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Last year Fortune, now divorced, was fired from his co-manager's job in Weatherford after he confronted a suspected shoplifter in the parking lot. Wal-Mart says he violated company rules by engaging in the scuffle; Fortune believes he was really let go for refusing to fire a potential union sympathizer. After he was fired state authorities rejected Wal-Mart's arguments and ruled that Fortune was eligible for unemployment compensation.
Fortune says he still admires a lot about Wal-Mart but feels that it is not living up to its own ideals. In particular, he now takes a dim view of the direction management takes in its relations with associates. Wal-Mart just raised the insurance premiums for associates. Sam promised them. There is no question that Las Vegas is at the psychic edge of Wal-Mart's expansion, where the pressures of competition and the differences in outlook from Wal-Mart's rural, Southern origins magnify every difficulty. And it would be fair to protest that a store in the middle of a union-organizing drive is an atypical petri dish in which to study the Wal-Mart culture.
And yet even if not typical, Las Vegas is instructive: Like a magnifying glass, it makes visible conflicts that are present but less obvious in other places--places that have more in common with Las Vegas than they do with Madisonville. After all, Wal-Mart's U. Sam Walton himself was aware that as Wal-Mart spread out from its rural base, its culture would face increasingly greater strains. That cultural strain is the first of three big reasons that Wal-Mart's deal with its workers is eroding.
Sam Walton himself anticipated this. But in new Wal-Mart territories like Las Vegas and Washington State, where the expectations of everyone from hourly workers to regulators are very different from those in Wal-Mart's home turf, it's not clear that Walton's optimism was justified. And you can even argue that Wal-Mart's core territory has become increasingly unfamiliar. Workers in places like Weatherford are perfectly willing to drive an hour to higher-paying jobs in, say, Fort Worth.
Even in Madisonville, cashiers now disappear with hardly any notice "We had five call in and quit in one day," says Stephanie Haynes.
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The second reason is that the work in the retail economy is very different from what it was just a few years ago. In today's hour Wal-Mart, managers most of whom work the day shift and get in at 7 a. In these stores working life is measured in numbers such as IPH, or items per hour, a figure recorded by high-tech cash registers that monitor merchandise scanned by Wal-Mart cashiers. In this way working at Wal-Mart has become a lot more like working anywhere in the modern service economy. And as Wal-Mart has become more like everywhere else, many other places have tried to become more like Wal-Mart.
Other chains have adopted the best of Wal-Mart's practices, like the open-door policy that gives workers easy access to management, and some of them like Costco pay more to boot. The final reason that Wal-Mart's deal with its workers is eroding is that the company is not growing as fast as it once did. Wal-Mart is huge; the economy is troubled; a slowdown isn't a surprise. But it does mean that management, both in the stores and companywide, is under increasing pressure to keep margins--and the stock price--up by cutting costs. When he announced the company's year-end results for , CEO Lee Scott thanked associates for a "good ending to a difficult year.
Where will the profit growth come from? Prudential analyst Wayne Hood says that Wal-Mart's labor costs are consistently lower than competitors' and are the single biggest reason Wal-Mart's operating costs are To keep margins up as sales grow more slowly, Wal-Mart will have to lower those operating costs even further.
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