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Wal-Mart: Abusing Its Power for 40 Years

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You don't have to be a bully to be a good capitalist.

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In a 2005 memo to the Wal-Mart board of directors, a human resources executive outlined myriad ways to save money on benefits, including ways to hire healthier people and requiring physical activity for all associates. She even raised the problem that comes with employees who are happy enough to stay at Wal-Mart for longer than they'd like:

Walmart


"[T]he cost of an Associate with seven years of tenure is almost 55% more than the cost of an Associate with one year of tenure, yet there is no difference in his or her productivity," she wrote. "Moreover, 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."

The horror! If we treat our people well, they might actually want to stay. This kind of thinking by a senior human resources executive at one of the world's biggest companies is simply unconscionable. Over the years, there have been too many examples of this kind of pervasive thinking among Wal-Mart's top ranks.

When you have to hire an army of people to help improve your image, you've been doing something very wrong. That's a lesson Wal-Mart seems incapable of learning.

Even more troubling to some is Wal-Mart's practice of instilling its own moral values into the public domain through its retailing. It's refused to stock countless albums due to their "offensive lyrics," forcing some bands to produce sanitized records just so they can be sold there. It's ripped mainstream magazines off its shelves and turned away best-sellers simply because it didn't approve of their messages. Its decision to carry emergency contraceptives was made only after public outcry in what was yet another transparent effort to help its image.

Recently, Wal-Mart made its most astonishing image repair effort ever. It teamed up with a Democratic think tank and a leading union to support President Obama's health-care reform proposal, which includes employer-mandated insurance. It's not clear what Wal-Mart's motive is behind this move. It insists it's always advocated for health-care reform. For more, see our video A Healthy Debate About Healthcare.

I applaud Wal-Mart's move, but knowing the company's history with health care and its mandate to keep costs down, I remain skeptical. It could be a politically savvy move that will cement its place at the table when the details of the reform get ironed out. It's certainly hard to believe it actively wants to provide health insurance to its employees.

I have no problem with a single company acquiring the influence and reach that Wal-Mart has attained. What I have a problem with is a company of its stature abusing its power time and time again, relying on hired image saviors to help bail it out.

I don't plan to ever travel the 8.2 miles to save a few cents on my shampoo, and fortunately I don't have to. I've got a Target (TGT) just a few blocks away.

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No positions in stocks mentioned.
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