March 28, 2005
Wal-Mart Turns Investigation Over to Authorities
By George Anderson
An internal investigation by Wal-Mart into “the alleged unauthorized use of corporate-owned gift cards and personal reimbursements that appear to have been obtained … through the reporting of false information on third-party invoices and Company expense reports” has resulted in the retailer dismissing several employees as well as asking the former president and CEO of the company’s stores, Tom Coughlin, to resign from the company’s board of directors.
Wal-Mart, reports The Associated Press, asked for Mr. Coughlin’s resignation after “a disagreement” over the company’s findings and his “knowledge” of the alleged offenses. According to the AP, the alleged “financial improprieties” were said to have cost the company between $100,000 and $500,000.
In a released statement, Wal-Mart said it had turned the findings of its investigation over to the U.S. Attorney for the Western District of Arkansas and that it would have no further comment on the matter.
Moderator’s Comment: Have American business people lost their ethical/moral compass? Are the ethical lapses Wal-Mart has found within its own business
representative of the greater business community as a whole?
For all those who have made a hobby, if not a career, out of pillorying Wal-Mart for the way in which it treats its store-level associates, it should be
acknowledged the company has established ethical standards for the way its headquarters’ personnel act and has been decisive when breaches of its rules have been found to have
occurred.
That said, we have to admit being somewhat troubled that such incidents continue to take place. As you may recall, Wal-Mart fired seven individuals back
in December (See RetailWire 12/16/04, Source: Wal-Mart Execs Fired Over Integrity
Breach) for what one unidentified source told the Northwest Arkansas Business Journal and the Benton County Daily Record were mistakes in “personal judgment
pertaining to integrity issues.”
Why do these errors in personal judgment in ethical matters continue to happen at Wal-Mart and elsewhere? When will individuals refrain from unethical actions
simply because they are wrong rather than factoring in their chances of getting caught?
During his life, Mohandas Gandhi identified what he called the seven social sins. These were politics without principle, wealth without work, commerce without
morality, pleasure without conscience, education without character, science without humanity and worship without sacrifice. Sometimes we can’t help wondering if Gandhi’s social
sins have become the standard of success in the modern world. –
George Anderson – Moderator
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I couldn’t disagree more with the comments that we shouldn’t single out Wal-Mart as an example of ethical lapses. True that such problems aren’t unique to them, but it’s also true that such law breaking is not common nor acceptable in American business. They should be ashamed. Further, it is worth looking hard at Wal-Mart’s recurring ethical problems, because they may well be harbingers of the company’s decline. Perhaps they are becoming victims of their own success. When people at the top who are highly compensated feel a sense of entitlement, or feel they aren’t getting enough compared to others in the industry, then it may mean the company has lost its way. They’ve lost sight of why Wal-Mart voraciously controls costs. They are more focused on themselves than their jobs. While we’re likely to see solid business results for some time, the company may well be rotting from within.
I don’t know if it is more of a problem at Wal-Mart or not. But when you are in the spotlight all the time, these kinds of thing can get magnified. From my experience with Wal-Mart, management seems to be extra careful regarding ethical issues.
This issue can be discussed on so many levels. This provides enough fodder for weeks worth of debate and discussion. So, for what it is worth, here are my two cents:
Tom Coughlin is someone I have met and, while I do not know that I can refer to him as “friend,” he certainly would be an acquaintance. His resignation/termination is NOT an absolute admission of guilt of wrongdoing (that still remains to be seen). As best as I can tell, because there were certain irregularities done under his watch…Wal-Mart is taking actions to rid itself of any veneer of impropriety. Whether he is directly involved in a criminally active way or not shall be a matter for courts to decide, not sideline observers speculating in rumor or gossip.
Unfortunately, it is all too easy in the world of popular opinion to heap criticism on Wal-Mart and to see nefarious intent in everything they do. In this instance, one could just as easily say that they are acting decisively and with alacrity to remove any hint of malfeasance within its ranks. They became aware of a situation that was unethical and have taken actions to rid itself of the problem. Even if it turns out that Tom was not involved directly, it occurred under his management and, therefore, it is his head that is being chopped. In this current environment of corporate wrongdoing and news headlines splashing across the papers and TV screens announcing some other dereliction of duties, for Wal-Mart to take this stance is not something I can be critical of or take them to task for doing.
As for your question about why people do it and when will it end…the answer is “human nature.” (Fill in your own analogy here – whether it is Adam and Eve biting the apple, or the state of moral decay/development in society, or the lack of role models, or any other “example.”) It all comes down to people acting like people…there are those who will act out of self interest alone and those who believe the remote chance they will be caught is reason enough to try things. There are others who will feel “justified” because they are “owed” something in their own minds, and still a select few who like the thrill of getting away with something.
Will it change…not likely. There have always been those who will challenge the roles, values, and norms of the group and there will always be a response from the group to those people to “keep them in line.”
I think we need to be careful to set Wal-Mart apart from the rest of society as if it is the evil empire. With all huge organizations, and theirs being one of the largest, whatever percentages of the population are going to be at the fringes are going to show up in direct proportion to the Wal-Mart workforce. For all the issues they are confronted with, you do have to give them credit for their decisiveness with making decisions like this. I think we are a 24/7 society. Gandhi’s principles should give us pause to think about all aspects of our business and personal choices.
To George’s point, maybe Gandhi’s social sins should get more focus in schools, workplaces, boardrooms and on Wall Street.
Gandhi also thought that fasting nearly to the point of death would instigate widespread social change. When was the last time you saw a CEO miss a meal?
Before you start vilifying Wal-Mart–everyone’s favorite hobby these days–or Tom Coughlin, let’s remind ourselves that this is the largest company in the world and the alleged financial improprieties of a handful of people are pretty insignificant. That being said, improper behavior should not be tolerated. But people are people and some do bad things. However, before you get all bent out of shape about this situation, take a look at how many executives of Enron, Worldcom, AIG or other corporate giants are doing time for ruining people’s lives.
I agree with Charlie. Singling out Wal-Mart makes it too easy to dismiss ethical issues in general. Can’t say that the ongoing head-rolling at Wal-Mart feels like a full solution, though. It’s already in the press … why not give a bit of context, history and solution going forward (beyond dismissals) to show that Wal-Mart understands how it happened and is ensuring it won’t again?
The most widely cited “source” of the problem is “human nature” and/or “fallibility” or the “bad apples in a barrel” theory. However, economists recognize this problem as the tendency for people to act in their own self-interest to the disadvantage of others when they hold ungoverned powers or rights – it is a variant of the “free rider” or “hold up” problem.
The solutions lie in “governance” – institutional arrangements that make the misuse of public and corporate assets difficult. A good example of poor “governance” was the former Soviet Union and aspects of the current Russian Commonwealth, the “Enron” and banking/investment houses, etc. The solution involves the creation of new corporate and public “institutions” – a set of rules, procedures, checks and balances designed to make wrong-doing more easily detected and corrected. This is not a case of “government regulation” versus “free enterprise” but a case of “rules” versus “profiteering” and malfeasance.
Everyone who believes that greater productivity should be rewarded in proportion to the value that it adds for consumers should strongly support this kind of change.
To err is human and (contrary to some opinions) Wal-Mart does employ more than its fair share of human beings.
Neither Wal-Mart nor the US are unique in this; unfortunately Ghandi’s principles seem to be globally rampant and getting more pronounced as globalisation continues to thrive. Principles get perverted by practice and there ain’t no way round it. Such is life. Size does matter and the bigger things get, the easier it is to lose what is important and bury what we know we should not be doing. All any of us can do is try to live the best way we know how and convince our children and employees to believe that we are leading by example.
As for Wal-Mart, in this particular instance there is no point picking them as an example. It is one area in which they have much competition.
In a dream, a golden statue of the king of Babylon had crumbling feet of clay. Power corrupts.
That written, WM seems to have feet of something stronger, perhaps fossilized bubblegum. Seriously, they are commendably adept at spitting out those who transgress. Congrats on their vigilance. They are quick and decisive in handling anything that is at all questionable. Crummy stuff happens in all companies. WM should be celebrated for their transparency.
I highly commend Wal-Mart’s forthcoming. Power corrupts! However, to err is also human. If the same approach were to be used in all major U.S. corporations, particularly retail chain stores, one would be very surprised that it would probably take an entire issue of the Wall Street Journal to print all the names involved. Furthermore, if the same approach were used for our government and the current administration, two issues of the Wall Street Journal would be needed to print all the names!
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I couldn’t disagree more with the comments that we shouldn’t single out Wal-Mart as an example of ethical lapses. True that such problems aren’t unique to them, but it’s also true that such law breaking is not common nor acceptable in American business. They should be ashamed. Further, it is worth looking hard at Wal-Mart’s recurring ethical problems, because they may well be harbingers of the company’s decline. Perhaps they are becoming victims of their own success. When people at the top who are highly compensated feel a sense of entitlement, or feel they aren’t getting enough compared to others in the industry, then it may mean the company has lost its way. They’ve lost sight of why Wal-Mart voraciously controls costs. They are more focused on themselves than their jobs. While we’re likely to see solid business results for some time, the company may well be rotting from within.
I don’t know if it is more of a problem at Wal-Mart or not. But when you are in the spotlight all the time, these kinds of thing can get magnified. From my experience with Wal-Mart, management seems to be extra careful regarding ethical issues.
This issue can be discussed on so many levels. This provides enough fodder for weeks worth of debate and discussion. So, for what it is worth, here are my two cents:
Tom Coughlin is someone I have met and, while I do not know that I can refer to him as “friend,” he certainly would be an acquaintance. His resignation/termination is NOT an absolute admission of guilt of wrongdoing (that still remains to be seen). As best as I can tell, because there were certain irregularities done under his watch…Wal-Mart is taking actions to rid itself of any veneer of impropriety. Whether he is directly involved in a criminally active way or not shall be a matter for courts to decide, not sideline observers speculating in rumor or gossip.
Unfortunately, it is all too easy in the world of popular opinion to heap criticism on Wal-Mart and to see nefarious intent in everything they do. In this instance, one could just as easily say that they are acting decisively and with alacrity to remove any hint of malfeasance within its ranks. They became aware of a situation that was unethical and have taken actions to rid itself of the problem. Even if it turns out that Tom was not involved directly, it occurred under his management and, therefore, it is his head that is being chopped. In this current environment of corporate wrongdoing and news headlines splashing across the papers and TV screens announcing some other dereliction of duties, for Wal-Mart to take this stance is not something I can be critical of or take them to task for doing.
As for your question about why people do it and when will it end…the answer is “human nature.” (Fill in your own analogy here – whether it is Adam and Eve biting the apple, or the state of moral decay/development in society, or the lack of role models, or any other “example.”) It all comes down to people acting like people…there are those who will act out of self interest alone and those who believe the remote chance they will be caught is reason enough to try things. There are others who will feel “justified” because they are “owed” something in their own minds, and still a select few who like the thrill of getting away with something.
Will it change…not likely. There have always been those who will challenge the roles, values, and norms of the group and there will always be a response from the group to those people to “keep them in line.”
I think we need to be careful to set Wal-Mart apart from the rest of society as if it is the evil empire. With all huge organizations, and theirs being one of the largest, whatever percentages of the population are going to be at the fringes are going to show up in direct proportion to the Wal-Mart workforce. For all the issues they are confronted with, you do have to give them credit for their decisiveness with making decisions like this. I think we are a 24/7 society. Gandhi’s principles should give us pause to think about all aspects of our business and personal choices.
To George’s point, maybe Gandhi’s social sins should get more focus in schools, workplaces, boardrooms and on Wall Street.
Gandhi also thought that fasting nearly to the point of death would instigate widespread social change. When was the last time you saw a CEO miss a meal?
Before you start vilifying Wal-Mart–everyone’s favorite hobby these days–or Tom Coughlin, let’s remind ourselves that this is the largest company in the world and the alleged financial improprieties of a handful of people are pretty insignificant. That being said, improper behavior should not be tolerated. But people are people and some do bad things. However, before you get all bent out of shape about this situation, take a look at how many executives of Enron, Worldcom, AIG or other corporate giants are doing time for ruining people’s lives.
I agree with Charlie. Singling out Wal-Mart makes it too easy to dismiss ethical issues in general. Can’t say that the ongoing head-rolling at Wal-Mart feels like a full solution, though. It’s already in the press … why not give a bit of context, history and solution going forward (beyond dismissals) to show that Wal-Mart understands how it happened and is ensuring it won’t again?
The most widely cited “source” of the problem is “human nature” and/or “fallibility” or the “bad apples in a barrel” theory. However, economists recognize this problem as the tendency for people to act in their own self-interest to the disadvantage of others when they hold ungoverned powers or rights – it is a variant of the “free rider” or “hold up” problem.
The solutions lie in “governance” – institutional arrangements that make the misuse of public and corporate assets difficult. A good example of poor “governance” was the former Soviet Union and aspects of the current Russian Commonwealth, the “Enron” and banking/investment houses, etc. The solution involves the creation of new corporate and public “institutions” – a set of rules, procedures, checks and balances designed to make wrong-doing more easily detected and corrected. This is not a case of “government regulation” versus “free enterprise” but a case of “rules” versus “profiteering” and malfeasance.
Everyone who believes that greater productivity should be rewarded in proportion to the value that it adds for consumers should strongly support this kind of change.
To err is human and (contrary to some opinions) Wal-Mart does employ more than its fair share of human beings.
Neither Wal-Mart nor the US are unique in this; unfortunately Ghandi’s principles seem to be globally rampant and getting more pronounced as globalisation continues to thrive. Principles get perverted by practice and there ain’t no way round it. Such is life. Size does matter and the bigger things get, the easier it is to lose what is important and bury what we know we should not be doing. All any of us can do is try to live the best way we know how and convince our children and employees to believe that we are leading by example.
As for Wal-Mart, in this particular instance there is no point picking them as an example. It is one area in which they have much competition.
In a dream, a golden statue of the king of Babylon had crumbling feet of clay. Power corrupts.
That written, WM seems to have feet of something stronger, perhaps fossilized bubblegum. Seriously, they are commendably adept at spitting out those who transgress. Congrats on their vigilance. They are quick and decisive in handling anything that is at all questionable. Crummy stuff happens in all companies. WM should be celebrated for their transparency.
I highly commend Wal-Mart’s forthcoming. Power corrupts! However, to err is also human. If the same approach were to be used in all major U.S. corporations, particularly retail chain stores, one would be very surprised that it would probably take an entire issue of the Wall Street Journal to print all the names involved. Furthermore, if the same approach were used for our government and the current administration, two issues of the Wall Street Journal would be needed to print all the names!