Human Resources Case Study

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15 Organizational Ethics,

Sustainability, and Social Responsibility

Case 15.1. Corporate Social Responsibility (CSR): Can Human Resources Help Companies Develop a CSR Program? One of the hotter topics in business in the last 10 years has been corporate social responsibility (CSR). CSR means taking all stakeholders into account. All stakeholders means all—not just shareholders or executives. The business case for CSR is based on the ability of the organization to help or harm various stakeholder groups and to iden- tify, of those stakeholder groups, which ones help or harm the company. Each stake- holder group has different, and sometimes competing, interests. The organization must balance these social responsibilities among all the groups in order to succeed.

A CSR program recognizes that organizations have a duty to all stakeholders to operate in a manner that takes each of their needs into account. It signifies an attempt by organizations to be more aware of and to develop programs to create a triple P concept—people, planet, and profits. The goal is to save the planet, help people live a better lives, and still produce a profit for the shareholders, owners, and employees to share.

HR can play a role in helping organizations and employees be more CSR oriented. So far, HR hasn’t been active enough in this area. But HR can make sure that man- agement is ethically oriented. HR can make sure employees are ethically oriented by providing training and development on CSR. HR can make sure that ethics is adhered to at the board level of the company.1

Ethics is commonly understood to include morals, values, beliefs, and principles. An employee with these characteristics will have personal integrity and be known as a

C o p y r i g h t 2 0 1 6 . S A G E P u b l i c a t i o n s , I n c .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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Part V • Protecting and Expanding Organizational Reach7 8

trustworthy person. An ethical employee can be expected to want to help a company develop a CSR program.

In terms of the planet, HR can teach employees to think about sustainable issues. Employees look for improvements in their work areas. They can use suppliers that employ sustainable measures, such as paper packaging produced from recycled paper or renewable forests. Businesses and their employees can lower the use of environmen- tally damaging chemicals in the production of their products. Employees can learn to reduce or reuse waste products.

In regard to people, HR can help employees take care of their health by pro- moting the use of health-care benefits, such as reimbursement for membership to health-care clubs. Or HR can help employees find a better balance between work and family life.

However, the goal remains being a profitable business. Even a nonprofit business needs to break even to ensure staying in operation. The Triple P concept looks for ways to improve the environment, help employees, and yet still be profitable.

The American economist Milton Friedman felt that using any money to improve the environment, beyond what is required by the government, was not a good use of company finances since it would reduce overall profits.2 Accordingly, Friedman did not support the widespread use of CSR. He felt a company should do only what it legally needed to do as required by the law.

However, research by Edward Freeman resulted in a different view. Freeman’s stake- holder theory called for managers to create value for customers, suppliers, employees, communities, and shareholders. Freeman took a much broader view on creating value for everyone instead of just making profits for shareholders.3 Thus, Freeman would support the concept of CSR and the idea that a company should go beyond its legal requirements and help the people, planet, and profits all at the same time.

Since 2012, Apple Computers has faced troubles in regard to its supplier Foxconn in Taiwan. Foxconn has 1.2 million employees who make Apple’s very profitable iPads, iPhones, and other high-tech products. However, the employees work under extreme conditions to ensure that Apple products are consistently produced at a high quality.4 The repetition of the work has led many of the employees to feel depressed, and some employees have tried to commit suicide. Foxconn has installed nets around the roof of the company to prevent jumping off the building.5

Still, just because Apple has trouble with a supplier doesn’t automatically make it an unethical company. Nike had a very similar problem with its suppliers in the 1990s. Nike footwear was made in sweatshop conditions in Indonesia. Nikes were made by workers who were paid low wages and experienced poor working conditions.6 Nike was also accused of using children to make its footwear. Nike did its own research and found that the poor working conditions were real and needed to be corrected. The company has spent the last decade trying to publish where its footwear is produced and trying to train the managers in those locations not to use hurtful tactics (such as forcing workers to stay outside in the blazing sun after failing to reach their goal of 60 pairs of shoes on time).7 Nike has joined the Fair Labor Association, a group that includes other footwear and clothing makers, nongovernment organizations (NGOs), and universities, which conducts independent audits designed to improve standards across the industry.

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Chapter 15 • Organizational Ethics, Sustainability, and Social Responsibility 7 9

Case Questions

1. How do Milton Friedman and Edward Freeman differ on their views of an organization’s role in corporate social responsibility?

2. Has HR been active enough in CSR?

3. What can HR do to promote CSR in an organization?

4. How can HR help the planet?

5. Why did Apple have trouble with Foxconn?

Case 15.2. Equal Opportunity, Diversity, and Multiple Generations at Work Together Title VII of the Civil Rights Act of 1964 was enacted to stop discrimination based on race, color, sex, national origin, and religion. In later years, the meaning of diversity expanded to include individuals with disabilities, workers aged 40 years and over, and veterans.8 Today, workplace diversity includes differences attributed to generation, culture, and lifestyles.

Employee diversity will continue to grow, and we will have to become better at man- aging that diversity than we have in the past. To exclude a qualified person because that individual is different in some way is counterproductive to business success. Managing diversity is becoming critical in all organizations and in all industries. We have to con- tinue to get better at the HRM task in order to engage all our future employees.

Generational differences are one of the latest and most interesting areas of potential differences. Workplaces often have four or five different generations working together. These generations are labeled Traditionalist (born 1922–1945), Baby Boomers (born 1946–1964), Generation X (born 1965–1980), and Generation Y (born 1980–1994), also known as the Millennial Generation or Generation Next.9

Traditionalists tend to work late and on weekends. They grew up in a time when wives stayed at home and didn’t work. They are loyal employees and expect to be paid fairly well. Changing jobs did not occur often, since that meant something was not going well.

Baby Boomers were born in an era of general affluence. Many grew up in a house- hold with a single parent working. Women are often as educated as men. Boomers can be driven to succeed.

Gen Xers are often children who lived with two working parents. They tend to be individualistic, confident, and self-reliant. They believe that balancing family life and work life is most important. Xers are the first generation to feel comfortable with technology and diversity.

Millennials are very knowledgeable about technology. They are also very under- standing of diversity and expressing personal lifestyle choices. They are able to multi- task and like to work at their own pace.10

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Part V • Protecting and Expanding Organizational Reach8 0

Today’s business environment is the first one in which five generations of people are likely to be working at the same time. The differences in age could create con- flict between the younger and older employees. However, the differences between employee ages should be cherished and used as a source of information to help sell company products. Managing older workers will be important as younger people take over the leadership role in all organizations.11

Older employees (such as Traditionalists and Baby Boomers) are often the mentors for teaching younger (Gen X and Y) employees. Older workers can teach younger workers about the culture of the company and how things normally get done.

However, Gen X and Y employees have been born in the technology era. That being so, the younger employees can teach older employees about topics such as social media marketing techniques. So younger employees can become reverse mentors and teach the older employees how to better use technology in the workplace.

Case Questions

1. What are the traditional areas of discrimination the human resources department normally helps to resolve?

2. How do equal opportunity, diversity, and generational issues intersect?

3. What generation do you belong to? Do the characteristics describe yourself?

4. What differences do you experience between yourself and a coworker (or teacher) from a different generation?

5. What potential discrimination issues do you think exist between employees of different generations?

Notes

1. Higginbottom, Karen, “Why HR Needs to Take a Leadership Role in CSR,” Forbes, January 6, 2006.

2. Friedman, Milton, “The Social Responsibility of Business Is to Increase Its Profits,” The New York Times Magazine, September 13, 1970.

3. Freeman, Edward, Strategic Management (Boston, MA: Pitman, 1984). 4. Leach, Anna, “Foxconn Is World’s 10th Largest Employer: 1.2 Million Employees,” The

Register, March 20, 2012.

5. Myers, Connor, “Corporate Social Responsibility in the Consumer Electronics Industry: A Case Study of Apple Inc.,” Georgetown University, http://lwp.georgetown.edu/wp-content/ uploads/Connor-Myers.pdf.

6. Nisen, Max, “How Nike Solved Its Sweatshop Problem,” Business Insider.com, May 9, 2013. 7. Teather, David, “Nike Lists Abuses at Asian Factories,” The Guardian, April 14, 2005. 8. Mayhew, Ruth, “What Are an Employer’s Responsibilities for Diversity in the Workplace?”

Houston Chronicle: Small Business, http://smallbusiness.chron.com/employers-responsibilities- diversity-workplace-10417.html.

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Chapter 15 • Organizational Ethics, Sustainability, and Social Responsibility 81

9. http://www.valueoptions.com/spotlight_YIW/gen_y.htm. 10. Jerome, Alicia, and Michael Scales, “Millennials in the Workforce: Gen Y Workplace

Strategies for the Next Century,” e-Journal of Social & Behavioural Research in Business 5, no. 1 (2014): 1–12.

11. Hoving, Allan, “Managing Older Workers,” Human Resources IQ.com, October 24, 2013.

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