Employee complaints

Wal-Mart and the perils of ignoring staff complaints

November 21, 2012: 1:08 PM ET

Whether a business has millions of employees or just a few staffers, leaders ought to have a plan to deal with reputation damage that can stem from rumblings within the ranks.Wal-Mart

By Harrison Monarth

FORTUNE -- It's been a tough few weeks for Wal-Mart.

As the world's largest retailer celebrated its 50th year in business in October, workers in 12 states walked off the job in a wave of protest aimed at unfair employment practices. And the specter of a Black Friday protest could cost the retailer millions in lost revenue, not to mention more damage to its brand.

A Wal-Mart (WMT) spokesperson dismissed the October strike as a "publicity stunt," as a website dubbed "Walmart at 50," which features a slew of video testimonies from current and former disgruntled staff, went viral.

Whether a business has a workforce that numbers in the millions or just a handful of staffers, it's important for company leaders to have a plan to deal with reputation damage that can stem from rumblings within the ranks. A Weber Shandwick survey of business executives revealed that 63% of a company's market value is tied to its reputation. According to a recent Economist Intelligence Unit study, reputation risk is nearly three times greater than the risk of terrorism and natural disaster.

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"There's value in having an internal social media platform where employees can communicate, grumble, and gripe," advises Michael Roberto, a management professor at Bryant University. "When you don't have that, then you leave employees who want to vent about something with no internal option."

Roberto suggests that having a clear external social media policy and training could also redirect complaints to company leaders. "We often believe employees know what's acceptable and what isn't and sometimes they don't," he explains. Digital natives used to posting every detail of their lives on Facebook and Twitter may need some guidance, he says.

A high-level employee at BlackBerry-maker Research In Motion (RIMM) bypassed management and published an open letter to former co-CEOs Jim Balsillie and Mike Lazaridis last year. Rather than trash the company, the employee delivered an impassioned prescription for making the mobile phone maker competitive again. The executives' response was to restate the strength of the company balance sheet in tepid corporate prose, which only prompted more open letters from other dissatisfied staffers.

"What you don't want is to escalate a war with employees in social media, before you've actually communicated with them, because it can quickly escalate and get ugly, out for everyone to see," he asserts.

In the days leading up to the publication of former Goldman Sachs (GS) vice president Greg Smith's book on the pitfalls of the investment bank's culture, the Wall Street firm took its version of the story to the press. The bank's investigation of Smith's complaints brought to light his consistently low performance ratings -- even though he'd picked those reviewers himself.

Company execs need to understand the context of an employee's complaints to do any meaningful damage control. Saying "no comment," or giving an overly scripted response that's been vetted by corporate lawyers does little good in these situations.

"Sometimes all employees want is an apology," says Roberto. The American Airlines employees working through the chaos of the beleaguered carrier's bankruptcy, pilot strike, and maintenance issues got neither a "sorry about that" nor any acknowledgment for their work.

After publishing an empathetic piece about his "nightmare" experience with American Airlines, Tulsa World's business editor John Stancavage was inundated with emails from the carrier's staff. He then wrote, "All these workers really want, I surmised, was to be treated better and feel rewarded."

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It wouldn't have cost the airline anything to recognize the dedication of longtime workers who took pay cuts to help the company.

It is possible to turn perception around even after unhappy workers go public, says Charley Polachi, co founder of Polachi Access Executive Search. Mark Pincus, CEO of social gaming company Zynga (ZNGA), took this approach amid rumors of layoffs and a sale following top-level executives headed for the exits and its stock took a plunge. Pincus sent a note to his staff that acknowledged the coming layoffs, encouraged employees to discuss their questions and concerns with their supervisors, and published his message on Business Insider.

Yahoo's (YHOO) multiple CEO changes over the past few years certainly took a toll on the tech giant's stock price and morale. Not all execs and other employees exited quietly during that time, that's for sure. But it looks as if things have begun to shift with Marissa Mayer at the helm. "Clearly she has her finger on the pulse of employee morale and communicates frequently and directly with all reports," says Polachi, "She is an excellent example of a CEO changing the culture and communication style."

Harrison Monarth is the founder of GuruMaker--School of Professional Speaking. He's also the author of The Confident Speaker and Executive Presence.

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