Gas Pumper to CEO: A Brief Look at H. Lee Scott and His Wal-Mart Career

Erika MacKinnon

Harold Lee Scott is the current CEO and president of Wal-Mart, the largest Fortune 500 Company in the world. His ingenuity and tenacity for business success has brought him from the assistant director of transportation of a distribution center for Wal-Mart to the position that he currently holds. How was he able to move so quickly up the corporate ladder with such success? His tough work ethic, risk-taking success and a little bit of luck ultimately helped Scott thrive in his career.

Scott was born in 1950 in southern Kansas to a family of lower middle class. His mother worked as a music teacher at the local elementary school and his father managed a local gas station, where Scott worked part time during high school(Reference for Business, March 25, 2006). After graduating high school, Scott attended college at Pittsburg State University and completed a degree in business administration in 1971.

After completing college, Scott was hired at Yellow Freight System, a large trucking company based in Kansas. It was here where Scott had his first encounter with Wal-Mart as a corporation. Wal-Mart owed the company a bill in the amount of $7,000 and was refusing to pay. During the course of the payment disagreement, Scott met the future CEO, David Glass and was offered a job in Wal-Mart as head of one of their new distribution centers. Scott point blank refused at the time saying, “I’m not going to leave the fastest-growing trucking company in America to go to work for a company that can’t pay a $7,000 bill”(Business Week, November 15, 1999). However, several years later, Scott changed his mind and started working for Wal-Mart.

In 1977, Scott was hired as a terminal manager of the transportation department in Springdale, Arkansas. In 1979, Scott was promoted to assistant director of transportation. It was during these first years when Scott learned a lesson about Wal-Mart’s “open-door policy” after the drivers he was in charge of complained to Sam Walton about Scott’s letters that threatened to fire anyone who broke the rules. Several of the drivers had gone to Walton asking that Scott be fired for his rudeness. Instead, “Walton talked to Scott and ordered him to listen to the drivers’ complaints [….] and then told Scott that he was to shake the hands of all the drivers who came to see him and thank them for using the company’s ‘open-door’ policy to talk to management”(Reference for Business, March 25, 2006)

During the next 16 years, Scott was promoted through the corporate ladder and held the following positions: director of transportation, vice president of transportation, vice president of distribution, and senior vice president of logistics. While working in the various positions of the transportation department, Scott “was pivotal in developing the automated distribution system that link[s] suppliers and stores by computer”(Reference for Business, March 25, 2006). This system is one of the key elements that allows Wal-Mart to be so effective with its transportation and helps keep costs even lower for its customers.

In 1995, Scott was promoted, once again, this time to vice president of merchandising. This was one area, however, that Scott had little experience and had to take many risks in order for success. He managed to increase sales for the company, cut even more costs, implement better training programs, push for improved store design and help develop ways to increase store traffic during the slower days of the week despite being the ‘under-dog’ in merchandising knowledge.

Also during this time, Wal-Mart was the focus of public scrutiny after details of its sweatshop labor practices and the Kathie Lee Gifford clothing line had come to light. It was decided by a panel of directors that Scott would become the company spokesman and handle the media. Scott managed to “defuse what might have been a public relations and economic disaster for Wal-Mart” with his smooth talking skills and promising that Wal-Mart would “keep a closer eye on its foreign factories.”(Reference for Business, March 25, 2006) Scott would use the same smooth-talking tactics when he became CEO to deflect criticism and scorn.

In 1998, Scott was promoted to president and CEO of the Wal-Mart Stores division, “overseeing the merchandising and operations of the more that 2300 Wal-Mart stores.”(Meet Our People, Board of Directors, 2004) A year later, he was promoted to vice chairman and COO (chief operating officer) of Wal-Mart. In an effort to keep in touch with the core of the company, Scott visited a Wal-Mart store at least once a week to talk with managers and employees and make suggestions about how to run the store more effieciently.

Finally, in 2000, Scott was promoted for the last time to president and CEO of Wal-Mart at the age of 50. Following the Wal-Mart tradition, he tried to maintain a low profile and set a tone for employees by discouraging them from “indulging in status symbols” and “signs of ostentatious wealth”(Reference for Business, March 25, 2006) by driving a 1999 Volkswagen Bug to work. He gained reputation with the media as being a ‘nice guy’ and being more than willing to admit when the company made mistakes. Of course, he was always there to defend Wal-Mart against accusations of unfair pay, poor benefits and a variety of other issues.

As expected of one of the largest companies in the world, being CEO did not come without its share of difficulties. Scott has had to face a bombardment of criticism in almost every possible area ranging from wages to health care, foreign labor to not having enough American-made products and expansion to environmental violations. While in the early years of his CEO career Scott used tactics to brush off or attempt to hide Wal-Mart’s problems, he eventually had to come out deal with the issues that were becoming more and more obvious to the public. So far, Scott has managed to maintain a delicate balance with the public and the press with lawsuits and fines coming in from all directions.

One of the main areas that Wal-Mart is always taking a hit on is issues of health care benefits and wages for employees. Scott is always on the ready to say that “84 percent of Wal-Mart’s employees currently have health insurance”(Wal-Mart Facts, 2003) and that the average full-time worker makes around $10.00 an hour. In a response to critics who say that Wal-Mart should “take the role of General Motors after WWII and help create middle-class jobs that pay well”, Scott says” Retail doesn’t play that role” (Springfield Morning News April 6, 2005) and in all reality, that’s true. Scott has remarked that people want to work for Wal-Mart because their old jobs “didn’t have any benefits…and didn’t provide the right job at the right time in their lives...Wal-Mart offers this and gives them a step up on the economic ladder.” Scott also feels that Wal-Mart is there for the customer and giving higher wages to Wal-Mart’s 1.6 million employees would increase costs and make Wal-Mart less of a competitor in its own market of cheap products.

In addition to having to constantly defend Wal-Mart as a company, Scott has taken recent personal criticism with the leak of what was supposed to be an employee only website titled “Lee’s Garage.” Named after his father’s gas station, Lee’s Garage was a series of documents of “internal electronic correspondence between Scott and his managers”(Wal-Mart Watch, February 2005) that reveal a less friendly side of Scott and his snide remarks to manager’s questions. In a response to a manager who wanted to know why Wal-Mart did not offer higher health benefits, Scott suggested that the “store manager is disloyal and should consider quitting”( New York Times, February 17, 2006). In entries throughout the documents, Scott apparently shows a side of frustration, defensiveness and crankiness that is normally hidden from the press. Even with the release of these documents, Scott has maintained a relatively good face with the public and continues to defend the company.

Of course, being one of the largest companies in the world isn’t all bad either. Scott and Wal-Mart are able to influence others to change the way they operate for the good and benefit of more people. For example, Scott said in a recent statement that Wal-Mart would be “rewarding environment-friendly suppliers” and that Wal-Mart would take steps to “curb its energy use.” Another bold statement that Scott made was that he wants to turn “Wal-Mart into a company that runs on 100 percent renewable energy and produces zero waste”(GreenBiz News, April 25, 2006). However, after receiving the largest environmental violation fine ever, it’s easy to see why critics are so skeptical of Scott’s promises for the company. Scott, however, remains steadfast in his belief that Wal-Mart can lead a change towards more sustainable usage and growth and has already implemented a program that will eliminate the need for 230 cargo-ship containers by reducing the packaging on just 16 different toys.

In addition to changing how the stores themselves are run, he also plans to save more fuel by shipping more items on a single truck. These changes not only benefit the environment and save Wal-Mart a few dollars, but they save the customer even more because overhead costs are reduced. Scott is also pushing for the construction of more ‘eco-friendly’ stores that use solar power and left over fuel sources like used motor oil and fat used to fry chickens. Scott hopes that “Wal-Mart, with its massive market size, can make a real difference [in the environment]”(Business Week, September 22, 2005)

Overall, Scott has been a huge benefit for Wal-Mart with his knowledge, experience and dedication to improve the company. While he admits that “Wal-Mart isn’t perfect,” he also says that Wal-Mart has the ability for “look at those things were we’re wrong and fix ourselves”(Springfield Morning News, April 6, 2005). Being the largest and probably the most influential company in history comes with many responsibilities to set standards and keep a high set of values, at Scott plans to do just that while watching Wal-Mart expand and continue to grow.

Resources

1.) Bianco A., March 22, 2006, The Wal-Mart Way. Retrieved April 25, 2006 from http://sfreporter.com/articles/publish/cover-032206-wal-mart.php

2.) Berner, R., September 22, 2005, Can Wal-Mart Wear a White Hat? For Business Week. Retrieved on May 9, 2006 from http://www.businessweek.com/bwdaily/dnflash/sep2005/nf20050922_6448_db01 6.htm

3.) French, A., April 6, 2005, Wal-Mart Speaks Up At Media Conference, for Springfield Morning News. Retrieved on April 25, 2006 from http://www.laane.org/pressroom/stories/walmart/050406morningNews.html

4.) Grant, L., November 10, 2003, Retail Giant Wal-Mart Faces Challenges on Many Fronts. For USA Today. Retrieved on April 25, 2006 from http://www.usatoday.com/money/industries/retail/2003-11-10-walmart_x.htm

5.) Griscom Little, A., April 12, 2006, Don't Discount Him: An Interview with Wal- Mart CEO H. Lee Scott. Retrieved on April 24, 2006 from http://www.greenbiz.com/news/reviews_third.cfm?NewsID=30891

6.) Joyce, A. and White, B., October 29, 2005, Wal-Mart Pushes to Soften Its Image for The Washington Post. Retrieved on April 23, 2006 from http://www.washingtonpost.com/wpdyn/content/article/2005/10/28/AR20051028 02079.html

7.) H. Lee Scott Jr., for Reference for Business. Retrieved on April 22, 2006 from http://www.referenceforbusiness.com/biography/S-Z/Scott-H-Lee-Jr-1950.html

8.) Lee’s Garage Needs a Tune Up, for Wal-Mart Watch. Retrieved May 9, 2006 from http://walmartwatch.com/blog/archives/lees_garage_needs_a_tune_up/

9.) Wal-Mart Facts, Meet Our People: Directors. Retrieved on April 24, 2006 from http://www.walmartfacts.com/newsdesk/meet-our people.aspx?CategoryID=105&strShowHide=True#a229