L10: Failure to Act Creates Crisis at a Canadian Wal-Mart

Back in 2012, in Windsor, Ontario, Canada, a jury awarded an ex-manager of Wal-Mart a $1.4 million judgement after she sued Wal-Mart for being bullied at work (Gupta, 2014). This woman, Jacqueline Powers, worked for the Windsor Wal-Mart for ten years and claimed that she was subjected to incessant beratement and insults from her boss for most of her tenor with the retail giant (Gupta, 2014). There are also three other women from the same Wal-Mart that are alleging the same behaviors. I will use the aspects of a crisis, as well as the Canadian Code of Ethics to exhibit how this situation could have been handled if ethical treatment had been at the forefront of the minds of those who listened to the original complaints filed by these women. To these women, this situation constitutes a crisis. A crisis is a “critical event or point of decision which, if not handled in an appropriate and timely manner (or if not handled at all), may turn into a disaster or catastrophe” (Penn State University, n.d.).

A critical event is an incident of value that tends to have a stressful impact on the individual, especially when instrumental values, i.e. standards of conduct, are violated (PSU, n.d.). Critical events occur before a decision is made regarding the event (PSU, n.d.), such as Powers reporting the mistreatment she was receiving from her supervisor. Had Powers supervisor referred to the Canadian Ethics Code to make his decision as to how to proceed, he would have: (1) identified all those who were affected by the bullying (Canadian Psychological Association, 2000), which would have likely uncovered the other women who were experiencing the same mistreatment in his store. He would have also (2) identified any ethically relevant issues, including the interests and rights of those involved in the ethical problem (CPA, 2000). By following the tenets in step two, the manager should have investigated the claims from Powers in order to get a more in depth picture of the potential consequences of a situation of this magnitude.

The second aspect of a crisis is the point of decision. A point of decision is created by a crisis and is referred to as the point in time where if a decision is not made, something negative may happen for either the organization (Wal-Mart) or the individual (Powers) (PSU, n.d.). Acting on a crisis situation during the decision point could avert potentially negative outcomes (PSU, n.d.), or at least, lessen the possible negative ramifications. Had the Wal-Mart supervisor taken his point of decision seriously, and used the CPA Ethics Code as a framework as to how to handle the situation, he would have (3) considered how his personal biases or self-interest could influence the choices between courses of action and then (4) developed alternative courses of action (CPA, 2000). The manager, using the CPA code, could have weighed his options by looking at how his relationship with Powers, as well as the offending manager, could bias his decision, and then weighed that decision against what was right, what was best for Powers, as well as what was best for Wal-Mart in general.

The third aspect refers to handling a crisis situation in an appropriate manner. Appropriateness is determined by a combination of the philosophies of the leader (the acting manager), subordinates (Powers and her colleagues), organization (Wal-Mart), and sometimes society (Windsor, Canada) (PSU, n.d.). According to the Canadian Ethics Code, (5) leaders should analyze the probable short-term, long-term, and ongoing risks and benefits of each possible course of action, and the effect that action will have on everyone involved (i.e. self, Powers and her family, Wal-Mart, other employees, the town of Windsor) (CPA, 2000). The manager of Wal-Mart should have taken Power’s claim, and contemplated how his decision to act (or not to act) would affect every person touched by this incidence. Had he chosen to follow the CPA steps to decision-making, he could have mitigated the damage that was done, and lessened the impact of the situation before it got out of hand.

The fourth aspect of a crisis situation refers to making a decision in a timely fashion. Often times, crises require immediate (or almost immediate) attention from supervisors, and how much time that leader takes to make a decision can affect the outcome of the crisis in a big way. The manager of Wal-Mart could have referred to the Canadian Ethics Code to (6) determine the course of action he should take after meticulously applying his and Wal-Mart’s principles, values, and standards to the situation. By comparing the value sets from the appropriate resources, the Wal-Mart manager could have been directed towards an ethical solution to the bullying claims made by Powers. Instead, he chose not to act.

Step 7 in the Canadian Code of Ethics steps to ethical decision-making would have told the Wal-Mart manager to act, and assume responsibilities of the action, while step 8 would have told him to evaluate the results of his action, and step 9 would have directed him to take responsibility for the consequences of his decision and attempt to remedy any consequences that occurred as a result of his decision (CPA, 2000). If he could not have remedied the situation, he would have been directed to revisit his previous decision-making process in order to come to a more ethical solution. It does not appear, however, that this manger did much contemplating regarding making a decision.

The fifth and last aspect of a crisis situation is disaster/catastrophe which refers to the potential consequences of not making a decision in a crisis. Failing to make a decision is generally considered to be “an ethical failure of leadership” (PSU, n.d.) and this case provides a great example of just that; a manager fails to act, which results in a catastrophe for Wal-Mart. Had the manger employed the decision-making process in the Canadian Code of Ethics, he would have seen that (10) appropriate action should be taken to prevent future occurrences (other employees being bullied) of the same dilemma (CPA, 2000). Instead, by this manager’s failure to act, Powers sued Wal-Mart and won a large settlement.

By failing to act when the bullying was first brought to his attention, the Wal-Mart manager made this situation much worse than it should have been. Not only did he negatively affect Powers, who first complained, but his lack of action allowed the bullying to continue and affect other employees. His lack of decision-making hurt the organization (Wal-Mart) because they had to pay out a large settlement, but now are facing at least four other potential lawsuits from the same store. The managers lack of decision-making also affected the community of Windsor as many of the employees and potential future employees are likely worried about how they will be treated if they work for the Windsor, Ontario Wal-Mart. His failure to act resulted in other ethics violations that will likely last years, as court hearings continue in the other cases.

References:

Canadian Psychological Association. (2000). Canadian code of ethics for psychologists (3rd ed.). Ottawa, ON: Author.

Gupta, N. (2014, August 5). Canadian Wal-Mart Case Signals Shift in Workplace Policy. Retrieved from http://www.law360.com/articles/552843/canadian-wal-mart-case-signals-shift-in-workplace-policy

Penn State University (n.d.). Crisis. Retrieved from Penn State University Ethics and Leadership: https://psu.instructure.com/courses/1775390/pages/l10-crisis-defined?module_item_id=20678789

2 Comments

  1. David James April 2, 2016 at 7:29 PM #

    Amber,

    Great post and a good example of how a crisis can turn into something much more when supervisors don’t act in a timely fashion. Instead of figuring out the situation and resolving it, they let it go and it turned into a costly law suit. It is amazing to me that this leader let this situation go so far without resolving it. Of course the leader is the one responsible for inaction, but organizationally, Wal-Mart is a little suspect for situations developing like this example.

    Crisis plays a big part in pressure to make an ethical decision. In this case, the supervisor was paralyzed to the point of inaction due to the complaints. This is not surprising as ethical decisions tend to decrease when a crisis presents itself. (Kohl 2003). I also surmise that the longer the supervisor let this problem continue the greater the crisis became. A possible scenario is that the employee made the complaint and the leader dismissed it. As time continued, the leader may have realized that some or part of the claims were true, they probably realized that they were in hotter water. As the problem continued, the magnitude of consequences increased. This leader went from maybe being in trouble to facing possible termination. This makes sense in Kohl’s propositions which propose that ethical decision making will decline as the magnitude of consequence’s increase. (Kohl 2003).

    Organizationally, Wal-Mart has had it’s series of problems not only with bullying, but other such scandals as discrimination. Several on-going law suits allege discrimination of female employees. Dukes vs. Wal-Mart alleged that in a select group of Wal-Mart stores (approximately 250) female employees were concentrated at the lower end of all the store positions. (Wal-Mart Class Action 2016). The leader is fully responsible for there inaction, but one can’t help to think that due to Wal-Mart’s culture, training or other factors, maybe he/she was a product of the system. Organizations who flexible, have strong corporate culture, good coping mechanisms and strong social relationships tend to fair better in making better ethical decisions. (Kohl 2003). Of course, I’m an outsider to Wal-Mart’s corporate culture, but from your blog post, it doesn’t seem like they have good coping mechanisms for crisis. They may want to also develop a stronger corporate culture which focuses on fairness and strong and decisive leadership actions.

    It is important for organizations to consider ethical decisions during times of crisis as a separate matter from normal everyday decisions as these can negatively affect stakeholders if a poor decision is made. The potential repercussions could be law suits (as we saw in your example). But there are many other debilitating consequences that companies could face such as diminishing public trust, loss of clients and more. (Selart and Svein 2010).

    References:

    Christensen, Sandra L. and Kohls, John, (2003), Ethical Decision Making in Times of Organizational Crisis.
    Retrieved from:
    http://search.proquest.com.ezaccess.libraries.psu.edu/docview/199386376/fulltextPDF/A417086FB7DC4776PQ/1?accountid=13158

    Wal-Mart Class Website, 2016
    Retrieved from: http://www.walmartclass.com/public_home.html

    Selart, Marcus & Johansen, Svein T. (2010), Ethical Decision Making in Organizations: The Role of Leadership Stress, Journal of Business Ethics, Issue 2, pp 129-143.

  2. David Aquinas Mallen March 31, 2016 at 2:48 PM #

    Nice job breaking down the case by the steps suggested in the Canadian code of ethics (2000). It is easy to see where the decision points come in on these situations and how taking an alternative path could have led to completely different results. Yours is an example of a seemingly aloof leader not paying any mind to the correct way of dealing with a problem and because of his passive approach it became a much larger crisis for both the individual and Walmart. This is a good illustration of how a victim is simply looking for a justified response for an act that was committed against her and because she did not get an adequate response she was forced to magnify the issue in order to obtain a respectable level of attention. She likely did not want the additional attention but because the management did not act ethically, it negatively impacted both parties and doubly so for the victim because she was already victimized once.

    Your post looked at this situation from the case point of view but I would be curious to expand upon the framework to include the aftermath that Walmart then had to clean up. Just because the case came to a conclusion the company still needed to do some work in order to recover from the crisis. Looking at this from the macro level, perhaps the case itself is the initial crisis and then once the case concluded, then the fallout for the company required the use of the ethics code recommendations as well. The company got sued and lost; that could impact human resources and recruiting areas, financial departments, marketing and promotion of the company’s image, and so forth. It may be true that the company, upon losing the case, did move forward with consulting multiple stakeholders for how to proceed with rectifying their image. Maybe they did consider a variety of paths for how to market and recruit young professionals. They possibly did create a plan that was put into motion and then reassessed after a given amount of time. Is this likely what happened? It is difficult to say. Is it possible that it could happen? Absolutely.

    Your post was nice because it made me think about the ever expanding halos of a crisis situation. We sometimes only look at the crisis itself as the entire process that needs to be managed ethically. But we also must not lose sight of how the period following the crisis also needs to be approached with the same degree of ethical leadership. It is almost like the crisis becomes the first step in the larger picture that needs to be managed, and then the cycle repeats itself. My mind is blown.

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