Black Friday's Labor Strike May Hit Wal-Mart Where It Hurts


What do Wal-Mart's (NYS: WMT) employees want? Is it fair compensation, better working conditions, or an end to retaliation for attempts to unionize? Regardless of their individual motives, thousands of employees are organizing a strike on Black Friday, attempting to hit Wal-Mart where it hurts on one of the most important shopping days of the year.

To prepare for the planned strike, Wal-Mart execs sent out an eight-page memo, obtained by the Huffington Post, that detailed how managers should prepare and respond this week. The memo suggests that the company hopes to avoid violating workers' rights, while at the same time demonstrating that it made an effort to prevent its managers from breaking the law.

However, as I've argued previously, Wal-Mart's legalistic approach isn't sufficient. In this case, I suspect it won't be enough to avoid this labor backlash and the legal and reputational risks that come with it. And if this strike is successful, it has the chance to do more than just create bad PR -- it may level a more immediate hit to the company's holiday sales by driving shoppers away from participating locations.

Wal-Mart's labor woes
The potential Black Friday strike isn't the extent of Wal-Mart's labor troubles. After a daylong strike at one of its California locations on Oct. 4, laborers have started to organize their own strikes at other locations. Even Wal-Mart's headquarters witnessed a staged protest recently during the company's annual shareholder meeting in Arkansas.

In addition to the threat of a national strike, the company has been slapped with a class action lawsuit for allegedly making temporary employees come to work early and work through breaks, which violates minimum wage and overtime laws. After being investigated by the Department of Labor, the company also recently paid $4.8 million in back pay to employees who were illegally denied overtime pay.

And these aren't the only labor complaints Wal-Mart has endured. The company has long been criticized for its low pay and expensive medical coverage. Despite holding a job, many Wal-Mart employees still need government aid. According to an article on the Daily Kos, an activist website, Wal-Mart employees as a whole rely on $2.66 billion annually in food stamps, Medicaid, and other government assistance.

Legal caution
A memo distributed to salaried management associates suggests that Wal-Mart is taking a cautious approach to these strikes in an attempt to avoid charges of violating workers' rights. The memo points out that workers have a legal right to participate in walkout activities and tells associates not to threaten, intimidate, or spy on employees, and to avoid promising them benefits in exchange for not organizing.

It does indicate, however, that employees can share facts, opinions, or experiences to dissuade laborers from striking, and it even provides sample comments managers can share when discussing these matters. The memo reminds managers that their behavior might be recorded at any time and that for this reason they should avoid confrontations that might be captured and distributed through social media.

In addition, the memo suggests using a practice called "CBWA," or coaching by walking around, to effectively manage their employees, which Wal-Mart spokesman Dan Fogleman says helps managers "remain engaged with everyone working for them" and "foster channels of open dialogue that set us apart as an employer."

A hostile culture?
If a company has a culture that's hostile to labor and union interests, instructing managers to avoid spying, intimidating, and threatening employees will not be successful. In Wal-Mart's case, managers might use CBWA as an underhanded way to spy and intimidate, which is otherwise forbidden in the memo.

Consider what Christine Stroup told Human Rights Watch in 2005. Stroup explained how she thought management used this technique to undermine union activity:

If they [store managers] saw a group of us talking, they would come up and say, 'What's going on? How's everything going?' ... We did it all the time before, and no one ever came up to us. ... Before, they would walk the floor once an hour. After the union letter, it seemed like almost constantly, always someone circling to see what was going on.

Many employees also don't trust Wal-Mart's Open Door policy, in which employees are supposed to be able to approach management with any issue or concern. A petition posted on the "OUR Wal-Mart" page states: "Associates who have tried to utilize Wal-Mart's Open Door have found that their issues are not resolved and confidentiality is not respected. Wal-Mart should ensure confidentiality in the Open Door and provide in writing resolution to issues that are brought up and always allow associates to bring a co-worker as a witness."

While Wal-Mart officials may contest the claim that there are widespread problems with the implementation of that policy, there is some evidence that Wal-Mart's Open Door policy is rooted in its disdain for unions. For example, the company's management resources have called the policy its "greatest barrier to union influences trying to change our corporate culture and union-free status."

Time for a culture shift
Wal-Mart doesn't have to go far to hear the grievances of its laborers. The members of OUR Wal-Mart have made them abundantly clear. The next step is to address them. And a predominantly legal approach won't be sufficient. Wal-Mart leaders need to foster a culture that demonstrates that it values its workers.

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Fool contributor M. Joy Hayes, Ph.D. is the Principal at ethics consulting firm Courageous Ethics. She doesn't own shares of any of the companies mentioned. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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