What’s going on?

Why is there such a disconnect between management and minimum wage workers?

A disconnect that goes beyond all logic.

A disconnect that treats low wage workers more like serfs.

Two weeks ago it was Walmart’s efforts to enforce a dress code at their employees’ expense.

Now it’s companies such as Jimmy John’s sub shops requiring minimum wage workers to sign noncompete agreements.

But who knows, perhaps there is a proprietary trick to spreading mayo that I’m not aware of.

California outlawed most non-compete clauses on the basis that people have a right to earn a living.

And then there is the sexual harassment of low wage women workers.

The study showed that women reliant on tips made up the highest share of those who had experienced harassment and that those who lived in states where the tipped minimum wage was $2.13 an hour (the federal minimum for tipped workers) were twice as likely to experience sexual harassment as those who lived in places where a single minimum wage standard applied to all workers.

Whether large corporation or small business, it seems that those in the upper levels, who are financially secure, place little-to-no value on those who actually keep their company running.

And as for morality, well, that comes down to whether more employers decide that basic human decency requires viewing their workers not as interchangeable cogs to be paid as little as possible and worked to the bone but as valuable partners in building a company for the long term.

Centuries ago, when describing the actions of leaders, Lao Tzu ended by saying,

To lead the people, walk behind them.

Today it reads,

To lead the people, walk upon them.

Flickr image credit: Derek Purdy

WalMart is moving to improve your shopping experience.

No, not lower prices or expanded inventory.

Certainly not more women and minorities in management roles.

But soon, all ‘associates’ will greet you wearing collared shirts and khaki bottoms.

That’s right. Walmart wants to implement a dress code—but not pay for it.

The annual cost is probably around $50, which is a lot considering the pay.

Richard Reynoso, a Wal-Mart employee in Duarte, Calif., representing a campaign called Organization United for Respect at Walmart said in a letter to the company’s management: “I’m getting paid only about $800-$900 a month. The sad truth is that I do not have $50 lying around the house to spend on new uniform clothes just because Wal-Mart suddenly decided to change its policy.”

If pushed the action is likely to generate additional class action lawsuits, not to mention fan public outrage and generate a significant backlash.

But that isn’t what troubles me.

In the 21^st Century our largest employers are the likes of Walmart and McDonald’s.

They pay $8 to $12 an hour and would pay less if they could get away with it.

Businesses on and off-line are working to improve your shopping experience, but most are unwilling to do what Henry Ford did 100 years ago.

Pay people enough that they can afford to consume.

(For more information see previous posts No Help Wanted and Workforce USA)

Flickr image credit: rychlepozicky.com

Last month we looked at the economic dichotomy of having a consumer-based economy while simultaneously reducing wages.

Henry Ford understood that paying higher wages was good business.

Ford astonished the world in 1914 by offering a $5 per day wage ($110 today), which more than doubled the rate of most of his workers. (…) The move proved extremely profitable; instead of constant turnover of employees, the best mechanics in Detroit flocked to Ford, bringing their human capital and expertise, raising productivity, and lowering training costs.

Not to mention that a good part of that disposable income was used to buy Ford cars.

Business counters that idea by pointing to all the costs that didn’t exist in 1914 as justification for relentlessly cutting wages and benefits.

But nothing justifies the current minimum wage in many states.

Speaking of a hundred years, it took that long for new research by Zeynep Ton, a business professor at M.I.T.’s Sloan School of Management and author of “The Good Jobs Strategy,” to prove Ford was correct.

For every dollar of increased wages, one retailer that was studied by Fisher brought in $10 more in revenue. For more-understaffed stores in the study, the boost was as high as $28.

Not only doe it affect employees, but apparently higher wages has a halo effect on stock.

Costco pays its workers about $21 an hour; Walmart is just about $13. Yet Costco’s stock performance has thoroughly walloped Walmart’s for a decade.

Ton’s work is of major competitive importance whether you’re a boss in a small business or head up a giant enterprise.

Flickr image credit: ping.fm

Usually, when people talk about “too big to fail” they are referring to financial institutions and insurance companies.

But what happens when a company is too big to reign in? When it does what it wants and wields so much political clout that investigations seem to evaporate?

Walmart is such a company.

But maybe this time they will have to answer for their actions.

Because, fortunately, it is The New York Times that has been doing the investigating, not a government entity or by Wal-Mart—the internal investigation was shut down by company executives when the evidence wasn’t in their favor—and has been ongoing for years.

It seems that much of Walmart’s global growth in Mexico and other countries has been fueled by bribes.

Rather, Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited. It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals.

In a statement a Walmart spokesman said, “We are committed to having a strong and effective global anticorruption program everywhere we operate and taking appropriate action for any instance of noncompliance.”

But actions speak louder than words and Walmart’s actions are a case study of leadership failure in the home office—all the way to the top.

But Wal-Mart’s leaders did not tell Mexican authorities about his allegations, not even after their own investigators concluded there was “reasonable suspicion” to believe laws had been violated, records and interviews show.

It seems similar tactics were used in India and China, too.

The Foreign Corrupt Practices Act is a federal law that makes it a crime for American corporations or their subsidiaries to bribe foreign officials and the Justice Department and SEC Have started their own investigations.

As the investigations unfold it will be interesting to see if a corporation can, indeed, be so big that it’s above the law.

On a related topic.

One more thought for those who believe that newspapers are no longer relevant.

I seriously doubt that any Internet media company, let alone a blogger, could or would have mounted this investigation and stuck with it—nor can this story be told in 140 character spurts.

No matter what happens we owe a debt to The New York Times.

Flickr image credit: The New York Times and Walmart

What do Wal-Mart, Dewey & LeBoeuf and NewsCorp have in common?

Cultural deficiencies manifested in bad judgment, lies and executive shilly-shallying.

What was not previously known until the Times report on the bribery scandal is that at about the same time Mr Scott began the offensive to improve Wal-Mart’s image in the United States, he also rebuked the company’s internal bribery investigation in Mexico for being overly aggressive. The investigation was soon dropped. (Wal-Mart)

“The [compensation] guarantees were extremely corrosive culturally because they were divorced from individual or firm performance, which shatters the whole notion of a partnership,” Mr. MacEwen said. “And they were promiscuously awarded.” (Dewey)

The negotiations were so tightly held that only Mr. Crone, Mr. Myler and Mr. Murdoch knew about them, said two company officials. The officials said that even employees who were typically involved in legal decisions did not learn of the settlement until it leaked in a newspaper. (News Corp)

What does Google have in common with them?

Cultural deficiencies manifested in bad judgment, lies and executive shilly-shallying.

The report, which was first published in its unredacted form by The Los Angeles Times, also states that the engineer, who began the project as part of his “20 percent” time that Google gives employees to do work on their own initiative, “specifically told two engineers working on the project, including a senior manager, about collecting payload data.” (Google)

I guess that question is answered now.

But I have to say, I find it sad to see Google all grown up and playing in the same class as Wal-Mart, Dewey and News Corp; I honestly thought they were better than that.

Flickr image credit: Djenan Kozic

Change is good and anyone who looks around knows that change is needed. I don’t mean changing from a Democratic majority in Congress to a Republican, that’s not change, it’s more of the same, but in a different color.

Paul Blank made this comment about Wal-Mart, but it applies to a wide swath of businesses, “Now is the time for Wal-Mart to seize the moment for true change. The American people are tired of publicity stunts, half-truths and empty words that have become synonymous with corporate America.”

Lots of companies claim that they are changing, from Wal-Mart to Wall Street, but, cynic that I am, I tend to agree with Bill Potter when he said, “At this point, I don’t know whether it will be cosmetic changes or real reform. I’m holding back my applause.”

But what about individuals? Do they change?

Guy Fieri seems to think that you have a limited amount of time in which to change, “At 38, we’re not going to change. You are who you are,” which I think is ridiculous considering current life spans. Anyway, I believe that as long as you’re breathing you can change.

While you can change yourself, you can’t change others, but you can follow Jennifer Star’s sage advice, “You can’t change anyone; you can only change the way you react to them. Don’t let other people’s actions affect you. Just figure out a way to resolve conflicts and avert uncomfortable situations.”

Speaking of changing yourself, a good place to start is to remember the words of Dr. Donald Redelmeier’s, “Do not get trapped into prior thoughts. It’s perfectly O.K. to change your mind as you learn more.”
Change, your own and the world’s, is truly in your hands. I believe Margaret Mead when she said, “Never believe that a few caring people can’t change the world.”

I have to believe that because it was just a few uncaring people who so recently screwed it up.

Image credit: http://www.flickr.com/photos/spursfan_ace/2328879637/

When it comes to company success there is much talk about leading and influencing, visions and inspiration, but when the subject of benefits comes up then it’s all about the bottom line.

Did you know that no benefits (other than those negotiated by a union) are actually required by law for any worker, full or part-time?

So why should companies have benefits? Just think about how much better their bottom line would be without them. Wow!

Then think about how demotivated, unproductive and disinterested their employees would be. Double wow!

The smartest employers (AKA good leaders) offer all the benefits they’re able to offer to the people who work for them, even part-timers. Sure, they’re limited by financial consideration, but they do as much as they can.

• A startup CEO told me that he had insisted on good insurance coverage in spite of his investors’ gripes. Why? Because, he said, his people were more willing to put in 80 hour weeks when they didn’t have to worry about their families. Interestingly enough, his company also offered slightly below market pay and far more modest stock options and still filled their openings with top talent (this was during a boom period, too).
• Another small biz owner I know, with sales of less than $2 million, offers Aflac, exceptional working flexibility, including working from home, and just added a 401K, although many similar-sized companies just moan about how they can’t afford anything.
• My friend, who owns a tiny, neighborhood restaurant, gives her waiters their birthday off with pay—and has almost no turnover.

Part of the problem in large companies is that Wall Street penalizes companies that do take care of their people (Costco) and lauds those that use every trick to avoid spending that money (Wal-Mart).

But make no mistake—taking the best care possible of your people will yield a high return in the form of lower turnover, higher productivity and more creativity.

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Image credit: ZedBee|Zoë Power on flickr

By Wes Ball, author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining success. Read all of Wes’ posts here­.

Sam Walton made no bones about it.  He was not going to lose control of Wal-Mart to the stock market.  Even after they started selling stock over the counter, top management at Wal-Mart was able to maintain control over the strategic direction of the company right up to Sam’s death in 1992.

Sam was a leader.  He had a clear vision that he would not compromise.  He took risks, built a support team to “manage” the company, empowered and nurtured employees, shared profits, and built a company that is still the envy of most retailers.  It also became the Alpha in discount retailing due to that leadership.

Compare that with the life of most CEOs today: shareholders and stock analysts really run their companies, because stock price is the measurement of their success.  Their bonuses are based upon it, and their future employment is based upon it.

CEOs who have to answer to the whims of the stock market cannot be leaders, because they have already defined themselves as followers.

Is it possible for a CEO of a publicly-owned company to maintain leadership?

Certainly, but it takes an extremely charismatic, visionary, focused individual who is willing and capable of bucking stock analyst and shareholder pressure for short-term profit results and instead keep the company focused upon long-term success.

All of the Alpha companies I researched for my book, The Alpha Factor, had such leadership in their early formative years.  What killed most of those companies later on was the compromise of allowing stockholders and stock analysts (or other outsiders) to drive the strategic management of the company.

How would you protect your company from this if you had to generate significant financing?

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Image credit: jakoblyng  CC license

Image credit:Brave New Films

Yet another article on Wal-Mart’s commitment to sustainability. Now, I’m not knocking what they’re doing, but I do wonder if Wal-Mart’s sustainability efforts will ever be extended to their workforce.

Of course, according to Northeast corporate affairs representative Steve Restivo it is, “”Another component, and the one, frankly, that I’m most proud of, is the Personal Sustainability Program for our associates.” At the Portsmouth store, employees are taking part in three programs — stopping smoking, losing weight and changing to CFL bulbs in their homes.”

It really is too bad that sustainability doesn’t extend to equality in the workplace, health insurance, full-time employment and decent wages, but maybe the shopping public won’t support that.

What do you think? Are Wal-Mart’s efforts ground-breaking or damage control?

Ran into a great link to Ethispherhe Magazine’s 100 most influential people in business ethics on Sox First.”The selection panel used some rigorous criteria: impact on government rules and regulations, business leadership, design and sustainability, handling of whistleblowers, thought leadership, culture, investment and research and corporate culture.”

Four of the Top 10 fell in the category of “Business Leadership – Did the individual substantially transform a specific business’ operational practices consistent with profitable ethical leadership, forcing competitors to follow suit or fall behind?”

It makes perfect sense to me that GE’s Jeff Immelt is number 3 and that Xerox’s Anne Mulcahy is number 7 and Fluor’s Alan Boeckmann is number 8, but how in the heck did Wal-Mart’s Lee Scott make fourth place?

“Scott became one of the most visible “green converts” back in 2006, and during 2007 he continued to put his energy-saving and sustainability initiatives into action. Under “Sustainability 360,” the company is working with suppliers to take non-renewable energy out of regular business operations and to reduce packaging by 5% by 2013- the equivalent of taking 213,000 trucks off of the road.”

And if history is any guide, the targets will likely be achieved through edict with little consideration or help to the vendors ordered to comply.

Who made the list that annoys you?

Your comments—priceless

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