Scenario
MoonLucks is an international coffee shop company that operates primarily in the Middle East, with the UAE and Turkey being the primary markets. The company was created in the UAE in 2002 as a small coffee shop that focused almost exclusively on whole-bean coffee, but as the company grew, its products diversified. Nowadays, MoonLucks offers different hot and cold beverages and a wide variety of snacks as well as beans, tea leaves, and brand dishware.
We offer classic drinks and foods as well as unique ones that can only be purchased at our shops, and we position the company as an exclusive club that offers highest-quality products with exquisite taste and impeccable service for a handsome price. The company had performed relatively well during the recession, but the recent drop in oil prices, which has had a serious impact on the economies of the Middle East, seems to have affected us to a greater extent.
As a result, fifteen of our locations in six of the secondary Middle East markets that have been performing especially poorly will have to be closed. At the same time, we have been preparing to expand to China and Egypt. Both markets are most attractive: the former has a large population and has been exhibiting rapid economic growth for the past years (CIA 2016a); the second is especially appealing due to its touristic activities (CIA 2016b). As a result, we have decided to proceed with the expansion plan despite closing the shops.
MoonLucks takes corporate social responsibility (CSR) very seriously; in particular, we ensure that the coffee beans, tea leaves, and other consumables and products that the shops use or sell are grown, produced, and purchased ethically, which involves mindful, environmentally sustainable production and fair pricing. Apart from that, MoonLucks has been launching small targeted charity events, and our customers have been very supportive of our initiatives.
Similarly, MoonLucks has a responsible attitude towards our employees. The salaries and wages are always average or above the average for a particular city, the employees are provided with uniforms and training and protected from discrimination and harassment, there is a system of benefits that depend on the position, and the communication between the employees and the management is ensured through a system of tools, including forums, questionnaires, and exit interviews. In exchange, MoonLucks demands impeccable service that is assessed with the help of managerial evaluations and customer reviews and questionnaires. Customer assessments are optional, but managerial ones are carried out regularly, and to correspond to the criteria, employees need to be willing to learn and participate in training.
Our current strategic goals include expanding to the new markets as well as preserving and advancing our position in the ones that are already occupied. In the current situation, both goals are going to be challenging, and the present paper is dedicated to a part of these challenges, namely, the possible ethical and CSR issues and concerns and their implications for our HR practices.
Cultural Issues
MoonLucks has an established company culture, the development of which was facilitated due to the similarities in the cultures of the Middle East countries, in particular, the significant role of Islam. In this respect, Egypt is similar in being predominantly Islamic (CIA 2016b), but China is much more diverse (CIA 2016a). MoonDucks has had some experience in working with diverse communities; in fact, the UAE is most ethnically diverse, and about 15% of its population is not Muslim (CIA 2016c).
However, we also recognize that segmenting the more culturally diverse market of China can be a greater challenge that may be complicated with the issues of cultural conflicts; also, we do not believe that such conflicts are ruled out in the case of Egypt. We recognize the importance of diversity management within the organization (Boxall & Purcell 2011), and we have always considered it important to respect the culture of a country that hosts our shops. As a result, we instruct managers to ensure additional investigation throughout the process of the new shops’ establishment to locate potential and existing conflicts and find the means of resolving them without disrupting the organizational culture but by adjusting and accommodating it.
Ethical Issues
Ethical conduct is of importance for a company from the point of view of its reputation, which can become a significant competitive advantage (Yang, Colvin & Yim-Yu 2013). MoonDucks believes that our customers enjoy visiting coffee shops with an impeccable reputation; apart from that, we promote the ideas of sustainability and consider ourselves to be morally responsible for the ethical acceptability of our practices.
As a result, our organizational ethics code and sustainability policies need to be disseminated and implemented in new locations. We realize that some of our practices might conflict with those of the new locations, and such situations will need to be considered specifically and individually to ensure that the organizational culture remains intact while due respect is paid to the host country’s culture.
In general, we instruct the managers to be appointed to the future shops in China and Egypt to be most attentive to the local conflicts and issues that can be of importance for the company. We will be happy to support charity initiatives in an attempt to contribute to the wellbeing of the societies of our future host countries.
Concerning the existing markets, an apparent outcome of closing shops is dismissals. Dismissal is a stressful and negative event for an employee, and, apart from the legal considerations, ethical challenges also arise with respect to it. In particular, it is evident that dismissal often becomes a breach of the psychological contract, which is likely to result in lowering morale for the dismissed employee and the remaining “survivors” (Armstrong 2007).
All of the countries that host the shops which are to be closed have at least two more shops, which implies that grievously unfair dismissals are not only unethical (and potentially illegal) but also dangerous for MoonLucks’ reputation as an employer. As a result, it is imperative to develop legally and ethically acceptable means of compensating employees for unfortunate events. In particular, the best employees may be offered places in the remaining shops if an opportunity presents itself. The opportunity can only be regarded as valid if no unfair treatment of the employees of the remaining shops ensues; otherwise, such a solution will only bring additional issues.
CSR Issues
Unlike ethical issues, which involve going beyond what is required, CSR reflects a company’s responsibilities to its multiple groups of stakeholders (Yang, Colvin & Yim-Yu 2013). It is noteworthy that the interpretations of CSR can be different, and MoonLucks consider the majority of ethical obligations to be a part of its CSR. However, in this section, we are going to mention the issues that must be taken into account and addressed as a part of MoonLucks’ responsibilities to its stakeholders.
Dismissals have been described above: it is apparent that there is an obligatory and typically legally defined component to dismissal, but with respect to its employees, MoonLucks intends to carry out the non-obligatory ethical component of its responsibilities as well. With the new locations and new workers, it is imperative to control and monitor the establishment of MoonLucks’ practices in the field of employment.
Similarly, it is a must to ensure the establishment of a healthy, diversity-friendly, and culturally-savvy climate, which might require additional training for the managers who are going to be sent to new locations and future local workers. Finally, the quality of the products in the new shops (especially the beverages and snacks produced on the spot), as well as the service, needs to be monitored to ensure that no quality issues arise, which is a responsibility of the company to customers.
HR Implications
We recognize the fact that our employees are the main pillar of our success, and the development, implementation, and revision of HR practices is of supreme importance for MoonLucks (Khan 2014). The achievement of our strategic goals in the context of the current changes and difficulties in the economic development of our major existing markets is impossible without the efforts of HR managers (Caldwell et al. 2010; Ulrich, Brockbank & Johnson 2009).
Many of the mentioned issues can be resolved with the help of an appropriate HR policy. In particular, the development and implementation of ethical dismissal procedures and the work with the morale of “survivors” will largely depend on the HR specialists. MoonDucks has not yet encountered a case of such a massive dismissal, which implies that the suggestions of best practices, as well as creative and customized “best fit” solutions, are welcome (Boxall & Purcell 2011).
Similarly, extensive HR monitoring activities are going to help to prevent and resolve multiple cultural, ethical, and CSR issues. Ethical and CSR-compatible HR practices will serve to maintain and improve MoonLucks’ reputation and social legitimacy (Boxall & Purcell 2011), which will facilitate the achievement of the strategic goals of the company.
Reference List
Armstrong, M 2007, A handbook of human resource management practice, Logan Page Limited, London.
Boxall, P & Purcell, J 2011, Strategy and Human Resource Management, 3rd edn, Palgrave Macmillan, Basingstoke.
Caldwell, C, Truong, D, Linh, P & Tuan, A 2010, ‘Strategic Human Resource Management as Ethical Stewardship’, Journal of Business Ethics, vol. 98, no. 1, pp. 171-182.
CIA 2016a, The World Factbook: China. Web.
CIA 2016b, The World Factbook: Egypt. Web.
CIA 2016c, The World Factbook: UAE. Web.
Khan, D 2014, ‘HR as a strategic partner: a critical review’, International Journal of Human Resource Studies, vol. 4, no. 1, pp. 1-8.
Ulrich, D, Brockbank, V & Johnson, D 2009, ‘The role of strategy architect in the strategic HR organization’, People & Strategy, vol. 32, no. 1, pp. 2-31.
Yang, N, Colvin, C & Yim-Yu, W 2013, ‘Navigating corporate social responsibility components and strategic options: the IHR perspective’, Academy of Strategic Management Journal, vol. 12, no. 1, pp.39-58.