, he has a deadline to meet and decides to grab a headline and write an easy article slamming a big company that does way more good than the mistakes they make. At least Wal-Mart tries to do well.
In China, as elsewhere, we follow the Wal-Mart tradition of building our business one store and one customer at a time. We strive to provide our customers with friendly service and a wide selection of quality products at Every Day Low Prices. With each Wal-Mart store we bring advanced retail know-how to the local market. By fostering a healthy, competitive environment, we hope to constantly improve our business operations and customer service in order to contribute to the prosperity of the local economy.
Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. At Wal-Mart, we always work with our suppliers to grow together. In August 2007, Wal-Mart once again secured the top spot of the 2007 Supplier Satisfaction Survey conducted by Business Information of Shanghai. Additionally, Wal-Mart directly exports about US$9 billion from China every year. The export volume by third party suppliers is also estimated to be over US$9 billion.***end quote
If the largest employer in the US is a dang 5 & 10 cent store and they don't make anything and the government is in second place and the only thing they make is more debt.....the only way "we the people" can get all the US dollars back from foreign hands is to sell our debt and that is sad. America people got "I" not "WE" on their mind 99.9% of the time plus being addicted to cheap sh!! from China and the nice people of China have no choice at what they buy in a Wal*Mart store cause 95% is Chinese. So far....the smart people of South Korea and Germany have seen the light....to bad the middle class in America have their head up theirs!
I specifically did not use net income because I wanted to illustrate the point that giants like walmart wouldn't blink over $270M. In that same vein I am not belittling them either, what they do admirable. I wanted to put a little perspective on the numbers we are talking about here.
As an aside, net-income is a tricky beast, as I am sure you are aware, due to conflicting pulls in our current tax code. Which investors praise high net-incomes, but at the same time, the tax man is watching.
When was the last time you were able to tell uncle sam that 97% of your income shouldn't be taxed because you had bills to pay? I want my tax exposure to be income-expenses too! :(
WMT insurance covers her care.
They (actually) the insurance company should subrogate for what THEY paid out. WMT paid NOTHING - they might be entitled to premiums they paid (stretch) but NOTHING else. except possibly the loss of her time if she was a "valuable" employee (sorry - associate).
The idiot attorney (redundant) is at fault here AND as usual the biggest benefactor.
Personally I think she was entitled to nothing as it was her fault. You should not be rewarded for your own stupid behavior.
Has the whole concept of "insurance" been redefined ?
Yep.