The Wage Scandal
Discuss About The Motivation Organizational Information Assets.
Eleven is a Japanese owned, American convenience store chain, whose headquarters are based in Texas, USA. It is a global brand, with more than sixty thousand locations around the world, in several countries (7-eleven.com 2018). In Australia, 7 Eleven operates about 620 retail stores, and is ranked 132 among the top 2000 companies in Australia. The industry generates majority of its income from Food Retailing. The company generated revenues of 2.7 billion dollars in 2017, and employed 349 employees (7eleven.com.au 2018). In 2011, 7 Eleven faced charges of wage scam, in which the franchisees were blamed of underpaying or even not paying their employees. The reports were made by several employees of the store chains across most of the 7 eleven stores in Australia, who claimed that they were getting paid below the minimum wage levels (of $20 per hour), stating they were paid as less as $10, and were given no special pays for night shifts or working on weekends (Pha 2015). Many employees stopped receiving any pays for weeks on end. There were also reports of fraudulent documentation that hid the fact that the employees were getting underpaid. Few employees also complained that they were blackmailed to prevent them from reporting these malpractices to the authorities. Many of these affected employees were students (mostly foreign students) and visa holders, who were afraid to leave the job, as it was their only means to make the ends meet (news.com.au 2015; Terry-Armstrong 2017).
When the wage scandal was exposed by Four Corners, in 2015, the 7 Eleven management’s first reaction was to go into damage control. According the reports of Four Corners, 7 Eleven were running ‘sweatshops at every corners’, and they quoted a & Eleven insider claiming that the business principles on which 7 Eleven was built was not very different from slavery, and it depended on the exploitation of its workers to make gains (Ferguson et al. 2015; Pha 2015). The company’s statements plainly denied such accusations, claiming that they do not exploit their workers, and even allow ‘painless exits’ for their franchisees if they are struggling to perform. The Chief executive also added that the company has a policy of paying back the franchise fee, and even helps the franchisee to sell the store if they have made a goodwill payment. The disputed the claims of insufficient finances in the stores, stating that each store delivers a net profit of 165 thousand dollars along with a yearly growth of approximately 9%, which eliminates the possibility of these franchisee performing poorly. They cited such figures to emphasize that the viability of the organization is not dependant on the franchisee underpaying their workers. The chief Executive also promised that the franchisee who is indulging in such misconduct will be ‘weeded out’ of the system, as they plan to make their audits and monitoring systems more stringent (insidesmallbusiness.com.au 2017). The first step towards their damage control was to announce the setting up on an independent committee to investigate these claims. This step was taken in response to the reports of the employees and franchisee of 7 Eleven preparing to take a class action against the Head Office (retailworldmagazine.com.au 2015). During the Four Corners investigation, pressure inside the organization increase4d to take measures to prevent further damage to the company’s image, and according to reports by Fairfax Media, the management tried to cover up the information that can support the exploitation of its employees (news.com.au 2015). The media reported that it had leaked documents that proved that staff at the head office of 7 Eleven were well aware of the malpractice of underpayment or non payment of wages at its franchisee. Owner of a 7 Eleven store in Melbourne even admitted to the practice of falsifying documentations, and ripping off its employees of thirty thousand dollars. He reported that he learnt the process of manipulating the employee payroll from another 7 Eleven franchisee owner at a 7 Eleven conference. There were several other reports of now the 7 Eleven franchisee exploited and underpaid many of its employee hundreds of dollars, many of whom were students from abroad, and were afraid to complain against the franchisee as they fear that they will be reported to the Immigration Department. This fear was justified since most of these individuals were working more than 40 hours every fortnight, which was against the visa conditions. It was alleged, that all these malpractices and the forging the payrolls and employee documentations were done with knowledge of the head office. The company however responded that they take their responsibility as a franchisor very seriously, and they strive to ensure that proper education and support is given to the franchisee to ensure they meet their legal duties including their duties as employers of the store employees, and malpractice done by even a single store is unacceptable by the organizations principles and standards (news.com.au 2015; Pha 2015; Terry-Armstrong 2016).
Communication Theories
Different Communication theories can be applicable to explain how and why the Organization reacted to the reports of the wage scandal. The first theory can be associated in this context is the Cognitive Dissonance Theory, which proposes that people tend to avoid experiences of dissonance as they find them unacceptable to agree with. Here the individuals wish to avoid facing the facts, without listening to the views of others, considering that other’s views are largely debatable (Vaidis 2014; Harmon-Jones 2017). This implies that the management felt the allegations made against their organization was unacceptable, according to their business principles and policies, and hence found the reliability of the sources up be questionable (news.com.au 2015). This was also supported by independent reporters stating that the management at the head office plainly refused to listen to them over the phone, when they tried to inform the management about these alleged misconducts widespread across many of their franchisees, even stating that they were not interested in any proofs they might have supporting these allegations (Ferguson 2015). The decision of the management of setting up an independent panel to investigate the allegations also highlighted the same mindset that the management did not find the reports of the wage scam to be credible (abc.net.au 2016). The cognitive Dissonance theory suggests that dissonance (that is a lack of agreement between the public and the organization in the context of whether the organization is actually ripping its employees) can be reduced by 1) reducing the importance of the dissonant belief- that is the fact that the organization is systematically exploiting its employees by underpaying them 2) adding more constant beliefs to outweigh dissonant beliefs- that is emphasising that the organization does not support exploitation of its employees, and takes its responsibility as a franchisor seriously, to ensure that the franchisee fulfil their legal duties towards their store employees. The organization further highlighted that the claims of workers being underpaid as false as each of the stores are making good enough profits to pay the employees, and that the organization had no financial deficits that would prevent them from paying the workers adequately. 3) changing the dissonant belief so that they6 are not inconsistent envy more- this the organization tried by announcing an independent enquiry, which they claimed to prepare an unbiased and actual report of the situation, and help to clear out the cause of the issue (Vaidis 2014; Harmon-Jones 2017). The organization also stated that they will remove any franchisee that were found guilty of misconduct, and will tolerate not even a single store of ripping its employees (news.com.au 2015).
Cognitive Dissonance Theory
Another theory that can be applied in the scenario is the Face Negotiation theory, which is regarding facing conflicts on personal or organizational levels. The theory emphasises on the importance of ‘face’ or ‘image’ of individual or organizations, which is essentially the perception of others towards an individual or an organization. The theory suggests that during the conflicts, the face or image is adversely affected, which implies the necessity of saving ones face of image (Zhang et al. 2014). The theory assumes that communication is based upon the maintenance and negotiation of the face value; when identities are questioned, face value is negatively affected; face management is significantly affected by differences in individual and collective opinions; a collective culture depends of another oriented face value; cultural variances also affects behaviour and competence in communication is a result of the culminated knowledge and mindfulness (Ting?Toomey 2015). This shows that the concept of ‘face’ and image’, especially at the level of an organization is dependent on the collective focus, and one that fosters equality among the individuals in the organization as well as respects the hierarchy in it. It can be understood, that the reports of employees being underpaid, have serious negative implications for the face value of the organizations, and can lead to negative image of the organization to be created in public. The decision of the management towards a damage control prerogative shows that the company wanted to prevent their face value being eroded by these acquisitions, and they wanted to disprove them, or at least create an image which showed that they intended to get to the bottom of this alle4gations to find out if they were true or false, as much as the rest of the public, which is why they set up an independent panel to investigate these reports (abc.net.au 2015; abc.net.au 2016; Ferguson 2015).
The Organizational Information theory is also applicable in this context, is it proposes that organization can make communications ambiguous, and members in the organization utilise this ambiguity while making sense of the information (Posey et al. 2015). This might be relevant theory in the context that the 7 Eleven management tried to imply that the franchisee might be at fault of underpaying their employees and engaging in malpractice, which was done without the knowledge of the head office and upper management. According to the 7 Eleven management, their policies were never aimed towards exploitation of the employees, and any such incident might be one off acts, done by the franchisees, and thus cannot be blamed on the 7 Eleven management. They ensured that the management will adopt a more stringent policy to audit and monitor the franchisee to find any malpractice, which showed that at the organizational level, 7 Eleven might have had loopholes in its policies which allowed the franchisee to conduct the malpractices, without the management ever knowing about it. The theory also postulates that equivocality can be reduced by three steps: Enactment which emphasizes on the action or enactment in an organization (in this context, the management enacted by announcing the enquiry into the matter, and attempting to engage in damage control) Selection which is evaluation of the available information to further reduce equivocality (the management of 7 Eleven tried to discredit the reports against the malpractice, dating they were allegations which needed to be ascertained), and Retention which is an attempt to adapt to a change in the system to determining the validity of information (which was attributed by the management’s decision to use stricter process to monitor and audit the franchisee to identify these malpractices) (abc.net.au 2015; abc.net.au 2016; Ferguson 2015)..
Face Negotiation Theory
The study of the wage scam reports in the 7 eleven stores in Australia, showed several important aspects regarding the importance of communication standards and how effective communication is important for the growth of the company. On one hand the allegations pointed out that the management were well aware of the scam being done in the various stores operated by 7 Eleven, which resulted in their employees being underpaid and blackmailed and on the other hand is the response from the head office denying knowledge of any such incident. This showed that there is a probability of either the organization actively propagating the malpractice through its hierarchy, or any dissonance must exist in the organization which allowed some individuals to exploit the workers. The organization’s effort to try to control the damage done by the reports by establishing an independent enquiry is evident of Face Negotiation theory, while their inability to accept pr even acknowledge the allegations by different reporters showed a level of Cognitive Dissonance within the organization. It is important therefore for organizations to develop a more objective approach towards the analysis of situations that can jeopardise the sustenance and face of the organization and instead of refuting allegations, a quicker response to investigate these reports are vital to ensure that they still retain credibility and trust.
References:
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