Wayfair Facing a Crisis from Within

Empowered Employees Demand a Say in Who the Online Retailer Does Business With   

6/28/19 – – Online furniture retailer Wayfair is dealing with a very interesting inside-out reputational crisis. I say “inside-out” because it is pressure from within by Wayfair’s own employees that is threatening to spawn a consumer boycott of the company. And I say “very interesting” because the aggressive employee activism on display this week at Wayfair, which old-school managers may see as reckless disloyalty, is a sign of things to come.

Wayfair, if you’re not familiar with the company, is a much-watched digital retailer that has disrupted the traditional furniture-buying experience by displaying and selling its merchandise online. Founded in 2002 by two college buddies who created a start-up selling stereo racks and stands online, Wayfair today is a multi-billion-dollar public company (2018 sales were $6.8 billion). Even though Wayfair still operates in the red (the company lost $200.4 million on $1.9 billion in revenue in the first quarter this year), investors love the explosive growth and customers – primarily millennials just forming their own households – love the outstanding service.

The company’s success and positive culture have attracted a workforce of enthusiastic young people (again, primarily millennials) who proudly refer to themselves as “Wayfarians.” All indications are that founders Steve Conine and Niraj Shah, who still are the very visible heads of the company, are highly respected and liked by the majority of Wayfair’s more than 13,000 employees in North America and Europe.

So why is the collective Wayfair family no longer singing Kumbaya?

The company recently fulfilled a $200,000 order for bedroom furniture from a government contractor called BCFS. Turns out BCFS operates camps where children caught up in our nation’s own immigration crisis on the southern boarder are held. The Wayfair furniture was purchased for the holding facility in Carizzo Springs, Texas.

Interpreting this sale as tacit approval of the Trump administration’s controversial immigration policies, more than 500 Wayfarians working in the company’s headquarters in Boston signed a petition demanding that Wayfair not do business with BCFS and establish a code of ethics to guide future sales to business-to-business customers. Conine and Shah responded to the petition by praising the upset employees’ “passion and commitment,” but reminding them that, “It is our business to sell to any customer who is acting within the laws of the countries within which we operate.”

Failing to quiet the internal storm, the founders announced a $100,000 donation to the American Red Cross to support its “efforts to help those in dire need of basic necessities at the border.” They assured the employees that they “care a great deal about humanitarian issues,” highlighting the company’s many charitable programs – including a generous corporate match of employee donations.

On Wednesday, Wayfair employees (media estimates of participation have been inconsistent, ranging from “scores” to “hundreds”) walked off their jobs and over to Copley Square, joining other protestors, carrying signs saying such things as: “Workers Say No To Child Detention” and “A Prison With A Bed Is Still a Prison.” Congresswoman Alexandria Ocasio-Cortez applauded the protest, tweeting: “This is what solidarity looks like.”

As I often remind clients, one of the best ways to avoid a crisis is to go to school on the crises of others. Wow, does that hold true here. Put yourselves in the shoes of Conine and Shah. And don’t dismiss this high-profile confrontation as something that couldn’t happen in your company.  As I said in the opening paragraph, the dilemma Wayfair is facing is a sign of things to come.

Recognizing that employees and customers want companies to take moral stands in harmony with their own ethical and political views, CEOs are injecting themselves more and more into political battles they would have steered well clear of just a few years ago. This well-meaning willingness to rumble has empowered employees to follow suit. Here’s what one Wayfair employee told the Boston Globe during the walkout:

“There are a lot of people that asked me today where Wayfair should draw the line, in terms of how it does business,” said Emily Garbutt, an organizer of the walkout who works in IT support at Wayfair. “I think it’s fair to say that a good place to draw the line is kids in jail.” 

Things are getting messy. Calls for a consumer boycott of Wayfair are building online (not a good thing for a company that still has not made a profit), which of course threatens the jobs of the very people making this stand, not to mention the majority of the 7,000 headquarters employees in Boston who chose not to sign the petition or to walk out. And there really is a legal question as to how far Wayfair or any other business can go in denying customers service based on beliefs or political positions (that baker in Denver who refused to make a cake for a gay wedding is still defending himself in court).

In Chapter 3 of The Crisis Preparedness Quotient – Measuring Your Readiness to Weather a Reputational Storm (“Where Crises Come From”), we focus on politics as one of the primary sources of crises. CEOs – as well as activist employees – taking on sensitive issues need to consider the fact that the American public is pretty much split down the middle between Democrats and Republicans, liberals and conservatives. Both ends of the political spectrum hold passionate beliefs and have little patience for opposing views. Pick a side and you’ll almost certainly offend large segments of the population, your customer base, and, if you’re managing a public company, your board of directors.

And it is important to remember that while people do appreciate and support activism when it aligns with their beliefs, they highly resent it when it doesn’t. A 2016 Weber Shandwick survey of American consumers found 40% of respondents more likely to purchase from a company when they agreed with the CEO’s position, but 45% less likely to be buyers when they disagreed.

So, what can we learn by watching and analyzing the current Wayfair crisis as it unfolds? First and foremost, recognize that your employees come to work with a far different set of priorities and expectations than the workforce of the 20th century. That’s not all bad. Being engaged, wanting your company to act morally, and taking pride in what your company stands for are all good things. Rather than closing them out of discussions regarding the customers you will and won’t do business with, you may want to hear what they have to say.

The second demand of the Wayfair petition was to, “Establish a code of ethics to guide future sales to business-to-business customers.” Employees wanting to understand more about how their company makes such judgments should be seen as a reasonable expectation and an excellent opportunity for senior management to earn alignment – and head off future crises – through communications.

Don’t wait for an employee petition to land on your desk. Revisit your mission and values with plenty of discussion and, ultimately, buy-in. Find ways to channel the empowerment and pride of your employees. That’s the longer-term objective for Conine and Shah. Given what they have accomplished, my bet is they’re up to the task.

https://www.bostonglobe.com/metro/2019/06/26/wayfair-employees-plan-walkout-today-oppose-sales-migrant-detention-centers/uBK7rz5nXaFl84DCB4SU1K/story.html

https://www.cbsnews.com/news/wayfair-employees-plan-walkout-after-companys-sales-to-detention-centers/

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