12/16/2011 03:59 pm ET

Walmart Edit Of Union Story On Internal News Wire Reveals Tactic That Could Spell Trouble

Walmart is famously aggressive in protecting its public image, particularly when it comes to accusations that it's treating its workers unfairly. Now, new evidence sheds light on how Walmart presents the corporate message to its 1.4 million employees.

A day after The Huffington Post published an article that examined a new effort to organize workers at the retail giant, Walmart posted an altered summary of the story on the company's internal news wire that removed all criticism of its labor practices. Instead, Walmart's version trumpeted the company's "competitive pay and benefits" in an era of joblessness, by combining passages from different parts of the story, in order to deliver the message that employees won't benefit from unionization. There was no indication that the article had been altered from its original form.

It's not uncommon for companies to promote flattering media stories internally, but this is different, public relations experts say. When a company appears to intentionally mislead its employees about how it is viewed externally, the tactic can backfire.

Walmart, through a spokesperson, said there was nothing unusual about the company's presentation of the article, which could be viewed alongside other news clips and important company information.

"We provide news of the day every day to our associates," said Steven Restivo, Walmart's senior director of community affairs. "We condense articles much in the same way any news editor would, by highlighting portions that are of interest to the audience that's reading them."

But both public relations experts and journalism professors say that the company's treatment of the HuffPost story is unusual, unethical and potentially damaging to its reputation -- and its stock value.

"I don't think it's standard practice at all. I think it's unethical practice. I think it's deceptive," said Brenda Wrigley, chair of the department of public relations at Syracuse University, after reviewing the original article and Walmart's version.

In the long run, Wrigley said, this strategy will not serve the company well. "Yes, a company wants to put itself in the best possible light it can," she said. "But if you don't tell the truth to your employees, eventually you'll be in trouble. I say this to my students every day: The truth will out."

Although the headline and the first sentence remained the same, the 3,861-word story was edited down to two paragraphs, in part by combining phrases from different sections in the article to strengthen Walmart's anti-union message.

Selectively edited news summaries are not unusual. And some public relations experts describe the practice as widespread.

"While this type of selective editing isn't exactly straight-shooting, it's done by corporations, institutions and journalists all the time," said Eric Dezenhall, a communications strategist in Washington, D.C., who worked in the White House for President Ronald Reagan. He thought the news wire item essentially amounted to internal cheerleading. "There are few purists when it comes to prosecuting agendas," said Dezenhall.

What did surprise him was that the company did not appear to factor in the "near certainty that this correspondence would be leaked."

"This is the bigger red flag for me," Dezenhall said.

A copy of the news wire story was shown to The Huffington Post by a Walmart employee, who wished to remain anonymous because the publication is meant for internal distribution only. When she read the story at her computer at work, she thought that something about it seemed wrong. At home, she searched for the headline online, read the full story, and felt angry and mislead.

Mike Hoyt, executive editor of the Columbia Journalism Review and an adjunct faculty member at Columbia's journalism school, disputed Restivo and Dezenhall's assertion that Walmart's editing of the article follows common journalistic practices.

"It is dishonest and sleazy," Hoyt said. "It's also stupid. You actually want to know what your critics are saying about you. Maybe you don't want to disseminate that information, but the idea of essentially falsifying it seems shocking to me."

To the extent this is part of a larger trend -- and longtime Walmart observers say that it appears to be -- there are troubling implications for the company.

"There's an important lesson that the company has failed to learn about itself and its relationship to the community in the last 10 years," said journalist Charles Fishman, author of "The Wal-Mart Effect."

There is something antiquated about the edit, as if the editor was imagining a world in which the actual version of the article was not instantly and easily available for comparison -- what Fishman referred to as "the old-fashioned bunker mentality from Bentonville." Walmart's corporate headquarters are located in Bentonville, Ark.

"It's like, 'We see the world our way,'" Fishman said. "But Walmart needs to see itself clearly, and Walmart needs to allow its associates at all levels to understand how other people see it. They cannot have a constructive relationship with the economy without that."

Walmart's lack of candor with its employees is echoed in its CEO's lack of candor with corporate shareholders.

According to Rittenhouse Rankings, which rates executive candor at Fortune 500 companies, Walmart's ranking has sunk in recent years, starting when the current CEO, Mike Duke, began to take over operations at the company. Duke became CEO in February 2009. As of last year's survey, Walmart was ranked 90 out of 98 representative Fortune 500 companies.

"The most revealing areas in an executive communication are where you can see they're not telling the full story," said Laura Rittenhouse, president of Rittenhouse Rankings.

In her research, Rittenhouse has found a strong link between a lack of corporate candor and poor stock performance. Costco, she said, is among the highest-ranking companies for candor -- and its stock value is consistently higher than Walmart's.

"Companies that score high in candor usually have corporate cultures where employees are more motivated, where management works very hard to balance investor needs, customer needs and employees' needs," she said. "When I'm reading Costco's CEO's letter, it's very evident that this is something that they not only talk about, but that they're doing."

Not so at Walmart.

"Whenever I see an instance where the balanced reporting is not what it should be, I'm always on alert that maybe a company is not paying attention to the full scope of a problem," Rittenhouse said.