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Ethics & Governance Values & Ethics in Organizations (Stakeholders Model):

Ethics & Governance Values & Ethics in Organizations (Stakeholders Model) Prof. Sandeep Hegde

Nike’s Labor Practices in Vietnam :

Nike’s Labor Practices in Vietnam On 17 October 1996, CBS News ran a 48 hour program covering the inhumane treatment of workers by their supervisors, the payment of wages below the legal minimum wage, and the sexual abuse of several women workers at Nike's shoe manufacturing plants in Vietnam. Workers had been physically assaulted on the job. Temporary workers were paid, on an average, 20 cents per hour while team leaders were paid $42 per month; regular workers were paid even less. The report also observed that there was a difference between the practices in Nike's factories in Vietnam and what Nike told American consumers about its labor practices. Analysts said that in spite of its good image in the US, Nike was a very different company in Vietnam and other Asian countries. However, Nike had repeatedly claimed that it did not tolerate worker maltreatment in its Asian factories. The company had developed and published both a "Code of Conduct" and an agreement with its Asian subcontractors, setting out the company's position on wages and working conditions. Jim Cox, executive president of the New York based GCI group, said, "Nike has adopted a defensive attitude throughout. Recently, Nike seems to be grudgingly coming around to admitting something may be wrong but they missed an opportunity at the outset when they effectively said 'we're Nike and we're not doing anything wrong. We don't own these plants so they aren't our problem"... (Established in 1984, GCI is one of the largest global public relations firms in the world )

Nike’s Labor Practices in Vietnam:

Nike’s Labor Practices in Vietnam In May 2001, a report prepared by a labor rights group claimed that even after three years, Nike had not delivered on its promises. The report said that Nike used to warn its factory managers about inspections by its own inspectors in advance, allowing them to minimize toxic fumes by the time they arrived. Workers claimed that managers took such opportunities to mask working conditions. Moreover, according to the report, Nike workers were still paid wages that were below the legal minimum...

“Management Talk”:

“Management Talk” “ Our vision is to be as bold, innovative, and successful in corporate responsibility as our athletes are in their sports and as we are in our business. Nike has learned a lot, and we know we have a lot more to learn. We have a clear vision of where we want to go and how we’ll get there. We’ll do it by constantly challenging ourselves, pushing our limits, and being focused on one goal: Doing the right thing .” -Maria Eitel, Nike, Vice President of Social Responsibility

Understanding Management:

Understanding Management Athletic apparel manufacturer Nike sells footwear that has been assembled in overseas factories where the minimum wage is much lower than it is in the United States. Maria Eitel, Vice President of Social Responsibility at Nike, oversees programs that prevent the abuse of poor workers abroad. As more consumers demand that companies produce products without harming workers or the environment, businesses like Nike learn to keep step.

Video Case on Ethical sourcing: Nike's re-commitment to making footballs in Pakistan. :

Video Case on Ethical sourcing: Nike's re-commitment to making footballs in Pakistan. The Nike Company deserves plaudits for its approach to supply chain challenges. From what is understood of the Pakistan soccer ball industry, it’s a tough place to work. Not just for workers, many of whom, for cultural reasons, must work at home in pretty poor economic conditions. It also difficult for companies determined to source from there. It is not the easiest country in the world to source from, and is probably uncompetitive when factoring the cultural issues companies face in sourcing from there alongside the labour costs of somewhere like Vietnam, Bangladesh or China. Workers do not get the same freedom to work collectively in a factory in the same way as they do in China or Vietnam. Many women, at least in a major area of soccer ball manufacture, Sialkot, are made to work at home largely by conservative religious repression.

Stakeholder theory :

Stakeholder theory The basic premise is that business organisations have responsibility to various groups in society (the internal and external stakeholders) and not just the owners/ shareholders The responsibility includes a responsibility for the natural environment Decisions should be taken in the wider interest and not just the narrow shareholder interest

What characterizes these stakeholders?:

What characterizes these stakeholders? They are vital to the survival and success of the organization. Their relationship with the organization enables them to be benefited by the organizations’s actions and operations. This relationship also makes it possible for the organization to harm them or to violate their rights.

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Owners Employees Physical environment Board of directors Culture Competitors International dimension Political- legal dimension Technological dimension Sociocultural dimension Economic dimension Regulators Customers Strategic partners Suppliers Internal environment Task environment External environment Macro environment Environments in which the business operates

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Employees Society at Large Allies Competitors Regulatory Agencies and Influence Groups: Governments Unions Professional Associations Interest Groups Customers Suppliers of: Capital Raw Materials Human Resources Information Organization

Stakeholders:

Stakeholders Primary stakeholders; Those most vital to the organisation. A group without whose continuing participation the company cannot survive as a going concern. e.g. customers, suppliers. Secondary stakeholders: Those without whose continuing participation the company can still exist. e.g. the community. Active stakeholders Seek to participate in the organisation’s activities. e.g. managers, employees, pressure groups. Passive stakeholders Do not normally seek to participate in an organisation’s policy making. e.g. most shareholders, government, local communities.

Mendelow’s Matrix for Stakeholder mapping:

Mendelow’s Matrix for Stakeholder mapping Observers Informing/ empowering Key players Involving Crowd Ignoring Bystanders Encouraging Power to Influence Low High Level of interest High Adapted from Mendelow (1991)

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Prioritising actions based on impact and influence Low Impact on achieving our vision High Low Our ability to influence High High impact & High influence Clear priorities for action High impact & Low influence Depends on other people – can we engage them? Low impact & Low influence Why would we do this? High influence & Low impact Doing this because “we can”?

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Environment It is our long-standing policy to conduct business in a manner that considers both the environmental and economic needs of the communities in which we operate. We seek to drive incidents with environmental impact to zero, and to operate in a manner that is not harmful to the environment. Health ExxonMobil supports programs targeted to worldwide health issues because we believe that good health is a springboard to opportunity, achievement and development. Health support falls into several categories, the fight against global health pandemics, support for medical centers/hospitals, health education and health-care delivery, health and the environment, and health-related research. Safety We are committed to conducting our business in a manner that protects the safety and health of our employees, contractors, customers, and the public. We strive for an incident-free workplace and have set a global safety and health goal of zero injuries and illnesses. We believe that our commitment to safe, secure, and incident-free operations will contribute to improved operations reliability, lower costs, and higher productivity. Our worldwide spending includes contributions to nonprofit organizations as well as funds invested in social projects through various joint-venture arrangements, production-sharing agreements, projects operated by others, and contractual social bonus arrangements. In 2007, Exxon Mobil Corporation, its divisions and affiliates, and the ExxonMobil Foundation provided a combined $173.8 million in cash, goods, and services worldwide. (excerpts from the official website of the ExxonMobil Corporation: www.exxonmobil.com )

Exxon Mobil CEO takes aim at environmentalists :

Exxon Mobil CEO takes aim at environmentalists Chairman of the Board and CEO of Exxon Mobil Corporation Rex Tillerson listens to a reporter's question after the annual shareholders meeting in Dallas, Wednesday, May 28, 2008.

Exxon Mobil CEO takes aim at environmentalists:

Exxon Mobil CEO takes aim at environmentalists DALLAS -- Rex Tillerson, chairman and chief executive of Exxon Mobil Corp., the world's largest oil-and-gas company, came out swinging Wednesday against the environmental movement, arguing the science of climate change is far from settled and that his company views it as its "corporate social responsibility" to continue to supply the world with fossil fuels. Claudia Cattaneo,  Financial Post Published: Thursday, May 29, 2008

TATA Group and TBEM:

TATA Group and TBEM When the Founder said… “We do not claim to be more unselfish, more generous or more philanthropic than other people. But we think we started on sound and straightforward business principles considering the interests of the shareholders, our own and the health and welfare of the employees the sure foundation of our prosperity” ...he was balancing stakeholder needs , yet another key element of TBEM Tata Group Companies are required to ensure that they demonstrate consistent corporate leadership in order to build and enhance the Tata Brand Equity aligned with the group purpose of “Leadership with Trust” .

TATA – Creating Brand Equity Though Values:

TATA – Creating Brand Equity Though Values

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Institutionalizing the TATA Business Excellence Model to create  value for all  stakeholders while focusing  on achieving long-term sustained competitive success

An Organization’s Ethical Responsibility:

An Organization’s Ethical Responsibility Top management’s responsibilities Infuse ethical behavior into the organizational culture. Provide role models for ethical behavior. Punish unethical behavior when it occurs. Make explicit statements of what ethical conduct is. Establish a ethical code of conduct. Encourage the reporting of unethical conduct (whistleblowing) and protect those who report it.

References:

References Essentials of Management – An International Perspective by Harold Koontz and Heinz Weihrich Business Ethics: Concepts and Cases Sixth Edition. By Manuel G. Velasquez. www.nike.com www.exxonmobil.com www.tata.com