Corporate Crisis: Contextual Crises within Major Retailers

Corporate Crisis: Contextual Crises within Major Retailers

With retailers like Walmart, Kroger, and Amazon at the forefront of consumer watchdogs, the conversation around corporate culture and how it affects business continues to become inwardly focused. The nature of capitalism and supply-and-demand business models sometimes stand in the way of true reform when it comes to some of the nation’s most profitable corporations. Despite major retailers like Walmart and Kroger vowing to improve culture in several arenas of their business, the actual enforcement of these new “policies” has employees feeling lukewarm. 

Walmart has recently been at the forefront of several different types of corporate crisis. Most notably, the tragic active shooter event at a Walmart in El Paso, Texas that killed 20 people and left dozens more injured. This horrible event is an example of a contextual corporate crisis, in which external events directly affect the public’s perception of the company. While contextual corporate crises typically have little to do with internal operations, the ever-growing epidemic of gun violence in the United States has CEOs and leadership of large retailers like Walmart rethinking their strategies. Since the shootings, Walmart CEO and President, Doug McMillon has announced the retailer will now discontinue sales of ammunition in their stores for handguns and military-style firearms like AR-15s. More notably, McMillion also said the company would “respectfully request that customers no longer openly carry firearms into their stores” with the exception of law enforcement. For many in the nation, “respectfully requesting” customers not openly carry in their stores is not enough, but it is symptomatic of changes in a capitalist society. 

Following the tragedy at El Paso, eight more stores received threats of varying specificity. In the wake of the statement by McMillion, gun rights activists are already reporting individual stores are not enforcing their “respectful request” to not openly carry in their stores. David Amad, the vice president of Open Carry Texas, has reported members of the organization had openly carried in their local Walmart and not a single member was asked to leave, despite their visible firearm. When asked about it, Amad was quoted as saying, “They’re ducking the issue. They are trying to get the gun haters to leave them alone, while at the same time leave us alone when we carry in their stores.” 

When it comes to improving the culture and perception of a company in the public eye, there can be no room for soft enforcement of policy. Revised, enforced policies are how companies improve their culture, and no one knows that better than the employees who are seeing internal operations every day. According to the New York Times, “Walmart employees are instructed not to obstruct peaceful shoppers from openly carrying guns in the stores…But if an employee or customer feels unsafe, the store workers should call law enforcement.” 

What we know about the cycle of good corporate culture indicates that when employees feel valued, they remain engaged in operations and contribute to the overall improved health of the company. It is not a leap at all to assume employees who do not feel safe in the workplace do not maintain high engagement in daily operations. This is a corporation that is already the subject of gratuitous coverage involving internal issues, such as compensation, work conditions, and how toxic corporate culture continues to pervade within the organization.  Now the soft enforcement of no open-carrying in Walmart stores may cause employees to further lose hope that the retail giant will ever make meaningful changes within the organization. Research has shown, as the workforce continues to age, corporations will have no choice but to improve their corporate culture, or risk a consistent pattern of turnover and decline in profits. Glassdoor reported millennials are the largest generation within the workforce currently, and they are the prospective employees who will make unprecedented choices in their employment, favoring healthy corporate culture over high rates of compensation. If corporations wish to retain otherwise dedicated employees for the continued growth of their organization, they’re level of integrity in changing their corporation’s culture must have a stronger resolve. 

3 Most Common Types of Corporate Crisis

What is a corporate crisis? While exact definitions may differ, a corporate crisis is generally defined as “an event, situation, or public initiative that threatens the company’s ability to effectively operate its business. A crisis can escalate into a disaster or long-term impediment to business growth if not handled with efficiency and sensitivity to all involved.” This is a large umbrella that encompasses many of the internal issues we associate with companies, including (but not limited to) fraud, theft, misconduct, and harassment of all kinds.

A majority of corporate crises fall into one of three categories: personnel, systemic, and contextual.

  1. A personnel crisis is an internal issue that is a direct result of an individual employee or a group of employees’ bad behavior. Theft by personnel is one of the most widely-reported crises in corporations throughout America. The scope of this problem can be as small as stealing office supplies all the way up to executive embezzlement. Sexual harassment is a type of personnel crisis receiving a welcomed new level of attention in corporations. In the age of the #MeToo movement, corporations are viewing their workforce very differently when it comes to identifying potential predators in their midst in the name of a “pound of cure.” Prudent steps taken when vetting potential hires and current employees has saved companies difficulties down the line, especially in legal fees and public relations.
  2. A systemic crisis refers to a major breakdown in operations negatively impacting business. A common example is food service corporations that receive a sudden influx of food poisoning complaints. Source of the outbreak may be traced back to how the supplier or distributor handled the food product, and suddenly, there’s a systemic crisis: A misstep in operations led to a large sum of incidents. Systemic problems manifest themselves in many forms, including external theft. Repeated theft, both in cyberspace and the real world, is often the result of insufficient security within a company. Consequently, the company incurs loss because they remain vulnerable. Companies who have chronic turnover due to employee misconduct may have flaws in their vetting system for potential employees. That is another example of a crucial operation where a breakdown occurs and erodes a company’s profits with labor hours to hire a new individual to fill a vacant position.
  3. A contextual crisis has exponential consequences for a business relative to its size. These are the types of crises that companies cannot anticipate, because they influence public perception of their brand based on real-life events. A major news story like a mass shooting, or a major criminal case, or a lawsuit, can negatively impact a brand even if that event is not directly associated with that company. These external events can drastically change a company’s internal operations, and can weigh heavy on employees at every level. Sexual harassment is another example of this type of crisis in motion. The media coverage regarding high-level Hollywood executives like Harvey Weinstein and his alleged history of abuse have executives in companies of all shapes and sizes revisiting their human resource policies and practices when it comes to addressing sexual misconduct in the workplace. Internal operations receive a major overhaul to the benefit of a healthier work environment for everyone.

When it comes to corporate crises, not all businesses will be able to afford specialized investigators to work in-house to resolve issues that arise. Even if they can afford these professionals, investigators employed by the company—regardless of the quality of their work—by definition cannot provide a truly objective solution to any problem. Because they’re employed by the corporation, they have a potential stake in the outcome of the investigation, whether that stake be real or perceived. Hiring an independent professional, like a licensed private investigator, to conduct an external investigation is the best way to ensure that the solution is objective. This is particularly important personnel crises, because terminating personnel based on an unbiased investigation is kerosene for a disgruntled employee that can manifest itself with many devastating consequences—most commonly wrongful termination lawsuits. Private investigators can assist in systemic crises as well, like the example of repeated thefts with regards to security. Private investigators who specialize in different kinds of risk assessment can identify a company’s vulnerabilities to thieves and scammers, and provide them with a game plan to improve their security.

If your business has encountered a corporate crisis, call Lauth Investigations International today for a free consultation. Learn how we can provide you with an objective solution to your corporate crisis. Call 317-951-1100, or learn more about our services here.