H. Lee Scott Jr., the CEO of Wal-Mart, hosts an internal web site for Wal-Mart managers called Lee’s Garage. He named it honor of his dad’s service station, where Lee once pumped gas. Judging from the exchanges quoted in a fascinating New York Times article (registration required) by Steven Greenhouse and Michael Barbaro, Lee is still pumping gas.
The internal dialogue at Walmart mirrors the public discussion. When a manager asked why “the largest company on the planet cannot offer some type of medical retirement benefits?” Lee first argues that the cost of such benefits would leave Wal-Mart at a competitive disadvantage but then, showing his annoyance, he suggests that the store manager is disloyal and should consider quitting.
Lee goes on to write: “Quite honestly, this environment isn’t for everyone. There are people who would say, “I’m sorry, but you should take the risk and take billions of dollars out of earnings and put this in retiree health benefits and let’s see what happens to the company.’ If you feel that way, then you as a manager should look for a company where you can do those kinds of things.” Point well taken, Lee! Glad you are so receptive to an alternative viewpoint!
In defense of his position on benefits, Lee points to General Motors, whose expensive benefit package threatens their viability: “GM is no longer an automotive company. They sell cars to fund [their extravagent] benefits.” While we can acknowledge that an overly-generous benefits program can create problems for the bottom line, Wal-Mart’s stingy benefits hurt their employees and local communities every day.
The 10 Foot Rule
Lee urges managers to set an example by aggressively complying with the company’s 10 foot rule, which requires employees to smile and ask “Can I help you?” when a shopper is less than 10 feet away. Fair enough. But I cannot help but ponder the contradictions at the heart of the Wal-Mart culture. Last year Lee earned $17 million. He hops around the globe on Wal-Mart’s fleet of jets and lives in a gated community called, appropriately, Pinnacle. He chats with Steve Case, the AOL founder, about health care (unfortunately, what he said to Case about health care is not included in the posting).
It brings to mind one of the fundamental rules that Wal-Mart executives appear comfortable ignoring: the Golden Rule. Management seems ready to endorse the disconnect between Lee’s globe-trotting life style and the hard-scrabble subsistence of his employees, most of whom cannot afford health insurance. There’s certainly no danger that Wal-Mart will fall into GM’s dilemma, where the benefits promised over the years threaten the company’s survival. But eventually, Wal-Mart’s lack of generosity with their own employees will probably catch up with them. If you rely on low pay, mediocre benefits and constant turnover to stay profitable, no 10 foot rule is going to save you. The forced smiles on the faces of the associates who greet you are simply not very convincing. They are not having much fun working in Lee’s garage.