The Triple Bottom Line Blog

We've given Wal-Mart a fair amount of credit for some of the smart sustainable business moves they've made in recent months--for example, see what we wrote here, here, and here. Thanks to the favorable coverage Wal-Mart has (deservedly) received for some of its current initiatives, the company's bad reputation among citizen stakeholder groups has begun to dissipate.

On the other hand, it won't take too many stories like this one to undo all the good from a year's worth of well-meaning environmental and social efforts:

Wal-Mart Stores Inc. is mobilizing its store managers and department supervisors around the country to warn that if Democrats win power in November, they'll likely change federal law to make it easier for workers to unionize companies--including Wal-Mart.

In recent weeks, thousands of Wal-Mart store managers and department heads have been summoned to mandatory meetings at which the retailer stresses the downside for workers if stores were to be unionized. . . .

Wal-Mart may be walking a fine legal line by holding meetings with its store department heads that link politics with a strong antiunion message. Federal election rules permit companies to advocate for specific political candidates to its executives, stockholders and salaried managers, but not to hourly employees. While store managers are on salary, department supervisors are hourly workers.

Not only is this terrible public relations for Wal-Mart, it's a very clumsy way of trying to influence the political climate regarding labor. In the words of Daniel Gross, the Slate magazine commentator on business and economics, "Wal-Mart may be a master of many domains: global supply chains and logistics, local politics and zoning, anti-union warfare and branding. But on the stage of national politics, it has proved to be strikingly inept."

For one thing, why shift your political spending from overwhelmingly Republican to half-Democratic--as Wal-Mart has done in recent years--and then get caught awkwardly trying to torpedo Democratic electoral chances? If your goal is to make friends on both sides of the aisle (a wise strategy, especially during a period of political volatility), this is no way to go about it.

Gross goes on to point out that, in any case, Wal-Mart's assumption that having a Democrat in the White House would be bad for business is quite possibly wrong:

Despite Clinton's Arkansas roots, most Wal-Mart executives probably opposed Clinton in both his successful campaigns. But during his presidency, Wal-Mart's stock more than tripled. By contrast, Wal-Mart executives polled in 2000 would have been exultant at the prospect of two George W. Bush terms, especially if they were to be coupled with mostly Republican control of the House and Senate. And yet this decade has been a lost one for Wal-Mart shareholders: In the Bush years, the stock hasn't budged at all.

Yes, politics matters. But in the end, the macroeconomic climate matters a lot more. Wal-Mart's success ultimately depends on whether the lower-income and middle-income customers on whom it depends are doing well or getting eaten up by stagnant incomes and rising costs for health care and gas.

As Talleyrand once said, Wal-Mart's ham-handed political manuevering is worse than a crime--it's a blunder.

Lesson for business leaders: If you're going to get involved in politics, better rely on a team of people with shrewd political instincts and know-how. Otherwise you may end up doing yourself more harm than good.

Labels: politics, Role of Government, unionization, Wal-Mart