Fear is a good motivator. But when the fear goes beyond that necessary for protection, it can become paranoia. While it’s not a word we like to think applies to us, in Defend & Extend organizations paranoia is fairly common. Defending the Success Formula, and it’s Lock-ins, becomes so paramount that anything which even looks like it might affect the Lock-in can cause extreme over-reaction.
Take the reaction Wal-Mart displayed when it started telling employees they needed to fear a Democratic win next fall (read article hear.) Wal-Mart certainly has its share of problems, but they won’t be fixed, or turned into a disaster, by whoever is elected in the next Presidential campaign. Yet, the leaders at Wal-Mart are so fearful of anything that would upset their Lock-ins that they are now telling their employees they had better vote Republican.
Wal-Mart’s credo is low cost. And somewhere along the way, this included paying its employees no more than it has to. The stories abound of Wal-Mart employees so underpaid they have to use food stamps or other government welfare subsidies to survive. And everyone is familiar with the armies of Wal-Mart employees lacking health care coverage. This Lock-in, to everything being low cost – including employees – caused Wal-Mart to develop a pathological fear of unions. A paranoia. And that has led to a fear of Democratic politicians.
Once unions were powerful in America. But you have to go back to the 1950s and 1960s. Then threats of union boycotts or strikes actually caused management to make decisions that were not balanced, but instead designed to avoid union wrath. But even at its height, non-government worker union participation never reached more than 50%. Now, union participation is only 8% – and that is down 50% since the mid-1980s. Unions are not a threat to any business leader today – including Wal-Mart.
Yet, as the article details, even minor union activity has caused dramatic over-reaction within Wal-Mart. When one store achieved union representation for its butchers Wal-Mart got rid of butchers by going to meat cut at the slaughter house. When a store in Canada had its store personnel unionize Wal-Mart closed the store. And now Wal-Mart is so afraid that unions might regain some strength they are trying to affect the votes – one of the truly independent actions all Americans have – of its employees.
A union would not bankrupt Wal-Mart. It might even make the company better! Yes, its cost might rise – but as we’ve seen low cost is not the only way to compete. The cost of a living wage with health care for all full-time Wal-Mart employees would not even cost retail prices to rise 2%. So it’s not like Wal-Mart loses its ability to be low-cost if employees had a decent wage and benefits. Moreover, if Wal-Mart had to pay better it just might have to rethink some parts of its Success Formula. And that just might help Wal-Mart adjust to changing market circumstances and become a far better competitor.
By trying to "stamp out" unions, and certainly deny their existence inside Wal-Mart, management is being paranoid. So driven to defend its Success Formula that it won’t consider options. Most Americans want their cohorts to have the basics covered. And while liking low prices, they are willing to pay for good products and good service fairly. And instead of seeing Wal-Mart as a company that abuses employees, unions could cause people to say "Wal-Mart is a great place to work. They treat people well. Let’s shop there."
D&E breeds paranoia. Protecting the Lock-ins to an extreme. And that’s the sign of a company in trouble. Because inevitably, all companies have to migrate to changing markets if they want to be profitable longer-term. The sooner management identifies paranoia, and kills it, the faster the company can react effectively to market shifts and improve its profitability. But don’t expect that to happen at Wal-Mart.