The Julie Toehm Saga at Wal-Mart Stores Inc

18 A. Discuss the possible advantages and disadvantages of adopting employee surveillance

methods like those adopted by Wal-Mart. In your opinion, were the means adopted by the
company to collect evidence against its employees ethical? Give reasons for your answer.
Employee Surveillance
--------------------------
Businesses use workplace surveillance as a way of monitoring the activities of their employees.
A lot of the monitoring that takes place is in electronic format. Electronic monitoring is defined
as "the computerized collection, storage, analysis, and reporting of information about employees'
productive activities"1.
Workers today are exposed to many types of privacy-invasive monitoring in the course of doing
their job. These include drug testing, closed-circuit video monitoring, internet monitoring and
filtering, e-mail monitoring, instant message monitoring, phone monitoring, location monitoring
(RFID Smart Cards, GPS Location services), personality and psychological testing, and
keystroke logging.
The extent to which employees' computer and internet use is monitored varies from company to
company. In some case, strict surveillance is legally required, for example, monitoring the
activities of financial services industry personnel.
Enterprises are concerned that an employee will use enterprise property to download viruses,
transmit sensitive company information, or use enterprise property to break the law. Laws are
getting stringent and penalties levied on organisations are running into millions of dollars. On a
business level, time-wasting internet use represents lost productivity and, ultimately, money lost.
Employers’ Viewpoint
Many employers feel they have the right to monitor employees because they are being paid to
perform certain duties. Others feel that companies are the owners of the office equipment and
therefore have the right to specify how those resources are used.
Many companies track key stroke accuracy, e-mail use, destination of phone calls, and employee
movement throughout the office to measure the productivity of individual employees.
Telemarketing companies, particularly those engaged in transaction of financial products,
routinely monitor telephonic conversations with their clients. This is necessary, and even
desirable, if the quality is service is to be maintained at a high level.
The reasons for surveillance range from concerns about legal liability to security fears to worries
about productivity and "cyberslacking."
Employees’ Viewpoint
Many employees consider corporate surveillance measures to be unethical and an invasion of
privacy. There is evidence that computer monitored employees suffer health, stress, and morale
problems to a higher degree than other employees.
Employee feel that surveillance is unethical because it takes away their rights to make their own
choices.

1
Office of Technology Assessment, 1987, p. 27
 The Julie Toehm Saga at Wal-Mart Stores Inc

Employees are generally of the opinion that although various kinds of software provide the
opportunity to acquire extensive amounts of information about an individual, the relevance of
that information to the day to day operations of the business is inconsequential.
Since there is little to no regulation or legislation that prohibits employers from gathering
information, they often collect as much information as they can gather. Without the knowledge of
what information is being acquired it is hard for the employees to estimate how much their
privacy is being invaded.

Advantages of Employee Surveillance

----------------------------------------------
Monitoring allows employers to protect themselves from theft, boost productivity, increase
safety, and hold down costs. Workplace monitoring is considered a good way to increase the
employee's work performance. If the employees know that they are being monitored, they will
try to change their bad habits and make some improvement in their work performance. This
knowledge can increase employee performance and efficiency. A study conducted by Christopher
Earley in 1988 indicated that "computer-based feedback has a greater impact on an employee's
performance if he or she receives it directly from the system than if it is provided by a
supervisor".2
Proponents of employee monitoring view it as an efficient management technique to manage
organisations, ensure quality customer service, and help employees be as productive as they can
be through the use of objective feedback.
Employers also believe they should be able to monitor employees for signs of wrongdoing since
the employer is ultimately responsible for many actions of its employees e.g. the owner of an e-
mail system is responsible for all the e-mail sent on the system whether these are business or
personal.

Disadvantages
-----------------
Surveillance carries many costs associated with its implementation. The equipment needed,
installation, upkeep, and monitoring proves to be very costly for many companies.
Stressful working conditions related to monitoring include a heavy workload, repetitive tasks,
social isolation, fear of job loss, and a lack of job involvement and personal control.
Monitoring is intrusive and the potential for abuse exists. For example, computer databases,
telephone and video monitoring, active badges, and other monitoring techniques make the
private lives of workers easier to delve into without detection.
Technology has made it easy to gather private information and to potentially use it against the
employee. For example, information can be used to discriminate against employees by using it

2
"You've Got Inappropriate Mail", www.helium.com
 The Julie Toehm Saga at Wal-Mart Stores Inc

"to identify or harass whistleblowers, union organizers, or other dissidents within a firm or
agency" .3
These monitoring systems also tend to reduce job satisfaction, and they might also discourage
employees from focusing on aspects of the job the monitoring doesn’t measure.

Did Wal-Mart use ethical means?

----------------------------------------
The only element of workplace surveillance that concerns ‘ethics’ is the issue of Privacy at work.
Wal-Mart has always placed tight limits on what its employees can do while at work. For
instance, it bars store employees from using personal cellphones on the job. Managers receive a
list of email addresses and phone numbers their employees have communicated with, and a list
of Web sites visited.
Surveillance at Wal-Mart include not only on employees, but also on critics, stockholders and the
consulting firm McKinsey & Co.. The company also deploys cutting-edge monitoring systems
made by a supplier to the Defense Department that allows it to capture and record the actions of
anyone connected to its global computer network.
Wal-Mart’s surveillance activity appears to be legal. U.S. courts have long held that companies
can read employee emails, and Wal-Mart employees are informed they have “no expectation of
privacy” when using company-supplied computers or phones. The surveillance of people in
public places is also legal. So, legality is not an issue; the only debate is if its ‘ethical’ or not.
The line between acceptable and unacceptable surveillance is far from clear.
If surveillance is specific, targeted and purposeful, there is no reason why it should be considered
unethical. The criteria should be:
- it should be aimed at reducing time wastage (e.g. Trading in Stock while at work) and
bandwidth hogging (downloading music, for example).
- the employee must be aware of exactly what is being monitored and why it is being
monitored.
- the employee must be aware of the company policies on what is permitted and what is not
(is reading G-Mail in officer hours permitted?)
- If there are change in policies, the employee must be made aware of these promptly.
- The policies must be implemented uniformly and transparently (the CEO can not bend
the rules to suit his/her convenience)
There was no need to write emotion laden personal e-mails to a co-worker when it is common
knowledge that e-mails are routinely monitored within the company. Same with accepting gifts
from vendors and potential vendors. If the company regulations explicitly prohibit this level of
relationship with vendors, then it must not be pursued. The plea that ‘others’ are doing it as well,
is not valid in this case.

3
U.S. Congress, 1987, p. 2
 The Julie Toehm Saga at Wal-Mart Stores Inc

We must today remember that we leave behind a massive amount of information about ourselves,
advertently or inadvertently, everytime we use the internet – be it for information gathering,
participating in some form of financial e-transaction, or just indulging in e-mailing. We leave a
trail behind each time we log on – a trail that can be followed by anyone with the right resources.
In this highly paranoid, suspicious, information overloaded, and above all, overly connected
world we live and operate in, it does not appear very consequential that your employer has
access to your e-mails.
If you know it is going to happen, you could always take steps to protect yourself without
spending too much energy on worrying about the ethics.
To combat the issues arising out of all-pervasive technology, clear ethics policy and training are
necessary. With proper instruction and training, employees can learn that ethical reasoning means
doing what is morally right, even in the face of powerful selfish desires.
 The Julie Toehm Saga at Wal-Mart Stores Inc

18 B. Do you agree with Roehm and some analysts that a cultural conflict and office politics
were responsible for Roehm’s exit from Wal-Mart? Give reasons to support your answers.
For a variety of marketing and other reasons, Wal-Mart was, in 2005-6, no longer the growth
engine it once was. The company was searching for a new marketing strategy as part of an
makeover exercise. That strategy involved moving away from its existing "everyday low pricing"
stand to attracting a wider audience among the middle class.
To help with the turnaround, Wal-Mart hired Julie Roehm in Feb 2006. Julie Roehm then had a
successful career in Detroit as a marketer of vehicles. She had a growing reputation as a ‘Star’
and was famous for constantly pushing the envelope in advertising. This was just what Wal-Mart
needed to help in achieving a image changeover.
Or so they thought. By December 2006 Wal-Mart had turned its back on her. Julie Roehm was
fired as Senior Vice President of Marketing Communications, just 10 months after being
recruited by Wal-Mart. Here are some reasons why:
While operationally Wal-Mart is very forward looking and bold (the company has a log list of
firsts to its credit, particularly in adapting technology to improve its supply-chain processes), it’s
not known to be very bold when it comes to projecting a radical image. The company also has a
well known history of laying down a strict code-of-conduct for its employees – a code that exists
outside the realm of official work and governs many aspects of the employees’ lives that
normally most other companies would leave well enough alone.
Cultural differences between the employer and employee were evident right through her stint at
Wal-Mart. While new employees traditionally spend the first quarter or so keeping a low profile
and ‘fitting in’, that was just not Julie Roehm’s style. In her own words “I get overly excited, I
wanted to hit the ground running. Go, go, go”.4 Keeping in line with the culture at Wal-Mart, no
one even advised her to keep a low profile. While her own staff did try to tell her “…you
shouldn't be doing things like planning skits for the annual meeting…”, her superiors never gave
her any indication that she was not on track. Outwardly everything was fine, while the wound
continued to fester inside.

Cultural compatibility is critical for success. The other aspect of this issue here is that Julie
Roehm was blissfully unaware of Wal-Mart’s reputation as a very conservative company. How
can a senior executive with her kind of experience not conduct complete research on a potential
employer before taking the big leap? There are two possible explanations for this – 1) She was
blinded by the compensation package on offer, while also looking at the opportunity as a means
to further strengthen her resume by adding the experience of a complete new vertical; 2) She
overestimated her abilities to be a genuine ‘change agent’ while completely overlooking the fact
that an organisation as deeply entrenched in conservatism as Wal-Mart is unlikely to change very
rapidly.

It seems in hindsight that Julie Roehm was the only one who didn’t see it coming.
One of the responses that Wal-Mart made in response to certain demands Julie Roehm made after
being dismissed was that “…she is free to collect a step ladder and paint supplies left behind….”.
This statement clearly reflects that Wal-Mart wasn’t particularly amused to see Julie painting her

4
www.businessweek.com
 The Julie Toehm Saga at Wal-Mart Stores Inc

office walls soon after she moved into the Arkansas headquarters of the company. A company
that is so easily made uncomfortable by such seemingly innocuous moves, is obviously not a
right candidate for large scale image shift.
Roehm’s relationship with here boss Fleming, who was the head of marketing, gives some clues
about the politics at work which ultimately became the bane of her existence at Wal-Mart. In the
ongoing territorial war between Quinn, who was her contemporary in the marketing department,
and Roehm, Fleming seemed much inclined to continuously favour Quinn. The fact that Fleming
kept their roles fuzzy and overlapping, didn’t seem to help Roehm’s case at all. Roehm’s role
was being constantly marginalised in favour of Quinn.
Roehm also displayed an astounding sense of naiveté when she failed to constantly attend the
Friday morning meets called by Chief Executive Lee Scott, on the mistaken ideology that she
was too busy doing her work to bother about niceties. Her apparently irrational moves only
succeeded in giving the impression that she was not a team player.
Cultural incompatibility between Roehm and her employer was evident from the way they
approached common issues. Even though Roehm was hired based on her strength as a ‘change
agent’, the company was unwilling to change its deep set ways that were essentially the legacy of
Sam Walton. The strong influence that the merchandising department exercised on all major
decisions within the company, didn’t leave much space for the marketing department to
maneuver. Wal-Mart’s inherent resistance to change is amply illustrated by the case of the
nightgown advertisement, that was created under Roehm’s authority, and aired during the pre-
Christmas shopping season. Though Wal-Mart liked it well enough initially, they subsequently
withdrew the ad just on the basis of a handful of adverse reactions from television viewers.
According to a NY Times story of 9th Dec 2006, in an interview, John Fleming, the Chief
Marketing Officer at Wal-Mart, said the company had indeed begun to backtrack from sleeker
advertising that emphasized style over price. Customer research, he said, showed that, rich or
poor, Wal-Mart customers “care about unbeatable prices.” “I don’t think Wal-Mart advertising is
ever going to be edgy,” he said. “I do not think that fits our brand. Our brand is about saving
people money.”5 Another example of why it is certain Wal-Mart was never ready for a change –
with or without a change agent.
According to Sergio Zyman, Coca-Cola's former CMO, “…Wal-Mart wanted to wear a pair of
high heels, and Julie was high heels. When they put on the high heels, they said, “No, this is too
difficult to me, my feet hurt”. Then the high heels became the problem.”6
If Roehm is being accused of unethical behaviour, or behaviour contrary to company guidelines,
what about Wal-Mart’ own behaviour in gathering evidence against her? Wal-Mart coerced,
pressurised and nearly blackmailed Womack’s wife to produce the damning evidence against
Roehm. Surely it can not be part of Wal-Mart’s code of conduct to interfere in employees’
personal lives to fulfill their own corporate objectives.
Julie Roehm’s own burning ambition was a contributing factor to her eventual downfall at Wal-
Mart. She was essentially a middle-manager trying to achieve stardom. She had not been at Wal-
Mart long enough to justify the high profile she was starting to create for herself. Her decision to
appear at Draft/FCB’s new-business presentation and the agency’s dinner at Nobu was a clear

5
www.adrants.com
6
Behind the Rebranding Campaign of Wal-Mart’s Scarlet Woman, By Danielle Sacks; www.fastcompany.com
 The Julie Toehm Saga at Wal-Mart Stores Inc

case of bad judgment. Not only did this contravene Wal-Mart’s strict entertainment policy, it’s
also an unethical thing to do in the middle of an agency review process.
In the final reckoning, the allegations against Roehm of accepting gratuities from potential
vendors and having an intimate relationship with a co-worker, were certainly of a minor nature
when measured against the backdrop of corporate America. What did her in was – she just didn’t
fit in.
While Julie Roehm suffered immense financial losses and loss of opportunities out of her lawsuit
against Wal-Mart, the company would also have paid some price for its lack of judgment. Wal-
Mart would probably not be able to buy the services of another ‘change agent’ for a very long
time.
 The Julie Toehm Saga at Wal-Mart Stores Inc

References
1. Playing IT Big Brother: when is employee monitoring warranted?,
www.thefreelibrary.com
2. ‘Workplace Privacy’, Electronic Privacy Information Centre, www.epic.org
3. Negotiating Electronic Surveillance in the Workplace: A Study of Collective Agreements
in Canada, Simon Kiss (Queen's University), Simon Kiss (Queen's University); Canadian
Journal of Communication, Vol 30, No 4 (2005)
4. Wal-Mart Spies on Wal-Mart Watch Employees, www.walmartwatch.com
5. Former Wal-Mart Worker Blows Whistle on Company Surveillance Operation, Spying of
Critics; www.democracynow.org
6. Ethical Implications of Employee Monitoring: What Leaders Should Consider; Bahaudin
G. Mujtaba, Nova Southeastern University
7. Employee monitoring: privacy in the workplace? By Crampton, Suzanne M.
Publication: SAM Advanced Management Journal; www.allbusiness.com
8. Employee surveillance, www.yourprivacy.co.uk

9. Roehm Accuses Wal-Mart Brass Of Ethics Lapses, By Gary McWilliams and James
Covert; Wall Street Journal May 26th, 2007

10. You're Fired! Wal-Mart vs. Julie Roehm, www.fusionbrand.blogs.com

11. My Year At Wal-Mart; How marketing whiz Julie Roehm suffered a spectacular fall in 10
short months; www.businessweek.com

12. How Wal-Mart got the love e-mail; www.money.cnn.com