Business Ethics in an Organisation: Nike Company - Case Study Example

Business Ethics in an Organisation Organization is a structure with a ‘collage’ of humans doing their allocated work under the supervision of a leader, for the benefit of the organization as well as them. So, the workers only form the crucial ‘cog’ in the running of the organization. Only if these crucial workers are recruited or staffed optimally through an effective recruitment process, the organization can achieve optimum success. For organizations particularly multinational companies, recruiting the apt workers is not the end of the task, they have to recruit employees from diverse backgrounds in their home operations and importantly in their foreign operations. That is, it is necessary that the management must ensure a constant availability of sufficient number of efficient employees importantly from diverse backgrounds, for the efficient functioning of the organization and importantly to fulfil ethics. This is what Nike is trying to do through its Diversity program. Background Nike Corporation is the world’s leading supplier and or manufacturer of sports equipments, athletic shoes and apparels. It was formed in 1964, and by 1980, it already had more than 50% market share in the United States. Currently Nike has over five hundred factory or office locations in around 45 countries all over the world, the majority of these are in Asia. With such extensive locations, Nike, an American corporation has a sizeable percentage of employees from diverse groups. “More than 30000 employees on six continents • Relies on approximately 700 contract factories, employing some 800,000 workers, in 52 countries to make Nike products.” (Severn, 2008). As part of a positive image building exercise, it planned to increase that percentage to recognizable levels. So, in 2005, it actualized that plan by adopting the diversity program in its recruitment process. “Nike set out on a five-year journey to make the company an Employer of Choice. We said diversity could be a competitive advantage. … Our commitment to diversity is an integral part of Nike’s identity as a company” (nike.com). At the European headquarters at London, Nike currently employ over 70 different nationalities…Nike also works closely with Stonewall, Britain’s leading gay equality organization, and other members of the program, to improve the working environment for our lesbian, gay and bisexual employees (nikebiz.com). So, Nike took a ‘proactive’ stance in relation to ethical responsibility, meaning they took the responsibility to act ethically. Ethical Dilemmas While implementing this diversity program and recruiting employees, Nike face certain ethical dilemmas. The main ethical dilemma or criticism which is faced by the diversity program is, workers are selected by Nike mainly based on theirs’ background or religion or allegiance, and by giving only second preference to their educational qualification, skill level, knowledge, experience, etc. That is, the qualifications and requirements needed by the prospective employees and which is necessary to do the job are given secondary importance. By fully focusing on the diversity aspect, sometimes Nike’s management and HR team could recruit ill-equipped individuals, thereby affecting the Nike’s functioning and performance. So, the main doubt regarding this program is whether these employees are recruited based on skill, knowledge, etc. The next ethical dilemma that Nike should analyze is about the need to involve people from Asian countries or Middle Eastern countries. Currently, Nike is co-operating with six employee networks, which were established by Nike themselves, to incorporate diversity. The six Nike networks each containing a minority group are Networks for people of African origin, Asia Pacific, Disabled Employees & Friends, Gay, Lesbian, Bisexual, Transgender, etc. (nikebiz.com). But, it is yet to optimally involve people from Middle Eastern countries as part of its employee network. The other important dilemma Nike face and could face is about the outsourcing operations or outside operations. Even while maintaining their bases in their home country, organizations like Nike will explore the outsourcing mode. In that case also, ethics should be given foremost importance in all stages of functioning from the recruitment stage to the retirement stage, otherwise ethical dilemmas will arise. Some times, MNCs stationed in foreign countries or particular managers while incorporating the Diversity program will discriminate the local employees on the basis of religion, race, caste, sex, etc. Companies that do not have proper… ethics procedures risk severe damage to their reputation, criminal/legal action and regulatory penalties. The consequences could include loss of customers, reduced share price (adviceonmanagement.com). In host countries, there will be different religions or cultures, and if certain managers without understanding their uniqueness and importance, ignore and mistreat the workers, the whole organization will come under fire leading to problematic ethical dilemmas. Management of the dilemmas identified The dilemma of recruiting ill-equipped or under skilled employees is managed by Nike by continuously testing the potential of the employees, recruited through the Diversity program. That is, even though Nike is sure that they only recruit diverse employees who are qualified, they have to be tested whether they are fulfilling their job requirements. That is, employees are mainly recruited based on their skill and capabilities with individuals from certain groups, given little more importance than his/her competitors. So, there are no quotas allocated to the minority groups, only the opportunities for them will be more than others. Nike recruit employees who they think would be productive to their company and at the same time fulfil the ethical responsibility. “We need to be aware of what every person is about, what they think, what they like, and what they don’t like. It’s not enough just to hire for a diversity of gender and color. We need to hire a diverse workforce that thinks differently.” (nikebiz.com). Nike intended or intends to recruit some of the brightest and talented individuals from the groups or sections of population, who are not given adequate opportunities due to their allegiance to particular group and its way of living. Nike is also hoping that these diversity programs will bring in many dynamic people from different backgrounds, who can enrich the creativity and innovation part of their business. Apart from these employee centric outcomes, Nike mainly intends to build a positive image about the company in the minds of the customers, all over the world. This positive image will bring in many benefits to Nike like elevating its brand image, easier identification of Nike’s products particularly among the ‘minority’ groups (who will be happy with Nike for recruiting one of their kind or group members). “Diversity heightens the stature and belief in the brand and within our culturally diverse consumer base. “ (nike.com). So, Nike introduced this diversity program to recruit talented group of workers from diverse population and thereby improve its image. The ethical dilemma of enlarging its employee network can be managed effectively with few suggestions. The first suggestion that can be carried out by the Nike’s management to further optimize its diversity program is to enlarge or increase its current number of networks, so to include more disadvantaged but qualified people. Networks specifically for minority groups from Third world countries including Middle Eastern countries could be a feasible option because crime rate among these groups of people are in the high ranges in U.K., and so if they are provided employment and livelihood by Nike it is like achieving two objectives in one go – minimizing crime and importantly incorporating diversity. This way Nike can further optimize its various activities. Nike has mainly set up its subsidiaries in other countries or outsource to other countries, to tap the resources of the host country and thereby earn benefits from it. So it is normal or necessary for Nike to give a share of their benefits, back to the people of the host country. Apart from fulfilling the unwritten rule of giving employment to the locals, this recruitment procedure is also benefiting the Nike by providing it surplus and cheap labour. And importantly, as Nike recruits each country’s citizens, it diversifies its work force further, thereby accomplishing the diversity program and ethics in a different way. . These employees will act as symbols of diversity and positive understanding of Nike. “research on organizational change has highlighted the role of symbols and symbolization in promoting new understandings of an organization” (Ravazi and Schultz, 2006). Apart from recruiting locals and fulfilling its ethical responsibilities, Nike by taking good care of the employees in foreign operations particularly, in Third World countries is again able to meet the ethical standards. That is, when “problems surfaced regarding the abuse of employees and unfair wages in the factories producing Nike athletic shoes, Nike took a number of initiatives to solve these ethical problems” (Altham). Nike management and the contractors in those countries set up a code of conduct or standards to take care of the employees’ health and safety aspects. Also as part of its plans, “Nike also brought in auditing firms to monitor such issues as unfair wages, work schedules and child labor” (Altham). Importantly, Nike also carried out cultural sensitivity training for its r outside operations’ expatriate supervisors or PCNs, so that they become aware of the culture of the host’s country employees Conclusion A company will be appreciated, feted, discouraged, hated etc, etc… by the success or the lack of success (failure), they get. In today’s world, the success of a company is mostly correlated with its achievement in the form of high profits, maximum market share, etc. Even though this perspective is not at all wrong, the bone of contention is how a company achieves those positive things. Whether, they achieve through ethical means or by the ways of fraud, illegality, etc? The primary focus of any organization is to give a clean management based on preset ethics. If the management and the employees of the company are ethically perfect, they will exhibit good discipline, hard work and thus high productivity. This is what Nike is successfully doing through its Diversity program. That is, Nike by actualizing a diverse work force is able to show its ethical and social responsibility. So, in future, if Nike incorporates the above mentioned strategies, it will be able to give a clean management, attaining both its ethical and economical goals, thereby being judged a success. References adviceonmanagement.com, Famous advice on Ethics, accessed May 7, 2009 http://www.adviceonmanagement.com/advice_ethics.html Altham, J, Business Ethics versus Corporate Social Responsibility: Competing or Complimentary Approaches? International Business Ethics Institute, Washington, DC nike.com, Employees and Diversity, accessed May 9, 2009 http://www.nike.com/nikebiz/gc/r/fy04/docs/employees_diversity.pdf nikebiz.com. Diversity & Inclusion: Diversity Helps Drive Success, accessed May 7, 2009 http://www.nikebiz.com/careers/diversity.html nikebiz.com, Diversity and Inclusion, accessed May 8, 2009 http://www.nikebiz.com/responsibility/documents/7_Nike_CRR_Diversity_C.pdf nikebiz.com, Diversity, accessed May 9, 2009 http://nikebiz.com/company_overview/diversity/learn_more.html Ravasi, D and Schultz, M. (2006) “Respond to Organizational Identity Threats: Exploring the Role of Organizational Culture.” Academy of Management Journal 49, 3, 433–458. Severn, S., 2008, Sustainability. The Journal of Record, 1, 4, 229-232 Read More