Walmart Inc.’s Corporate Governance Regulation Through Nonprosecution

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Table of Contents

Introduction
Corporate Governance at Walmart
Overall Financial Situation and Sustainability Theory
Business Ethics and Regenerative Theory
Lack of Sustainability in Shares and Workplaces
The Issue of Transactional Leadership
Recommendations: Regenerative and sustainable leadership
Conclusion
Reference List

Introduction

The email aims to articulate the challenges Walmart has in integrating leadership theory into practice, emphasizing that implementing these changes expands corporate opportunities for growth. Corporate governance is a system of relationships defined by structures through a set of rules, practices, and processes used to control a company. It supposes considering and aligning the interests of a company’s key stakeholders and providing them with legal, ethical, and sustainable values (Liao and Lin 2017). The investigation focuses on significant theories, frameworks, and models of effective leadership to conduct an in-depth critical analysis of Walmart’s strategy in leadership, information systems, operations, and the company’s financial performance.

Walmart experiences specific problems; whereas the company aspires to be transparent, accountable, trustworthy, and responsible, and to foster financial stability, it has to cope with governance challenges. Currently, it has cultural diversity issues because it has only achieved 18% in terms of diversity 18% and just 27% of females’ service in the committee (Walmart 2022). Further, its Board members typically serve 6-12 years, creating a lower turnover that impedes the company’s demographics and optimization of skills for an extended period. This professional email aims to highlight cultural diversity, address low turnover of directors that reduces optimization of skills, and suggest different views on compensation and how they can be solved. The leadership structures at Walmart are considered from various theoretical perspectives.

Corporate Governance at Walmart

Walmart creates the image of a retail corporation built on the foundation of honesty, respect, integrity, and fairness. The company’s approach to corporate governance is anchored on having an independent board with diverse backgrounds, relevant skills, and experiences. In addition, it strives to efficiently manage oversight of its strategy, risks, and opportunities (Walmart 2022). Likewise, the company regularly engages with stakeholders such as customers, associates, and suppliers through queries and feedback. However, challenges to its management structure, cultural diversity, low ethical standards, compensation problems, term limits of board members, and low turnover still exist.

Overall Financial Situation and Sustainability Theory

In the current financial year, the firm’s financial outlook slashed its quarterly and full-year profit forecasts in July 2022. It was occasioned by economic challenges, including high inflation, scrambled energy markets, and supply chain bottlenecks. All of these caused the increase in product prices, which has changed how consumers purchase items and their priorities. Essentially, customers started to avoid other goods they deemed unnecessary. Its stocks lost more than a quarter of their value after reporting a 52% drop in first-quarter profits (Shaban et al. 2022). Further, it cited supply chain pressure and rising expenses that led to heavy markdowns.

The compensation programs in place at Walmart are said to be designed to motivate and retain valuable executives. It is intended to assist the top managers in generating solid operating results and creating alignment with their shareholders. Additionally, it supports its enterprise strategy and helps align the leadership with the company’s culture and organizational structure (Walmart 2022). However, there are issues with underpaying employees, which is a severe problem from the sustainability perspective (Zhong, Wang, and Yang 2017). Sustainability implies constant changes, social and economic, in order to adjust to the ever-changing circumstances. Its low remuneration practice is upon its chain of corporate policies and culture. Additionally, there is a divide between Walmart’s pay structure and the living wage in the United States as of 2020. For example, the average living wage recorded per hour in America was $16.54 for a family of four, while an ordinary employee of Walmart gets $9-12 per hour (Walmart, 2022). The low prices it uses to attract customers have led to either decline or stagnated manner in which it pays employees’ salaries that constantly cost dissatisfaction among them.

Business Ethics and Regenerative Theory

When it started, Walmart did not have a formal ethical program because its founder relied on his personnel and believed it would not affect its operations. For the same reason, the company does not provide medical care for most of its employees over the years (Rubasundram and Rasiah, 2019). The company has been accused of poor customer service because it had fewer employees compared to the number of stores, thus, unable to implement the 10-foot rule (Walmart, 2022). It forced it to adopt a commitment to adhere to ethical and compliance standards as of 2012.

In recent years, some stakeholders have accused the retailer of lowering prices and changing the placement of goods in its stores as a ploy to buy more goods at higher prices. Further, it has also been criticized by ILO for paying its staff wages below standard salary brackets (Admati 2017). Additionally, it forces its suppliers to enter a bidding process for the company to list its products in its stores. This strategy is said to be harmful to suppliers. This permanent underpayment of workers also fits with the exploitation of the surplus value theory (Chandler and Kirsch 2018). It stresses that labor can be purchased on the payment of its price, and the surplus goes to the owner. Unethical standards demonstrated by Walmart stretch to environmental and discrimination issues. There have been complaints that the company emits millions of tons of Carbone dioxide because it sells low-quality products and builds warehouse-sized stores that cause contamination of the environment (Scharmer 2018). Such behaviour goes at odds with the ideas of regenerative theory, which is concerned with relations between human and ecology.

Moreover, regenerative leadership implies balanced respectful relationships between employers and employees of all races and genders. The firm has been accused of being biased toward underpaid female employees. Further, just about 27% of board committee members are female. In addition, the average age of members currently stands at 55 years (Walmart 2022). Walmart is also having a lower advancement in terms of opportunities that generally arise in the company. This means that the company intentionally avoids the natural order of progress in time postulated by the regenerative theory.

Lack of Sustainability in Shares and Workplaces

This part of the e-mail applies the company’s statistics to the theory of sustainability – a concept of constant changes, improvement through direction and commitment. The retailer reviews its leadership structure annually, but the results do not change seriously in reality. Currently, 47% of its shares are held by its founder’s family, which has historically ensured that three members are part of the board (Walmart, 2022). The company believes this is necessary because the founding family has significant and long-term share ownership. This structure presents a dilemma for Walmart’s sustainability because it cannot move away from its originator’s traditions. After all, one-quarter of that family is part of the top decision-makers. It signifies traditional autocratic leadership that is not sustainable and not focused on people and progress.

Walmart believes its strengths lie in including people from diverse backgrounds in its management. Therefore, as part of its policy, it expects all its associates and employees to embrace working in a multi-ethnic environment where almost all groups are included and differences are celebrated (Walmart 2022). The company, as of 2021, had a workforce of 1.4 million in the United States. Its inclusion in terms of race or ethnicity stood at 21% for African Americans, 17% for Latinos, 5% for Asians/Pacific associates, 1% for American Indians, and 56% were whites (Walmart 2020). On the side of its board of directors, the top management is only 18% racially/ethnically diverse (Walmart 2022). This proves that their diversity politics need some update in the context of sustainability, as this concept of leadership implies addressing social problems in order to constantly progress and improve.

Walmart’s board of directors is a mix of retired business managers, its officers, and family members of the founder. A board member’s average work period is eight years; however, there was an example where one person worked for 44 years (Souza 2022). At the same time, its independent directors serve for 12 years; this is a long time that could impact the decision-making in case some or many of them are incompetent. Further, it requires its outsider director to acquire shares within five years of board appointments (Souza 2022). It is unlikely that any radical or innovative management decision can be approved without the support of both the board including the founder’s family (Lussie and Achua 2022). This information shows that from the perspective of sustainability theory, the organization of the board of directors is rigid and does not correspond to modern tendencies in leadership.

The board sees independent directors as a way to sustain long-term shareholder and stakeholder value. However, it limits the company from attracting the best skills, experiences, and competence due prolonged stay of the critical decision-making organs (Tenney 2021). Only a few individuals on the company’s board come from different industries and corporations. This weakness primarily affects Walmart’s vision and strategies due to limited team capacities. For instance, the firm currently tries to make its services digital, and this plan needs visionary and tech-savvy members on the board (Zhang 2019). However, its current directors lack the skills, knowledge, and experience in technology to drive this policy shift, and it would create hurdles for sustainable progress.

The Issue of Transactional Leadership

It is possible to state that Walmart currently uses the transactional approach to corporate leadership that negatively affects business performance and the corporate environment. Transactional leadership is a style of leadership in which the leader achieves goals from his followers through the “carrot and stick” method (Dugan 2017). Leaders of this type carefully analyze the actions of their subordinates to identify errors and inaccuracies in their actions. At the same time, the company claims that it introduces a sufficient number of bonuses for the most valuable leaders. This theory, in its application, certainly runs counter to the positioning of domestic policy that Walmart offers on the official website. This system turns out to be traditional and hierarchical, bordering on authoritarianism in terms of the hierarchy of payments and the principles of maintaining subordination.

The company is excessively focused on its hierarchal structure and increasing profits, which leads to abusing employees’ rights and losing economic growth opportunities. In addition, pursuing the traditional leadership strategy leads to stagnation in the company’s activity in the market, which is the typical consequence of using this approach (Wheeler 2022). The issue of payment for work is also a concern for many employers and has been so for a long time. For example, subsistence theorists state that employees are paid to allow them to subsist and sustain the race without increase or diminution (Arlen and Kahan 2017). If applied to Walmart politics, such theoretical framework can be seen as cynical, depriving the workers out of all possible perquisites and salary other than minimal. Walmart’s leaders need to adopt a sustainable style that will inspire and encourage actions that support its employees (Wheeler 2022). It can create innovation, improve an organization’s competitive advantage, and bring long-term success (Igbal et al. 2020). In contemporary leadership it would make sense to outline a number of theories that a company can adjust to influence motivation in the workplace.

Recommendations: Regenerative and sustainable leadership

The principles of inclusiveness that are stated to be professed by Walmart (2022) should, in fact, have a certain correlation with the theory of regenerative leadership. The diversity of different leaders and employees is indicated by the company as a guarantee of its further development. Regeneration as a practical natural activity of a successful leader is thus closely related to sustainability theory, which aims to develop the company through the diversity of its internal discourse (Hutchins and Storm 2019). Walmart’s organizational politics positions itself as being built on a mutual dialogue of different people from diverse backgrounds. The experiences of leaders in the Walmart system make sense from the standpoint of expanding the prospects for development. The more relevant experiences and progressive perspectives are presented, the more natural is the vitality of the team. Leadership according to the parameters set in the regenerative theory is positioned as the ability to feel other people, hear them and be able to interact with them talentedly. Leadership in Walmart should be associated with a sense of presence, which is a philosophical concept that requires awareness of oneself at a given point in time and space, that is, the most natural state. This naturalness gives rise to an organic flow and logic of interaction with other people. Thus, the system turns out to be the most psychologically comfortable and can afford a conflict-free racial and class diversity of the working collective.

Walmart can still use motivators taken from transactional theoretical suggestions. That is to make staff work harder through recognition, giving them responsibilities with increased wages and creating their growth paths through training and other professional developments (Tricker 2019). Another possible parameter to use is the Hertzberg’s hygiene factor, which makes staff feel unmotivated when they stay away from work (Northouse 2018). This theoretical framework can be practically implemented through improved working conditions, salaries, fair and transparent company policies, enhanced supervision, and improved employee security.

Walmart should make sustainability and regenerative principles its priorities for the business. Creating an organic environment for employees, in the form of green offices with reduced carbon emissions, would serve as a motivating example for other companies. Concern about environmental issues is a worthy task for a company entering an era of crisis due to global warming. Therefore, regenerativeness as a principle of finding a balance in the present can be expressed in support of economic and social development, as well as in various forms of environmental protection. This activity can make working at Walmart more ethically attractive, as well as create a favorable image for cooperation with sponsors and new investors and stakeholders.

Walmart must regenerate its leadership to restore, conserve, renew, and replenish the workforce. The profound reformation of leadership in the company is essential for achieving sustainable and regenerative development. Another practical recommendation for Walmart is introducing more democratic and inclusive tendencies into managing the personnel. These measures will ensure that the staff feels appreciated, encouraged, loyal, and satisfied. Additionally, Walmart will be able to build an economy that is life-affirming and in balance with our natural resources. In terms of employees’ motivation, Walmart should urgently consider increasing their wages and allowing them to form unions to bargain for better terms of service.

Conclusion

Thus, it is critical to focus on sustainability and regenerative leadership in developing the strategic plan for the company’s improvement. Walmart cannot do away with the traditions set by its founder because one-quarter of decision-makers on the executive board come from that family. It lacks diversity at the directors’ level, hence denying it the benefit of inclusivity and variations in skill set and experience to steer it competently. Further, the company has been running on unethical standards that have left employees dissatisfied, compromised the environment, and broken discrimination within its ranks over the years. These details support the hypothesis that the principles of sustainability are not followed in Walmart, and there are significant problems with regenerative leadership.

To solve these issues, Walmart must adopt sustainable leadership to enhance the staff’s psychological empowerment levels. It will result in a higher impact on the overall performance of the retail company. Regenerative leadership, in turn, is another opportunity to rebuild the company and make its policy and performance more balanced. Regenerative leadership pursues the same goals as a sustainable strategy due to the focus on balance with nature and society and life-affirming principles.

Reference List

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