Walmart has a trust issue…but it’s not the one you think

By | April 25, 2012

The world doesn’t need another blog about Walmart’s Mexico problem.  We all know the deal: allegations of bribery pose reputational risk.  So does obstructing and covering up an internal investigation…offenses that lead to textbook responses: board and executive resignations, the appointment of watchdogs, a re-examination of policies. And as we know, Walmart has had plenty of practice with implementing textbook responses.

For me, the bigger question is why Walmart continually has these kinds of problems.  Discrimination, sustainability, living wage, healthy eating, health care – the biggest issues imaginable seem to dog the biggest retailer on the planet. We already know that Walmart is politically polarizing. Labor unions, environmentalists and employee advocates oppose them at every turn. Now in the wake of the Mexico scandal, some are calling Walmart an international embarrassment. It’s only a matter of time before one of these issues  — if not the cumulative impact of all of them  — destroys the retailer’s reputation for good.

With so much crisis communications experience under their belt, you’d think Walmart would have it figured out by now. But instead, Walmart’s reputation problems are precisely because they follow the crisis communications checklist above all else. They create rigorous supply chain policies to serve as a shield against environmental activists.  They create such stringent ethics policies that you can be fired for letting a contractor buy you a soda. They appoint watchdogs for everything that ails them.  And then they wear those policies and procedures like a bulletproof vest enabling them to do whatever they need to do to make a buck.

It isn’t bulletproof. In fact, the excessive reliance on stringent policies suggests an underlying truth: they don’t trust their people, including their own leaders, to act ethically, responsibly and in alignment with their values.  And when you expect very little of your people, they rarely disappoint.  They extort compliance from their suppliers, then turn around and do something entirely different.

You can’t legislate morality or corporate culture.  The question of culture is a complicated one – but it’s one that is increasingly coming under scrutiny.  Corporate citizenship isn’t just about eco-responsibility and philanthropy – and it’s clear that the behavior and culture of an organization will continue to be front and center.

So, yes, Walmart has a trust issue alright – they don’t trust their employees, their partners or their vendors.  And they’ve demonstrated that they shouldn’t be trusted either.

To solve this problem, Walmart doesn’t need another czar, policy or another initiative.  They need another outlook.  Maybe even another leadership team. (Here is an interesting piece suggesting that what they really need is a female CEO.) They need to shock their system, or there will be a steady stream of Mexicos down the line.

But the real risk facing Walmart is not Mexico or whatever big issue comes next… it’s the danger that people will decide that the high price they pay for low prices isn’t worth it, and vote with their wallets.

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