Organizational culture of Wal-Mart January 30, 2007
Posted by Lady in Organizational Culture, Retail.trackback
Basically this was an article that stated that Wal-Mart just recently settled a
U.S. federal lawsuit about overtime paid to its’ employees. Wal-Mart agreed to pay $33.5 million to its’ employees for overtime they had worked without pay. The U.S. Labor Department was accusing Wal-Mart of labor violations which led to this lawsuit. In addition, forty other states had filed lawsuits against Wal-Mart in regards to overtime violations.
Before the lawsuit was settled, Wal-Mart had recently “denied any liability for the accusations in the lawsuit”. But ironically, an associate director in the department’s Fair Labor Standard’s Division, Steven Mandel, commended Wal-Mart for this recent settlement of this overtime issue. He said that Wal-Mart asked for their support because they needed assistance with these “complicated efforts”.
Moreover, Wal-Mart officials are proud of their accomplishment of correcting their errors in overtime calculations. Sue Oliver, senior vice president of Wal-Mart’s HR division, said, “We want our associates to know that the situation has been fixed, that overtime calculations now are being done correctly, and that we’ve added safeguards to our payroll processes to make sure these type of errors don’t happen again”. She also feels that Wal-Mart has acted in good faith because they decided to compensate their employees for five years in back wages although the Labor Department only requires two years of compensation. She also stated, “We are commited to our associates…we work very hard to make sure associates are compensated correctly.” Now that this lawsuit is finally settled, close to 87,000 employees will receive compensation for the overtime that they had previously worked.
I wanted to mention this article to question Wal-Mart’s organizational culture. What does it say about their organizational culture–is it good or bad? Sue Oliver’s statements make it seem as though they are committed to taking care of their employees and in that sense, I guess that would speak highly of their culture. However, another question could also be–should this issue have even occurred in the first place? What type of organizational design does Wal-Mart have where employees are working hard and not being fully compensated for their efforts? Might these errors in their organizational structure affect the relationships between the employees and management? I believe that it would. Might the lack of proper compensation lead to management’s loss of trust from employees? Might employees start to question the ehtics of Walmart? I believe that it is possible. Maybe Wal-Mart only agreed to pay out the compensation because they got caught. Wal-Mart is already known for being a “bully” because they have so much power. However, I believe that these errors in overtime compensation displays a weakness in their organizational culture and could lead to increased employee turnover rates.
But on the other hand, one might think that this settlement makes Wal-Mart’s culture look good because they are taking a step towards improvement, looking to make their organizational culture stronger by compensating their employees. Although this is a possibility, I am leaning more towards my former explanation. What does everyone else think?
Wal Mart is notorious for treating employees, or “associates”, poorly. My bet is that Wal Mart knew full well that they were doing something wrong. Of course now that someone took the time to look into the problem they are putting on a good public face, but from what it sounds like this is a, “Uh Oh, we’re busted,” kind of reaction. I’m also pretty sure that Wal Mart won’t really care about having higher employee turnover because it already has high turnover, and they spend minimal amounts of money training these people, who are a dime a dozen for Wal Mart.
It is mind boggling to me how something like this happens inside a major corporation like Wal-Mart. How do you not pay your employees for their overtime? On the other hand, how are you an employee and do not realize that your check is a couple of hundred dollars short of what it is supposed to be? If you know you worked overtime and it is not in your check why would you not say something? There is no way that Wal-Mart did not know that they were not paying them for overtime. They keep track of all hours worked and what peoples paychecks should look like. They were caught trying to get over on their employees and are trying to compensate for it by paying out five years instead of two. I am not buying it.
Wal Mart is very well-known for the poor treatment to its employees. Long-hours and unfair compensation are usually the norm. I read a book called “Nickel and Dimed” by Barbara Ehrenreich, in which she does research about the unskilled work conditions in the US. The writer actually obtains a job at Wal Mart and her experience there seems to be the worst from any of the other jobs that she undertook for research purposes, such as maid and waitress.
Ehrenreich particularly highlighted the poor, long hours, as well as the constant supervision for the lower ranking employees, to ensure that they were never slacking off or taking unauthorized breaks.
I think Wal Mart in general abuses the amount of power that they hold in order to impose poor working conditions on their employees.
Great post! I like how you laid out questions for people to answer.
Wal-Mart, I read somewhere, is the single entity after the federal government, that is involved in the most litigations as a defendant. In short, they get sued a lot. Some of that is due to size. We may wonder how much is due to specific qualities or WM.
You bring up culture. If there were specific practices or policies that directed managers to encourage employees to restock after clocking out, is that a policy or a cultural norm?
And Terrance points out, how can something like this go on in such a large company? Is government enforcement that weak? Is that part of the national culture? I think so. Many Americans like to complain about how intrusive the government is. Maybe, but the trade-off is that something so clearly wrong, not paying employees even the LOW wages that is part of their explicit labor contract, becomes possible.
I don’t think it was an accident or an honest mistake. If you want to see more on this, look for WM and promoting women or hiring illegal workers through contractors.