Background of the ethical issues at Nike Company
Discuss about the Leader Ethical Decision Making in Organizations.
Various individuals or groups have always resisted violation of the code of ethics at the workplace, but ethical misconduct at the workplace is still evident in most organizations. This essay considers the latest published ethical issues of Nike Company in the Raked media article. The piece begins by providing an outline and summary of the ethical issues in the article; then a discussion is made on the key ethical concerns namely corporate social responsibility. The writer’s opinion on whether the company has taken the most appropriate decisions or not is provided alongside examples of moral cases in other companies. Lastly, the student submits his ethical decision-making process in line with his opinions.
Ethics can be defined as the right principles by which individuals behave themselves personally informally and professionally. “The perceived conflict between the traditional corporate objective of profit maximization and the overall desire for increased social welfare” (Schwartz, 2017). The article “did Nike’s Frat Boy Culture” lead to the departures of two executives”? by Lieber (2018) published in Racked examines the recent resignation of Nike executives on accusations of engaging in actions that were demeaning to female employees. The article names the Brand president of Nike Trevor Edwards and Nike vice president Jayme Martin as the individuals who were fired for protecting male staffs who harassed and bullied women and people from foreign nations.
The article points out that the announcement was made through a memo of the company CEO Mark Parker. The CEO consents that the organization’s internal HR system was under review. However, the article points out that cases of workplace misconduct are not new in Nike Company, and several cases of former employee complaints are taken from Glassdoor in which most employees refer Nike to “frat boy culture.” A former employee also refers Nike to an insolent, ageist, chauvinist, entitled, spoilt and selfish executive management”. The article also notes that Nike has all-time low employee satisfaction because of its bureaucratic overwork of 80 hours per week and inadequate compensation. The company is also accused of favouritism in promotions and workplace operations. Such workplace misconduct is a direct violation of labor laws on gender equality, employee right to safe working conditions and reasonable pay.
The article points out several areas of key ethical issues about Nike Company. The article points out that Nike has poor working conditions that are not up to the standard of WHO. For instance, employees are forced to work for 70-80 hours per week. This shows that Nike has no responsibility for the well-being of its employees. Nike has historically been accused of taking advantage of underdeveloped countries to establish subsidiaries and take advantage of the cheap labor force (Boje and Khan, 2009). The organization is also accused of segregation by color (Lund-Thomsen and Coe, 2013). One of the former employees is quoted in the article blaming Nike Company for favoring the white or British employees more than others. The company is accused of making it difficult or impossible for employees to advance career-wise if not included in their social circle. This state of things is fostered and encouraged by the executive, and as a result, it is reflected amongst the employees.
Key ethical concerns at Nike Company
The article primarily reports of demeaning actions of the Nike management on women and individuals from foreign countries. Two senior executives resigned from the company on allegations of sexual harassment and protecting junior staff who were involved in behavior that was belittling to female employees and even bullied them alongside team from foreign countries. The management behavior suctioned the misconduct of the employees against their colleagues and made the workplace conditions unbearable to the segregated class. Sexual harassment is reported to be rampant even at the headquarters of Nike in Beaverton, Oregon.
The complainants give first-hand information because they were former employees in the organization. They accuse the company management of the “frat boy culture.” One of the current female directors says that she was told several times to attend the meeting but should never make any contribution but to keep silent. Additionally, the Complainant accuses the company of having males dominate their leadership position. This is evidenced by the campaign by Nike to promote women to appear gender balanced. Another employee accuses the management of Nike for supporting only the male leaders. The administration excuses their action by citing specific instances in which a female leader reactive emotionally.
The Nike Company have not made the most appropriate moral decision to deal with the issues in its workplace misconduct. This is because ethical misconduct in Nike Company has been exposed in history in almost all its subsidiaries in different countries (Herrnstadt, 2013). Meaning that it is a culture that has been fostered and developed, and just firing two executives who have been found guilty of workplace misconduct will not deal with the menace from the cause, if it will only stop at that. The organization claims in other forums to have clearly outlined guidelines on workplace ethics, but the complaints from the employees show that the management is not implementing these codes of ethics. This can also be attributed to the fact the management does not only apply them, but they are the one leading to the misconduct.
Therefore, I am of the opinion that the decision to fire the two executives for wrongdoing is not the most appropriate ethical decision if it will only stop at that. This is because it is already an established culture and therefore to deal with it appropriately, the company should besides of firing the accused executives, should streamline its leadership to the lower level of line managers and employees and fish out those that promote the menace. This will be more effective if an independent joint investigative committee is established to investigate the matter in each company and then present a report with recommendations to the directors.
Critique of Nike’s decision-making process
Additionally, the new management should promptly act on any reported allegations of workplace misconduct after identifying the direct and indirect perpetrators. To facilitate this, the new administration should ensure that the reporting process is effective and safe for the employees who may fear to report due to intimidation.
A fitting example is Coca-Cola Company and its allegations on CRS policy in India (Gill, 2009). Coca-Cola Company in India had faced water conflict with the government in 2003. It was accused of causing the water shortage in the community in India due to its manufacturing operations. This led to several legal sanctions that saw the company lose its sales in India. However, the response by the 2008 Coca-Cola vice president of environment Jeff Seabright was remarkable. Jeff first acknowledged that the company had not adequately addressed the conflict and that the local community was justified (Calvano, 2008).
The company went ahead and developed goodwill with the government and locals by partnering in projects for water conservation such as the Coca-Cola India Foundation (Mitra, 2012). This has achieved a full balance between groundwater used in beverage production and that used by the community. The several legal sanctions imposed on Coca-Cola Company in India are justified because this led them to re-examine their relationship with the community and the decline in sales, and acted appropriately.
Another example of ethical cases is Walmart. The company has had multiple conflicts with its CSR policies in different countries with its establishments, but it still stands as one of the international employers. Walmart has been accused majorly of child labor and poor work conditions. However, the organization worked towards tolerating zero tolerance policy for underage staff by undertaking some steps (Torres et al., 2012). The 2005 report on ethical sourcing shows that Walmart had terminated business with 141 factories which were accused of underage labor violations (Lund?Thomsen et al., 2012). The organization also encouraged transparency and accountability through its Global Responsibility Report. The sanctions imposed by Walmart were justifiable because it demonstrated its commitment to safe work conditions.
An ethical decision-making process will take seven stages. The first step is to gather facts regarding the ethical misconduct. At this stage the individuals involved are identified, the situation, the time, how, and why it took place. Step two is to define the ethical issues. According to Ruedy and Schweitzer (2010) defining moral matters will ensure that specific ethical issues are focused and dealt with one at a time. In the case of Nike, allegations such as sexual harassment, segregation, etc. should be dealt with one by one. Step three is to identify the affected parties. Identify the primary or direct and secondary or indirect parties involved in the case.
Case studies on ethical issues in other companies
Step four is to ascertain the consequences by brainstorming on the potential positive and negative results for the affected people by the decision. Thiel et al. (2012) suggest that the leadership should consider both the short and long-term consequences and whether the decision will offer a long-term solution or not. The decision by Nike Company to fire the two executives is a short-term decision because the ethical issue is already a culture in the company. The fifth step is to identify the appropriate principles, rights and justice issues that are associated with the decision. The rights of the affected and well as accused are to be considered here. Nonetheless, fairness for all is key.
Step six is consideration of individual character and integrity. The CEO of Nike should think what will be the perception of the community regarding his integrity while making the decision and should also consider a disclosure rule in case of the social media interviews him. Step seven is thinking of the potential actions. The actions against the accused should be done in the interest of the primary parties involved in the issue (Ferrell and Fraedrich, 2015; Detert et al., 2008). The decision here should not only stop at the executives but should also extend to the supervisors that foster and encourage unethical behaviors.
Conclusion
Nike has recently and historically been accused of workplace misconduct. The key ethical concerns outlined in the news article by Chavier Lieber include corporate social responsibility. The decision announced by the company’s CEO of firing the brand director and vice president is not the most appropriate decision if it will only stop at that. Workplace misconduct in Nike is a culture that has been fostered in almost all its subsidiaries and therefore must be dealt with entirely by dealing with everyone involved. Examples of Coca-Cola and Walmart companies on how they have dealt with ethical misconduct is worth imitating. The ethical decision-making process should be comprehensive and should consider the long-term and short-term effect on the organization as a whole.
References
Boje, D.M. and Khan, F.R., 2009. Story-branding by empire entrepreneurs: Nike, child labour, and Pakistan’s soccer ball industry. Journal of Small Business & Entrepreneurship, 22(1), pp.9-24.
Calvano, L., 2008. Multinational corporations and local communities: A critical analysis of conflict. Journal of Business Ethics, 82(4), pp.793-805.
Detert, J.R., Treviño, L.K. and Sweitzer, V.L., 2008. Moral disengagement in ethical decision making: a study of antecedents and outcomes. Journal of Applied Psychology, 93(2), p.374.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.
Gill, L., 2009. The limits of solidarity: Labor and transnational organizing against Coca?Cola. American Ethnologist, 36(4), pp.667-680.
Herrnstadt, O.E., 2013. Corporate social responsibility, international framework agreements and changing corporate behavior in the global workplace. Am. U. Labor & Emp. LF, 3, p.i.
Lieber C., 2018. Did Nike’s ‘Frat Boy Culture’ Lead to the Departures of Two Executives? Racked. 16 March [online]. Retrieved from: https://www.racked.com/2018/3/16/17129110/nike-trevor-edwards-workplace-misconduct [Accessed on 22 May 2018].
Lund-Thomsen, P. and Coe, N.M., 2013. Corporate social responsibility and labour agency: the case of Nike in Pakistan. Journal of Economic Geography, 15(2), pp.275-296.
Lund?Thomsen, P., Nadvi, K., Chan, A., Khara, N. and Xue, H., 2012. Labour in global value chains: Work conditions in football manufacturing in China, India and Pakistan. Development and Change, 43(6), pp.1211-1237.
Mitra, R., 2012. “My country’s future”: A culture-centered interrogation of corporate social responsibility in India. Journal of Business Ethics, 106(2), pp.131-147.
Ruedy, N.E. and Schweitzer, M.E., 2010. In the moment: The effect of mindfulness on ethical decision making. Journal of Business Ethics, 95(1), pp.73-87.
Schwartz, M.S., 2017. Corporate social responsibility. Routledge.
Thiel, C.E., Bagdasarov, Z., Harkrider, L., Johnson, J.F. and Mumford, M.D., 2012. Leader ethical decision-making in organizations: Strategies for sensemaking. Journal of Business Ethics, 107(1), pp.49-64.
Torres, C.A.C., Garcia-French, M., Hordijk, R. and Nguyen, K., 2012. Four Case Studies on Corporate Social Responsibility: Do Conflict Affect a Company’s Corporate Social Responsibility Policy. Utrecht L. Rev., 8, p.51.
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