HE’s espoused culture
The importance of business ethics is growing between organisations as the competition become fierce at the global stage. Organisations are focusing on implementing a competitive approach to push boundaries in order to generate a competitive advantage in the industry. Generally, companies find it difficult to comply with the principles of business ethics while implementing the policies for generating a competitive advantage. The importance of corporate governance and corporate social responsibility (CSR) structure has grown significantly, especially for multinational organisations since their operations affect a large number of stakeholders which include customers, employees, shareholders, government, environment, and others (Torres et al., 2012). As per corporate governance policies, the companies should implement effective human resource policies which are focused on implementing a positive working environment in the workplace to provide appropriate facilities for employees and fulfil their needs.
Moreover, the corporation and its management have to comply with various ethical theories while forming business policies to ensure that they address the moral and ethical issues while taking actions for performing their business operations (Chell et al., 2016). In this report, the case study of Hutong Enterprises (HE) will be evaluated while assessing the policies of global corporate governance and CSR. HE is facing a number of challenges since the management of the company has decided to forcefully terminate its employees that violated their long-term employment relationship. The company has also failed to address the issues relating to its organisational culture due to which many employees have committed suicide. This report will evaluate the contradictions between the company’s culture and its recent actions and analyse how they can be resolved. The two challenges will be evaluated by using relevant ethical theories and whether the company’s culture is exploiting its employees will be assessed in the report. Lastly, advice will be given to the CEO and the union leader for their future approaches regarding these issues.
HE has emerged from a local Chinese company to a multinational organisation which offers its services in several countries. The corporation has gained a competitive advantage in its business based on its effective organisational culture which is focused on increasing efficiency in the workplace. The company has hired more than 150,000 employees for its operations. Its products include professional services, telecom network infrastructure, mobile telephony, and associated applications and software. Around 80 percent staff members of the company are male, and they are relatively young as well. Three-quarters of the company’s employees are under 50 which mean it hires young employees who have ambition and energy to work as per the schedule of the enterprise. The company has a reputable culture based on which it cannot be expected from the company that it had involved in any immoral or unethical behaviour towards its employees. The corporate governance structure of the company is influenced by the western principles which are focused on ensuring that the rights of employees are not violated. The vision of the company is focused on providing high-quality services to its customers, and its values are focused on teamwork, improvement, integrity, mutual trust, and dedication.
Contradictions between HE’s espoused culture
The corporation has given a significant position to its employees because they are a key contributor in its success. This element is highlighted by the HRM policies which are implemented by the enterprise. These policies are focused on providing effective benefits and rewards to employees based on their performance in the company. The performance of employees is continuously monitored by the HR department, and they receive benefits according to the improvement in their performance. The contradiction occurred because the values and policies of the company are focused on promoting the welfare of its employees and maximising their values (Manroop, 2015). The HR policies of the company are focused on welfare, health, and well-being of its employees which is achieved by providing consultation and counselling to employees when required. On the other hand, the company has adopted a ‘mattress culture’ in which most employees have to work long shifts in which they sleep on their desks rather than going to their homes. This has adversely affected their health, and it started to create challenges in their personal and professional life. Therefore, the actions of the company contradict with its own values since its actions are adversely affecting the health and well-being of its employees.
The company has been established in many activities which have led to coercion to esteemed employees, and it did not provide a remedy to them. The corporation decided to forcefully terminate 5000 of its employees and forced them to re-join the company after the introduction of the Labour Contract Law of 2005. These employees were in a long-term employment relationship with employees, and they wanted to change their agreement into a short-term contract. Due to this decision, the values on which HE stands for are violated. The relationship of the company with its employees has been fractured, and it hurts the sentimental feeling of the employees. These relationships were created by decades of relationship between the employees and the company, and they should be treated carefully (Rolander et al., 2016). However, this decision resulted in breached the trust of the employees. Later the company changed its decision after many concerns raised by the local council. The union leader also expressed the concerns regarding the implications of this decision. The company later reversed its decision after it was threatened for legal action. However, the reversing of this decision did not affect the relationship of the company with its employees. The relationship was not restored after this decision because the psychological contract between the employees and the management is violated.
According to Filatotchev and Stahl (2015), there is a key difference between implementing effective CSR and corporate governance policies and complying with them accordingly, without facing a slight deviation. The reality is different from the expectations. It is challenging for multinational corporations to comply with the corporate governance policies while managing their operations in several countries. They find it difficult to comply with the code of ethics which they have implemented in the organisation to ensure the well-being of their employees. The contradiction between the values of the company and its decision to terminate its long-term employees is a good example. Moreover, the mattress culture implemented by the company is another good example which contradicts with its values. The company is putting the health of its employees at risk based on this culture. The issues occur because the management of the company is solely focusing on achieving its organisational targets (Mason and Simmons, 2014). The corporation has implemented a wide range of CSR policies; however, it did not focus on complying with these principles. The leadership of the company has failed as well because the CEO and the union leader has failed to take reasonable steps to ensure that the requirements of employees are meet and the work is not adversely affecting their health and well-being. The management has also prioritised the profits of the company above the well-being of its employees due to which the contradiction between the company’s culture and recent actions has occurred.
Actions to resolve contradictions
There are several actions which can be taken by the management of the company in order to resolve these contradictions. The company is required to reconsider its actions which adversely affect the health and well-being of its employees. The culture of the company should not cause harm to its employees and other stakeholders. The company should adopt a better and more effective approach for maximising the benefit of its workers by adopting another approach than the current one. The corporation should be held accountable for its actions towards the stakeholders of the company whether insider or outside (Jizi et al., 2014). In case of multinational corporations, high quality is expected from the management to ensure that quality of life is maintained by them among the customers and their workers by avoiding those business cultures which can hurt the principles and values of the company along with its stakeholders.
HR is facing two ethical challenges due are affecting its business operations, and they are violating its values. The first challenge which is faced by the company is firing and re-joining of its long-term employees after the introduction of the Labour Contract Law of 2005. Due to this decision, the long-term relationship of the company with its employees was violated. Most of the employees joined the competitors of the company since they lost their trust in the company. It begs the question whether the decision of the company is right or wrong. The second challenge is related to the suicides which are committed by the employees against the ‘mattress culture’ which is adopted by the enterprise. Although the company has adopted employee-centric values and adopted HRM policies which target their requirements, however, the company has still failed to take action against reducing the number of suicides committed by the employees. It raises the issue whether the actions of the company are justified or not and whether it fulfilled its duty by implementing the policies in the company without ensuring whether they work effectively or not.
In order to understand the ethical issues, the utilitarianism ethical theory can be implemented in this case. It is a part of the normative ethical theory which is also called consequentialism theory. The theory judges the morality or ethical nature of a situation by evaluating the consequences of a situation. The theory provides that if the consequences of an action are positive, then it is considered that the policy is ethical (Broad, 2014). The key element of the theory is the actions must achieve a greater good for a greater number of individuals. Based on this element, the actions which positively benefit a large number of people are considered as ethical. As per this theory, the actions taken by the management of the company are unethical. Firstly, the company has violated its long-term relationship with employees by forcing them to resign and re-join the company. The consequences of this action are negative since it breaks the long-term relationship which employees have with the management due to which many employees leave the company and join its competitors. It adversely affected the happiness of a large number of people due to which this action is unethical as per the principle of the utilitarianism ethical theory.
Another key ethical theory is the virtue ethics theory which is also a part of the normative ethical theories. This theory focuses on the virtues of the mind and character of individuals which they are taking certain actions. This theory did not focus on the rules or the consequences of a situation while evaluating whether the decision taken by the parties are ethical or not (Audi, 2012). The virtues are referred to quality or habits of a person which assist them in succeeding their purpose. This theory requires that the parties facing a particular issue must focus on maximising the benefit of each other from the actions. As per this theory, an action should not only focus on benefiting a single party while other parties suffer a detriment. The actions which are selfish are considered as wrong and unethical. Therefore, based on this theory, the actions of HE and its management are unethical. The company is violating its virtues and values by taking the business decision to forcefully resign over 5000 long-term employees. The company has acted selfishly while taking this decision since it did not consider the relationship with its long-term employees and it only focused on maximising its profitability. The failure of taking any action to stop the number of suicides of employees also prove that the company has not complied with virtues while taking business decisions based on which its actions are considered as unethical as per the provisions of virtues ethics theory.
HE has adopted the ‘tiger culture’ in the company which is focused on increasing the efficiency of the company to maintain a competitive advantage to expand its operations in international markets. This culture did not inevitably result in leading to the exploitation of the workers; instead, it depends on how the company practices its policies of corporate governance and CSR. It is possible for the company to fulfil the needs of its employees while it is practising the tiger culture. Multinational corporations are focused on achieving competitive advantage by delivering high-quality service and output because the competition is fierce at the international level. These objectives can only be achieved by a collaboration of a team of dedicated and engaged employees who focuses on achieving the corporate goals. By effectively complying with corporate governance and CSR policies, the implementation of tiger culture cannot exploit the rights of workers. As per Ali, Frynas, and Mahmood (2017), the corporations which are socially responsible are more likely to give space for transformative leadership which increases the accountability of the company towards its stakeholders which include its employees as well. It also assists the employees in communication the issues which they face in the company and adopts adequate policies to address such challenges. The working of the company is harmonised with effective compliance with corporate governance and CSR policies which avoid the exploitation of workers.
By adopting an effective CSR structure, the company can create a balance between the objectives of the organisation and its stakeholders. Effective compliance of these policies begins with adopting these principles in the culture of the company. The culture ensures that parties are not being mistreated while they are conducting their operations. As per Lim and Greenwood (2017), the culture also enables the management to quickly take corrective actions regarding the operations of the company to ensure that the issues which are faced by the employees are addressed accordingly. Without the implementation of policies in the organisational culture, it is difficult for the company to implement and comply with an effective CSR structure. HE complies with key regulations and local laws on the fear of avoiding punishment; however, it did not seem equitable. The tiger culture which is adopted by the company is targeted to exploiting its employees in order to increase the efficiency of the company and achieve its corporate targets. If the company remains socially responsible to its employees, then it cannot lead to the exploitation of its employees. The company should not focus on maximising its profits; instead, it should focus on implementing effective corporate policies which are targeted on ensuring that employees are not exploited. HE should focus on maximising its social performance by adopting the key corporate governance policies which assist the company in indirectly inducing higher profitability. The company can achieve its business objectives while at the same time ensure the well-being and health of its employees by implementing effective corporate governance and CSR policies. The company should abolish the ‘mattress culture’ in the company to ensure that a balance is created between the social and professional life of employees.
The CEO of HE is not focusing on complying with the ethical policies while taking business actions. The strategies of the company are formed while solely focusing on the maximising the profits of the company. In order to achieve sustainable growth, the implementation of the principles of ethical leadership is necessary. Ethical leadership assists the management in ensuring that the needs of employees are fulfilled while the business targets are also achieved at the same time (Schaubroeck et al., 2012). The ethical leaders rely on ethical decision making in which they evaluate the consequences of their actions and ensure that stakeholders’ rights are not violated. They evaluate the interest of each stakeholder while forming business policies which assist them in ensuring that the objective of the company is achieved while at the same time the company is acting ethically towards its stakeholders. The CEO of HE is required to ensure that certain actions are taken in the company which is motivated by the ethical guidelines given under the corporate governance policies. While implementing these provisions, the CEO should evaluate various impending actions which are more likely to affect people who are inside and outside the corporation. Effective compliance with ethical principles ensures that the actions taken by the senior executives are most appropriate. For example, the decision taking the CEO to terminate the long-term relationship with employees by forcing them to resign and re-join the company did not comply with any ethical principles.
The CEO did not consider that this could adversely affect or harm the rights of its employees. Before taking the business decision or forming future strategies in the organisation, the CEO should seek ethical guidance in which the actions should be evaluated through different ethical theories to ensure that they are ethical. Moreover, it is the duty of the CEO to ensure that the future policies of the company did not contradict with its core values. It means that the values of the company should not be violated by the management to achieving other goals such as maximising the profitability of the company. For example, the mattress culture which is implemented by the company resulted in contradicting with its core values because it did not focus on the health and well-being of its employees. It also contradicts with the HRM policies of the company which are targeted towards achieving a balance between the personal and professional lives of the employees. Effective compliance with the corporate governance policies assists the CEO in ensuring that the objective of the company is achieved while it complies with its core values (Othman and Rahman, 2014). The CEO should publicly make an apology to its employees for the decisions made by him, and he should also provide a remedy to them regarding the current issue which is faced by them. It will result in improving the overall image of the society of the company, and it will also strengthen the relationship between the employees and the management.
The union leader should focus on complaints which are made by the workers to ensure that the board of directors and the local authorities are aware of these policies. The issues faced by the employees should not be delayed since it affects their productivity and relationship with the company. It is the duty of the union leader for bargain equitable treatment of the employees so that their rights are not exploited by the senior level executives of the company. The union leader should create pressure on the management of the company to ensure that they did not violate the code of ethics while taking business decisions. They should ensure that the ethical policies are achieved by the company while implementing policies which governs the operations of the employees (Huhtala et al., 2013). In this case, these policies are violated by the union leader of HE since he had failed to take any actions regarding the issues which are faced by the employees of the company. The union leader had to ensure that he should conduct a regular review of the organisational practices to ensure that the rights of employees are not exploited, and the company ethically conduct its operations.
The union leader should ensure that the management complied with the ethical responsibility of the company towards its employees and did not form any policies which could adversely affect their health and well-being. In case of HE, the union leader has failed to stop of the decision of the management to forcefully resign its employees and re-join again due to which the long-term relationship between the employees and the management were breached due to which many employees leave the organisation. Moreover, the union should become a whistle-blower, and he reports the failure of the company to take any actions to stop the number of suicides in the organisation (Lewis and Vandekerckhove, 2018). The union leader should engage with employees to learn about the issues faced by them to ensure that ethical policies are followed by the management while taking business decisions. The union leaders should be active whenever a complaint is made by the employees to ensure that it is addressed accordingly and a remedy is provided to the employee.
Conclusion
From the above observations, it can be concluded that the management of HE has failed to comply with corporate governance and CSR policies to ensure that the rights of their employees are not violated based on their decisions. Good corporate governance practices are the key for building an excellent public relationship within and outside a company. In the case of HE, the corporate governance and CSR policies were violated by the management due to which the relationship between the employees and the corporation are violated. This case shows that only implementation of corporate governance policies is not enough, the management has to ensure that these policies are effectively complied with while taking business decisions. By critical adherence and sustainability to CSR structure, the corporation can expand its operations in a challenging business environment. The organisational culture assists the management in ensuring that the corporate governance policies are fulfilled while forming business policies. By effectively comply with good corporate governance policies, the management of HE can build a strong relationship with employees and ensure that the company is able to sustain its future growth.
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