Walmart's Real PR Crisis Has Nothing To Do With Bribery

Kim Bhasin | Apr. 23, 2012, 11:42 AM | 322 | 1

Walmart has spent the last decade trying to get people to stop hating it. Its reputation as a small business killer always preceded it. There would always be anger and outrage when it brought a Supercenter to a new town.

Its dozens of PR initiatives have been received well, for the most part. Take its eco-rating system, which reveals exactly how eco-friendly its suppliers are being. When Walmart acquired Massmart in South Africa, the International Monetary Fund praised it for being "transparent," with all parties playing their parts properly.

All the goodwill Walmart has scraped for disappeared when David Barstow's explosive New York Times article was printed in the paper and posted online, exposing the company's huge cover-up scandal in Mexico.

But the bigger PR problem has nothing to do with bribery. and everything to do with trust.

Folks despise it when companies lie to them. They also hate it when companies don't tell them what's really going on. Walmart betrayed people's trust. It betrayed the public, its employees and its shareholders.

A lot of people understand that these kinds of things happen in big corporations. There are always a few bad eggs that will do unethical things and make a company look bad, but the public is willing to forgive a brand for its shortcomings as long as it's truthful.

It's "information ownership" — when people protect what they know without sharing it with others — and it can brutalize an organization. Transparency is important in building trust with consumers and employees, and there was none of that here.

Think of it this way. How would people have reacted if Walmart revealed its issues in Mexico early in the investigations?

If it issued a simple release explaining that it has reason to believe that there are some unethical practices occurring in Mexico, along with a writeup that details what it's doing to figure out what's going on and promising updates as soon as it had them, the backlash would have been very different.

As CEO Mike Duke's own Statement of Ethics states, "our customers trust us to be their advocate. Our suppliers trust us to be an equitable partner. And as Walmart associates, we trust each other to uphold the highest standards of conduct every day."

It didn't. Not even close. And now it's going to have to slowly earn back that trust.