Julie Roehm, a high profile advertising executive, was terminated from Wal-Mart after only ten months with the company on accusations of fiduciary misconduct and violation of clearly established corporate ethical standards. She brought suit against Wal-Mart shortly after her dismissal claiming she was wrongfully terminated. Among other tasks, Roehm was in charge of heading up the search for a new marketing agency to take on the $580 million Wal-Mart account. During the process, Wal-Mart claims Roehm violated its strict no gift policy by accepting gifts and acting in a disloyal manner in order to give the advertisement agency, Draft FCB, an advantage in the competition.
Although Roehm admits to accepting gifts, including a case of vodka and a Toy watch, she claims to have reimbursed ad agencies, or requested that her account be billed for the full value of the items she received. Wal-Mart allows for social engagements combined with presentations to be part of the search process, but insists on paying the bill for the Wal-Mart executives in attendance. One extravagant dinner attended by Roehm, however, did not appear to be part of Wal-Mart’s approved review process and therefore it is unclear whether Roehm was billed. While some may argue that Roehm made an ethical attempt at compromise while conducting amiable business, Roehm appears to have violated Wal-Mart’s strict gift and gratuity policy and thus, even if she was clean on all other accounts, Wal-Mart had a valid basis on which to terminate her.
Examining this case in terms of alternate gift policies, we conclude that there would have still been grounds for Roehm’s dismissal. If Wal-Mart had a policy with a maximum value allowed, it appears that the dinner in question was worth much more than the standard $100 limit, and so still may have been unacceptable. Using a post-transaction policy for gifts, we see that Roehm attended the dinner with advertising candidate Draft FCB a month before an ad agency was chosen by Wal-Mart, and therefore would not have been able to consider it a “thank you” gift.
Is Wal-Mart’s staunch no gift policy too strict? In this case, it appears that Wal-Mart cited the gift violation as terms for dismissal in lieu of publicizing more personally harmful accusations about Roehm. But now that the case has escalated, more than sufficient evidence on multiple issues supporting Wal-Mart’s decision has come to light on its counter-claim. It's possible that Wal-Mart’s gift and gratuity policy, although consistently applied in this case, may provide grounds for unnecessary dismissal of otherwise ethical employees if taken to the extreme. Certainly the company would not want to be in the position of firing a conscientious committed executive for accepting a cup of coffee or a free pen from a vendor or client.
To avoid this dilemma, we propose that Wal-Mart consider taking the following actions:
1. Evaluate its hiring practices to ensure it adequately examines candidates’ ethical standards and personal virtue as part of the hiring process.
2. Make a conscious effort to instill loyalty in employees so as to increase their desire to act in the best interest of the company.
3. Adjust its gift policy to allow small gifts under a certain value to be accepted and presented in the course of professional interaction, while still requiring larger gifts to be reimbursed.
These actions may be applied in varying degrees to executives only, or to the entire employee base, as Wal-Mart sees fit. The purpose for additional steps in hiring practices ties to Aristotle’s view of virtue; that people who are ethical and possess personal virtue will act most consistently in that manner, while people lacking virtue are not likely to attain those characteristics simply because of a company policy. We feel the good will and trust that the latter two actions would evoke would create a better atmosphere for business interaction and a better relationship between Wal-Mart and its top employees.