October 03, 2003
Azim Premji, BusinessWeek & Wal Mart

There is a largely flattering story on Azim Premji (the chairman of Wipro) on the current issue of BusinessWeek (Asian edition).

In last week's BW (US edition), there was a story savaging Wal-Mart (registration needed). It is interesting for a number of reasons.

Firstly, it confirmed to my mind BusinessWeek's tendency to go for alarmist headlines. A few months back, it went after IT outsourcing to India and China with blazing headlines on the cover "Is your job next?". Obviously, the Asian edition has a different slant where they interview people like Premji! But having said that, the article does present some thought provoking statistics about how the outsized influence of Wal Mart in America effects almost all aspects of life. I did not like what I read about the wages.

On average, Wal-Mart sales clerks -- "associates" in company parlance -- pulled in $8.23 an hour, or $13,861 a year, in 2001, according to documents filed in a lawsuit pending against the company. At the time, the federal poverty line for a family of three was $14,630. Wal-Mart insists that it pays competitively, citing a privately commissioned survey that found that it "meets or exceeds" the total remuneration paid by rival retailers in 50 U.S. markets. "This is a good place to work," says Coleman H. Peterson, executive vice-president for personnel, citing an employee turnover rate that has fallen below 45% from 70% in 1999.

Critics counter that this is evidence not of improving morale but of a lack of employment alternatives in a slow-growth economy. "It's a ticking time bomb," says an executive at one big Wal-Mart supplier. "At some point, do the people stand up and revolt?" Indeed, the company now faces a revolt of sorts in the form of nearly 40 lawsuits charging it with forcing employees to work overtime without pay and a sex-discrimination case that could rank as the largest civil rights class action ever. On Sept. 24, a federal judge in California began considering a plaintiff's petition to include all women who have worked at Wal-Mart since late 1998 -- 1.6 million all told -- in a suit alleging that Wal-Mart systematically denies women equal pay and opportunities for promotion. Wal-Mart is vigorously contesting all of these suits.

I also thought that their cultural gatekeeping is foolish:

Wal-Mart cites customer preferences as the reason it does not stock CDs or DVDs with parental warning stickers and why it occasionally yanks items from its shelves. In May, it removed the racy "lad" magazines Maxim, Stuff, and FHM. A month later, it began obscuring the covers of Glamour, Redbook, Marie Claire, and Cosmopolitan with binders. Why did Wal-Mart censor these publications and not Rolling Stone, which has featured a nearly naked Britney Spears and Christina Aguilera on two of its recent covers? "...

Wal-Mart was the only one of the top 10 drug chains to refuse to stock Preven when Gynetics Inc. introduced the morning-after contraceptive in 1999. Roderick L. Mackenzie, Gynetics' founder and nonexecutive chairman, says senior Wal-Mart executives told his employees that they did not want their pharmacists grappling with the "moral dilemma" of abortion. Mackenzie was incensed but tried to hide it. "When you speak to God in Bentonville, you speak in hushed tones," says Mackenzie, who explained, to no avail, that Preven did not induce abortion but rather prevented pregnancy. Wal-Mart spokesman Jay Allen says "a number of factors were considered" in making the Preven decision, but he denies that opposition to abortion was one of them. "If anybody of any belief reads any moral decision [into] that, that's not right," he says.

....By most accounts, though, Wal-Mart's cultural gatekeeping has served to narrow the mainstream for entertainment offerings while imparting to it a rightward tilt. The big music companies have stopped grousing about Wal-Mart and are eagerly supplying the chain with the same sanitized versions of explicit CDs that they provide to radio stations. "You can't have 100% impact when you are taking an artist to a mainstream audience if you don't have the biggest player, Wal-Mart," says EMI Music North America Executive Vice-President Phil Quartararo.

But I am not specially concerned about their moral obsessions. In today's Internet enabled age, most people in North America can buy what they want, though may be not on Wal Mart prices.

As I have noted earlier, I admire what they have managed to achieve. (And I love the price!). But I queasy about their labor policy.

NYT has an interesting story about how Netflix is trying to use speed of delivery to fight off Wal Mart on the online DVD rental space. (Very cool analysis of their DVD rental allocation system here). I used Netflix for some time when I was in California. I was very happy with their service. I hope they make it without having to sell out to someone like Blockbuster.

Posted by Kaushik at October 03, 2003 04:32 PM | TrackBack

Yes, I have been hearing a great deal about No Logo for quite some time now :-). Its time I check it out ....

Posted by: Kaushik on October 7, 2003 5:14 PM

No Logo by Naomi Klein ( http://www.amazon.com/exec/obidos/ASIN/0312421435/qid=1065227193/sr=2-1/ref=sr_2_1/002-3745691-4039246 ) covers in detils Wal Mart's (and others's) salary "problems".

The book also highlights how most of these new "services jobs" that are getting created now a days do not pay a living wage.

Numerous instances of Wall Mart's and several other corporation's "cultural gatekeeping" is also documented.

Its a good read.

The book also writes several instances of culture policing

Posted by: Kingshuk on October 3, 2003 8:37 PM
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