Introduction
Ethical decision making is a key requirement for the success of any business organization. It usually involves a critical analysis of forthcoming organizational impacts based on the present facts (L’Etang & Pieczka, 2006). The practice of ethics in business is critical, particularly in situations where the business firms are faced with infringement or the employees of the firm are subjected to the process of legal investigation.
The increase in business scandals in the recent past poses need to have an ethical framework in the execution of business processes and making of ethical business decisions. Ethical decision making is always a subject of the top level management, however, failure to apply ethical decision making always affects the entire business structure, ranging from the top management to the lower level staff of the organization.
Multinational companies are subject to public attention; this implies that internal business scandals usually affect the people’s perception towards the organization (L’Etang & Pieczka, 2006). This essay attempts to analyze the implications of unethical decision making procedures on multinational companies, with a particular concern on clothing manufacturers and retailers; Adidas and Wal-Mart. Strategic management is a key factor in influencing the reputation of an organization (Mallaby, 2005).
As a requirement for global corporations, Adidas and Wal-Mart have to be involved in partnerships with various stakeholders such as labor unions, religious organizations, community members and other regulating bodies such as environmentalist authorities.
Wal-Mart has been subject to criticism concerning its business policies and ethical practices; one of such complaints that have been directed to Wal-Mart is the lack of unjust employment opportunities, lawsuit issues, lack of health insurance schemes for its employees (Smit, 2009). Corporate ethics has subjected Wal-Mart to equal criticism, with a focus on the implications it have on the employees.
Unethical business practices do not usually turn out to favor corporations, as depicted in the decrease of the Wal-Mart stock during 2006 by 30 per cent. As a matter of fact, the increasing negative perceptions of the company causing a hindrance to the growth of the company, both from an internal and external point of view. It was therefore critical that Wal-Mart had to approach such issues at hand through effective and strategic communication, since its corporate image greatly depended on the negative perceptions from the public.
The approach that Wal-Mart deployed towards the effective management of such crisis was Corporate Reputation management (CRM). This strategy was primarily aimed at streamlining the relationship between its employees, customers and to reverse the already negative perceptions towards the company by a majority of its stakeholders (Murphy, 2008).
Wal-Mart can be viewed as a corporate bully, principally because of its employee’s relationships and the corresponding employee rights. One major area of ethical concerns is regarding the wages and the number of working hours that its employees are subjected to.
Most of the wages that Wal-Mart issued to its employees during 2003 were way below the federal poverty line. Despite the recent increases the wages of its employees, they have forced their employees to work for longer hours. This implies that the increase in wages is not justified. This is evident through the high number of law suits that were filed against the company during 2008.
During this year, Wal-Mart was facing a total of 80 different law suits, which basically involved labor related problems (Zimmerman, 2010). One of such lawsuits involved a settlement of close to $ 50 million of approximately 69000 Wal-Mart employees during the year 2000. It can be argued that Wal-Mart was aware of what they were doing and why they were doing, this is because they were hiding proof in order to stay away from the liability (Bergdahl, 2004).
The managers and Chief Executives were well informed of the violations that were taking place and they did not take any necessary action to prevent them. An audit of the company to determine if they complied with the government policies and regulations concerning employee affairs depicted that the company was understaffed and scheduling was not being done in a proper manner (Smit, 2009).
Another way in which Wal-Mart violated business practices is evident on the way the company handles women associates. There have been a number of lawsuits in favor of women, especially from 2006. Wal-Mart does not treat their women associates fairly in terms of how they pay them and the promotions.
As matter fact, the company faces largest number of lawsuits in the history of the United States, meaning that if the company is found implicated, it is liable to pay approximately $ 10 billion worth of damages (Bergdahl, 2004). Women employees of Wal-Mart are being compensated unfairly compared to their male counterparts.
Women earned about $ 5200 less in comparison to the male employees, accompanied with long working hours. The company needs to put people first rather than focusing on making huge profits (Birchall & Yeager, 2006).
Despite the tarnished corporate image, Wal-Mart is currently trying to mend its employee relationships. This is evident through its new adopted approach; Corporate Reputation management strategy. Adidas also deployed the same strategy to improve its employee relationships. Both the companies had to respond to the various corporate image issues that affected their reputation.
This is evident through the recent increase in wages and the streamlining of the employee relationships through the introduction of health and insurance schemes. The labor standards at both the Adidas and the Wal-Mart have been streamlined to meet international labor standards.
Presently, the staffs of the companies enjoy support from the top level management. Wal-Mart is presently trying to employ the use of stakeholder’s opinion in order to reverse the bad reputation it had in the past. This strategy usually involves putting the needs of your employees as a first priority compared to the corporate goals and objectives (Zimmerman, 2010).
The corporate code of ethics for an international company usually defines the ethical standards and policies that the company bases on in the execution of its business processes.
The Wal-Mart corporate codes of ethics are basically divided into: Compliance codes, which define the limitations of the conduct of their employees, corporate credos and management philosophies. The leadership and decision making processes at Wal-Mart and Adidas are usually based on the established code of ethics. This implies that the decision making procedures at the companies are subjective to the ethical codes of the organization (Birchall & Yeager, 2006).
In terms of social responsibility, Adidas and Wal-Mart have effectively contributed substantial development to the community. This is evident through the support that Wal-Mart gave during Hurricane Katrina. Wal-Mart helped in the supply of relief foods to the affected areas. Adidas on the other hand has been involved in a number of charitable contributions to the community. One of the Wal-Mart policies was to promote environmental sustainability (Birchall & Yeager, 2006).
Conclusion
The major issues that usually affect corporate reputation are employee and labor relations. Adidas and Wal-Mart should more critical and analytical when handling such issues. It therefore sums up to deploying effective and ethical decision making approaches to corporate management. One approach is to prioritize employee welfare.
References
Bergdahl, M. (2004). What I learned from Sam Walton: how to compete and thrive in a Wal-Mart world. New York: John Wiley and Sons.
Birchall, J., & Yeager, H. (2006). A Purchase on Psephology. Financial Times , 6.
L’Etang, J., & Pieczka, M. (2006). critical debates and contemporary practice. New York: Routledge.
Mallaby, S. (2005). “Progressive Wal-Mart. Really. The Washington post , 7.
Murphy, F. (2008). Walmart Exposed. New York: Lulu.
Smit, B. (2009). Sneaker Wars. New York: Harper Perennial.
Zimmerman, A. (2010). Rival Chains Secretly Fund Opposition to Wal-Mart. The Wall Street Journal , 56.