Submission by Volkswagen AG - Essay Example

by Volkswagen AG 2 September As one of the leaders in world automobile manufacturing and the largest car producer in Europe (The Group 2011), Volkswagen AG has come to an understanding that a successful company is the one that works in cooperation with its hosting societies, respects human rights, and cares about the future of the planet. Our company was founded in 1904 (History 2011), and since that time we have gone through a great number of changes and developed a series of strategies to help us be a socially responsible company that employs around 370,000 people globally (Human Resources 2011). Therefore, on the basis of our vast experience operating internationally we would like to provide the local network with a number of recommendations on how other companies can become as socially responsible, for the benefit of both the companies and the global society. In particular, we would like to address the following two principles of the Global Compact: Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 6: the elimination of discrimination in respect of employment and occupation. (UN Global Compact 2011). Lessons Learnt Our company takes active part in initiatives aimed at human rights protection. We respect and support people’s right to collective bargaining. In particular, the freedom of association and our employees’ right to collective bargaining have had a significantly positive impact on the company’s operations in the 1990s. Due to financial constraints, at that time Volkswagen was about to fire a great number of company’s employees. However, we managed to design and sign a number of collective agreements and employment pacts that saved the jobs. One of the agreements introduced a 4-day working week and, therefore, 20% wage reduction for employees. As a result, a significant reorganization and flexibilization of working times and practices took place within the company and allowed to restore the economic efficiency of Volkswagen (Haipeter and Lehndorff 2009). Therefore, it can be concluded that only working cooperatively with associations, including German Metalworkers’ Union, and recognition of employees’ right to collective bargaining helped to both save people’s jobs and restore financial profitability of our manufactures. On contrast, failure to follow collective agreements and cooperate with unions and associations may lead to disastrous results for a company. In particular, one of our competitors, General Motors Corporation (GM), had to undergo through a series of court trials as a result of denial to support human rights. In 2005, as the Delphi Corporation, a former part of General Motors Corporation, filed bankruptcy and refused to fulfil its defined benefit plans. The plans, including retirement plans for former Delphi employees, were terminated and GM cancelled and terminated all the obligations under the old collective bargaining agreements. In 2009 GM, finally, did sign a settlement agreement. However, it “did not provide top-ups to the splinter unions or to any other noncovered employees” (Bovbjerg and Clowers 2011). We, at Volkswagen AG, believe such behaviour of the company to be unacceptable in terms of the recognition of the right to collective bargaining. Furthermore, such actions lead to negative consequences for both the company and the society: the company’s image is damaged, and people are left without any benefits provided by collective bargaining agreements. As for the elimination of discrimination in respect of employment and occupation, Volkswagen AG can proudly claim that it is taking numerous measures to follow this Global Compact principle. In particular, among our CSR initiatives is advancing women and promoting diversity in the workplace. More than 30% of our employees are women, and we are actively working towards increasing this number. In addition, we are striving to increase the number of women in management positions (Advancing women and promoting diversity 2011). The negative example of Toyota, who was sued for discrimination against injured and disabled workers in 2010 (Lawson Law Offices 2010; Witterhold and Grayson 2010), makes us even more eager to hold sustainable and just policies in relation to fighting discrimination. Therefore, we are presenting the following recommendations to be followed by companies and organizations in order to achieve better compliance with the principles of Global Compact. Recommendations On the basis of the presented above experience and lessons learn we suggest that the Local Network considers the following recommendations: 1. Design a regulatory framework that would ensure companies’ following the Global Compact principles. 2. Provide organizations with suggestions and recommendations on how their strategies and procedures can comply with the principles. 3. Design and implement certain measures to be able to monitor and control the fulfilment of the principles. 4. Educate employees, managers and leaders on their rights and promote human rights protection practices among businesses and organizations. 5. Provide local and country level support and guidance to companies willing to improve their human rights protection procedures. 6. Help companies to organize trainings on non-discrimination and collective bargaining policies and procedures for their employees. Business Implications Though it might seem that implementing the above recommendations will entail additional spending for the companies, it is not the case. On the contrary, integrating these procedures into everyday operations will only benefit the organization in both financial and social aspects (Sharma, Sharma, and Devi 2009). Furthermore, is such CSR procedures are implemented effectively, the overall core value of a company will increase (Souto 2009), as well as its value to local hosting societies. Benefits to Stakeholders 1. Rights of companies’ employees will be more protected – women, youth or disabled people will be experiencing less discrimination. 2. Freedom of association and the effective recognition of the right to collective bargaining will ensure that employees, as well as unions, will have more power over their wages and working conditions. Risks While protecting human rights is, from all sides, beneficial for companies and stakeholders, companies may face an increase in demands related to regulations of wage, working conditions and anti-discrimination policies. There also exists a risk that a number of lawsuits from victims of unfair human rights policies. Conclusion Having undergone through a series of changes and innovates aimed at achieving compliance with the principles of Global Compact, Volkswagen AG fully understands how difficult the process might be. However, we believe that previous positive experience and guidelines and procedures to be developed by the Local Network, will be of a great assistance to companies willing to be responsible members of local societies. References Advancing women and promoting diversity. 2011. Volkswagen. http://www.volkswagenag.com/vwag/vwcorp/content/en/sustainability_and_responsibility/society/advancing_women_and.html Accessed September 2, 2011. Bovbjerg, B. and N. Clowers. 2011. Key Events Leading to the Termination of the Delphi Defined Benefit Plans. United States Government Accountability Office. www.gao.gov/new.items/d11373r.pdf Accessed September 2, 2011. Haipeter, T., and S. Lehndorff. 2009. Collective bargaining on employment. Working Paper No. 3. International Labour Organization. History. 2011. Volkswagen. http://www.volkswagenag.com/vwag/vwcorp/content/en/the_group/history.html Accessed September 1, 2011. Human Resources. 2011. Volkswagen. http://www.volkswagenag.com/vwag/vwcorp/content/en/human_resources.html Accessed September 1, 2011. Lawson Law Offices. 2010. Displaced Workers Sue NUMMI, Toyota Over Discrimination in Severance Package. Press Release. http://www.las-elc.org/docs/media/NUMMI-Press-Release.pdf Accessed September 1, 2011. Sharma, S., J. Sharma, and A. Devi. 2009. Corporate Social Responsibiity: The Key Role of Human Resource Management. Business Intelligence Journal 2(1): 205-213. Souto, B. 2009. Crisis and Corporate Social Responsibility: Threat or Opportunity? International Journal of Economic Sciences and Applied Research 2 (1): 36-50. The Group. 2011. Volkswagen. http://www.volkswagenag.com/vwag/vwcorp/content/en/the_group.html Accessed September 1, 2011. UN Global Compact. 2011. The Ten Principles.  http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html Accessed September 1, 2011. Witterhold, M. and Grayson, T. 2010. Revisiting the Vortex: The Collision of the Oklahoma Workers’ Compensation Act, FMLA and ADA. The Oklahoma Bar Journal 81(7): 575-584. Read More