Some headlines that many might find unsavory plagued retail giant Wal-Mart
Should investors throw up their hands and dismiss a story like this because of what could be called the natural antithesis between the concepts of happy employees and happy shareholders, particularly in the retail universe?
After all, some argue that Motley Fool Stock Advisor pick Costco
Regardless, I'd argue that treating one's employees with respect and fairness doesn't have to be a drain of resources or a drag on profitability -- in fact, it can better the outlook for a company by a long shot, and not simply in terms of generating good PR. One well-known powerhouse, Whole Foods Market
In Whole Foods' proxy statement (available for free from the SEC), it states: "We have a company philosophy of 'shared fate' which recognizes there is a community of interest among all our stakeholders... . We believe that happy Team Members create happy customers who grow our business and produce happy shareholders." Among the innovative ways the company does this is by providing transparency of pay scale so that all employees know what everyone else makes, and by granting stock options to employees across the board -- not just to executives. It also caps the amount executives can make over and above regular employees.
Another company that springs to mind is Starbucks
Whole Foods and Starbucks are both prime examples of companies that made some socially responsible elements part of their impressive financial success. Both are known for their happy customers and happy employees, and it's arguable that people feel good about frequenting them -- and investing in them -- for these reasons.
It's OK if some of us say, "Shame on Wal-Mart" (although just as many may defend its practices, arguing that it often provides much-needed jobs in the first place). In this day and age, where more and more people realize that investing is a way to put their dollars to work for them, more and more people also realize that being a shareholder means a company is accountable to them. In that vein, it seems that many shareholders are going to begin to expect certain ethics that makes them feel at ease with their investments.
This is by no means the first time Wal-Mart has found itself in hot water because of the way it treats its employees. On the other hand, Wal-Mart deserves credit for guranteeing all Wal-Mart employees displaced by Hurricane Katrina a job in any Wal-Mart store in the country.
The thing to remember is these days, there are plenty of alternatives for investors' dollars, some of which may fulfill a more socially progressive angle.
For more on similar issues, such as Wal-Mart's track record or socially responsible investing, please see the following Foolish content:
- A Better Portfolio, A Better World, by David Gardner
- Does Wal-Mart Deserve to Be Hated? by Stephen Simpson
- Wal-Mart's Bum Rap, by Chris Mallon
Alyce Lomax owns shares of Starbucks but of none of the other companies mentioned.