The giant retailer's CEO announces that top executives' bonuses will be based on their ability to fix the problems.
By Associated Press
Published June 5, 2004
FAYETTEVILLE, Ark. - Wal-Mart Stores Inc., facing lawsuits accusing it of gender bias and unfair treatment of workers, pledged Friday to work harder to promote women to management and announced a new pay system that would be more fair for hourly workers.
Chief executive Lee Scott told employees and shareholders at the company's annual meeting that executives' bonuses, including his own, would be cut up to 7.5 percent this year and 15 percent next year if the company does not promote women and minorities in proportion to the number that apply for management positions.
"If 50 percent of the people applying for the job of store manager are women, we will work to make sure that 50 percent of the people receiving those jobs are women," Scott said.
Scott said the financial penalty for executives shows Wal-Mart is serious.
"This is not something where we stand on the stage and we say we're going to try," he said.
The planned changes in job classifications and pay structure for hourly workers would help keep pay fair and enable the company to remain competitive in wages, Scott said. He did not give details but said the changes came after the company commissioned a study of its hourly positions as well as local and national market conditions.
Wal-Mart's pay and benefits have been criticized by labor unions, workers and competitors, which struggle to come close to the company's low costs.
Wal-Mart is a target of an investigation by federal prosecutors, charging that it knowingly hired contract cleaning services to use low-paid illegal workers.
Critics were skeptical of Wal-Mart's planned changes in work conditions and pay scales.
"None of it sounds like huge improvement in the lives of Wal-Mart workers," said Ross Eisenbrey, vice president of Economic Policy Institute, a liberal think tank in Washington.
Eisenbrey said it seemed "wooden" to have what he said amounts to quotas for promoting women and minorities, but credited the company for acknowledging a shortcoming.
"I think what he's really saying is 'I think we're going to make sure that women are given a fair shake.' It's recognizing that they haven't been, and I think that's important," Eisenbrey said.
Wal-Mart, the world's largest retailer, is being sued for allegedly not paying employees for overtime and for alleged gender bias.
One sexual discrimination lawsuit in San Francisco seeks to represent 1.6-million current and former female workers against the retailing giant. The suit filed by six women working in Wal-Mart's California stores alleges that Wal-Mart set up a system that frequently pays its female workers less than their male counterparts for comparable jobs and bypasses women for key promotions.
Wal-Mart, based in Bentonville, Ark., has claimed that its stores operate with so much autonomy that they are like independent businesses with different management styles that affect the way women are paid and promoted.
The company also said the suit ignores the thousands of women who earn more than their male counterparts and doesn't consider factors that cause one job to pay more than another.
Scott complained about the criticism that has been heaped on the company in the last couple of years but said the glare of the spotlight has helped the company function better.
Wal-Mart created a compliance office this year that now has 140 people working to ensure the company follows the rules and its own procedures. Scott said the office is working to make daily improvements in how workers are treated.
A new procedure will have workers approve any changes to their time sheets, Scott said. In lawsuit documents, the company was accused of adjusting downward the hours for which workers were paid.
The company also is using its computer systems to help ensure that cashiers, other hourly workers and managers take their required breaks. The changes will help see to it that the company follows each state's child labor regulations, putting in stops so young workers won't be able to work late or too many hours.
The policies don't go far enough, Eisenbrey said.
Wal-Mart managers have essentially stolen from workers by changing time sheets, he said. What would be more significant is if the company adopts a zero-tolerance policy and fires any manager caught "shaving time" off worker records, Eisenbrey said.
"If you have the power to make somebody work off the clock, you also have the power to make them sign a statement, a time sheet," he said.
At Friday's meeting, chief financial officer Tom Schoewe told the crowd packed into the 19,000-seat Walton Arena that last fiscal year's 11.6 percent sales increase came about while the company rolled back prices to the tune of $12-billion. Wal-Mart is the world's largest company as measured by sales, with $256-billion last year.
He said the company's running goal is for profit to grow faster than sales, and profits increased 13.3 percent last year.
The company has 1.5-million workers in the United States and abroad. Domestically, Wal-Mart has 3,578 discount stores, Supercenters, Sam's Club warehouse stores and Neighborhood Market stand-alone grocery stores.
