Walmart and union relations

Unionization at Wal-Mart

What are the advantages and disadvantages to Wal-Mart in working with unions?

The greatest potential advantage for Wal-Mart in working with unions is the ability to control one of the greatest series of costs they perennially face globally. There are the salaries that are paid to part-time workers that are often below industry average, yet the lack of unionization saves the company billions in added costs per year. These two aspects of salary and healthcare expense is what Wal-Mart typically gets cited for by their critics in government, academia and throughout independent research firms. Working with unions to keep them out of their stores is a major advantage for Wal-Mart. Additional advantages include not have to cede or give up any seats on their board of directors, not having to comply with the union demands for pay raises and benefits in a down economy, and not having to comply with union requirements for overtime, time-and-half and paying multiples of per-hour wages for work by unionized workers (Ellis, 2007). The disadvantages of Wal-Mart not working with unions include the continued pressure and attempts by them to break into their company, which Wal-Mart often fights with awkward results as the case shows. Closing stores, discontinuing meat products throughout several states, and working to get out of the responsibilities of being a union employer could over time be more expensive than being unionized. There is also the issue of credibility and trust in their brand, as the survey mentioned in the case study shows that just 9% of Canadians believe the stores where union efforts were forming were closed for economic reasons. Wal-Mart will also face continued paradoxes as well from a global standpoint as China has intensive programs and unions in place by the Communist Party (Fong, 2006). To gain access to this market, Wal-Mart will need to cooperate with the largest Chinese unions they are and pay a portion if not all of the 8% pay raises for the two years the case study mentions. The assurance of raises that large from a union regardless of the economic condition of a nation speaks volumes how much clout this organization has in China (Fong, 2006). The bottom line is that Wal-Mart must come to terms with unionization and its many forms is a cost of being a global force in mass merchandising and retailing.

Explain the advantages and disadvantages of union membership from the employee perspective.

From an employee perspective there are many advantages to being a member of a union and they can easily outweigh the disadvantages on a purely personal level. This is why there is such a strong membership base for unions throughout many of the manufacturing industries globally, especially the U.S. auto industry, where unions nearly have bankrupted the Big Three automakers that once dominated global manufacturing. Ironically this is where unionization becomes the greater crippler of national growth and global industry competitiveness. With so many workers looking out for their own needs and not how to combine their efforts and lift the companies they work for over the massive problems they face, they ironically ensure their own entitlements will go away. By using unions to only serve their own needs and not considering how to ensure the long-term viability of the companies they work for, they virtually assure their own self-entitlements will come to a crashing halt. This is exactly what is happening today.

Unions can deliver a stable wages, job security, raises in the midst of massive unemployment globally, healthcare and pensions that taken together defy the economic reality we're living in right now (Maher, Zimmerman, 2009). These are all wonderful for the individual or employee. Yet the paradox is that when these benefits are multiplied across millions of workers in a given industry, the economy-defying aspects of these benefits can cripple and eventually bankrupt industries that can't afford to pay entitlements in the first place. The disadvantage then for employees is that while the individual entitlements are excellent, they can be short-lived, given the illusion of entitlement, and leave literally millions of workers unprepared for the hard realities of a global economy that doesn't reward union loyalty, it rewards intelligence and contribution to tough goals. So while the individual employee may have years of excellent raises, job security, protection for over-time and being taken advantage of my employers, they must face the consequences of being in an organization that promotes entitlement at the expense of self-reliance and the need to continually grow on ones' own.

Explain the consequences of Wal-Mart's efforts to slow or stop union representation in the United States.

Wal-Mart continues to attempt to stop unionization, often with uncertain and unpredictable results. The case study underscores how Wal-Mart redefines its value chain and business model regionally to avert the potential threat they see from unionization. While Wal-Mart contends both in the press and to the communities served that the decisions to quit offering beef in cities where there is unionization around meat cutters is purely a coincidence, they are in fact playing a dangerous and uncertain game with the public's trust. Further, investigations by the Federal Trade Commission over pricing practices and hiring decisions have been considered part of their efforts to block unionization (Graves, 1988). The immediate effects of all these efforts will be a dilution of their brand, less trust in them as a retailer, and a lack of transparency to the federal government in these areas. While Wal-Mart continues to deny their strategies as defined in the case are exclusive of anti-union efforts, the evidence is mounting that their decisions are in fact based on these considerations.

For Wal-Mart the challenge is in keeping their operating costs low enough to enable a global supply chain that can outperform many government agencies on many metrics of accuracy, cost control and performance. A typical Wal-Mart superstore employees approximately 425 employees, 80% of which are part-time and not paid benefits as a result (Graves, 1988). Of this, 80%, the majority are women who are often paid on average $8 per hour. These employees are often required to also unpack the tractor-trailers that arrive at superstores over night and replenish shelves as well. Arguably they should be making more than $8 per hour as many warehouse jobs pay at least $10 per hour (Graves, 1988). This example and others like them are a potential threat to Wal-Mart, especially in the current economic environment of high unemployment and an administration that favors litigation over compromise. The fact that Wal-Mart has been able to avert a massive directive from the government to become unionized is in itself amazing. The long-term threat to their business however is that they will be forced under law to drastically re-order their cost structure to comply with government mandates.

What laws regulate the activities of Wal-Mart and the employees in the organizing efforts? Do you believe Wal-Mart is ethical in its efforts to stop the unions?

Wal-Mart has several investigations ongoing of their violation of the U.S. Equal Employment Opportunity Commission (EEOC) laws, child labor laws from having employees below the 18 working too many hours, and violations of the Wagner Act of 1935 (Maher, Zimmerman, 2009). By closing down stores where union organizers are attempting to get a base of supporters, Wal-Mart is in violation of many of the clauses and conditions of the Wagner Act specifically, which seeks to provide workers with access to union organizing if they so choose. Wal-Mart also keeps the majority of their workers on a part-time basis which makes it even more difficult for union organizers to be successful in gaining support. In short, Wal-Mart has developed a business model that seeks to define competitive advantage for market speed, and part of that is how the company chooses to manage its employees.