Impact of U.N. Global Compact on Employment Practices in Gap Inc. Report

Introduction

Gap Inc. is a retail company that deals with clothing and related accessories. The company was founded in California in the year 1969 and it has expanded to other parts of the world. The major brands for the company are namesake Gap banner, banana republic, old navy and Athleta among others.

The company has more than 140,000 employees and it has many operating stores in and outside the United States of America. The company has had several labor disputes and allegations of bad practices therefore it is important to review its operations with regard to the U.N. Global compact principles.^[1] This report will show the lessons Gap Inc can learn from the implementation of U. N. Compact principles by Army & Navy, which is a competitor to Gap Inc.

The U.N. Global compact principles are guidelines developed in order to provide a common understanding of labor issues and give principles to address the labor issues all over the world. These ten U.N. Global Compact principles were developed by the Labor working Group established in 2008. They were developed under extensive consultations with the International Labor Organization.^[2]

The two principles, which will be discussed in this report, are the Principle 2 and Principle 3. Principle 2 states, “Businesses should make sure they are not complicit in human rights abuses”^[3]. Principle 3 states, “Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining.”^[4] These principles are relevant to Gap Inc. The company is an international organization since it has many stores in many parts of the world.

Over the past, the company has been implicated in several violations of human rights in their employment practices. For instance, the company was sued in 2003 for failing to pay their workers their overtime dues and poor working conditions, which are tantamount to violation of human rights. The company has been struggling to effect policies that could help it to improve on human practices. The U.N. Global Practices are therefore very useful to the company.^[5]

Stakeholders

The two U.N. Global Compact principles discussed above affects almost all the stakeholders in an organization. The most affected stakeholders are the customers, employees and the management. The employees are the most affected of the others. The two principles seek to promote labor practices in businesses that are why employees are most affected. Managers are the ones who are responsible for implementing the principles. It is therefore the duty of the managers to ensure that the organization follows the laid down principles.^[6]

The other group of stakeholders affected by these guidelines is the customers. This is because the principles provide against violation of human rights and provides for freedom of association^[7]. These principles affect the performance of GAP Inc. both positively and negatively. Compliance with the principles will need some restructuring which will be costly to the organization. After the implementation however, the performance of the company will improve.

Lessons Learned

The lessons will be derived from the implementation of the U. N. Global Compat principles by Army and Navy Stores Inc. In order to comply with the Principle 2 and Principle 3 of the U.N. Global Compact, Army & Navy Stores Inc has taken some steps from which Gap Inc can learn some lessons.

One of the steps is to assess the effect of the activities of the company on human relations and also to assess its employee decisions. This has enabled the company to improve on its efforts to respect human rights and enhance freedom of association of the employees. As a result, Army & Navy stores has been able to increase its productivity since the employees are more motivated.

Gap Inc. has learnt the need to assess its practices in order to know any cases of violation of human rights and to know whether the company has prevented freedom of association. From these assessments, the company came to an understanding that there were many cases of human rights violations in the company by the employees, security personnel and even the management. The company had also been making efforts to suppress freedom of association for employees.

Because of these actions, the employees of the company were not motivated and their productivity was down. After this, the company has decided to set out clear guidelines on how to adhere to the U.N. Global Compact principles. Up to today, there has been no official report on the progress of the process of setting out the guidelines. This has a negative effect to the company since many customers and other stakeholders are not contended with the first step.^[8]

Recommendations

There is need for Gap Inc. to step up its actions to ensure compliance with the U.N. Global Compact principles. In order to comply with Principle 2 on violation of human rights, after assessment of the human rights situation in the company, Gap Inc. should develop and promote policies aimed at ensuring respect of human rights.

These policies should be communicated to all stakeholders and posted to all work situations. Gap Inc. should also adhere to any other provisions on human rights such as those by the International Labor Organization (ILO) and other legal provisions. The company should also interact freely with the stakeholders in order to get suggestions and support in upholding human rights in the company.^[9]

In order to adhere to Principle 3 on freedom of association, Gap Inc. should encourage its employees to form trade unions in order to enhance their bargaining power. The company should involve the trade union in major decisions and there should be extensive consultations between the company and the trade union in the course of its decision making process.^[10]

The company should ensure adequate representation of employees in the bargaining table and uphold respect for the trade union. The company should preserve the secrets of the trade union and keep distance from the operations of the trade union. By doing so, the company will have ensured full compliance with the two principles of U.N. Global Compact.

Full compliance with the guidelines will have several benefits to the concerned stakeholders. To the employees, they will have better working conditions and they will be in a good position to bargain for better salaries and better working conditions.

The management’s role will be made easier since the employees and other stakeholders will be satisfied and will thus give the management amble time.^[11] In order to combat these risks, I would recommend that Gap Inc. should conduct seminars in order to sensitize employees on the changes, their advantages and the risks associated.^[12]

Conclusion

Labor practices around the world have become difficult to manage due to globalization, increasing competition, increase in human rights activism among other factors. This was the prime reason for the development of the 10 principles by the United Nations in 2008. These principles have both negative and positive implications to business organizations.

Most organizations have not managed to implement the policies full. For instance, Gap Inc. has a long way to go despite the fact that the company needs the principles guidelines badly to avoid labor issues it had over the past^[13]. The benefits of compliance with the principles are many as compared to the associated risks therefore I really encourage the management of Gap Inc. to take the recommendations seriously.

Bibliography

Cayreyre, Mireille, Filiz Demirayak and Paul Dickson. Global Compact International Yearbook 2009. Geneva: United Nations Publications, 2009.

Davila, Anabella. Best human resource management practices in Latin America. London: Taylor & Francis, 2009.

Dunning, John and Sarianna Lundan. Multinational enterprises and the global economy. Cheltenham: Edward Edgar Publishing, 2008.

Gregoratti, Catia. The UN Global Compact. London: Taylor & Francis, 2010.

Idowu, Samuel and Celine Louche. Theory and Practice of Corporate Social Responsibility. New Jersey: Springer, 2010.

ILO. “The labour principles of the united nations Global Compact, A guide for business”. Geneva: International Labour Organization: 2008. Web.

ILO. The cost of coercion: global report under the follow-up to the ILO Declaration on Fundamental Principles and Rights at Work: International Labour Conference, 98th Session 2009. Geneva: International Labour Organization, 2009.

Lawler, John and Greg Hundley. The global diffusion of human resource practices: institutional and cultural limits. Bingley: Emerald Group Publishing, 2008.

Pattanaik, Kumar. Human rights and business: perspectives and practices. New Delhi: Icfai University Press, 2008.

Perkins, Stephen and Susan Shortland. Strategic international human resource management: choices and consequences in multinational people management. Philadelphia: Kogan Page Publishers, 2006.

Rasche, Andreas and Georg Kell. The United Nations Global Compact: Achievements, Trends and Challenges. Cambridge: Cambridge University Press, 2010.

United Nations, Global Compact Principle three. United Nations Global Compact, 2009. Web.

United Nations, Global Compact Principle two. United Nations Global Compact, 2011. Web.

United Nations. Human Rights Translated: A Business Reference Guide. Geneva: United Nations Publications, 2008.

Footnotes

1. ILO. “The labor principles of the united nations Global Compact, A guide for business”. (Geneva: International Labor Organization: 2008).
2. Catia Gregoratti. The UN Global Compact. London: Taylor & Francis, 2010, p. 26.
3. United Nations, Global Compact Principle three. United Nations Global Compact. 2009.
4. United Nations, Global Compact Principle two. United Nations Global Compact. 2011.
5. John Dunning and Lundan Sarianna. Multinational enterprises and the global economy. Cheltenham: Edward Edgar Publishing, 2008, 133.
6. ILO. The cost of coercion: global report under the follow-up to the ILO Declaration on Fundamental Principles and Rights at Work: International Labour Conference, 98th Session 2009. Geneva: International Labour Organization, 2009, p. 214.
7. United Nations. Human Rights Translated: A Business Reference Guide. Geneva: United Nations Publications, 2008, p. 156.
8. Andreas Rasche and Kell Georg. The United Nations Global Compact: Achievements, Trends and Challenges. Cambridge: Cambridge University Press, 2010, p. 93.
9. John Lawler and Greg Hundley. The global diffusion of human resource practices: institutional and cultural limits. Bingley: Emerald Group Publishing, 2008, p. 103.
10. Kumar Pattanaik. Human rights and business: perspectives and practices. New Delhi: Icfai University Press, 2008, p. 57.
11. Stephen Perkins and Shortland Susan. Strategic international human resource management: choices and consequences in multinational people management. Philadelphia: Kogan Page Publishers, 2006, p. 291.
12. Mireille Cayreyre, Demirayak Filiz and Dickson Paul. Global Compact International Yearbook 2009. Geneva: United Nations Publications, 2009, p. 212.
13. Anabella, David. Best human resource management practices in Latin America. London: Taylor & Francis, 2009, p. 33.