Gotta love Wal-Mart, they provide us with so many opportunities to learn.
Here’s a really long article from the most recent New Yorker that I think is awful from start to finish for Wal-Mart, the PR profession and the people involved. It’s hard for me to imagine a worse portrayal (OK, the reporter didn’t find the room in the HQ with the pentagrams on the floor and the black candles, but that’s about it).
The big question in my mind is, “Why?” Why did Wal-Mart agree to allow this reporter to interview its executives and to allow him access to its headquarters and facilities? Was it a calculated gamble that failed? A failure to adequately research the reporter and the publication? Something they felt compelled to do for some other reason?
The only reasons to work with the media, I tell folks in the “Intro to PR” presentation I use, are to either 1) enhance the reputation of your company’s brand, products or people or 2) mitigate damage that may be done to the brand, product or people. I think you should take an expansive view of that proposition (i.e. sometimes you work with the media because investing in a relationship serves both purposes), but the question to ask about every media opportunity is, “What form of participation best achieves those goals?”
Sometimes the right answer to that question is to decline to provide any on-the-record comment and to deny access to your people and facilities, usually because the reporter you’re working with will use each and every word, image and interaction you give them as an extra length of rope with which to hang you.
I think that might have been the right answer here. Read the article and tell us what you think: Is it as bad as I think? How would you have handled the “opportunity?”
Annals of Spin
Can the company co-opt liberals?
by Jeffrey Goldberg
April 2, 2007
Wal-Mart has hired Democratic P.R. experts to help improve its reputation on such issues as low wages, miserly benefits, sex discrimination, and union busting.
On the second floor of Wal-Mart’s headquarters, in Bentonville, Arkansas, is a windowless room called Action Alley. In the Wal-Mart idiom, the term “Action Alley” usually refers to the main aisle of the company’s two thousand Supercenters—the stores that have upended the retail business by selling enormous quantities of groceries and imported goods at prices that competitors find difficult or impossible to match. At the “home office,” as Bentonville is known, Action Alley is the company’s war room, a communications center that was set up and is staffed by Washington-based operatives from Edelman, a public-relations firm that advises companies on issues of “reputation management.” Wal-Mart corporate culture is parsimonious except in the matter of executive compensation, but, according to a source, the company has been paying Edelman roughly ten million dollars annually to renovate its reputation.
Twenty years ago, Wal-Mart was widely viewed as a scrappy regional retailer, and its founder, Sam Walton, an Ozarks eccentric with a vision of super-discounting, was praised for intuiting the needs of his customers, and for maintaining high morale among his workers. When Walton retired, in 1988 (he died in 1992), the company had revenues of sixteen billion dollars. Today, Wal-Mart is the second-largest company in the world in terms of revenue—only ExxonMobil is bigger. Its revenues last year came to more than three hundred and fifteen billion dollars, with profits of more than eleven billion, and it has developed a reputation as a worldwide colossus that provides poor pay and miserly benefits to its 1.8 million employees. The image of the company is not helped by the immoderation of Sam Walton’s widow and children, who together control forty per cent of Wal-Mart’s outstanding shares, and who are worth roughly eighty billion dollars; they are, by a striking margin, the richest family in America. (They are worth more than Warren Buffett and Bill Gates combined.)
Wal-Mart is traditionally a Republican-leaning company (during the past fifteen years, more than seventy-five per cent of its political donations have gone to Republicans) and has become a favorite target of Democratic politicians. Hillary Clinton, who once served on Wal-Mart’s board, recently returned a five-thousand-dollar donation because of what a campaign spokeswoman said were “serious differences with current company practices.” Barack Obama and John Edwards have joined union-led campaigns to denounce the company for its wage-and-benefit policies. Wal-Mart is notably unfriendly to unions; in 2000, when meat-cutters at a single Wal-Mart in Texas organized into a collective-bargaining unit, Wal-Mart responded by shutting down its meat counters across Texas and in five neighboring states. It closed an entire store in Quebec, rather than see workers unionize.
The company has also been criticized for driving American jobs overseas, by demanding immense discounts from its suppliers. Senator Byron Dorgan, a North Dakota Democrat who is one of Wal-Mart’s main foes in Congress, says that the company, by forcing its suppliers to manufacture goods in China, shows that it “doesn’t stand for American values.” Wal-Mart has been the subject of numerous unflattering documentaries and books. Even Ron Galloway, the maker of a recent pro-Wal-Mart documentary, “Why Wal-Mart Works and Why That Makes Some People Crazy,” has turned against the company. Galloway told me that he now considers Wal-Mart to be a “heartless” employer. “They just instituted a wage cap for long-term employees—people making between thirteen and eighteen dollars an hour. It’s a form of accelerated attrition. They can’t expect me to defend that,” Galloway said.
Two unions—the Service Employees International Union and the United Food and Commercial Workers—fund anti-Wal-Mart lobbying groups that catalogue what they see as the company’s diverse sins. Each month seems to bring a new, self-inflicted embarrassment. Most recently, Wal-Mart announced that it had fired a technician from its Threat Research and Analysis division (which combats industrial espionage) for eavesdropping on telephone calls made by the Times’ Wal-Mart beat reporter, Michael Barbaro. Wal-Mart claims that the technician acted alone; the U.S. Attorney in Arkansas is investigating.
In 2005, Barbaro and another Times reporter, Steven Greenhouse, cited an internal memo written by the company’s chief human-resources executive, M. Susan Chambers, in which she suggested that the company could control personnel costs by not hiring unhealthy people. (To keep the sick and the lame off the payroll, Chambers suggested that all jobs should include “some physical activity; e.g., all cashiers do some cart-gathering.”) In the same memo, Chambers noted that forty-six per cent of the children of Wal-Mart’s million-plus American employees were uninsured or on Medicaid.
More recently, the company experienced a run of bad publicity when it announced new scheduling policies for its store workers (known as “associates”). Under what critics call the “open availability” policy, workers must make themselves available for different shifts from month to month or risk losing hours. Kathleen MacDonald, a cosmetics-counter manager at a Wal-Mart in Aiken, South Carolina, explained to me, “It’s simple. They say you have to be there when the computer says the customers will be there. So if you have kids at home you can’t show up, but then your hours are being cut.”
The company is facing more consequential challenges over its treatment of women. A class-action lawsuit filed in San Francisco in 2001 by six female Wal-Mart employees, alleging that the company has denied promotions and equal pay to women, is proceeding steadily to trial; by some estimates, the suit could cost the company as much as five billion dollars. Wal-Mart has denied that it discriminates against women. Kathleen MacDonald joined the suit after she learned that a male counterpart, who, like her, was stocking shelves, earned more than she did. When she raised the issue, she told me, “my immediate supervisor said, ‘Well, God made Adam first, and Eve came from him.’ I was, like, what? That’s when I decided enough was enough.”
Full-time hourly workers at Wal-Mart stores make an average of $10.51 an hour, according to the company. Wal-Mart’s most energetic adversary, a group called Wake Up Wal-Mart, which is sponsored by the food workers’ union, notes that $10.51 may be the average full-time wage, but the company won’t disclose the average hourly wage of part-timers. “We think the true average is probably less than nine dollars,” Chris Kofinis, the Wake Up Wal-Mart spokesman, said.
The company has had its bright moments, most notably in the immediate aftermath of Hurricane Katrina, when Wal-Mart mobilized its truck fleet to deliver goods to the storm zone. But that was a rare instance of good public relations. Owing in part to its status as a retail behemoth, Wal-Mart has met with resistance in numerous communities (including New York City) when it has tried to open stores. And its recent business performance has been less than stellar; sales have slowed, and the stock price is stagnant. Problems like these have concentrated the minds of Lee Scott, Wal-Mart’s C.E.O., and his top executives. “We used to be the David and now we’re seen as the Goliath,” John Fleming, the company’s chief merchandising officer, told me.
The job of the Edelman people—there are about twenty, along with more than three dozen in-house public-relations specialists—is to help Wal-Mart scrub its muddied image. Edelman specializes in helping industries with image problems; another important client is the American Petroleum Institute, a Washington lobbying group that seeks to convince Americans that oil companies care about the environment and that their profits are reasonable. Edelman does its work by cultivating contacts among the country’s opinion élites, with whom it emphasizes the good news and spins the bad; by such tactics as establishing “Astroturf” groups, seemingly grass-roots organizations that are actually fronts for industry; and, as I deduced from my own visit to Bentonville, by advising corporate executives on how to speak like risk-averse politicians.
It became clear to me in Bentonville that Wal-Mart’s senior executives had been tightly scripted. When I talked with John Menzer, a company vice-chairman, a spokeswoman named Sarah Clark, my official escort there, told me that the conversation would be limited to the company’s new Jobs and Opportunity Zones concept, which is designed to help smooth the arrival of new stores in urban areas. (A company source told me that the Zones idea was intended by Edelman as a public-relations maneuver to soften Wal-Mart’s image among minority communities; the entire budget for the program is five hundred thousand dollars over two years.) Menzer, a slender man with a thin smile, explained the company’s attraction to underemployed inner-city residents, saying, “One of the biggest opportunities a person has at Wal-Mart is to be part of this growth company. There are always opportunities for promotion, learning, and education, and people know they can build a career here.”
When I asked about the “open availability” policy, Clark interrupted, while Menzer stared at me. “I can certainly take that one,” Clark said. “I’ll make a note of that. We’ll talk about that later. We don’t have ‘open availability.’ ” Menzer continued as if the question had not been asked. “Now we’re expanding outside our four walls to invest in the community, so let me add that in as another step we’re taking,” he said. (Sometime later, Clark suggested that I interview an employee about flexible scheduling, and she provided the name and number of one who would talk to me: Latoya Machato, a cashier at a Texas Supercenter. I called the store and asked for Machato, but was told that “cashiers can’t come to the phone during work.” I called later and was told that Machato could speak to me on her break, but would not be allowed to call long-distance from a company phone. I asked Clark if Machato could talk to me after her shift, but Clark said that that would be impossible, because the store would have to put her “on the clock,” and thus file the paperwork to get her paid an extra hour’s wage.)
The Edelman team assigned to Wal-Mart, I learned, is divided into three groups: “promote,” “response,” and “pressure.” The Jobs and Opportunity Zones notion came from the promotions team. The response-team members—veterans of political campaigns—are supposed to quickly counter criticism in the press or on the Web. The pressure group works on opposition research, focussing on the unions and the press.
There is great mistrust of the press at Wal-Mart headquarters. The chief spokeswoman for the company, a former A. T. & T. executive named Mona Williams, keeps on a shelf a framed cover of a 2003 issue of Business Week featuring a story titled “Is Wal-Mart Too Powerful?” The story asked tough questions about Wal-Mart’s influence on the American economy. “I keep that there to remind me never to trust reporters,” she said, without smiling. Sarah Clark was friendlier, but similarly suspicious. It was Clark who, without enthusiasm, brought me to Action Alley for a brief glimpse inside.
Before opening the door, she instructed me not to write down anything I saw—the third time that this particular directive had been issued. In some ways, the home office is not unlike the headquarters of the National Security Agency—both contain a large number of windowless rooms and both are staffed by people who are preoccupied by the movement of strangers in their midst. The N.S.A.’s headquarters, though, seemed to me more aesthetically appealing; the Wal-Mart home office resembles a poorly funded elementary school. Wal-Mart executives take pride in their ostentatiously shabby surroundings. “When I was working internationally, I got to be friends with Henry Kissinger, and so I invited Henry to have lunch with us,” Menzer told me. “We had lunch in the Quail Room, and it’s got pictures of Sam Walton and all his bird hunting, and we handed out Subway sandwiches and said, ‘Well, you’re very special, so we threw in a bag of chips,’ and I daresay I don’t know if he ever saw a Subway sandwich before, but he was actually so impressed that we live our culture.”
I pointed out to Menzer that his salary would allow him to purchase something more elegant. His face clouded over. “I’m just not going to talk about that,” he said. In 2005, Menzer earned six and a half million dollars in salary, bonuses, and options.
Clark opened the door of Action Alley to reveal a dark, threadbare room, its walls, like most of Wal-Mart’s walls, painted battleship gray. Six desks were clustered at the center of the room, and at these desks sat five Edelman executives.
When the presence of a reporter was announced, three of the executives looked away and two stood up to greet me. One was Greg St. Claire, at the moment the senior Edelman employee there. St. Claire, who is about forty and is a former Republican congressional staff member, got Wal-Mart in some trouble last year, because of a group called Working Families for Wal-Mart, which advertised itself as a “grass-roots” organization. St. Claire was one of the forces behind Working Families for Wal-Mart, which paid for his sister, Laura St. Claire, to travel across America in a recreational vehicle and keep a blog about visits with Wal-Mart employees. Everyone she talked to was delighted with Wal-Mart. At about the time that the trip came to an end, Business Week revealed that Wal-Mart had financed the journey. When I asked Richard Edelman, the company’s chairman, about this rather blatant example of Astroturfing, he said, of Working Families for Wal-Mart, “I do believe that it is a real group of real people, as far as I know.” Working Families for Wal-Mart is housed in Edelman’s Washington office; its steering-committee members, some of whom have business ties to the company, were recruited by Edelman. They include the singer Pat Boone, who told me by e-mail that he volunteered his public-relations services to Wal-Mart several years ago, and Wal-Mart passed his name on to the group.
Greg St. Claire was not interested in talking to me, but the other Edelman executive stood up and said hello. He was a man of about thirty named Fred Baldassaro. I was surprised to see him. We had last crossed paths more than a year earlier, in a union hall in Albuquerque, New Mexico. At the time, Baldassaro was working for the Democratic National Committee chairman, Howard Dean, as his top travelling aide. Dean had spoken about democratic values at a rally, and said, “When you see that you’re putting in as many hours as the C.E.O. of your company, and he’s making five hundred and thirty-eight times what you’re making, do you think capitalism works for you?”
Down some stairs from Action Alley is the office of Lee Scott, Wal-Mart’s president and C.E.O., who last year earned $15.7 million in salary and bonuses. Early this month, the company announced that it was granting him an additional twenty-two million dollars in stock. In the past year, Scott earned roughly two thousand times the salary of the average Wal-Mart worker.
Sarah Clark was eager to move along, but I asked Baldassaro why he went from Dean’s Democratic National Committee to Scott’s Wal-Mart.
“Well, it’s interesting here,” he said. “I’m getting married soon, anyway, and, you know . . .” He trailed off, as Clark invited me to leave.
Later that day, I drove to a Wal-Mart Supercenter in the nearby town of Rogers with one of Clark’s deputies, a young New Yorker named David Tovar, who, before joining Wal-Mart, spent nine years as a spokesman and lobbyist for Philip Morris, including a stint arguing against government regulation of cigarettes. He explained his position: “It’s a legal product that adults can choose to use, or not use, as they see fit. I learned a lot by doing that sort of work.” As we drove out of Bentonville, I asked Tovar if he thought it odd to find ostensibly pro-labor Democrats at the headquarters of Wal-Mart. In fact, he said, it would be quite normal for Democrats to join Wal-Mart’s “cause,” because Wal-Mart’s customers are the Party’s natural constituency.
Wal-Mart’s executives are angry about Democratic attacks on the company. Tovar’s boss, Mona Williams, told me, “Wal-Mart is taking care of the people the Democratic Party says it represents—the poor, the middle class. The Democrats are not taking care of them. We’re like Lyndon Johnson’s Great Society.”
Tovar offered a more self-interested explanation for his service in the public-relations industry: “Why did I go work for Philip Morris? Because I wanted to get out of my parents’ house. Why do people take jobs? It’s like in ‘Thank You for Smoking’ ”—Christopher Buckley’s satire of the Washington public-relations industry. “What do they all say in that book? ‘I’ve got to pay the mortgage.’ You know, everybody’s got to pay the mortgage.”
In another novel, Buckley devoted a chapter to the exploits of a fictional White House advance man named Leslie R. Dach. “His motto was ‘Get the fuck out of my way,’ ” Buckley writes of Dach. “Leslie was serene in his contempt for fools, a category which in his view included most of humanity.”
Buckley borrowed Dach’s name from an actual Leslie Dach, who was his roommate at Yale, and who, thirty years later, remains a close friend. The real Dach also worked in Presidential politics—first as an advance man for Senator Edward Kennedy in his failed run for the nomination in 1980, and, later, as communications director for Michael Dukakis’s campaign in 1988 (a campaign that is still recalled for the moment when Dukakis was photographed, and ridiculed for, wearing a helmet as he rode in a tank). Today, Dach is Wal-Mart’s executive vice-president for corporate affairs and government relations. Last year, Lee Scott hired Dach away from Edelman, where, among other duties, he was vice-chairman, and where he managed the Wal-Mart account. “Fresh from his triumph in staging Michael Dukakis’s tank ride, it’s on to Bentonville,” Buckley said to me earlier this month. When I mentioned Buckley’s comment to Dach, he demurred: “I was thousands of miles away in my office at that famous moment.”
Dach, who is fifty-two, is the son of Holocaust survivors and grew up in Queens. He is wiry, with wavy graying hair and a pointed sense of humor—an improbable addition to the ranks of Wal-Mart’s senior managers. He is not as impolitic as his fictional counterpart, although Buckley told me that Dach’s friends are “bemused that he ended up in public relations, because, roughly speaking, he was the least tactful person on the planet.”
Upon graduating from Yale, Dach worked for a time for the National Audubon Society, and then for the Environmental Defense Fund, and he became involved in Democratic politics. (He has worked in seven Presidential campaigns.) After the 1988 race, the public-relations expert John Scanlon, who was volunteering on the Dukakis campaign, recommended Dach to Edelman. He went to work there and stayed for seventeen years, interrupted quadrennially for campaigns. In 2000, he managed the program at the Democratic National Convention for the Gore campaign. At Edelman, he did public relations for a range of corporate interests, along with Michael Deaver, Ronald Reagan’s former image-maker, who also works for Edelman in Washington.
One of Dach’s first big clients was Starkist, a division of Heinz, which was being accused by environmentalists of slaughtering dolphins during tuna harvests. Richard Edelman told me that Dach worked to bring the two sides together, and helped create the dolphin-safe tuna campaign. Dach maintained his ties with the environmental movement throughout his career at Edelman. In 1995, he helped to plan a seminar for petroleum-industry executives on ways to counter the bad publicity that comes with oil spills, while at the same time serving on the board of the National Audubon Society.
Ethical ambidexterity is no barrier to success in the public-relations field, particularly in Washington. Many prominent Democrats spend the years between national elections representing corporate clients: the political consultant Carter Eskew, who has worked for such Democratic politicians as Al Gore and Christopher Dodd, also worked for the tobacco industry; Mike McCurry, the former Clinton White House press secretary, represents the telecommunications industry in its fight against, among others, Democratic bloggers on issues of Internet access. Democrats and Republicans frequently come together to build bipartisan lobbying firms that seek corporate clients; Clinton’s onetime counsel Jack Quinn, who had as a client the international fugitive Marc Rich, for whom he helped arrange a Presidential pardon, built a successful firm with Ed Gillespie, the former Republican National Committee chairman.
Dach and Edelman have been innovators in their field. A press release issued in 2000 outlines a strategy that Dach has used repeatedly to good effect. “You’ve got an environmental disaster on your hands,” the document reads. “Have you consulted with Greenpeace in developing your crisis response plan? Co-opting your would-be attackers may seem counterintuitive, but it makes sense when you consider that N.G.O.s (non-governmental organizations) are trusted by the public nearly two to one to ‘do what’s right’ compared with government bodies, media organizations and corporations.” The document goes on to describe Amnesty International, the Sierra Club, and the World Wildlife Fund as “brands” that the public believes “do what’s right.”
Edelman’s co-option policy may already be on display at Wal-Mart. Greenpeace has talked with the company about the issue of environmentally sound product packaging, and earlier this year Lee Scott joined Andy Stern, the leader of the Service Employees International Union, in a coalition of businesses and unions calling for quality health care to be made available to all Americans by 2012. Stern, whose union pays for the activities of a group called Wal-Mart Watch, which regularly criticizes the company, told me he did not believe that he had been co-opted by Wal-Mart, but his allies in the labor movement weren’t so sure. “Anyone who wants to take health-care lessons from Wal-Mart,” Chris Kofinis, of Wake Up Wal-Mart, said, “needs to have a serious reality check.” Government-sponsored universal health coverage would, of course, free Wal-Mart and other companies of the burden of providing health insurance for their employees.
Dach declined to take credit for Wal-Mart’s foray into the health-care-policy debate, but Richard Edelman suggested that he is seeing Dach’s influence on the company. Edelman called Dach an “idealist” who has carried to Wal-Mart his fervor for such traditional Democratic causes as universal health care and environmentalism. “I feel very strongly that Leslie Dach is making a very real contribution to Wal-Mart,” he said. “When he left, I didn’t get weepy, but I said, ‘Go and make a great contribution.’ ”
Wal-Mart, in turn, is making a great contribution to Dach: he was given three million dollars in stock and a hundred and sixty-eight thousand stock options, in addition to an undisclosed base salary. He and his wife, a nutritionist, recently bought a $2.7-million house in the Cleveland Park neighborhood of Washington. He commutes to Bentonville during the week, to an apartment furnished out of a Wal-Mart store.
Dach’s decision to join Wal-Mart has brought him, by his own admission, some mockery, most recently at a seventy-fifth birthday party for his former boss Edward Kennedy. (Dach said that, for each person who teased him, “two others asked if they could do business with us.”) It has also strained relations with some friends. Joseph Sellers, a prominent civil-rights lawyer who is one of the lead attorneys in the Wal-Mart sex-discrimination lawsuit, said that his relationship with Dach has become awkward. “There’s no question that his profession views reality as malleable,” Sellers said. “I’m in the reality business.”
Even Andy Stern, the president of the service-employees’ union, who maintains a diplomatic relationship with Lee Scott, suggested that Dach is a turncoat. Lee Scott, he said, pursues harsh labor policies but is not a hypocrite about it, while Dach, an ostensible progressive, has, by declaring his allegiance to Bentonville, abandoned core principles of Democratic activism. “I would respect him if he said, ‘Listen, I’m just trying to get rich,’ ” Stern told me. “If that was your goal, you did really well. If your goal is to say you’re a progressive, then you’re full of it.”
In a recent conversation, Dach wanted to emphasize that he was not doing this for the money. He added, “I think I’ve been a person who has cared about issues over my entire professional career, and through seven Presidential campaigns I’ve tried to make a difference in my own limited way, and I firmly believe Wal-Mart’s core proposition of saving people money so they live better, working on sustainability, being part of the solution, moving these policies forward.”
Dach knows how to divert an unfriendly question with a flood of words, few of which address the subject at hand. I asked him whether it was moral for a self-styled progressive Democrat to work for a company that, among other things, maintains a mobile squad of union busters who can be dispatched by corporate jet to any store that gives off the faintest rumblings of union activity.
“I think that, first of all, morality is not the right language,” he said. “I think the more than one hundred and thirty million people who shop at Wal-Mart each week, who are saving money so they can live a better life, who save money there, they’d be insulted by that frame. Some of these issues are complex, and the debates are complex.”
Like the best P.R. men, Dach seems to find joy in spin. One day, while we were having lunch in the Wal-Mart cafeteria, I asked him why all the televisions in the building seemed to be tuned to Fox News. The television in the main lobby was on Fox, as were the televisions in the P.R. wing of the building and in the cafeteria, including one that was ten feet from his head.
“Is that true?” he said. After I assured him that it was, he said, “What about in the mornings? Do you know if they’re on Fox in the mornings?”
Such matters, he said, are sideshows. The important thing, he told me, is that Wal-Mart is making changes that even the most loyal Democrat would have to acknowledge are beneficial to the working poor and to the environment. Dach mentioned Wal-Mart’s newly instituted plan to provide its customers with generic drugs for four dollars a prescription. The program has been a success, even though, so far, a relatively small number of drugs—about three hundred—are on the four-dollar list. The program is being marketed as a way for Wal-Mart to “give back to the community,” as Dach put it. It, too, has its critics. Charlie Sewell, a senior vice-president of the National Community Pharmacists Association, a lobbying group, called the Wal-Mart plan a “classic bait-and-switch,” adding that most of the drugs on the list are older, less prescribed drugs.
Wal-Mart’s executive vice-president responsible for pharmacies, Bill Simon, told me that the company is making large profits on the program. “It’s not like these are twenty-dollar items that we’re selling for four dollars as a loss leader,” he said. By applying the Wal-Mart model to the generic-drug industry—pressuring manufacturers to sell to Wal-Mart for less—Simon said, the company has been able to make “more money” in pharmaceuticals “than we made last year.” Wal-Mart’s cost for some generics, he said, is as low as thirty-two cents. Not far from Simon’s office is a wall covered with exhortations to the company’s workers. One reads, “If you aren’t working on sales or the things that enhance the profitability of this company, then you are working on the wrong things.”
The generic-drug program has taken some public pressure off the company on the subject of its medical benefits. According to one study, Wal-Mart spends an average of thirty-five hundred dollars per employee per year on health benefits; the average for the retail industry over all is forty-eight hundred dollars. Recently, the company offered employees a “value plan” for health insurance, at a monthly premium as low as eleven dollars in some areas. But a family on the plan would have a three-thousand-dollar deductible, which would make it functionally unaffordable to a worker making seventeen thousand dollars a year. When I asked Linda Dillman, the company’s vice-president for benefits, about this potential financial strain, she said, “Well, that’s the problem we all have.” Dillman was a strong defender of Wal-Mart’s benefits plan, and said that the Susan Chambers memo that called for Wal-Mart to cease hiring unhealthy people had been misinterpreted. “The fact that we have to apologize because we want our associates to be healthier is absurd to me,” she said.
At the core of Dach’s campaign to prove that Wal-Mart is changing is the new “green” campaign—the company’s efforts to cut fuel and electricity consumption and make its stores eco-friendly. The green campaign has won some important allies. John Flicker, the president of the National Audubon Society, told me that he is pleased to see Dach at Wal-Mart: “He truly believes in the cause, and at a company the size of Wal-Mart he can truly make a difference.” Dach gives credit to Wal-Mart. “All of this began way before I got here,” he told me. “The passion for change is widespread throughout the company. I’m just a helper.”
As part of the green campaign, Wal-Mart has committed itself to cutting the fuel consumption of its truck fleet, the second-largest in America, and to reducing its electricity bill—Wal-Mart is one of the largest private consumers of electricity in the world—by twenty per cent in the next five years. Dach arranged for me to visit a recently opened Supercenter near Bentonville that was built to conserve energy.
For any number of reasons, this Wal-Mart seemed different from other Wal-Marts I’d been to. The prices were still low, but the workers appeared to be more enthusiastic, and I was impressed, in particular, by the store’s environmental innovations. Skylights allowed so much natural illumination that the fluorescent lights were switched off. The lights in the vast freezers were controlled by motion sensors, so they switched on only if someone walked nearby. “In this store alone, we’ll save more than a hundred thousand dollars in electricity this year,” Charles Zimmerman, a Wal-Mart vice-president who showed me around, said. “What we’re trying to do is make sustainability sustainable,” Dach said.
Even doubters in the environmental movement acknowledge that Wal-Mart is attempting to lower its energy consumption. “The energy-efficiency piece of this is real,” Carl Pope, the executive director of the Sierra Club, told me. “They will deliver on it. But it’s a straight-out business call.” Pope, who worked with Dach while he was at Audubon—“He was very good at what he did,” he said—is now a member of the coalition that makes up Wal-Mart Watch. “The third and by far the most intriguing initiative is that they’re going to green their supply chain”—to press their more than sixty thousand suppliers to embrace conservation as well. “They, and perhaps only they, have the market power to do it,” Pope said. “It will be phenomenally important if they actually did it.”
Pope acknowledged that Wal-Mart’s liberalizing environmental strategy will win it new supporters, but he is skeptical of the company’s motives. “You can’t be a good progressive and support Wal-Mart because Wal-Mart is saving money on energy—that’s all they’ve done so far,” he said. On Dach, he was acerbic: “One of the remarkable things about the environmental movement is how rarely people from our side end up on the other side, and Leslie is on the other side.”
Environmentalists, he said, should not be swayed by cost savings alone. “You can’t say that they have a good business model. Their model is efficient. Henry Ford used efficiency to raise standards, to bring his workers into the middle class. Wal-Mart has that choice. Their game is to say that there’s no other way to be efficient. But they’ve driven down wages across the retail industry, and they don’t have to, in order to be profitable.” Pope cited Costco, the chief rival to Sam’s Club, Wal-Mart’s membership warehouse. “Costco pays their workers well”—the average wage at Costco is $17.46 an hour—“and we know they’re profitable.”
Mona Williams, the chief spokeswoman for Wal-Mart, disagreed. When she was asked why the company could not simply give two-dollar-per-hour across-the-board raises to its store employees, her reply was free of obfuscation. “Wal-Mart’s profit per associate is six thousand four hundred dollars,” she said. “If we were to pay two dollars more an hour to associates, that would cut four thousand dollars out of our per-employee profit. If anybody ever stopped to do the math, they’d see this. It would take two-thirds of the profit if we gave everyone two dollars more.” She added, “You could raise prices, but what about the woman who is shopping for Easter shoes for her kids? We can’t raise prices on her.”
Dach told me, “Wal-Mart pays competitive wages everywhere we have a store or club. We’re one of the only companies to support an increase in the federal minimum wage. We have many more applicants than we have jobs, and we have more than one million people on our health care.”
Dach, whose 1988 candidate for President, Michael Dukakis, called for “good jobs at good wages,” said that “it’s too early to tell” if he will work on the 2008 campaign. (He would not say which candidate he favored, or whether he would remain on the Wal-Mart payroll.) The company, Dach said, is handing out political donations in a more “evenhanded” manner now than it did before his arrival.
“It was very smart of Wal-Mart to appoint him to this job,” Kenneth Adelman, the former Reagan Administration arms-control official and one of Dach’s former colleagues at Edelman, said. “He’s brilliant at what he does. He’s a great advocate for Democratic causes.” Each election year, Adelman recalled, he and Dach would stage a mock debate before employees in the Edelman office. “It would always start out seriously, and then get funny,” he said. “I would argue the Republican line, and Leslie played the part of the Democrat.”