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OM in the News: Walmart vs. Walmart

January 15, 2013

walmartAlthough I am not a big fan of shopping at our nearby Walmart Superstore, I respect the company from an OM perspective. It has become a leader globally in sustainability (see the case study in Ch.7) and its feats in supply chain management and logistics are legendary (a fact we discuss in Ch.11). Further, my ever-budget conscience niece continually praises the store for its across-the-board low prices.

But as Businessweek (Dec.14-21, 2012) points out in its recent cover story, the company does not always have its employees best interests at heart. Walmart has been vilified by activists who say the company’s relentless growth has come at the expense of its workers and the law. Since 2005, it has agreed to pay about $1 billion in damages in six different cases related to unpaid work. The largest private employer in the U.S., with nearly 1.4 million workers in 4,602 stores and sales of $464 billion, Walmart’s operations management efficiency has remade the retail industry. Its decisions about workers’ schedules, wages, and benefits likewise ripple through the industry.

Here is a brief history of labor disputes in the company:

1970 Walmart’s lawyer calls Missouri clerks “blood sucking parasites” to stop their union drive.

1992 Sam Walton writes in his autobiography: “I have always strongly believed that we don’t need unions.”

2000 Butchers in a Texas Walmart vote to unionize, spurring votes at other stores. Two weeks later, Walmart closes its 180 meat counters and switches to prepackaged cuts only.

2001 A class action suit claims gender discrimination. Walmart fights the case for 10 years, finally winning a Supreme Court ruling by a 5-4 vote.

2003 Walmart is caught using illegal immigrants to clean stores in 21 states. It pays an $11 million fine.

2004 Workers at a Canadian Walmart unionize. Walmart closes the store the next year.

2005  A California jury fines Walmart $172 million for failing to provide meal breaks to 116,000 workers.

2006 A Pennsylvania judge orders a $188 million payment for Walmart’s failure to pay 187,000 workers for “off-the-clock” work.  Weeks later, Walmart settles 63 other class actions over unpaid work for $640 million.

2009 Walmart pays 87,000 Massachusetts workers for shortened breaks and “off-the-clock” unpaid work.

2010 Walmart pays $86 million for failing to pay vacation wages to 232,000 California workers.

Discussion questions:

1. Why does Walmart fight to keep out unions?

2. What issues regarding Chapter 10’s discussion of human resource strategy arise from this article?

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