Published on: February 17, 2006The New York Times reports this morning that Wal-Mart CEO Lee Scott operates a confidential, internal website called “Lee’s Garage,” that he “uses to communicate his tough standards to thousands of far-flung managers.” In transcripts from the site provided to the NYT by the activist group Wal-Mart Watch, it appears that Scott may be facing some of the same challenges internally that he is facing from outside critics.
For example, when one store manager wrote in to ask why "the largest company on the planet cannot offer some type of medical retirement benefits?", Scott responded:
"Quite honestly, this environment isn't for everyone. There are people who would say, 'I'm sorry, but you should take the risk and take billions of dollars out of earnings and put this in retiree health benefits and let's see what happens to the company.' If you feel that way, then you as a manager should look for a company where you can do those kinds of things."
The Times writes, “The Web site shows many sides of one of the nation's most powerful executives. He denounces managers who complain about the company or their subordinates. He frets about the success of his discount rival Target. He exhorts employees to act with integrity. He mocks General Motors for problems caused by its generous benefits. He rejects a manager's suggestion that Wal-Mart has created ‘a culture of fear,’ and he hails Wal-Mart's performance in responding to Hurricane Katrina.” In addition, he derides the media for making a living by focusing on the negative, and suggests that legislative remedies being sought by its competitors are merely a way of continuing to provide lousy service at high prices.
Scott also makes the point on the site that the company has to be a lot stricter about toeing the line in terms of rules and regulations. The NYT writes:
“Responding to a manager's question about attacks on Wal-Mart's image, Mr. Scott wrote in an April 2004 posting: ‘Your value to Wal-Mart is outweighed by the damage you could do to our company when you do the wrong thing.
"’If you choose to do the wrong thing: if you choose to dispose of oil the wrong way, if you choose to take a shortcut on payroll, if you choose to take a shortcut on a raise for someone — you hurt this company,’ he added. ‘And it's not unlikely in today's environment that your shortcut is going to end up on the front page of the newspaper. It's not fair to the rest of us when you do that.’”
The Times continues, “In his postings, Mr. Scott tries to strike a chummy, ‘in the trenches’ tone, reminding managers how frequently he visits stores — at least once a week — and pops into meetings unannounced ‘to make sure there's not a filter keeping me from hearing what's really important.’
“But his responses often serve to remind managers of the gap between them and their chief executive, who earned more than $17 million last year, including stock options, who hops around the globe on Wal-Mart's fleet of jets and who lives in a gated community called Pinnacle.
"’I recently had dinner with the prime minister of the U.K., Tony Blair, and his wife; my wife and I had a meeting with Prince Charles to talk about sustainability; and I met with Steve Case, the founder of AOL, and talked about health care,’ Mr. Scott wrote in a two-week-old entry describing how he represents Wal-Mart around the world.”
- KC's View:
- It always is a risk to be honest with people in a forum where almost anyone can see it…even if you have expectations of a limited audience.
It is a little surprising, though, that Scott’s attitude toward managers with legitimate questions is to say, essentially, “If you don’t like it, leave.” Seeing as Scott worked his way up through the ranks, one of these managers could be a future CEO…though maybe that likelihood becomes more remote as the company gets bigger and more investor-focused.
Clearly there is some dissent in the ranks. This is a good thing, by the way, since a company full of “yes men” is a company staring into the abyss. And keep one other thing in mind – it had to be a Wal-Mart employee who gave Wal-Mart Watch access to the site, which then provided transcripts to the New York Times.