Wal-Mart Business Change: Fire Employees, Hire Them Back

Business Change is a beautiful thing. Not always easy, not always obvious, and often painful, business change nevertheless pays off time and again for companies that plan it, enact it, and then look forward to their next form of business change.

Wal-Mart has enacted a business change that makes me cringe. This week, they laid off 11,000 employees with effectively no notice. That’s ugly enough considering the financial position Wal-Mart occupies; certainly there was no emergency that required such an action.

The lay-offs weren’t “real”; the employees were immediately re-engaged as contractors temporarily, while a new company Wal-Mart has designated to handle certain jobs on an outsourced basis interviews the once-and-future employees to re-fill their own jobs.

Does that sound a little bit odd? Wal-Mart knew they were going to outsource the jobs and created an orderly not-quite-a-transfer situation to another company, but laid off the employees first? Maybe it has something to do with the new company being based in Arkansas, just down the road from Wal-Mart’s corporate headquarters. Wait a second: maybe Wal-Mart set up that new company themselves and owns it.

That would be OK, but . . . why fire the employees and have the other company re-hire them? Why not just transfer the employees from one company to another?

Assuming Wal-Mart owns the new company, there really is an answer: because to simply transfer the employees would confer longer seniority on them if a labor action involving the issue ever came to pass. Microsoft’s dealt with “you aren’t an employee/whoops, it seems you are” issues; ask them.

I’m not one of those “bash Wal-Mart” types. They deliver goods at a lower price than almost anyone and fill an important place in the US economy. They’re our largest employer . . . by a factor of almost three. I’m not interested in the debate about whether they underpay their employees and provide inferior benefits; business is about handling many different transactions well. I had no issue with their “no more pay checks” position a few months back; only the details were troubling.

But when you fire 11,000 employees after having set up another company to hire them back and demand that the employees give up certain rights to take action against you if they want to get severance pay (and, I presume, have any chance of BEING hired back by the new company), it’s obvious that your actions were specifically targeted at skirting the rules of good corporate behavior . . . and probably the law.

Oh and by the way: the employees that Wal-Mart has outsourced in this particular business change are the “free sample” people. Ever noticed that those people are always the oldest employees? That’s right; it looks like age discrimination. Tuck that into the point about interrupting seniority and the picture just keeps getting uglier.

C’mon, Wal-Mart. Business Change is great, but when you do things like this you only lend credence to the way so many people think about you.