The Walmart predicament (Guest Commentary)

Everybody does it (and we don’t mean bribery)
By Jack Welch and Suzy Welch
|Canadian HR Reporter|Last Updated: 07/24/2012

Do these lines sound familiar? “Ignore him, he’s a whack job.” “She’s just bitter she didn’t get promoted.” “He’s been shooting his mouth off for years — and it’s always about nothing.”

It’s how people talk about whistleblowers. Even though they may have a noble reputation in the media, gracing magazine covers and prime-time TV spots, when whistleblowers surface at a company, management almost always brushes them off with a discrediting back story or a little piece of history that explains away all their annoying accusations.

And here’s why that happens: In most cases, whistleblowers are, to some degree, crazy or vengeful or both.

Until one terrible, awful day when, speaking out of vengefulness or ethical earnestness, a whistleblower tells the truth. And then, well, you have a crisis like the one Walmart is in today.

(The firm allegedly paid bribes in Mexico and a subsequent internal investigation was allegedly quashed by executives, according to a New York Times report in April.)

Make no mistake — Walmart is a great company. It’s created upward mobility for thousands of people and more than one million jobs around the world, and it remains the consumer’s greatest ally in the war against inflation.

But those allegations, true or not, still offer an important lesson. To us, the Walmart story is a reminder of the pervasive, even understandable, impulse at companies to ignore whistleblowers because they’re so often time-wasters. And it’s a reminder of why you can’t turn your back on them. Ever.

In fact, the only way to deal with a whistleblower’s accusations — every single time — is with a hyper-bias toward believing the informant is onto something big. Such a bias will impel you to investigate every claim ferociously.

And don’t let the investigation be conducted by the boss who’s been accused of wrongdoing. Bring in an outside agency to do the sleuthing or, at the very least, executives outside the scope of the alleged problem, with no relationship to the people involved.

It’s the only way to overcompensate for the propensity to wish whistleblowers away with the perfunctory spot check or the “Everything OK?” kind of look-see that usually occurs.

In the months ahead, Walmart will very likely experience five steps that characterize virtually every organizational crisis:

• First, it will quickly come to see its problem is much worse than it originally appeared. That’s the nature of these kinds of things — the first report of wrongdoing is usually just the tip of the iceberg.

• Second, Walmart will find there are no secrets in this world. Every last detail of the Mexico situation — and corporate coverup, if there was one — will eventually seep out.

• Third, Walmart’s handling of the crisis will be depicted in the press in the worst possible light. Being vilified goes with the territory.

• Fourth, there will be changes. That is, someone at Walmart will be fired for what’s happened, and maybe more people will share the fall.

• Finally, Walmart will become a better company for it. That’s the good news about every ugly crisis — it teaches you something your organization desperately needed to know and usually ensures the same mistake will never happen again.

It’s too bad, though, that this crisis had to happen in the first place. And it wouldn’t have, if Walmart had done a very hard, very necessary thing: Taken every whistleblower at his word.

Jack Welch was CEO of General Electric for 21 years and is founder of the Jack Welch Management Institute at Strayer University in Virginia. Suzy Welch is an author, speaker and former editor of the Harvard Business Review.

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