May 30, 2007

Roehm Is Burning (Wal-Mart)

I've no doubt that the higher-ups at Wal-Mart rue the day they'd ever heard Julie Roehm's name.
Because the damage she's doing to their respective reputations is far worse than anything they'd ever imagined.

There's always been something of a cloud over the post- Sam Walton leadership, with many suspecting that Wal-Mart's phenomenal success was due to his genius and his genius alone.

So when Wal-Mart abruptly fired Roehm last December and pulled their newly-awarded account from DraftFCB, there were many who saw it as a sign that management was again in disarray. Why had she been left alone to run the agency review? And given her relatively sparse resume, why had they hired her in the first place?

As allegations of Roehm's misdeeds spilled out into the press, Wal-Mart management was left with egg on their faces again: If she was as unstable as they'd been painting her, why had they hired her in the first place? And, if they suspected something was up, why hadn't they intervened sooner?

Then Roehm filed a lawsuit and Wal-Mart hit back hard, with evidence of marital infidelity, blatant favoritism, violations of company policies and attempts to secure a job for herself and her paramour. Which seemed like a clever position for Wal-Mart to take... until the Wall Street Journal ran a front page story detailing how Wal-Mart hired former CIA and FBI agents to run a black ops operation of sorts on their own employees.

This then got tied up with an unrelated story about how some Wal-Mart employee was intercepting emails sent to a reporter and Wal-Mart's reputation took another hit.

Which might not have mattered as much, had their profits not been sinking faster than Bush's approval ratings. The business press was awash in stories about Wal-Mart's missteps in trying to take their merchandise upscale, an operation they'd entrusted primarily to some woman named Julie Roehm, who, by the way, they wound up firing and is now suing them for all sorts of things.

Roehm did not go down quietly, firing off various retorts both legal and PR-related, most of which resulted in stories about Wal-Mart's financial woes, the incompetence and lack of vision of the current leadership, their failed marketing plans and by the way, they're being sued by some woman who used to work in marketing who claims that everyone from the CEO on down was on the take and violating company policy.

Which they vehemently denied, of course, until today's Journal comes out with a story that starts "Wal-Mart Chief Bought Ring From Firm's Vendor" and details the sweetheart deal CEO Lee Scott got from the Aaron Group.

Oops.

Now Wal-Mart is not going to go out of business because of this. Far from it. But the current leadership may not be able to hold onto their jobs much longer unless they turn the ship around fast. A feat that's going to be that much harder given the lack of confidence from investors, both potential and current.

Bet Lee Scott is wishing he'd bought out Roehm's contract, let her go quietly and waited another six months before switching agencies.

But what really sucks is that it's not the Lee Scotts or Julie Roehms who will get screwed here. It's the low-level Wal-Mart employees who'll get laid off or have their hours cut as the company attempts some sort of "cost-cutting."

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