In the News…
Week 5
Business Policy

Wal-Mart vs. Compliance

By
Daniel Williams
Student of DeVry University

Professor
Bethany Poore

Compliance with laws and fairness are a major hurdle for most companies. There is a fine line between paying someone for their services and giving them money for an upper hand. Recently there have been allegations against Wal-Mart for some unethical behavior in foreign countries. This has created such uproar that investors are now suing top Wal-Mart executives. Several board members involved in the scandals are being asked to step down from their positions by some shareholders (D'innocenzio, 2012). Wal-Mart CEO Mike Duke has come forward to reassure the public that Wal-Mart will take care of the problems and make things right. The scandals came about when the New York Times came out with a story stating Wal-Mart had allegedly bribed key foreign official. Then Wal-Mart failed to notify law enforcement after finding evidence that officials authorized millions of dollars in bribes in Mexico (Clifford, 2012). The alleged bribes where meant to get speedier building permits and other favors.

Shock and dismay can be used to describe the public’s reaction to the recent controversy. Wal-Mart has been polishing their image so they can win over the public and create a feeling of trust. Mexican president Felipe Calderón recently stated he was “indignant” over Wal-Mart’s behavior (Clifford, 2012). The Mexican government is now looking into unethical behavior of Mexican official linked to the scandal. As the company celebrates its 50th anniversary, shareholders are asking for the heads of key board members and the general public is shifting its positive thoughts of the retailer back to where they were years ago. The incidents bring back memories of a time when Wal-Mart was being accused of low wages, sexual discrimination and community dividing. Wal-Mart shares dropped more than 7% to $57 per share after the allegation were reported but have bounced back to $65 due to strong sales recently (Press, 2012).

To the rescue, at the company’s lavished annual meeting comes CEO Mike Duke. He states, “"Let me be clear: Wal-Mart is committed to compliance and integrity everywhere we operate. I want to personally assure you, we're doing everything we can to get to the bottom of this matter" (D'innocenzio, 2012). In the wake of the scandal Wal-Mart has launched investigations which are going to be widened to other countries. They are also in the midst of re-vamping their compliance program. Duke and the other board member have a little hill to climb but with the companies past record this will all be a thing of the past. Wal-Mart has overhauled their image before and will use this as a learning experience.

Wal-Mart cannot project itself to its employees as a company that wants everything done right away. The presence of a quick, we can do anything we want attitude makes employees think that Wal-Mart wants results as fast as possible. This can lead to people believing they are doing the right thing when they are not. This is most likely the cause of the recent Wal-Mart scandal. The affects can be devastating but can be recovered from when the company is as big as Wal-Mart.

* This material shows how unethical behavior can affect all stake holders be it with shares dropping or board of director members being let go. It is a snowball effect. The actions of a few can damage the lives of many.

* Public image of Wal-Mart has now been damaged again. It takes time to recover from scandals like this, but hurts seeing how Wal-Mart is expanding.

* New global regions or countries may be less likely to work with Wal-Mart because they don’t want the association.

* CEO Mike Duke publically spoke about the incident and has let the public and shareholders know that Wal-Mart is taking care of the situation. This is a good step to fixing a potentially devastating issue.

* Overhauling compliance within an organization is a way to correct errors in the system that is intended to keep the company in the good graces of the public.

* The internal environment of the firm can be assessed during the revamping of compliance procedures. This will help to redefine Wal-Mart’s operational culture.

* The Wal-Mart Corporate credos and codes of conduct will most likely be changed or reiterated to employees. This will instill the needs and wants of the organization which could help to keep employees on the right path.

Works Cited
Clifford, S. (2012, April 29). Wal-Mart’s U.S. Expansion Plans Complicated by Bribery Scandal. Retrieved June 1, 2012, from nytimes.com: http://www.nytimes.com/2012/04/30/business/wal-mart-bribery-scandal-complicates-us-expansion-plans.html?pagewanted=all
D'innocenzio, A. (2012, June 1). Wal-Mart CEO says co. committed to compliance. Retrieved June 1, 2012, from yahoo.com: http://news.yahoo.com/wal-mart-ceo-says-co-committed-compliance-161023675--finance.html
Press, T. A. (2012, June 1). Walmart to face scrutiny from shareholders. Retrieved June 1, 2012, from cbsnews.com: http://www.cbsnews.com/8301-505123_162-57445252/walmart-to-face-scrutiny-from-shareholders/
Shore, S. (2012, June 1). Gas Prices are Silver Lining as Economy Weakens. Retrieved June 1, 2012, from yahoonews.com: http://news.yahoo.com/gas-prices-silver-lining-economy-weakens-193911559--finance.html