Sam Walton founded Walmart in Rogers, Arkansas, and the company grew from that single store in 1962 to more than 11,300 locations spanning 27 countries by 2019. Today, the multinational retailer is the world’s largest company by revenue—generating over $500 billion in 2018—and the largest private employer with more than 2.2 million employees. The retailer also owns Sam’s Club, a chain of warehouse clubs that sell groceries and general merchandise in bulk.77Walmart is known for its “everyday low prices,” but critics say prices are not all that’s low at the retailer. Individual employees, advocacy groups, and govern-ment agencies have brought numerous labor-related lawsuits against the company, scrutinizing its internal values. Let’s take a closer look at what’s going on at the massive retailer.A SERIES OF WORKPLACE ABUSESWalmart prides itself on its values. The retailer states that, “We define culture as our values in action. It’s how we deliver superior customer service, create a great front- line work environment and improve performance . . .” Moreover, Walmart’s stated values are centered on being “guided by good,” which includes “respect for the individual” and “acting with integrity.”78 Allegations against the company suggest a different story.Consider a report by a workers’ advocacy group that says Walmart “routinely refuses to accept doctors’ notes, penalizes workers who need to take care of a sick family member and otherwise punishes employees for lawful absences.” The report is based on a survey of more than 1,000 Walmart employees and accuses Walmart of vio-lating the American with Disabilities Act and Family Med-ical Leave Act, among other labor laws.79Katie Orzehowski was a cashier at the Walmart in North Huntingdon, Pennsylvania, and completed the employee survey. She suffered a miscarriage in 2016 and provided doctors’ notes and hospitalization records to excuse her missed shifts, but the company refused to excuse her absences. She was so worried that another absence would get her fired that she returned to work, while still in recovery. “I still had a lot of bleeding going on, and that’s embarrassing,” Orzehowski told The New York Times.80 Walmart’s focus on the bottom line over its employees’ welfare didn’t end with those who suffered from an illness. The Equal Employment Opportunity Commission (EEOC) filed a lawsuit against the retailer in September 2018 alleging it unlawfully discriminated against pregnant workers in Wisconsin. The complaint was filed on behalf of Alyssa Gilliam, who became pregnant in 2015. Gilliam requested light duty or trans-fer to a less physically demanding job in which she would avoid heavy lifting due to her pregnancy. The company declined to accommodate her in any way, including providing her with a chair, shorter work days, or additional breaks. The EEOC alleges that Walmart retaliated by cutting Gilliam’s benefits, reducing her work hours, and eventually forcing her to take unpaid leave. Interestingly, Walmart had a robust light duty program that allowed workers with lifting restrictions to be accommodated, “But Walmart deprived pregnant workers of the opportunity to participate in [this] pro-gram. This amounted to pregnancy discrimination, which violates federal law,” said the EEOC.81Gilliam wasn’t the only employee denied a chair. Adam Catlin, who suffers from cerebral palsy, has been a Walmart greeter in Selinsgrove, Pennsylvania, for almost ten years. Catlin was told in 2019 that due to a change in corporate policy, he would need to stand for his entire eight-hour shift and lift up to 25 pounds or be fired. Cait-lin’s mother urged Walmart customers on Facebook to support her son. “I know corporate decisions are corpo-rate decisions, if [that’s] where this originated from, but does anyone ever make any decisions anymore by put-ting any heart or care into it?” she wrote.82WALMART’S ALLEGED BAIT AND SWITCHWalmart CEO Doug McMillon’s compensation for fiscal 2018 was $22.8 million, which is 1,188 times the annual compensation of its median employee. In con-trast, CEO pay at S&P firms averaged 361 times more than the average employee in 2018.83 Overall, the company “has been the defendant in scores of cases, including class actions, or group suits, accusing the company of wage-law violations,” according to Jona-than Tasini, president of the Economic Future Group.84Walmart decided to raise its minimum wage from $10 to $11 in 2018. With much fanfare, CEO McMillon stated, “Today, we are building on investments we’ve been making in associates, in their wages and skills development . . . It’s our people who make the differ-ence and we appreciate how they work hard to make every day easier for busy families.”85 Now consider that Walmart closed dozens of its Sam’s Club ware-houses on the same day it announced the pay increases.86 This brings into question whether the
retailer had positive intentions in raising employee pay. The United Food and Commercial Workers Inter-national Union, for example, called the wage increase a “public relations stunt” meant to distract from the closing of 63 stores.87 The closures resulted in approx-imately 10,000 workers losing their jobs.88 The timing of the announcement wasn’t the only issue as many Sam’s Club employees had no idea their stores would be closed until the day of the announcement. Accord-ing to The Times, some workers showed up for work only to be informed that their stores were closed.89POOR JOB SATISFACTION IMPACTS CUSTOMER SERVICE Walmart’s minimum wage hikes may raise the pay of some of its workers, but they may not be enough to solve the retailer’s continued customer service prob-lem, according to Forbes.90 Walmart’s American Cus-tomer Satisfaction Index (ACSI) score dropped between 2016 and 2017. The ASCI measures the quality of products and services American consumers receive by major department and discount retailers. The drop placed Walmart at the bottom of a list of department and discount retailers (even below a bankrupt Sears). Making Change at Walmart (MCAW), an organiza-tion dedicated to transforming the lives of Walmart employees, believes the company’s poor customer service ratings are related to the way it treats its work-ers. “Walmart lacks the ability to improve its customer experience when it refuses to focus on what we all know to be true—quality jobs create quality experi-ences for both shoppers and workers,” says MCAW director Randy Parraz.91 Walmart needs to do more for its employees if it wants to improve their attitudes with customers. For example, wages and benefits are so poor at Walmart that thousands of its employees qual-ify for food stamps, Medicaid, and other government assistance programs, according to MCAW.92 Walmart says it has a “common purpose of saving people money so they can live better.”93 It seems its employees will need to live better as well if the com-pany wants to continue its success.
STEP 3 Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recommendation is desirable and feasible? • Given the causes identified in Step 2, what are your best recommendations? Use the material in Chapter 2 (or in Chapter 1) to propose a solution.• Find potential solutions in the OB in Action and Applying OB boxes within the chapter. These fea-tures provide insights into what other individuals or companies are doing regarding the topic at hand.• Create an action plan for implementing your recommendations.
John Schnatter founded Papa John’s Pizza in a broom closet in his father’s tavern in 1984. The restaurant is now the fourth largest pizza delivery chain in the United States with more than 5,300 corporate and franchisee owned establishments worldwide.97 Papa John’s revenues exceeded $1.5 billion in 2018 but were down for the first time in almost ten years.98 The company is also down a spokesperson. Schnatter, bet-ter known as “Papa John,” was ousted by the organiza-tion after a series of controversial statements.99Let’s take a closer look at the issues facing Papa John’s and its founder. PROBLEMATIC STATEMENTSSchnatter told college students in 2013 that he “has a real problem with the English language” while dis-cussing his poor score on the verbal portion of the SAT. Those who know him seem to agree with that sentiment, but don’t believe grammar is the under-lying problem. For example, Steve Coomes, a restaurant industry journalist who has interviewed Schnatter a dozen times, wrote a blog post in 2018 titled “A tale of a man who couldn’t tame his tongue” in which he profiled a CEO he claims “has always said too much.”100One of Schnatter’s first controversial statements was in 2012 when he discussed the passage of Presi-dent Obama’s Affordable Care Act. What caught the public’s attention was not his political opposition to the law, but the fact that he complained to shareholders that it would increase the cost of a large pizza by 14 cents. Papa John’s social media was soon inun-dated with outraged customers claiming they would pay a couple extra cents so Papa John’s employees had health insurance. Others said they would take their business to a restaurant that has empathy and “. . . doesn’t begrudge their employees the ability to seek a doctor when they’re ill.”101Schnatter found a new target in 2017, the National Football League (NFL). Papa John’s was a significant sponsor of the league at the time that many players were kneeling during the national anthem to raise awareness of police brutality and social injustice. Again, Schnatter caused controversy because he could not keep his emotions and impulses under con-trol. According to the Washington Post he said that the NFL’s “poor leadership” and inability to stop the pro-tests hurt the league’s TV ratings, which in turn hurt sales of his pizza because it is advertised heavily during games. To make matters worse, a white suprem-acist group embraced the remarks and dubbed Papa John’s as the official pizza of the alt-right. Papa John’s condemned the group and distanced itself from the endorsement, but the damage was already done and the company had to apologize for Schnatter’s “divisive” remarks.102 The NFL also broke ties with the company, according to the New York Times.103Schnatter was forced to resign as the company’s CEO after making the controversial comments about the NFL, but that did not stop him from continuing to cause public outrage with his statements. In May 2018 Schnatter, who was still serving as Papa John’s chairman at the time, used the n-word on a confer-ence call with executives and a marketing agency when referring to African Americans. The marketing agency terminated its contract with Papa John’s and Schnatter was forced to resign as the company’s chairman.104PAPA JOHN BATTLES PAPA JOHN’SSchnatter’s comments gravely injured the restaurant chain he founded. Sales at North American stores fell more than 7% in 2018 and the organization’s stock lost a third of its value.105 Papa John’s tried to distance itself from Schnatter to stop the bleeding. The board of directors evicted Schnatter from the company’s Louisville, Kentucky, headquarters, took him off pizza boxes and commercial materials, and directed him to cease all communications with internal and external stakeholders.106Papa John would not go quietly though. He hurled multiple lawsuits at his former company and took out a full-page newspaper ad directing Papa John’s 120,000 employees to a website he set up. The website includes press releases, news articles, and public fil-ings in support of Schnatter.107Papa John’s and Schnatter reached an agreement in 2019 to resolve many of their points of contention. As a result of the agreement, Schnatter will resign from the Papa John’s board of directors and cease litigation against his former company. However, the matter is far from closed. Schnatter’s spokesperson says he still “retains his ability to assert new legal claims” in the future related to his ouster.108 Moreover, the founder is still the company’s largest individual shareholder, own-ing a 19% stake.
STEP 3: Recommend solutions.Make recommendations for solving the problem, considering whether you want to resolve it, solve it, or dissolve it. Which recommendation is desirable and feasible?A. Given the causes identified in Step 2, what are your best recommendations? Use material in the current chapter that best suits the cause. Remember to consider the OB in Action and Applying OB boxes, because these contain insights into what others have done. Details of this case, for instance, describe how Papa John’s board is concerned and has legitimate authority to make changes at the organization and repair its reputation. What might they do?B. Be sure to consider the Organizing Framework—both person and situation factors, as well as pro-cesses at different levels.C. Create an action plan for implementing your recommendations and be sure your recommen-dations map onto the causes and resolve the problem.