Executive Summary
This report has been aimed at examining Honda Corporation in terms of its relationship with employees and community. While discussing this issue, we relied on the Stakeholder theory which explains how an enterprise can be influenced by various external and internal forces. Findings of this report indicate that on the whole, Honda Corporation invests heavily in its stakeholders and particularly and promotes their wellbeing.
The ethics program at Honda Corporation is such that all employees are treated equally and are provided with the same at-work benefits even wearing the same uniforms regardless of their position with the corporation. Behavioral guidelines include provisions and requirements for mutual respect among employees and management.
Apart from that, this report has demonstrated that Honda Corporation greatly contributes generously to community and education programs. Nonetheless, this study has also identified the key problems, faced by the company, especially in its relations with the stakeholders.
In particular, the company should not pay more attention to the demands of trade unions whose representatives argue that the company very resists unionization of the workers. Additionally, it is crucial that this company will establish better relations with the consumer unions which attract the public’s attention to the fact that the company does not provide full information about their products.
Introduction
This work has reviewed a large volume of literature relating to the Honda Corporation and its ethical policies and corporate social responsibility principles and the way in which they impact Honda stakeholders, in particular, the community and the employees. This discussion will be based on the stakeholder theory which explains the relationship of an organization with the employees, customers, governmental organizations, and so forth.
This theoretical framework explains how corporate social responsibility can contribute to the overall success of an enterprise. While discussing Honda Corporation we focused on such parameters as transparency of HR policies, the willingness to comply with consumers’ demands and governmental regulations.
This analysis will enable to us to point out those areas which require improvement. Yet, at first, it is vital for us to discuss the concept of stakeholder and how this person or organization can shape the performance of the company.
The role of stakeholder
Such approach as the stakeholder theory has become extremely popular among modern managers. The representatives of this approach urge the business administrators not to forget that the concept of a stakeholder should not be limited only to those people, who own the stock of the company since such a view overlooks the role of customers, community, and certainly employees (McWilliams et al, 2006).
It should be that the interests of various stakeholders do not always coincide with one another, and the management of the company must be able to reconcile them. Overall, it is possible to argue the relations between a private business and its stakeholders can be described as a form of interdependence.
Furthermore, the existing research shows that corporate social responsibility should not be viewed only as some moral obligation imposed from outside; more likely it is a necessary condition for the survival of the organization.
Overall, it is possible to argue that Honda is an example of company that does care about its stakeholders. As a matter of fact, it is rather difficult to point out those areas which require improvement, and the record of this company seems always impeccable.
Findings
Honda’s relations with the employees
Strengths
The investment in the individuals and their community is critically important to Honda’s stakeholder strategy. A primary part of the compliance and ethic program at Honda Corporation is the company’s ‘Egalitarian’ culture characterized by: (1) All employees wearing the same uniform and being addressed as ‘associates’; (2)
All employees eating in shared cafeterias and all employees parking in the same parking area with no reserved parking spots; (3) Managers at Honda are located on the production floor with offices being well-planned in an open design with no designation of high rank employee workstations. (Gupta, et al, 2010, paraphrased)
Honda reports that it is key to “promote accessibility across the company by removing physical and social barriers, thereby eliminating the natural intimidation employees often feel when they wish to speak with their managers.” (Gupta, et al, 2010 p.1).
On the whole, the existence of these strategies indicates that the management of Honda Corporation does care about the needs of its employees and attempts to prove that they personnel is the most valuable asset of the company. To a great extent, the HR policies of Honda Corporation resemble that one of Toyota Motor Company.
Weaknesses
Certainly, Honda always tries to pursue honest policies in its relations with the personnel, however, in some cases even they infringe upon their rights. In particular, one has to bear in mind that the company resists unionization of the workers and such an attitude can be regarded as a violation of their rights (Bybee, 2008, unpaged).
It seems by restricting the rights of these people, Honda only compromises its reputation and public image. It should be mentioned that the management refused to acknowledge the existence of the trade union in Great Britain (Clement, 2001). Apart from that many critics of the company believe that the company’s hiring policies are marked by racism (Bybee, 2008, unpaged).
In particular, they maintain that they avoid employing African-Americans and the unionized employees (Bybee, 2008). These are the key issues to which the management of this enterprise should pay attention to. Again, we have to emphasize an idea that these accusation of racism may result of a misunderstanding.
The thing is that the company hires only those people who live within a certain radios from the factory. Many critics believe that in this way the management tries to exclude the black or unionized workers. This is why the company should take a closer look at this issue.
Honda Corporation and its interaction with the community
Strengths
It should be mentioned that the concept of community includes a great number of components, for instance, people, living in a certain area, governmental and non-governmental organizations, environment protection group, and certainly customers.
Honda has as its fundamental approach in business ethics the goal of earning the trust of customers and society and toward this end they have frameworks in place “to ensure a systematic approach to compliance and risk management” along with the “formulation of behavioral guidelines and procedures for self-assessment.” (Gupta, et al 2010) (p.1)
A group governance system establishes behavioral guidelines that serve to “guide the behavior of all employees through conduct guidelines” in combination with “division wise specific guidelines according to specific attributes.” (Gupta, Priy, Kundu, and Dixit, 2010)
President and CEO of Honda Corporation, Takeo Fukui states that Honda Corporation is “sharing dreams with people everywhere, striving to become a company that society wants to exist.” (Gupta, et al, 2010) (p.1)
This is stated to be based on corporate activities focused on “…creating value, expanding value through globalization and realizing its commitment to the future.” (Gupta, et al, 2010) (p.1) Findings in this report on the impact of Honda Corporation on its Community-Stakeholders includes the Honda pursuit of daily business interest under the principles stated as follows:
- Honda will strive to “recycle materials and conserve resources and energy at every stage of our products’ life cycle;
- Honda will strive to minimize and find appropriate methods to dispose of waste and contaminants that are produced through the use of Honda products and in each stage of the life cycle of these products;
- Honda associates, as members of the company and society will focus on the importance of making efforts to preserve human health and the global environment and will do what they can to ensure that the company as a whole acts responsibly.
- Honda will consider the influence that corporate activities have on the regional environment and society, and strive to improve the company’s social standing. (Honda, 2010, North American Environmental Report) (p.1)
It was reported by Market Research World that Honda “…ranks top in UK companies for corporate social responsibility” (Market Research World, 2006) (p.1) in a study that was carried out for the purpose of understanding the public perception of automotive companies in respect to compliance and “contribution towards corporate, social, environmental and philanthropic activities.” (Market Research World, 2006) (p.1)
Key practices of Honda Corporation include: (1) product planning and development; (2) manufacturing; (3) recycling and green guiding; and (4) communication. (Honda, 2010, North American Environmental Report)
Honda is reported as having been a consistent leader in fuel-efficiency technology and specifically with its commitment to advancing internal combustion engine fuel efficiency including VTEC and Variable Cylinder Management along with an expansion in Honda hybrid technology. (Market Research World, 2006) (p.1) Honda is reported to have:
“…gone beyond development new vehicle technologies including: (1) development of photovoltaic solar cells which are reported to “significantly reduce the energy and CO2 emissions in the manufacturing phase1.; (2) FFVs- Flexible fuel system; (3) Bio-fuel; and (4) MCHP or micro-combined heat and power cogeneration bringing about a 30 percent reduction in energy use and associated CO2 emissions. (Honda Corporation, 2011) (p.1)
One example of community commitment is illustrated in the actions of Hero Honda Motors, a retail Honda dealership who has reported “…taking considerable pride in its stakeholder relationships, especially ones developed at the grassroots.” (Hero Honda, 2006) (p.1)
Hero Honda relates that the foundation has “adopted various villages located within vicinity of the Hero Honda factory at Dharuhera for integrated rural development”. (Hero Honda, 2006) (p.1) These initiatives include: (1) installing deep bore hand pumps to make the provision of clean drinking water; (2) construction of metalled roads and connecting these to the National Highway;
(3) renovation of primary school buildings and making the provision of hygienic water and toilet facilities; (4) ensuring a proper drainage system at each of these villages to prevent water-logging; and (5) promotion of non-conventional sources of energy by providing a 50 percent subsidy on biogas plants.(Hero Honda, 2006, paraphrased)
American Honda Motor Company reports being committed to running an enterprise “of real and continuing value to society.” (Hero Honda, 2006) (p.1) The corporate objectives pursued by the American Honda Foundation toward this end include the following corporate objectives:
- To apply to the Foundation’s grantmaking program the same professionalism and creative management processes that characterize the other activities of American Honda Motor Co., Inc. Resources used in this program are reported to have come from capital revenues which will be invested with care and planning;
- Identification of activities for contributions that provide special emphasis;
- Operation of the Foundation in a manner that is flexible and responsive to the changing needs of society and to provide momentum for innovation and leadership;
- Complementing rather than substituting the role of public institutions and funds;
- To provide contribution funding that is reflective of American Honda Motors Inc. level of success;
- To make sure the grants of the Foundation accomplish the most possible good. (American Honda Foundation, Contributions Policy, nd) (p.1)
The American Honda Foundation states that the grantmaking it will engage in will be consistent with characteristics as follows related to youth and scientific education:
- Programs dedicated to making the human condition better;
- Programs that are managed properly and administered by individuals who are “enthusiastic and dedicated”;
- Programs that look to the future;
- Programs that are innovative and creative;
- Programs with a broad scope, intent, impact, and outreach;
- Programs that have a great potential for success;
- Programs that operate from a position of financial soundness;
- Programs that urgently need funding and which are important to the public; and
- Programs that “represent a minimal risk in terms of venture capital investment”. (American Honda Foundation, Contributions Policy, nd) (p.1)
Weaknesses
When speaking about the problems in relations with the community, we need to discuss its relations with consumer unions. Some of them accused the management of the failure to inform about the faults in their vehicles (Skrzycki, 1998). Certainly, the company has already made numerous recalls and each of them was aimed at protecting the lives of customers throughout reforms.
In fact, the company filed a lawsuit against several consumer unions charging them with defamation. The key objective of the management is to establish better relations with these unions since they have a profound effect on the customers’ opinion.
Conclusion
Overall, these findings indicate that Honda does tries to managing the interests of different stakeholders. This enterprise attempts to act as a company which creates value for the customers, stockholders, the employees, community, and environment.
The key problems, are connected with the following areas: attempts to stop with the unionization of workers; 2) accusation of alleged racial discrimination, and unwillingness to acknowledge the faults or defects in the products.
Recommendations
On the basis of this discussion we can make a set of recommendations which can improve the company’s interactions with the stakeholders. They are as follows: 1) the management should take a more lenient stance toward trade unions, the attempts to stop the unionization of workers usually only spoil the public image of the company.
Moreover, the employees may be forced into belief that the management tries to subdue them. The top executives must prove that there is no need for trade unions, instead of trying to forbid them. 2) The second step which must be taken is the evaluation of hiring policies. The company has to make sure that that there is no loophole for the discrimination against employees on the basis of their sex, age, or race. 3)
The third recommendations is to establish a better partnership with customer unions which represent a large part of the community. Namely, the management should prove to them that Honda does everything possible to eliminate any risks for the customer’s health or life. These strategies can strengthen the company’s reputation of a responsible corporate citizen.
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Appendix A
Source: CSR Report (2006)