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Wal-Mart’s Latest Ethics Controversy

Wal-Mart’s Latest Ethics Controversy [BusinessWeek]

The very first day that Chalace Epley Lowry started working at Wal-Mart Stores (WMT) as an administrative assistant in the communications department, on Jan. 2 of this year, she went through a day-long orientation with a heavy emphasis on ethics. “We were told that even if we see something that has the appearance of something unethical we should report it,” says Lowry. Now, two weeks after filing a complaint against a more senior executive, the 50-year-old mother of two finds herself looking for another job.

Lowry is the first to admit that she didn’t know whether the Wal-Mart executive had done anything wrong. Mona Williams, the vice-president for corporate communications, had asked Lowry to photocopy some papers related to stocks. When Lowry found out a few days later that Wal-Mart was planning a $15 billion stock buyback, she worried that Williams might have traded on insider information by exercising her stock options. “In all honesty, Mona’s transactions could all have been aboveboard,” she says, “but I acted in good faith, just pointing out that there might have been some wrongdoing.”

“Next Steps”
Wal-Mart says Lowry is simply confused. The company says she mistook a deferred compensation form for an options exercise request and that Williams did nothing wrong. “The Ethics Office determined the same day the complaint was filed that the document that created Ms. Lowery’s [sic] concerns had nothing to do with stock trading and that there was no violation of Wal-Mart’s ethics policy,” said David Tovar, a Wal-Mart spokesman, in a statement. (Wal-Mart spells the name “Lowery” throughout its communications, although her name, as she told BusinessWeek repeatedly, is in fact spelled Lowry.)

In dispute, however, are the circumstances that led to Lowry’s looking for a new job. Soon after Lowry filed the complaint, her identity was disclosed to Williams. Wal-Mart says Lowry agreed to disclosure, but Lowry says she was never given a choice. Lowry said it was impossible to remain in the department since Williams was effectively her boss, so she asked to be transferred. Wal-Mart has said that Lowry now has 60 to 90 days to look for a job within the company, but she may not get one. If she can’t find another Wal-Mart job in 90 days, human resources officials have told her that they would have to discuss “next steps.”

Tarnished Image
For Wal-Mart’s own communications department to be dealing with an issue like this is particularly poignant. Williams and the department have been the key people trying to protect Wal-Mart’s reputation over several difficult years. The company has come under scathing attacks for its workplace practices from union-backed groups WakeUpWalmart.com and Wal-Mart Watch, as well as from several politicians including Presidential hopefuls Senator Barack Obama (D-Ill.) and former Senator John Edwards (see BusinessWeek.com, 11/16/06, “Can Barack Wake Up Wal-Mart?"). Wal-Mart has also taken heat from shareholders as its stock price has stagnated (see BusinessWeek.com4/30/07, “Wal-Mart’s Midlife Crisis").

Most recently, the issue of ethics at Wal-Mart has been in the spotlight because of the firing of a high-profile marketing executive, Julie Roehm (see BusinessWeek.com, 2/12/07, “My Year at Wal-Mart"). Wal-Mart says that the company dismissed Roehm because she violated the company’s code of ethics by accepting gifts from vendors and because she had an affair with a subordinate. In a lawsuit against the company, Roehm has denied those charges and alleged that other top Wal-Mart executives have received gifts from vendors. She says in her suit that Chief Executive H. Lee Scott Jr. accepted trips and discounts on yachts and jewelry from billionaire Irwin Jacobs, who owns a company that buys surplus items from Wal-Mart. Wal-Mart has denied those charges, and Jacobs has filed claims against Roehm for defamation.

Taking Its Toll
All of this has also led to something of a consumer backlash: Some people won’t shop at Wal-Mart because they don’t want to support a company that they perceive as unfair to workers or bad for the economy. As early as 2004, a confidential report prepared by consulting firm McKinsey & Co. found that 2% to 8% of the company’s customers have stopped shopping there “because of negative press they have heard.” Another document, prepared in October, 2006, by Wal-Mart’s former advertising agency GSD&M Advertising, found that the segment of Americans who say the chain is their No. 1 destination for discount shopping fell from 75% two years ago to 67%. The ad agency suggests that besides competition, Wal-Mart’s image could account for this drop-off. The report also says that Wal-Mart’s rating as a company that consumers trust and respect has “steadily declined” in the last two years.

This has all been difficult for a company with a long, proud history, dating back to the retailer’s founding in Arkansas in 1962. Wal-Mart prides itself on having one of the strictest and most stringent ethics policies in the industry. Buyers are not allowed to accept even a cup of coffee from their suppliers. And its 1.3 million employees are encouraged to report any ethics violations that they might suspect or see.

Name Dropping
But Lowry’s story may prove a cautionary tale for workers at Wal-Mart, and beyond. She had been on the job only a few months when she saw the documents that fueled her concerns. With the words from her initiation class still ringing in her ears, she decided to tell her direct supervisor, Sarah Clark, a senior director in the communications department. Clark encouraged her to report the issue to the company’s ethics office. So on May 25, Lowry filed a complaint.

Within days, Williams knew that it was Lowry who had raised questions about her ethics. Wal-Mart says that’s because Lowry agreed to make her name public. “Ms. Williams was informed after the Global Ethics Office concluded their review and after Ms. Lowery [sic] agreed that it was appropriate to inform and discuss the matter with Ms. Williams,” said Tovar in his statement. However, Lowry says her supervisor made it seem like it was required. “It was phrased to me like it was part of the complaint process to tell Mona that I had filed a complaint,” she says. “I didn’t know I had a choice.”

“Disheartened”
Wal-Mart says that Lowry was given the option of staying in her current position. “In spite of the fact that Ms. Lowery was not treated any differently after making her report and was in fact praised for bringing her concerns to her supervisor’s attention, Ms. Lowery [sic] indicated that she was uncomfortable continuing in her current position and asked to be transferred,” said Tovar in his statement.

Lowry says that a human resources officer she met soon after her identity was disclosed brought up issues related to team dynamics and alleged that she didn’t get along with co-workers. Given the timing of the comments, Lowry says she grew even more uncomfortable in the communications department. She says she had an outstanding evaluation in her last job performance review in March, scoring 4.5 out of a possible 5 in the rating scale.

Today, Lowry feels “totally disheartened” by the way the ethics complaint was handled. She was just trying to do what was right. Now she hopes something good comes from the episode. “My experience was not what I perceived the ethics line or open-door policy to be, and I would think twice before going that route again,” she says.

Posted by Alex Goldschmidt on Wednesday, June 13, 2007

Click Here for a Printer-Friendly Version

COMMENTS

Play by wm rules and get stabbed in the back. Just the
norm for wm.

BOB in
Wednesday, June 13 at 11:15 AM

[Wal-Mart spells the name “Lowery” throughout its communications, although her name, as she told BusinessWeek repeatedly, is in fact spelled Lowry.]

A swing and a miss… I would think the first step in trying to discredit someone would be to spell their name right.

tjc in NY
Wednesday, June 13 at 12:33 PM

The WM ethics hotline at my store is a joke. We’re told to “tell your manager”, even after explaining that the manager is screwing around with the associate we’re reporting for under-ringing mdse. What a joke.

SW in
Wednesday, June 13 at 08:10 PM

In the adult world, you don’t accuse a Vice-President of a crime on a hunch. You had better see it and you had better be able to prove it without engaging in corporate espionage. Even if Mona Williams WAS insider trading, your best bet is to say nothing until you get a subpoena and are forced to testify. Otherwise, you risk losing your job and getting labeled a troublemaker.

Just some words to the wise.....

Nick in
Wednesday, June 13 at 08:26 PM

“....you don’t accuse a Vice-President of a crime on a hunch.”

But you would be encouraged to report a fellow worker for whispering the word union at Walmart. Why the class distinction”

R E M E M B E R
J O N Q U I E R E
Q U E B E C
Home of Walmart Worker Abuse
We will never forget what you did Walmart.
Never.

Alex in Ontario, Canada
Wednesday, June 13 at 09:07 PM

Just some words to the wise.....

Nick in
Wednesday, June 13 at 09:26 PM

Well I would like to see where you read that she accused her of a crime

gary in
Wednesday, June 13 at 09:12 PM

gary,

“Well I would like to see where you read that she accused her of a crime”

How about, insider trading?

“When Lowry found out a few days later that Wal-Mart was planning a $15 billion stock buyback, she worried that Williams might have traded on insider information by exercising her stock options. “In all honesty, Mona’s transactions could all have been aboveboard,” she says, “but I acted in good faith, just pointing out that there might have been some wrongdoing.”

Bob in
Wednesday, June 13 at 11:56 PM

I use Excite to keep my eye on WMT and apparently Mona Williams isn’t considered high enough in Bentonville to be classified as an “Insider” so there is no record of her stock transactions. (Not much activity going on by insiders at the moment and what is happening is a little vague.)

“We were told that even if we see something that has the appearance of something unethical we should report it,” says Lowry.

Wal-Mart is required by law to “create procedures for internal whistle blowing.”

The Corporate and Criminal Fraud Accountability Act is part of the Sarbanes-Oxley Act of 2002, enforced by the Department of Labor. It protects employees of publicly-traded corporations from retaliation for reporting alleged violations of any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders.

Advice to the Bentonville blockheads:

Arrange a nice horizontal transfer for Ms. Lowry into an area not quite so mainstream before she becomes “disheartened” and goes public with this.

Oops! Too late! Nevermind.

Ken V in Texas
Thursday, June 14 at 03:57 AM

“...enforced by the Department of Labor.”

With all the indictments/subpoenas flooding down on the Bush groupies we needed a good laugh this week, thanks-

Elaine Chou in WalMart cahoots
Thursday, June 14 at 04:14 AM

Me very sorry-

That should be Elaine L. Chao

http://www.dol.gov/

soldier in Chinese spelling combat
Thursday, June 14 at 04:40 AM

Ever get the feeling that we have some racists, here?

Joey in
Thursday, June 14 at 07:45 AM

Nick-

You are wrong on that one. Wal-Mart ethics training makes it quite clear that they would prefer false accusations to failure to report a real ethics violation.

What I don’t understand is why we are hearing about Ms. Lowery’s situation. (Why didn’t she change her name to “Lowry” in the system? That should be possible for her.) She was ignorant of procedure even if her intentions were righteous. Then she felt “uncomfortable” and wished to transfer. She was given the opportunity to do so per the policy.

Wal-Mart followed policy (which I assume was covered in orientation and I know from past experience was available on the WIRE) from start to finish in this case. No retaliation took place. What is Ms. Lowery’s problem?

Someone in USA
Thursday, June 14 at 05:33 PM

Nick-

My comments don’t mean I think your advice is bad advice…

Someone in
Thursday, June 14 at 05:33 PM

I love what someone wrote in Business Week.
The open door policy really means out the door.

Well said. Thanks to Walmart for the proof.

R E M E M B E R
J O N Q U I E R E
Q U E B E C
Home of Walmart Worker abuse.
We will never forget what you did Walmart.
Never.

Alex in Ontario, Canada
Thursday, June 14 at 06:11 PM

I didnt see in this article where it said Wal-Mart fired or punished Lowry. It just says that she is requesting a transfer to another dept.

Big T in Rogers
Friday, June 15 at 09:03 AM

You’re right, Big T, but I think this question about the deferred compensation form/options exercise request should be investigsted by the SEC, don’t you?

Ken V in Texas
Saturday, June 16 at 01:26 PM

My favorite WalMart ethics controversy of late is the culture of Asset Protection (formerly Loss Prevention) and the Bentonville ‘love of money’ psychopath slobs paying $750,000 to buy off a homicide in Texas where WalMart killed a petty theft suspect.

The International Association of Professional Security Consultants recommends that retail security personnel do not strike, tackle, sit on a suspect, or engage in any contact that might cause physical injury.

“No merchandise is of such value as to justify physical injury to a suspect,” the association states in its “Best Practices” section of its Web site.

WalMart- We are ‘love of money’ psychopaths and it is written in all of the WalMart business philosophy and the slobs of Bentonville corporate culture. Robert Hare on hold for Lee Scott.

SanDiegoView in
Monday, June 18 at 07:42 AM

SDV,

“My favorite WalMart ethics controversy of late is the culture of Asset Protection (formerly Loss Prevention)”

““No merchandise is of such value as to justify physical injury to a suspect,” the association states in its “Best Practices” section of its Web site.”

So, Wal-Mart changed it’s practices to follow the International Association of Professional Security Consultants guidelines and now they are getting slammed for letting the shoplifters get away with theft and encouraging ‘associates’ to steal as well. What does Wal-Mart have to do, to please you people, short of shutting their doors?

RDS in
Monday, June 18 at 11:26 AM

What does Wal-Mart have to do, to please you people, short of shutting their doors?
RDS in
Monday, June 18 at 12:26 PM

“Given Costco’s performance, the question for Wall Street shouldn’t be why Costco isn’t more like Wal-Mart. Rather, why can’t Wal-Mart deliver high shareholder returns and high living standards for its workforce? Says Costco CEO James D. Sinegal: “Paying your employees well is not only the right thing to do but it makes for good business.”

What Sinegal has proven is that a company doesn’t have to be ruthless. Being humane and ethical can also make you money.
<http://abcnews.go.com/2020/Business/story?id=1362779>

This is a question asked from not having a social conscience and a refusal to recognize better business models that don’t exploit labor to the point of impoverishing them. Notice that the attitude for the neocon slobs is that the Waltons did not steal from labor.

Capitalism is best when it behaves itself.

Free enterprise and capitalism only operate to the degree of what society is willing to tolerate.

Wal-Mart founder Sam Walton once said, “I pay low wages. I can take advantage of that. We’re going to be successful, but the basis is a very low-wage, low-benefit model of employment.
http://en.wikipedia.org/wiki/
Criticism_of_Wal-Mart#_note-iswalmartgood

“Is Wal-Mart Good for America?” PBS. November 16, 2004. Retrieved on February 24, 2007.

Proverbs 22:16 “He that oppresseth the poor to increase his riches, and he that giveth to the rich, shall surely come to want.”

“Most people are bothered by those passages of Scripture they do not understand, but the passages that bother me are those I do understand.”
Mark Twain

As for the corporate psychopath wolves of Bentonville-

“The Shepherd drives the wolf from the sheep’s throat, for which the sheep thanks the shepherd as a liberator, while the wolf denounces him for the same act as a destroyer of liberty.” Abraham Lincoln

SanDiegoView in
Monday, June 18 at 07:38 PM

… a homicide in Texas where WalMart killed a petty theft suspect.

Stacy Clay Driver, 30, of Cleveland, was chased by employees after he left the store in the 6600 block of FM 1960 East with items they said he stole. Four employees in the Atascocita Wal -Mart wrestled Driver - who was shirtless at the time - to the ground and struggled with him on the hot pavement for 10 to 30 minutes, witnesses said. He stopped breathing and later died at a Humble hospital.

Paper: HOUSTON CHRONICLE
Date: WED 08/10/05
Section: A
Page: 01

Ken V in Texas
Wednesday, June 20 at 06:57 PM

http://7510091d18105cee4379de0884ab1c89-t.qjhuma.org 7510091d18105cee4379de0884ab1c89 http://7510091d18105cee4379de0884ab1c89-b1.qjhuma.org 7510091d18105cee4379de0884ab1c89 http://7510091d18105cee4379de0884ab1c89-b3.qjhuma.org 5da269d70f258be2341c2332392a1020

Erin in Dominque
Tuesday, June 26 at 03:21 AM

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