More Thoughts on the Wal-Mart Decision

More Thoughts on the Wal-Mart Decision

In the wake of the Supreme Court’s refusal to allow an enormous class action to proceed against Wal-Mart, representatives of employees and employers are evaluating its message. Justice Scalia’s pointed criticism of the plaintiff class’s approach intrigues some management representatives. The plaintiffs argued that by giving almost unfettered discretion to male managers to hire, pay and promote, Wal-Mart ensured an old boy’s club to flourish. The Supreme Court rejected this idea completely, saying that without a company-wide policy of discrimination, the class could not prove its case.

Now some advisers are contemplating whether to recommend more discretion and less top-down control, in the interest of avoiding class discrimination complaints.   Others are not so sure.

A healthy corporate culture is imposed from, and rewarded from, the top. Nicely worded statements in the employee handbook are worth nothing if they have no backup. A manager who is permitted to discriminate, treat his employees like dirt, and look the other way when racial or sexual harassment pervades the workplace has no incentive to change his ways. If the behavior goes too far and the company is sued, however, the particular victims of this person’s discrimination do not have to mount a class action. One, two, or five people suing the company for discrimination costs less than a class action to defend, but is not something any employer courts. A maverick manager defying the company does more harm than simply inviting lawsuits. Morale suffers, some good employees leave the company, and sick leave usage rises as the miserable employees take time off for stress-related ailments. Fettered discretion is much smarter.

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