“You’re known by the company you keep,” my mother used to say. Not just to me, but to or about anyone she felt was hanging out with a bad crowd.
In business, you’re not only known by your own reputation, but by the reputation of the companies with whom you contract: the companies that provide your parts or materials, buy your products, ship your products, sell your products or do contract work for you.
Smart companies realize that if their name is on a product, a customer is not going to care if a particular component came from some other source. All that customer knows is that his XYZ television or car isn’t performing up to his standards or the standards that have become associated with that brand name.
In construction, general contractors often require subcontractors to submit their written safety programs and their workers’ compensation histories as part of the bidding process to ensure the subcontractors’ safety programs meet a certain standard. In the construction industry, like manufacturing and other industries, reputation matters and safety records – just like honesty and quality of work – are a part of that reputation.
Why hasn’t Walmart gotten this message?
The family-owned business has created some of the wealthiest people in the world, yet it appears that they – through the thousands of Walmart contractors – prey on the poorest.
Six warehouse workers for a Walmart contractor in California sued the contractor, Schneider Logistics, in 2011, claiming they had been shorted on wages for overtime and had their wages illegally docked. Schneider Logistics operates many of Walmart’s distribution centers.
The workers, who received a piece rate and worked in unsafe conditions such as extreme heat, said their employer threatened to fire them for complaining about the working conditions and for demanding the wages to which they felt entitled.
A $21 million preliminary settlement between the workers and Schneider Logistics recently was announced. Worker David Acosta, one of the plaintiffs, said in a statement. “When we raised these issues, we knew it would be a fight. Schneider tried to fire us. Walmart tried to deny responsibility. But we knew that the law was on our side."
The workers managed to get Walmart named as a defendant, but according to the terms of the agreement, the payment of the settlement is the sole responsibility of Schneider Logistics.
A Walmart spokesperson told the Huffington Post, “We’re obviously pleased with the proposed settlement agreement.”
Kory Lundberg, the Walmart spokesperson, went on to say, "Schneider is the one that's solely responsible for paying the agreed-upon amount.”
That’s true on the face of it, so is this a case of plaintiffs going after the guy with the deepest pockets? It happens; we’ve all seen it.
But I don’t think so.
Walmart, in its efforts to be the lowest-cost retailer around, forces its contractors into contracts that in turn force them to cut corners in order to meet Walmart’s lowball price. Too often – as in this case of the California workers or workers at Rana Plaza in Bangladesh – the contractors’ employees suffer for it.
Do the contractors have to take the jobs? No. Do the workers have to take the jobs? No. But often, Walmart is the only game in town and it’s hard to say no when the alternative is losing large contracts or being unemployed.
Walmart will argue that it can’t or shouldn't dictate to contractors how they run their businesses, but that’s untrue; companies do it all the time. Walmart ontractors, if they are like other contractors, are handed various contract requirements, including production and delivery schedules, budgets, box sizes, weight requirements, product testing, quality, etc… It’s an almost endless list.
Imagine what would happen if Walmart went to its contractors and said: “You need to provide a safe work environment for your employees (or for temporary workers you've hired to meet our contract). You need to pay them what you agree to pay them. Do these things or you violate our contract.” Holy Moley! Those things would get done!
It potentially could cost Walmart more money, since the contractors would have to invest more in providing a safe workplace and living wage for their employees. But is that so bad?
If you take a look at Forbes’ list of world billionaires, you’ll see three names in the top 15: Jim Walton ($35.6 billion), Alice Walton ($35.1 billion) and S. Robson Walton ($35.1 billion). This is the family that owns Walmart. (A sister-in-law, Christy Walton, and her son are worth another $36.7 billion). The combined worth of the family is estimated at $150 billion, which is approximately the same net worth of the bottom 43 percent of American families combined.
If they wanted to, the Walton family could draw a line in the sand and demand that the people running the company founded by their parents be ethical in their dealings with Walmart employees and contractors. It might cost them a few billions over time (or it might not), but it would raise the workplace standards and pay for hundreds of thousands of workers in the United States and around the world.
After all, how much money does one person need? Jim, Alice and S. Robson Walton are in their 60s and 70s. As my mother also used to say: “You can’t take it with you.”