Penny Wise and Pound Foolish

We have all heard the expression, Penny Wise and Pound Foolish. Yesterday, I received a not so subtle reminder of the same. Wal-Mart, the big mighty retailer sued a former employee for the amount of $470,000 because she received $417,000 as damages from the trucking company she lost her short-term memory to. According to Wal-Mart’s policy, if the employees receive damages then Wal-Mart is well within rights to ask for the money they spent on an employee. Their spokesperson said they are doing this to be fair to all of their associates.

So, then why do I think it is penny wise and pound foolish? I do because when we make laws such as these we do so to protect the shareholders and to be fair. The amount of negative press that Wal-Mart has received on this alone would be any Corporate Relations’ nightmare. Given that Wal-Mart already was not being portrayed in the best light exacerbates the situation. Negativity is a big value stealer. People don’t want to work for such companies and where there is employee strife, how does one perceive shareholder value is being created. It can be based on profits alone but is that sustainable? And, for how long? Are people not the biggest asset in the retail business and does that not include employees?