Ethics, Corporate Social Responsibility and Global Outsourcing - Example

Report on Ethics, corporate social Responsibility and Global Outsourcing Student Name: Course: Date submitted: Report on Ethics, corporate social Responsibility and Global Outsourcing Executive Summary This is a detailed report that has covered the relevant issues that are involved in outsourcing a company’s activities or functions. The report has addressed core issues that should be critically looked into before a company goes ahead to outsource its activities. The report is being addressed to the Australian company. The report has captured the necessary issues that if left out, may lead to flaws in the process of outsourcing production. The report flows from the introduction where a brief outlook of what necessitated the report to be written is addressed. This is followed by definition of the core terms that are used in the report, the three terms including business ethics, corporate social responsibility, and global outsourcing are looked at. This is followed by the main discussion that is divided into two. The first part critically analyses ethics, and Corporate Social Responsibility. In this part, the need for business ethics is looked at with case studies of workplaces in different countries, followed by the benefits of the board factoring in CSR in outsourcing production. The second part critically analyses CSR and global outsourcing, outlining the issues the company needs to look at before outsourcing production. Contents Executive Summary 2 Contents 3 Introduction 4 Definitions 5 DISCUSSION 6 Conclusion 15 Recommendations 16 References 17 Introduction It is possible for the company to increase the company’s supply chain strategies beyond importing component parts for its pumps to outsourcing production to overseas manufacturers. This reports holds a firm position that for effective decision making with regard to outsourcing production of our company that deals with manufacture of industrial vacuum pump intended for use by medical, as well as hospitality industry; the board should consider both ethical and corporate social responsibility (CSR) issues which are relevant in making the company benefit from outsourcing its production. This is issues are critical to be addressed, even as the company looks forward to maximize results, increase their market share, reduce their manufacturing costs, and boost profits. The decision to take on outsourcing the production of the company is such a core process that many positively affect the company; however it may also have costly consequences that may ruin the company. This is why the report holds that there is need for a number of key issues to be examined by the board before they make the ultimate decision to outsource production. It is important for the board to consider the issues that surround outsourcing, and also build up mechanisms by which risks involved can be minimized. Definitions Business Ethics: Business ethics concerns itself with is the application of morally appropriate behaviors and day running of a business venture. Corporate Social Responsibility: Corporate Social Responsibility may simply be looked at as processes where businesses negotiate their role in society. This is important for the purposes of ensuring that an organization has both social and commercial benefit. This implies that CSR is conducted to ensure that the business grows in a way that it gives value to everyone who is connected to the business. Relationship between CSR & Business Ethics: The two terms are linked to each other, through CSR activities are not guaranteed to be characterized by ethical behaviours. Global Outsourcing: It involves contracting an external party to perform certain functions that would have otherwise have been performed by an organization. Often this is done to minimize costs through tapping the benefits of economies of scale which outsourcing companies enjoy, making the costs of carrying out the obligations relatively cheaper. Various organizations in the globe have outsourced a number of functions to minimize costs. DISCUSSION I. Critical analysis of Ethics, and Corporate Social Responsibility a. The Need for Ethics & CSR Change in organization such as outsourcing production calls for the board to make an informative decision. From a number of previous experiences in the organizations, a number of key lessons which is significant for the decision making. Ethics is such an important aspect in the management of organizations, and thus even before outsourcing the production aspect, it is important to give ethical considerations before getting to the real decision making. For instance, a case example of a number of Japanese organizations where workplace gender discrimination has been prevalent exposes ethical concerns. Indeed, the gender discrimination was common in the work place, and this led to the Government to approve a bill revising the laws for equal employment opportunity. In fact, Japan Times outlined the provisions of the bill, such as facilitating maternity leave, providing a ban of indirect discrimination, and strengthening the measures against sexual harassment. The bill barred employers to recruit individuals based on weight, height, and looking at past relocation files when it comes to deciding relocations. The law prohibits sacking women in their maternity leaves or unfavorable treatment of the pregnant women; this is alongside the institutionalization of tougher measures against workplace sexual harassment. This shows how unethical practices are conducted, and the need for them to be dealt with. In Korea, a number of organizations are also facing the challenge of the practice of unethical behaviors. In fact, from a survey that was captured in ‘Chosun’ revealed that a large number of female workers hold the opinion that unethical practices such as sexual harassment are practiced not only in the workplace, but also in job search. This survey found that 57.5% of the 573 female workers who responded to the survey question: “Have you experienced discrimination based on your gender while looking for a job?” said they were affected. (Birch & Moon, 2004, pp. 34-40). This and other unethical practices in the workplace has led to activists as well as human resource managers calling for an end to discrimination against female workers, as well as other unethical practices during recruitment by businesses. All in all, it is important for the board to understand that the challenge of unethical practices is a global challenge, which affects all the business operations including this case where the production function of the business wants to be outsourced. Benefits of CSR The effectiveness by which the company may increase its supply chain strategies beyond importing component parts for its pumps; to outsourcing production to overseas manufacturers may be realized when the process is done in a way that benefits both the organization, and the society that is connected to the organization. It is important for the board to note that outsourcing would even yield better results when the society, as well as the organizational needs such as increasing the profit margins is put into consideration. From the fact that the industrial vacuum pumps made were meant for the public i.e. the hospitality and industrial use, CSR comes in as a very important aspect in to be checked before the decision is fully implemented. It is important for the board to consider factoring corporate social responsibility in the decision making for the following benefits that comes to the organization, when CSR initiatives are prioritized in the organization. Public image of the organization CSR activities are important with regard to boosting the public image of the organization. This is first because the public expects it, and thus meeting this expectation makes the company to score highly with regard to attending to the needs of the people in the external environment. The fact that the company wants to outsource its production, would send signal to the public that the company is not interested in people’s affairs; for the implications such as loss of jobs for the locals who were serving in the production unit. However, when the company considers taking on corporate social responsibility initiatives, it will blur this image, and instead indicate that the company is interested not only to maximize its profits at the expense of the public but also look at how it can serve the society amidst the change of who would be producing the products (vacuum pumps). This would also show that the organization is interested in the affairs of the community, for the employees who may lose jobs after outsourcing production may be involv in the CSR projects. Corporate social responsibility also boosts the image of the organization despite of the consequences that the society would have to bear with when production is fully outsourced. Global Business Patterns It is also important for the company’s board to understand that today’s business has taken a new pattern where companies are obligated to engage in corporate social responsibilities. Therefore, it is also important for the company to conform to the global practices of corporate social responsibility. From the fact that production would be outsourced from overseas, it means that the company would have fully entered into the international market, and thus it is also important for the company to conform to the global standards that calls for companies to engage in corporate social responsibility initiatives. It is also important for the company to engage in corporate social responsibility not just to conform with global expectations but for the reason that the company is widely monitored, and thus should give priority to CSR initiatives to build up an image that would sell the company, as opposed to that one that would make the company’s global reputation go down (Carroll, 1991, pp. 39-48). Employee Retention The change of production from the company to be performed by an outsourcing company may also affect the morale and motivation of the employees. In a real life case study, it would come with implications such as new experts being employed to carry out the transition of production, it would lead to new partnerships of the companies involved, as well as the workforce involved. This decision may also affect the attitude of the existing workers, and this depends on how the changes are fully effected. It is important for the company to keep its good human resources, as well as attract more people to desire to work in the company. This can be realized when the company undertakes CSR initiatives that would send a signal that the organization is not self centered, instead it is committed to ensuring that it meets its own needs, the needs of its employees, as well as the needs of the society (Husted et al. 2007, pp. 345-359). Notably, corporate social responsibility has been proven to be significant in helping organizations to keep and retain qualified and competent staff. Outsourcing production function of the company may cause competent employees to opt out of the company. CSR significantly improves the quality of the organization with regard to being an employer of choice. Corporate social responsibility is key in developing motivated and committed employees. Boost Organizational Performance It is also important for the company to use CSR to boost its performance. CSR has been proven to improve performance of organizations through boosting employee performance and morale, and building team work among the employees. CSR activities have been proven to contribute to business performance. Performance is all about the employees who work; CSR significantly boosts employee motivation, and thus this would boost their performance towards the objectives of the organization (Kiran & Sharma, 2011, pp. 58-68). As the company makes the decision to outsource production function, there is need to improve the company’s performance, and this is why corporate social responsibility initiatives should be introduced, so as to boost performance of the organization both within and without the organization. Organizational performance is not limited to the profits that an organization makes but also the impact it has on the society it serves. Therefore, in the event that the company invests on CSR initiatives, then performance is improved. Economic Benefits There are a number of economic benefits that a company is able to get when it gets involved in conducting CSR initiatives. For instance, the organization will be able to get tax waivers and public support when it gets involved in CSR activities. A number of CSR initiatives also involve volunteers partnering with volunteers, as well as other organizations and this makes CSR relatively cheaper for the company (Hills, 2006, pp. 171-182). II. Critical analysis of CSR and global outsourcing a. Issues it will need to consider before deciding to outsource production In the previous times, the organizations have been involved in outsourcing their functions have faced a number of issues. It is important for the board to also consider factoring these aspects before they ultimately make a decision to outsource production. Without a critical look at these issues major flaws may be committed, and such flaws may be costly to the organization. Outsourcing production by the company is such as major change that requires change management experts to assess the consequences of the decision, and asses the best methodology by which the company can outsource production. In this case, the less costly method by which the company can outsource relates to the costs involved, verses the benefits that would be accompanied by outsourcing (Rothman, 2003). The core issues that should be looked at with regard to outsourcing production function include: a. Costs involved in Outsourcing Outsourcing has been argued to be a beneficial decision for many companies that have undertaken it; however the initial huge costs involved in planning and implementing the decision to outsource are huge, and thus should not be in any way undermined. The challenge of cost of outsourcing has led to various organizations suffering due to the assumptions that the managers make. It is important for the company’s board to find it a matter of priority to realistically address the issue of cost has been advanced by business experts that when a company embarks on the process outsourcing, there are other additional costs that have to be met alongside the known costs. These costs include the costs related to vendor selection, the costs incurred at the transitional period due to the transitional processes, the legal costs. It has also been found that in spite of the obvious savings that may be realized, an increasing number of outsourcing vendors have developed their capacity to provide positive ROI to their clients. This being a relatively complex project, then such ROI may be realized (Arndt & Foust, 2006, p. 34-43). b. Analysis of the company’s vision, strategy & Goals It has been found that many mistakes are made in making outsourcing decisions due to conflicts of the outsourcing plan and strategy with the company’s goals and objectives. In the event that the strategy used to enforce outsourcing conflicts with the company’s goals, then outsourcing may not offer the results that are expected by the company. It is important for the managers in the board to ensure that the strategy employed by the company in outsourcing production tally’s with the overall goals of the company. This is because it is fit for any company that intends to outsource any part of its activities to analyse its strategy as well as vision. The existence of the following conditions in the company may justify the aspirations of the company to outsource its production, in its bid to maximize profits. a. Increased need of specialists or experts. When the company’s board observe that they require a high number of specialists in production who would lead to heavy financial burden to the company; then this may justify the decision to outsource the production function. “The Outsourcing Institute pointed out that: "Outsourcing is a clever alternative to hiring". (Overby, 2007, pp. 44-53). This implies that outsourcing may be justified on account of the increased need to have experts who would increase the costs of production; to outsource production. b. Demand of Personnel The company should look at the consequence of the decision with regard to irregularity or irregularity of demand for personnel. Would the outsourcing process cause more demand for personnel as opposed to carrying out production on our own. In addition, the board should consider the demand for personnel before the decision to outsource is enforced. For instance, if production is characterized by irregular demand for personnel, this justifies the need to outsource production. c. The nature of production The board should consider the nature of the process of outsourcing. In some companies the process of production is periodical/ seasonal and thus products are exclusively produced in certain seasons, whereas in other companies the process of production is an annual process. This implies that if the company intends to produce the vacuum pumps on annual basis, then it may be not be necessary to outsource its production, however in the case where production is seasonal then the board may be justified to take on the decision to on to outsource production, since the costs of keeping full time experts to run production may be high. Additionally, the board may also find it wiser to outsource production to an offshore vendor and thus accrue gains to the company; through avoiding the costs that would have otherwise spent on maintain a permanent employee (Overby, 2007, pp. 44-53). d. Risks involved in outsourcing Production Risks are assessed through conducting a forecast study of the implications of implementing the decision to outsource. In this case, the managers assume that they have undertaken the decision to outsource production before making the decision, and they step by step analyse the risk implication that would accompany the decision to outsource production. If it is established that there is a high risk level when production is outsourced, then the company may be left with two decisions to make. The first one being to consider a change of strategy in outsourcing production, and secondly the company may consider stopping outsourcing production function. The board should also consider the magnitude of the risk, as well as the nature of the risk. Magnitude relates to how severe the risks may be faced; while nature relates to the period/ length of time that the risks may impact on the company. Short term benefits of outsourcing should not blur the board from looking at the impacts of outsourcing production (Boyce & Ville, 2002, pp. 33-39). There are also other issues that other organisations have faced in recent times regarding CSR and outsourcing production. They include; a. Production material Companies that didn’t factor in the issue of production material when outsourcing production have faced challenges. Indeed, before outsourcing production, the company’s board should consider the materials that are used in production, is it available to the company that it intends to outsource production? Is the production material available in Australia same as the one in the overseas country where the outsourcing function is to be carried out? Is the material content used by the company same as the one which would be used after outsourcing production? If the response to these questions is satisfactory, the company may as well go ahead and outsource production (Stepheen, 2006, pp. 234-243). b. Production capability & Capacity The board of the company should also make effort to determine if tducinfhe outsourcing company will use a different process in production or not. It may be important for them also to consider what the process is capable of producing. The company may also consider the capital equipment that the outsourcing company has, so as to identify if it will increase the capacity of the outsourced products. c. Support Personnel The company may also be compelled to asses who is going to provide the required support to the outsourced company. This may also relate to the hours, and the costs that the support team would serve. In addition, how will the support team give information to the outsourcing companies?, for the information supplied may be important in ensuring that timely delivery of services is offered after outsourcing production (Stepheen, 2006, pp. 44-54). Conclusion All in all, outsourcing is seen as a core process and decision making venture that may affect an organization positively or negatively. It is important for the board to consider the factors raised so that to make smooth the process of outsourcing, as well as to make outsourcing production to be effective. Selection of an effective strategy to outsource production would be accompanied by good results that will help the company be able to reach out to its objectives of outsourcing production. It all lies with the board to analyse the issues that are core, and make a decision that would serve best the company. Recommendations After looking at the issues addressed in this report, I find the following recommendations necessary for the board to look at even as they make the decision for or against outsurcing production. The company should critically look at the selection process of the company that it would outsource the production. If the company lacks the same or better production material, lacks sufficient capital equipment for production, and other sufficient qualification; there may be need to delay outsourcing. The board should also look at the costs tagged to the transition process before production is fully outsourced. There is need for the board to ascertain that the Production capability & Capacity of the company that is to take over production. It is also essential for the board to carry out a forecast analysis of the risks against the benefits of outsourcing production. This should be done both on short term and long term basis so as to minimize the risks that could be evaded. References Arndt, M. & Foust, D 2006. The Future Of Outsourcing. Rutledge, London. Birch, D. & Moon, J. (2004). CSR in Asia. Journal of Corporate Citizenship. Vol. 3, No. 2, pp. 34-40. Boyce, G. & Ville, S 2002. Development of modern business. Basingstoke, Palgrave. Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward a moral management of organizational stakeholders. Business Horizons, Vol. 34, No. 4, pp. 39–48. Husted et al. (2007). Corporate social strategy in multinational enterprises: antecedents and value creation. Journal of Business Ethics, Vol. 74, pp. 345-361. Hills, J 2006. Corporate Social Responsibility and Environmental Management. Corp. Soc. Responsibility Environ. Mgmt. Vol. 13, pp. 177–181. Kiran, R., & Sharma, A. (2011). Corporate social responsibility: A corporate vision. International Journal of Contemporary Business Studies, Vol. 2, No. 3, pp. 58-68. Overby, S (2007). An Introduction to Outsourcing. CIO, New York. Rothman, J. (2003). 11 Steps to Successful Outsourcing: A Contrarian's View. Stepheen, F 2006. Corporate Social Responsibility and Environmental Management. Corp. Soc. Responsib. Environ. Mgmt. Vol. 13, pp. 238–244. Read More