Bonnie Kavoussi brings us shocking, tragic, and sad news in her article, Walmart Rejected Proposal To Protect Bangladesh Factories Against Fire: Report.
Last year, Walmart reportedly decided against aiding factory upgrades that could have stopped fires like last month's blaze at a Bangladesh garment factory.
Bangladeshi suppliers of Walmart clothes wanted to upgrade their facilities to make them more fire-proof, and other retailers approved the plan, according to Bloomberg. The plan only fell through after Walmart and the Gap said they would not pay higher prices to make such upgrades feasible.
The Huffington Post says Walmart refused to comment on the Bloomberg story but said it works to insure "proactive measures are in place to reduce changes of factory fires."
There may be some question of the extent to which Walmart management was aware of the working conditions within the factory as the story includes this:
The Bangladeshi garment factory fire last month, the worst in Bangladesh's history, killed 112 people. Walmart did not confirm for more than a day after the fire whether the factory was making clothes for the company. The retailer ultimately admitted that a Walmart supplier hired the factory without Walmart's knowledge, adding that Walmart ended its relationship with the supplier as a result.
The report also mentions that Disney and Sears allegedly used the factory, that Walmart made $3.63 billion in profits last quarter, and that the Walton family, which owns much of Walmart, are worth over $89.5 billion in 2010, suggesting that a wiser Walmart leadership could have easily afforded to spend the comparatively modest sums needed to improve worker safety.
Let me take the point further, by asking how much will Walmart end up spending on advertising, over the next 50 years, to make up for the damage to their brand caused by pictures. like the ones I show here, to our generation of consumer and readers? How much will it spend on motivational seminars to repair sagging moral of Walmart employees ashamed to mention where they work? How much more will they pay for local siting licenses to communities harboring tacit anger?
Totally apart from any considerations of human compassion, or corporate and individual ethics and responsibility, if I were a stockholder, I would see in this story, if it turns out to be true, alarming evidence of a top management falling short of the level of thinking they need to survive and thrive in our complex modern world. How sad, but common, it is for the senior-most leaders to grow so large, so fast, that they become lost in a narrow perspective of cost reduction, when they have already demolished their competition on this dimension,
A second sign of a management team in trouble, we see in this case study, is evidence of an obsolete accountant-like view of management as being slaves only to the goal of maximizing corporate profits, instead of the emerging more modern view where management develops a more sophisticated and more robust view of their role as agents of achieving a sustainable, and healthy balance between multiple stakeholders; including not just stockholders, but also employees, suppliers, customers, communities, the nations they operate in, as well as the environment.
An important trend wiser managers are trying to stay ahead of is that customers do not want to buy products from companies that are exploitative, and irresponsible. Local governments do not wish to grand site licenses to chemical companies that may jeopardize community safety.
So, at a time when the "fair-trade" versus "free-trade" issues are gaining greater attention from American unions, economists, and politicians who are beginning to recognize that unless "free-trade" treaties are renegotiated to level the economic playing field, no country will be able to afford child and worker safety laws, environmental protections, or even the rule of law, if corporations will respond by seeking some other country willing to allow them a lower cost by not adhere to what should be global world standards. In systems science this is called "drift to low performance."
In a totally free market, with no trade barriers, global wages are going to seek equilibrium, which is such a long way down for American workers "wiser" management should be more proactive so as not to provide ammunition for unemployed American workers to demand protective tariffs so that we do not plummet to the working conditions of the worst places on earth.
Please forgive such a crude and Machiavellian illustration. But, it is becoming clearer to me as I get older, that much of the "goodness" we used to teach as part of ethics and morality, may have been a shorthand heuristic bootstraps to get those not intelligent or wise enough to correctly compute their true long-term best interest in sad, and crude, purely Machiavellian calculus. But, as increasing numbers of our citizens are rejecting the superstitions often included in much of religious upbringing, we may have thrown out the baby with the bath water.
One of the items on my bucket list is to develop a mathematical-like proof that, more often than not, striving to achieve the highest possible ethical and moral standards will get you to the same places as a purely Machiavellian calculus of optimizing ones self-interest in the long-term.
Most managers, and other humans are not capable of solving the kinds of multi-ordered non-linear differential equations which would be required to correctly calculate these kinds of complex system trade-offs. But, look how much more easily the executives of Walmart could have avoided this human tragedy, as well as tragic self-besmirching of their own brand, had they just tried to "do the right thing" in terms of intuitive human compassion and common sense with regard to accepting the proposal to improve factory fire safety.
Major corporations with much invested in the value of their brands who would like to be more responsible corporate and community citizens would be wise to strive to improve their vision, values, empathy, and intelligence with regard to issues of worker safety. Another insight with regard to their presence in emerging nations around the globe is the systems insight that if a person, corporation, or group doesn't regulate and limits ones own behavior the rest of the system will eventually do it for you.