Introduction
Wal-Mart is the leading retail chain in the US and the global retail industry. It is also the largest employer in the US private sector. Despite its financial success over the years, the company has been accused on several occasions of engaging in unethical practices in order to achieve its business targets.
It has been particularly accused of engaging in unethical labor practices some of which violates the rights of its employees (Fishman, 2006, pp. 6-25). The government through the labor laws expects all employers to focus on ethical labor practices in order to enhance the welfare of the employees.
This paper analyzes the labor practices at Wal-Mart. The analysis will be done with the aid of three “ethical principles of global business standard codex namely, the principle of fairness, reliability principle and the transparency principle” (Carol and Buchholty, 2008, p. 45).
Employment Practices at Wal-Mart
Low Wages
Research conducted on wage rate in the retail industry indicates that Wal-Mart pays the least wage rate. Compared to the national average wage rate for the same job categories in the retail industry, Wal-Mart’s wage rate is less by between 26%-37% (Rao and Cynthia, 2007, pp. 27-33).
The company’s average wage rate per hour is $ 10.84. Thus a fulltime employee working for 34 hours in a week will be entitled to an annual income of about $ 19,200 (Rao and Cynthia, 2007, pp. 27-33). However, according to the federal government’s definition of poverty, this amount is not sufficient for a family of four in the US.
The amount is considered to be less by at least $ 10,000 for a family of two (Christopherson and Lillie, 2005, pp. 1919-1938). This means that the workers of the company are not able to support themselves financially and live decent lives.
This is support by the fact that most of Wal-Mart’s associates partly depend on state welfare support programs. Wal-Mart assesses the performance of its store managers based on their ability to reduce costs associated with labor. The employees who are paid more are expected to be highly productive.
The company’s management on the other hand defends its wage rate and claims that it is comparable to the industry rate (Hemphill, 2008, pp. 26-29). The management further claims that its investment in employee training and automation provides more opportunities to the employees and this account for the low wages.
Paying low wages is considered an unethical practice since it is against the welfare of the employees (Heineman, 2008, p. 78). This is also against the ethical principle of fairness which advocates of fair compensation for employees’ services (Heineman, 2008, p. 78).
According to the fairness principle, a company is considered to engage in unethical practice if its wage rate is below the industry average. According to the principle of transparency, Wal-Mart engages in unethical behavior through deception. This is because the use of automated systems or regular training of its employees is not a justification for its low wages.
The firm must offer competitive or fair remuneration packages for it to be considered ethical. According to the reliability principle, Wal-Mart is not committed to improving the welfare of its employees through better pay (Heineman, 2008, p. 79).
For example, in 2006, the firm announced plans to raise the wage rate by 6% for the newly recruited associates. However, the company placed “a wage cap on the salaries of its veteran staffs” (Rao and Cynthia, 2007, pp. 27-33). The wage cap was meant to compensate for the 6% pay rise. This is considered an unethical practice since it only focuses on the interest of the firm at the expense of the employees.
Gender Discrimination
The firm has been accused of gender discrimination at the workplace (Tilly, 2007, pp. 1805-1823). The male employees are entitled to better treatment as compared to their female counterparts at Wal-Mart.
During the recruitment process, the company gives first priority to the male applicants (Rao and Cynthia, 2007, pp. 27-33). This means that the female applicants do not have a fair chance of being employed by the firm. Gender discrimination is also depicted in the firm’s pay structure.
The male associates are normally paid higher wages as compared to their female colleagues. In cases whereby the male and female associates with similar qualifications do the same job, the male associates’ salary has been found to be higher by at least $1(Rao and Cynthia, 2007, pp. 27-33).
The differences in wages have led to law suits as female employees demand equal pay (Spangler, Britt and Parks, 2008, pp. 14-25). The company has failed to ensure fairness in the process of rewarding its employees through promotions. The female employees have low chances of being promoted to managerial positions.
This is based on the fact that most managerial positions at Wal-Mart are held by male employees. Due to the high criticism elicited by the acts of gender discrimination and the resulting law suits, the company is exploring ways of ensuring fairness to all employees.
Gender discrimination at the workplace is not only unethical but also illegal since it infringes the employees’ right to fair treatment. According to the principle of fairness, gender discrimination at Wal-Mart is considered unethical since the firm does not focus on fair treatment for all its employees (Carol and Buchholty, 2008, p. 47).
Besides, the principle demands that a firm must provide equal employment opportunities to all qualified citizens for it to be considered ethical (Carol and Buchholty, 2008, p. 48). However, Wal-Mart has failed this test by favoring the male employees.
The firm has failed to ensure fair competition among its employees for higher positions especially at the management level. According to the principle of transparency, a firm engaged in ethical practices must allow objection to its policies (Carol and Buchholty, 2008, p. 49).
However, Wal-Mart has consistently failed to take into account the plea of its female staffs for fair treatment. Consequently, the employment disputes between the firm and its female employees have always been settled at the court. This further confirms the firm’s inability to focus on ethical labor practices.
Diversity
Wal-Mart being a multi-national corporation employs workers from different socio-cultural backgrounds. All major ethnic or racial groups are represented in the firm’s workforce (Christopherson and Lillie, 2005, pp. 1919-1938).
The firm has also introduced an elaborate diversity program which promotes corporation and teamwork among employees from different walks of live. Besides, the representatives of various groups such as African-Americans are normally involved in the company’s recruitment exercise in order to ensure fairness.
The firm has since been rewarded through various awards for its efforts to promote diversity. According to the principle of fairness, the diversity program is considered ethical since it offers fair employment opportunity or treatment for various ethnic or racial groups (Carol and Buchholty, 2008, p. 47).
However, an analysis of the firm’s diverse workforce reveals that the African-Americans and the Hispanics are the majority (Christopherson and Lillie, 2005, pp. 1919-1938). Critics of the firm attribute this to the firm’s commitment to paying low wages (Christopherson and Lillie, 2005, pp. 1919-1938).
The African-Americans and the Hispanics are likely to accept low wages due to their social economic statuses. Besides, the firm has been found to employ illegal immigrants through its partners. According to the transparency principle, this is an unethical behavior since the firm failed to disclose its partners’ criminal acts of employing illegal immigrants.
Conclusion
The above discussion reveals that the labor practices at Wal-Mart are unethical since they do not conform to the “ethical principles of global business standard codex” (Carol and Buchholty, 2008, p. 46). The firm has been found to engage in gender discrimination as well as paying low wages.
These practices are not consistent with the ethical principles of transparency, fairness and reliability as discussed above. The diversity program is an ethical practice since it offers equal employment opportunities to all ethnic groups (Carol and Buchholty, 2008, p. 47).
However, employing illegal immigrants either directly or indirectly is unethical as discussed above. The law suits resulting from the unethical practices are associated with negative effects on the image of the firm (Christopherson and Lillie, 2005, pp. 1919-1938).
This is because it lowers the reputation of the firm in the community it operates in. Thus in order to protect its image, the firm should engage in ethical practices that conform to the accepted ethical principles.
References
Carol, A. and Buchholty, A. 2008. Business and society: ethics and stakeholder management. New York: McGraw-Hill.
Christopherson, S. and Lillie, N. 2005. Neither global nor standard corporate strategies in the new era of global standards. Environment and Planning. 37(11), pp. 1919-1938.
Fishman, C. 2006. The Wal-Mart effect and a decent society: who knew shopping was so important? Academy of Management Perspectives. 1(1), pp. 6-25.
Heineman, B. 2008. High performance with high integrity. New York: McGraw-Hill.
Hemphill, T. 2008. Demonizing Wal-Mart: what do the facts tell us? Journal of Corporate Citizenship. 31(1), pp. 26-29.
Rao, S. and Cynthia, O. 2007. Business practices of Wal-Mart in Northwest Indiana. Journal of applied Management and Entrepreneurship. 10(2), pp. 27-33.
Spangler, A., Britt, M. and Pars, H. 2008. Wal-Mart and women: good business practice or gamesmanship? Journal of Applied Management and Entrepreneurship. 13(2), pp. 14-25.
Tilly, C. 2007. Wal-Mart and its workers: not the same all over the world. Connecticut Law Review. 39(4), pp. 1805-1823.