Ethical case
The business in focus is Walmart. This is an American global retail company that sells a variety of consumable items. It operates a chain of hypermarkets, grocery stores, and discount department stores. Aside from being the largest company in the US, it is the largest private employer in the world, with more than 2.2 million workers all over the world. However, there are concerns on how the company treats its workers. Some of the employees (especially foreigners) are paid low wages and not paid for work done overtime. There are accusations that employees who work in factories situated in Asian countries, i.e., Bangladesh, India, Cambodia and Indonesia face labor exploitation and abuse (Smith, 2016, par. 1). They work under highly unfair contracts that leave them vulnerable to hazardous working conditions, low wages, no benefits and harsh punishments for taking part in union activity-including being laid off (Smith, 2016, par. 5).
Also, the company strongly objects the idea of a workers’ union. Therefore, it discourages employees from establishing a union or joining one. As a result, employees lack a union that could advocate for better working conditions and a scheme that could provide them with a platform to voice out their grievances against the organization. In some instances, employees found engaging in strikes are illegally disciplined, by for instance, being sacked. For years, Walmart has fought unions. It even holds periodic meetings with personnel to re-examine the benefits of a non-union store. In this regard, it spends millions in legal actions annually in an attempt to prevent its millions of workers from joining labor organizations (Levin, 2018, par. 4).
Walmart continues to engage in the mistreatment of workers even in this COVID-19 era. For instance, a majority of Walmart workers in the U.S. feel that the safety measures the company has put in place during the pandemic are inadequate. According to them, the retailer delayed executing crowd size limits in its stores and constantly failed to make sure that workers can maintain proper social distancing (Rice, 2020, par. 6). The workers have also reported a lack of personal protective equipment and sanitizing supplies, inadequate time for improved cleaning, and leave policies discouraging workers from staying at home when sick (Rice, 2020, par. 7). The reason for Walmart’s practice as described above is to minimize the cost of production. This way, the company is able to sell its products to customers at cheap prices. Therefore, consumers are the ones who end up benefiting from the practice. The organization also ends up benefitting by raking in millions in profits; this is thanks to the cheap prices that appeal to their clients.
Ethical principles violated
By engaging in the above practice, Walmart violates the principles of fairness and justice. Fairness refers to the equal sharing of something between parties or participants (Holmes, 2019, p. 16). In this case, if several people are producing a product that others can benefit from, it is immoral to free ride on their backs, enjoying the advantages without paying the costs (Boran, 2006, p. 95). As such, a fair share of the production cost of that product is owed to them. Evidently, Walmart is doing the opposite. It has constantly failed to fairly compensate workers for services provided. As a result, it has continued to enjoy profits at their expense. Furthermore, as aforementioned, employees producing products for the company in Asian countries continue to work under exploitative conditions (i.e. low wages, lack of benefits, overtime without pay, etc) as it freely joyrides on their backs by enjoying millions in profit without paying the costs.
Justice refers to the concurrent fair treatment of people in a certain situation with the result that everyone gets what they deserve (Holmes, 2019, p. 16). Obviously, Walmart has also failed to treat employees justly by not giving them what they deserve. Workers need to be appreciated and hence fairly compensated for the time they dedicate to offer their services, and should also be given the chance to join unions that advocate for their needs, things that Walmart has denied them. The company has also violated the rights theory. According to this theory, there are a number of rights, both positive and negative, that humans have based on the fact of being human (Holmes, 2019, p. 11). Those who support this theory argue that moral standards should seek to advance the welfare of a person and safeguard the choices of the person against violation by society. Walmart has infringed on this theory by mistreating its employees and by failing to promote their welfare. Walmart’s actions/practice demonstrates egoism. This theory posits that as moral agents, people should act in their own self interest (Holmes, 2019, p. 10). In this case, it is obvious that Walmart would rather maximize its profits even if it is at the expense of its workers by violating their labor rights.
Stakeholders affected, local and global impact
A number of stakeholders have negatively been impacted by Walmart’s unethical behaviour. First in line are the employees. They have been at the forefront of mistreatment; as a consequence, they are not motivated to work leading to a decrease in their productivity. Moreover, dissatisfied employees end up leaving the company. Suppliers and distributors are also negatively impacted. This can be attributed to the company’s insistence on purchasing products at lower prices from suppliers, also in an attempt to minimize costs. Retailers are affected in a negative way as well. The negative publicity associated with Walmart’s exploitation of workers can act to disrupt the ability of the retailers to expand into new regions. The negative publicity is also not good for investors.
Local communities have been negatively affected by the company’s unethical practice. The Walmart Effect is the terminology used to denote the economic effect felt by local businesses when a big organization like Walmart opens a location in the region. This effect normally manifests itself by forcing smaller retail companies out of business and decreasing wages for competitors’ workers. Walmart stores’ presence can harm business for these smaller firms and decrease wages for local employees. Walmart’s unethical practice as demonstrated in this paper could impact the global economy negatively, and in particular, wages, and labor relations. The company has various stores spread out across the world, and the culture practiced is the same; low wages and lack of payment for overtime as well as lack of benefits. Walmart believes that lower prices are more crucial than higher wages; this neglects the global economic climate in terms of the augmented costs of healthcare, housing, and transportation. In an attempt to compete with Walmart in minimizing costs, businesses around the world have also increasingly focused on decreasing the costs of production at the expense of factory workers. It is now not uncommon to come across cases where big companies are accused of exposing their employees to sweatshop conditions.
Recommendations
A company that operates ethically, beyond compliance could not be identified. Therefore, certain practices are recommended to improve the ethics at Walmart. One of the recommendations pertains to wages. As such, the company should increase the wages of its workers in every country it operates so that they are at par with the each country’s minimum wage stipulations. Employees should also be compensated for extra hours worked. Improving the contract terms of factory workers is important as well. This may entail ensuring they are compensated well, are given medical, transportation and housing benefits.
Another recommendation is for Walmart to set up a proper workers’ union that is managed autonomously and that negotiate matters like poor remuneration on behalf of the employees. Setting up such a suitably managed union will ensure that it is utilized as a platform for communicating employees’ grievances rather than taking matters to court, which negatively impacts the organization’s reputation. In addition, having such a union will enable Walmart to retain employees and thus reduce its turnover rate; this is because the union will assist it to manage issues related to workers. Walmart should consider developing a compensation plan where some of the profits the company makes are shared among the best employees. There is a direct correlation between productivity and compensation. This means that an increase in compensation serves to increase productivity, and vice-versa. Such a plan would thus increase the performance of Walmart’s employees. Consequently, it will be able to avoid some lawsuits associated with dissatisfied workers, which can prove to be expensive and take a lot of time, not to mention the negative publicity they come with.
References
Boran, I. (2006). Benefits, Intentions, and the Principle of Fairness. Canadian Journal of
Philosophy 36(1), 95-115. doi:10.1353/cjp.2006.0002.
Holmes, W. R. (2019). Unit Two: Thinking about Business Ethics [pdf].
Levine, J. (2018). Walmart ordered to stop mistreating workers – LaborPress. Retrieved from https://laborpress.org/walmart-ordered-to-stop-mistreating-workers/
Rice, D. (2020, May 27). Walmart workers push for board representation, citing COVID-19 concerns. Retrieved from https://blogs.thomsonreuters.com/answerson/walmart-workers-push-for-board-representation-citing-covid-19-concerns/
Smith, A. (2016, May 31). Report slams Walmart for ‘exploitative’ conditions in Asia factories. Retrieved from https://money.cnn.com/2016/05/31/news/companies/walmart-gap-hm-garment-workers-asia/index.html
