Ethics and Shareholder Duty

Publicly Traded Firm: Walmart

Walmart proudly has built its brand image and value proposition on offering the lowest prices to consumers at all times. The downside to this boast is that it has come under fire for not paying employees a fair wage, and not offering its workers adequate benefits. It must, to answer such concerns, find a way to ensure it can still offer low prices using its business model without charging membership fees like its rival Costco (which offers higher wages to its employees than Walmart). Walmart recently raised its hourly minimum wage rate to $11, and in response to concerns about inadequate healthcare, has now begun to offer free health screening events and fitness center passes to employees (Chochrek, 2020). But critics will likely contend that such efforts seem anemic, in light of the massive profits Walmart currently enjoys as an organization.

Walmart has also made efforts to prohibit shoppers carrying guns in its stores and engaged in more philanthropic efforts (Chochrek, 2021). Given the ubiquity of its low-price stores and the soundness of its supply-chain management enabling Walmart to offer such low prices, as well as its ability to sell at volume, efforts to appease some of its ideological opponents have not resulted in a conservative backlash. But significantly raising wages, in contrast, might be more of a threat to shareholder wealth, as might improving its employee benefits packages.

Walmart must find a way to ensure that raising wages also translates into better service and significant enough better PR to generate more consumer traffic. According to the firm’s fiduciary duty to its shareholders, profit-making and solvency must come first. Although some firms like Starbucks have ensured that ethical actions have resulted in green branding to encourage consumers to buy more of its product, and to feel good doing so, given Walmart’s history, this is far less likely. Given the high demand for committed workers, even at low-wage jobs, however, it may be forced out of necessity to raise wages, if not out of a sense of ethical responsibility.