Boom Town

How Wal-Mart Transformed an All-American Town into an International Community

By Marjorie Rosen

Chicago Review Press Incorporated

Copyright © 2009 Marjorie Rosen
All rights reserved.
ISBN: 978-1-55652-948-1

Contents

Map of Northwest Arkansas,
A Note from the Author,
Introduction,
I. DIVERSITY COMES TO NORTHWEST ARKANSAS,
1 A Black Man Redefines a White Company,
2 A Muslim Philanthropist Champions the Jews,
3 A Shul Is Born,
4 A Hindu Family's Delicate Balance,
5 A Marshallese Security Guard "Talks Story",
6 Of Buyers and Sellers,
II. TOWNS AND TOWNIES, THEN AND NOW,
7 Bentonville's Ex-Mayor, the Boom Town, and the Daughters of the Dust Bowl,
8 A Trucker in "Chickendale",
9 The Mayor of Rogers Takes on Undocumented Workers,
III. THE HISPANIC EXPLOSION,
10 Incident at Bentonville High,
11 Springdale's Tough-as-Nails Lady Police Chief,
12 A Chicken Plant Worker Without Options,
13 A Once-Undocumented Housepainter Finds Money and God,
Epilogue,
Acknowledgments,
Notes,
Bibliography,
Index,

CHAPTER 1

A Black Man Redefines a White Company

* * *

When Wal-Mart decided that it was necessary to create diversity in its home office, the company hired a black man from St. Louis and brought him to white-bread Bentonville to take on the job as head of human resources.

And so Coleman Peterson, a tall, elegant, and immaculately tailored African American, arrived in town in April 1994, a few weeks before his pretty, light-skinned wife, Shirley, and their two children. What Peterson and his family found was a world that was profoundly different from the diverse urban environment they had just left. "Bentonville was not only white, but it was also rural," he observes. "The environment here was everything but urban. So were the types of homes, the availability of restaurants, art, entertainment, and music. What I did find, however, were honest, kind, hard-working people. Also, the Wal-Mart culture was a terrific place to be."

Peterson readily admits that it was difficult to uproot his family, in part because of reasons such as the one above. "We had a lovely home in St. Louis. The kids were in great schools, and we really didn't want to move," he says. "But I could see that Wal-Mart was going to be larger and more successful, and from a career point of view, it was a good move for me. Also, I could see Wal-Mart's future and how it was going to influence the global economy. It was a fantastic opportunity for someone who cared about people. I told my wife that I was going to commit to ten years and then retire and do other things I wanted to do. So I started on April 30, 1994, and retired on April 30, 2004, although I still do independent consulting for the company."

As head of Wal-Mart's human resources (HR) — the People Division — Peterson had a goal to hold on to the company's top employees by offering perks and opportunities and to cast a wide net in an effort to bring diversity to the company's four hundred thousand employees worldwide.

Although he grew up in the inner city of Chicago during the late 1950s and 1960s, Coleman Peterson learned important diversity lessons early on. The son of a corrections officer and a clerk who worked in a retail warehouse, he was a gifted student who won a place at Lane Technical High, one of the best schools in the city at the time.

"Out of fifty-five hundred students, all males, there were only six or seven African American boys," he says. "And here I got my first sense of diversity. Before that, my world was simple — you were either black or white. Yet here students referred to themselves in different ways. You were German or Irish or Polish or Swedish, Catholic or Jewish. And I was like, 'I don't understand these differentials. You're all white!' But then I began to understand that the world makes differences — they're not intended to be bad or negative, it's just that we like to put people into categories. That's how we define and process things. And so because of that, I developed a nondefensive approach to race and ethnicity. And since I was naturally curious about other people's backgrounds, I thought it was fair turnabout for them to be equally curious about mine."

Peterson, who holds a bachelor's degree in English literature and a master's degree in industrial relations, both from Loyola University in Chicago, understood, on joining Wal-Mart, not only that he had to diversify, but that it was even more important to modernize the company's thinking regarding hiring.

"For me, the challenge was to bring the human resources group into the twentieth century," he says, explaining that Wal-Mart's HR organization back then was as unsophisticated as Bentonville itself. It was structured neither traditionally nor with people who had HR experience. "Most of the company's HR people at that time had been promoted out of the operating side of the business," he explains. "So they were experienced operators and had good people skills and values. They also understood the Wal-Mart culture. But they weren't necessarily trained in the basics of recruitment compensation or in organizational and training development. My challenge was to begin to try to professionalize the HR group."

Peterson also intuited that in this unpolished, simple, old-boy environment, he could not just stroll in, take charge, and start throwing the current HR buzzwords at his more rural colleagues. "I understood that in order to be effective, you couldn't come in using all these highfalutin terms," he says. "You had to reduce things to the lowest common denominator because you were trying to drive an understanding and various initiatives through the organization. So I came up with something that I called 'Get, Keep, and Grow.' It was basic-speak for focusing on three areas that made the company better."

For Peterson, Get meant, obviously, "recruiting." "We began to pay more attention to whom we hired and how we hired them, and so we began to professionalize the recruiting process," he says.

The second part of his equation was Keep. In 1994, Wal-Mart's turnover rates were going through the roof. "Wal-Mart was like a leaky boat, and even if we got good people, we were losing them," he said. "So we had to focus on the second bucket, Keep, or 'retention.' And the subheads under retention were the following: improving our orientation program so that people could be successful in their jobs; improving the medical plan; and improving pay. We also needed to improve the feedback processes for which we said not only, 'We want you,' but, 'We want you to stay.'"

Finally, Peterson explained, there was the Grow section of the equation. "As the company expanded, we needed people to assume greater responsibilities," he says. "So this third part, or bucket, focused on training programs for entry-level people and development programs for leaders in order to make them more effective. In the end, I was focusing on everybody, from entry-level associates [employees] to executives."

Under his aegis, the company also developed a senior-level training process in which top-level vice presidents actually train officer-level management. "Rather than sending them to Harvard or Stanford for training," says Peterson, "if it was a finance topic, the chief operating officer taught it; if it was a human resources topic, I taught it; and if it was an operations topic, literally, the president of the company taught it. So it was a very high level program which raised the level of senior managers." He also put into effect a process for succession planning. "What happens if the CEO gets hit by a bus?" he asks. "We have put into place a way of assessing talent once or twice a year, looking at available slots, and anticipating who is in the pipeline and what their potential is. That is part of senior-level development, too."

* * *

Remarkably, in the ten years that Peterson presided over the Wal-Mart People Division, the company almost tripled in size — to 1.1 million employees. What's more, in 1994, when Peterson arrived at Wal-Mart, the company, which had already reached more than a billion dollars in sales, employed fewer than 40 African American employees at its home office. Today, there are more than 1,000. (And the corporate Web site claims that the company employs more than 237,000 blacks around the globe.)

As for Wal-Mart's use of associates in place of employees, historian and Wal-Mart critic Nelson Lichtenstein aptly describes the term as an effort at "faux classlessness" and discusses the unspoken religiosity of Wal-Mart culture, citing The Wal-Mart Way, a 2005 book by Don Soderquist, the retired chief operating officer and senior vice chairman of Wal-Mart, Inc. Here, Soderquist, who now runs his own Soderquist Center for Leadership and Ethics, writes, "I'm not saying that Wal-Mart is a Christian company, but I can unequivocally say that Sam founded the company on the Judeo-Christian principles found in the Bible."

Questioning some of Soderquist's assertions, Lichtenstein observes, "Actually, Walton took his Presbyterian identity rather lightly, and unlike Soderquist, who was a graduate of evangelical Wheaton College and has contributed heavily to like-minded Arkansas churches, the company founder thought profit sharing schemes and Ozark picnics more central to the Wal-Mart ethos than do contemporary executives. But Soderquist is right in emphasizing the extent to which Wal-Mart exists within a cultural universe that is Protestant even if corporate officers refrain from declaring this evangelical sensibility an overt component of the Wal-Mart culture."

So it is all the more remarkable, then, that Coleman Peterson was hired to broaden that market. "I think a lot of people at Wal-Mart would give me credit for raising the profile of the diversity issue," he says. "There are a couple of aspects I concentrated on. The first was getting the dialogue on the table with the leaders about how important the issue of diversity is, and then defining it. And the second aspect was the whole issue of keeping score. In other words, how reflective are we of our communities? That is, what is our actual statistical performance in comparison to where we 'should' be?"

When Peterson came to Wal-Mart, it was with the understanding that he would reach out to minority and women's organizations in order to improve the company's diversity representation. In short order he began traveling to top-rated African American colleges like Howard University and to universities that were training young MBAs of all creeds and faiths. He began hiring middle- and upper-level managers for the home office, men and women who were from big cities such as New York, Chicago, Minneapolis, and Dallas and who were of different backgrounds and faiths — Jewish, Hindu, Muslim, and Mormon — coming from as far away as Pakistan, Bangladesh, Brazil, and Indonesia. Clearly he made a real difference among minorities, since today the organization is the nation's leading employer of Hispanics and African Americans.

And to answer criticism that minorities are brought in simply to fill low-wage positions, Peterson replies, "The entire U.S. Wal-Mart operation is run by a Hispanic, Ecuador-born Eduardo Castro-Wright; our external diversity operation is run by an African American woman, Charlyn Jarrells Porter; and our Asian operation by a Hispanic, Vicente Trius. One of our operational groups is run by an African American man, another by an African American woman."

Some in Bentonville also say that Peterson, because of his focus on bringing smart, diverse upper and middle managers into the fold, was more responsible than anyone else at the company for transforming the area into what locals call "Vendorville" — that is, a town where the major companies that sell to Wal-Mart have also established permanent offices and staffs. The arrival of these vendors and suppliers may account for two things: first, the fact that the population of Bentonville itself, between the years 2000 and 2007, grew by almost 40 percent, to 30,000, and second, the fact that the surrounding area has become so multiethnic and multiracial.

Peterson insists that, contrary to rumor, Wal-Mart has never had a policy in place that insists on the supplier's on-site presence. "Sometimes things that people have attributed to Wal-Mart have never been mandated by Wal-Mart," he says, adding that it is the third parties who are making decisions that they believe are in their best interest as it relates to Wal-Mart. "Walk a mile in a vendor's shoes," he adds. "You've got a businessoutlet that represents 20 percent of your company. Where are you going to be located? Does the majority interest have to tell you that it wants you there? Of course not."

Still, the difference between the ways companies now do business with Wal-Mart and the way they used to do it is striking. In 1994, says Peterson, Procter & Gamble sent 15 people to Bentonville to do the company's business with Wal-Mart; at the time P&G worked out of leased office space in Fayetteville. Now more than 250 P&G employees and their families live here, and the company has its own two-story office building. What's more, there are daily nonstop flights between Bentonville and Cincinnati, where P&G's home office is located.

The new and expanding vendor population contributed to the growing need for office parks, more and better housing, and more sophisticated support services in Northwest Arkansas. And the recruitment of Wal-Mart personnel — especially systems analysts and technology workers — from the finest MBA programs across the nation, from big U.S. cities, and from distant foreign countries has spawned an increasing diversity in the population, even though it remains heavily white, Baptist, and churchgoing. As it turns out, some of these men and women who have come to the area for the tremendous working opportunities, especially the women, choose to wear native garb to work and are encouraged to do so. In fact, so many people from various cultures are now working at the Bentonville office that Wal-Mart has instituted a local Diversity Committee, which meets monthly to help families better assimilate into both the corporate and local cultures.

"A lot of these diverse people that you see here are the results of Coleman's work," says Peterson's wife, whose nickname is Peaches. "I take a lot of pride in that." She is also proud, she says, that some people in the company call her husband "the culture keeper" because he preserves the culture of Sam Walton. "You should always be able to say what you think and be honest with people," she explains. "When Cole worked at Wal-Mart, he instituted what was called the open-door policy, where you did that with no repercussions."

Bad Press — or Bad Policies?

It is difficult to reconcile Peterson's push to diversify with the fact that Wal-Mart has been hammered in recent years by various groups claiming discrimination as a result of lack of diversity. Peterson has also had to deflect a barrage of negative press directed toward the corporation concerning its poor health insurance coverage, exploitation of illegal immigrants, and refusal to promote women. Dukes v. Wal-Mart Stores, Inc., an $11 billion class action lawsuit, originally filed in 2001 by six women and representing more than two million women who have charged Wal-Mart with discrimination, is still pending. (On February 13, 2009, Wal-Mart won a small temporary victory in its attempt to nullify the class action aspect of the case when the Ninth Circuit court in San Francisco granted the corporation's petition to rehear it en banc, in full court.)

Yet if anyone at Wal-Mart can emerge from the battle over women's rights at the company unscathed, it is probably Peterson. In the book Selling Women Short: The Landmark Battle for Workers' Rights at Wal-Mart, author Liza Featherstone, while critical of the company, noted that behind the scenes, Peterson "repeatedly let his colleagues know that women were underrepresented in company management and offered suggestions on remedying the problem, including the idea of hiring a point person to oversee diversity initiatives."

Publicly, however, Peterson defends Wal-Mart against what he perceives as unjustified slights. "I want to respond to [some of] these charges in two ways," he says. "Let's take California, where the newspapers said, 'Wal-Mart had five hundred instances of people working off the clock.' By the way, I was a witness in that case in California. Now here's the reality, here's what is being missed: Companies C, D, E, F, and G have fifty instances of people working off the clock. But with Wal-Mart, those five hundred instances represent one one-hundredth of a percent of what could have happened, whereas with the other five companies, the number represents 20 percent. The difficulty is that most people don't understand the scale. Everything that Wal-Mart does looks big on the scale, but if you look at how efficiently we operate in terms of the percentage of occurrences, we're outperforming many other organizations. I have literally had our competitors' human resources people say to us, 'We're glad you guys are there because you get bumped for everything, and we just travel right under the radar.' And that's real."

Peterson brushes off both bad press and occasional stories of employee mistreatment. "It's like anything else," he says. "On any given day in any company, something is going to go bump in the night. Stuff happens and people do things stupidly, sometimes on purpose. What seems to have happened with Wal-Mart, because of its size, is that people try to draw this image that its leaders wake up in the morning trying to figure out how we can screw the employee. That's just not true. The people who run Wal-Mart are people of high integrity. They have very strong value systems."

Wal-Mart, in fact, has attempted to answer some of its harshest critics by splashily making diversity one of its top priorities. In 2004 then-CEO Lee Scott pledged to promote women and minorities in the same percentages that they applied for promotion, or else he would forfeit 15 percent of his bonus. (There is no indication that he actually did either.) What's more, the company Web site (www.walmartstores.com) devotes an impressive amount of space to diversity initiatives, issues, and information, and tells us: "Diversity is a way of life at Wal-Mart. And our commitment to diversity is not just something we talk about, it's who we are. Our dedication to diversity extends from our board of directors to our associates; from our suppliers to our customers; and to every aspect of our business."

(Continues...)Excerpted from Boom Town by Marjorie Rosen. Copyright © 2009 Marjorie Rosen. Excerpted by permission of Chicago Review Press Incorporated.
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