CASE 10

Case 10 summary:

·         Wells Fargo has been accused and convicted of fraudulent behavior, selling clients by-product, opening accounts and charging unknowing customers extra for services they did not need

·         The fraudulent behavior was forced upon workers through managerial pressure and unrealistic sales targets

·         Whistleblowers were fired

·         Workers were forced to work overtime unpaid to reach targets

·         CEO was forced to step down and over 5000 people were fired

·         Many fear similar behavior is standard in banks across the nation

Challenges:

·         Setting too high sales targets leads to staff cutting corners or acting in a fraudulent way

·         Managers should always be aware of unethical behavior and react if they see any

Theory, Model and Key Concept  

The Wells Fargo case is a text-book example of bad management and HR decisions. The higher managers have set unrealistic sales targets that the lower and middle managers than have to turn into action. With pressure to succeed, they start allowing and even preferring unethical behavior. The company had a system in place for ensuring that whistle blowing was available, but the HR department then proceeded to terminate or relocate any whistleblowers once a complaint was filed. In addition, working hours weren’t monitored, staff wasn’t duly paid and there have been many examples of misconduct by manager and the HR department. Now the company’s bad practices have been brought out in clear daylight, and the picture is not pretty. What’s more, the banking industry is now starting to reveal that similar practices exists in many other banks and companies as well.

In Finland, workplaces specialized in selling via phone, and cold calling, have similarly bad reputation. Many have filed complaints about companies not paying wages, of discriminative behavior, harassment and unrealistic sales goals. Especially young people often fall victim of unethical companies, taking advantage. Many you people do not know their rights, are afraid to speak out, and fear that if they do speak up they will get fired and loose the little income that they do have. The businesses have now been under intense scrutiny and observation by the government officials, and reports and complaints have been reduced. (Yle 2015)

Many companies have introduced portals for whistleblowers to raise their concerns about unethical behavior. These portals have been set out to make sure, that reporting to a higher manager is not the only way to be heard about an issue in a company. Many countries have national laws, for protecting whistleblowers. In the Wells Fargo case, the whistleblowers were identified and consecutively fired, which is the exact opposite of the intended effect of a portal for whistleblowers. The European Commission, is looking into an EU wide legislation to protect whistleblowers, as more and more companies turn global. An EU wide legislation is curcial, when it comes to protecting whistleblowers in a new globalized world. This can also be useful, especially in terms of whistleblowing on tax evasion, corruption and fraud. According to the EU, whistleblowers are providing a great service for the Union, protecting democracy and public interest. (D. Vincenti, 2017) 

Literature:

D. Vincenti, 2017, “Commission calls for input on whistleblower protection”, EurActive https://www.euractiv.com/section/politics/news/commission-calls-for-input-on-whistleblowers-protection/ (12.3.2017)

Yle, 2015, ” Työtä ilman palkkaa, epäasiallista kohtelua ja häirintää – tehovalvonta paljasti puhelinmyynnissä rehottavat ongelmat, Yle,  http://yle.fi/uutiset/3-8086070 (12.3.17)

CASE 9

Summary of case 9

•          An investigation revealed some of the bigger clothing brands had children and refugees working in their factories or for their subcontractors
•          The factories hired refugees without work permits and children to work for less than minimum wage in sometimes strenuous and hazardous conditions
•          The companies are claiming they were unaware of such practices and are applying changes and support for the exploited workers
•          Critics say the companies are not doing enough to ensure labor rights and that “not knowing” is not enough, they need to actively monitor all subcontractors and sub-subcontractors as far as the product goes back

Challenges:

·         How can a UK based clothing company ensure its subcontractors in another country is obeying rules?

·         Is the clothing company responsible for practices that take place in another business if they have given codes of conducts for subcontractors?

·         What is enough monitoring?

·         Is an outsourced service still under the same brand and laws of ethics as a company service?

Key Concepts, Model and Theory

There are always risks when taking HR decisions, taking on someone new or outsourcing a service. When the whole production line of a company, from beginning to end, is in the hands of a company, they can be almost certain, that no unethical decisions have been made during the HR process. As soon as companies need to start outsourcing, collecting materials from others, or sub-contracting parts of their business, a problem may occur. 

In case 9, we can see that the clothing companies failed to make sure all factory workers (own and subcontracted) were treated equally and humanely. This sort of news is very bad for the company brand in today’s enlightened consumer market.

Sweatshops and inhumane factory conditions have been on the radar for some time now, yet companies have difficulties in enforcing legal and just HR processes in subcontractors. The environmental challenges that globalization entails for a company are difficult to harness. According to L. Gomez-Mejia, D. Balkin, and R. Cardy, many companies try to implement a worldwide company culture, to smooth over cultural differences in the whole company. (L. Gomez-Mejia, D. Balkin, and R. Cardy, 2012, p.35) 

Manpower, for example, uses a model called reversed-expats:

“This approach rotates a local manager, based in the emerging market, through functions outside the home market. The experiences and insights that the manager gains from this can then be adapted to the local market upon his or her return”. (J. Webb, 2011)

This is one approach to the difficulties of having different cultures in a global company. Of course, this approach is more difficult to implement, when it comes to actual outsourced activities or sub-contractors.

The opportunity for workers to be exploited in the developing nations has risen as a result of the westernized world becoming more service-oriented and less industrial. Instead, the production of products has been moved to emerging markets, where standard of living is lower, and therefore, the wages are lower. In the western world, labor unions have traditionally defended worker’s rights and have had a very strong place in society. (L. Gomez-Mejia, D. Balkin, and R. Cardy, 2012, p.36) This is not the case for the third world, where workers have little or no rights when it comes to employment practices. As union membership drops in the west, the third world is left with exploitation. In Cambodia, for example, the clothing industry exploitation and violence in connection to that, has been an ongoing issue for years. The international brands state that they pay factory workers the country’s minimum wage, but the unions in the country do not have enough power to ensure that the minimum wage is high enough to cover basic living expenses. (DW,2017)

Most companies perform some sort of monitoring to ensure legal and ethical standards are met in factories and subcontractor’s practices. They lay out codes of conducts for all subcontractors and evaluate and monitor appliance. Yet, the problem doesn’t cease to exist. Consumer’s today, are getting more and more aware of these issues, which means that companies too, start to care about their production facilities. Unethical behavior (whether it’s through a subcontractor or not) does not look good for the company brand. However, supporting ethical HR processes and legal practices, even though the company has previously been caught using child labor, can even be good for the company brand. For example, H&M is making money out of making a point of ethical behavior, therefore the company produced their brand H&M Conscious and now defend factory worker’s rights in disputes over wages. (AFP 2017) Making ethical HR decisions can therefore bring more, not less, money into the corporation.

Human Resources in a globalized company is a challenge. The most common HR processes of recruitment, legal advice, and competitive strategies, are all completely different when it comes to a global company. Add in subcontractors, and that makes Human Resources even more of a challenge. Yet, consumers see the company as a whole, wanting the HR process to maintain ethical standards, no matter where or by whom the product has been produced. The use of HR consultants is a growing business and many companies have understood, that it is often cheaper to hire an expert or a HR firm, than to deal with the legal issues and bad press after an unsuccessful HR process. The field of HR maintains a strong foothold in today’s businesses and, in tomorrow’s even more interconnected and global business world.

Literature: 

AFP, 2017, “Top brands including H&M, Zara to boycott Bangladesh garment summit”, Mail Online,  http://www.dailymail.co.uk/wires/afp/article-4249614/Top-brands-including-H-M-Zara-boycott-Bangladesh-garment-summit.html (6.3.17)

DW, 2017, Cambodian garment workers stay poor while dressing the West, DW, http://www.dw.com/en/cambodian-garment-workers-stay-poor-while-dressing-the-west/a-37796952 (6.3.17)

J. Webb, 2012, “'Reverse expat' your way to emerging markets”, Procurement Leaders, http://www.procurementleaders.com/blog-archive/blog-archive/reverse-expat-your-way-to-emerging-markets-220205 (6.3.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 1. Pearson Education Inc. New Jersey

Case 8

Summary of case 8A

·         Nokia, the Finnish mobile phone maker, decided to transfer on of its locations from Germany to Romania in 2008

·         The transfer meant around 4000 Germans were left without jobs

·         The decision to close the factory due to economic inefficiency was made without hearing representatives of workers or the German government

·         Talks about the Romanian factory being established on EU funding, and therefore in large parts funded by Germany, has angered the community even more

Summary of Case 8B

·         Nokia made yet more cuts in 2011, due to economic reasons

·         The company closed down operations in Romania and operations in Salo and other locations were at risk to be transferred to Asia

·         Over 3500 jobs were let go of as a result

Summary of Case 8C

·         Some of the former Nokia Symbian developers were outsourced to Accenture to continue their work

·         The jobs at Accenture did not match their expectations and 40% have now taken package deals and left the company

·         Accenture was unable to provide work for all outsourced staff members

·         The outsourcing has been criticized by the labor union since the start

Challenges:

·         Communicating news of layoffs due to shift in geographical location

·         The long-term effects to a community heavily dependent on one company or factory (Salo for example)

·         The company’s obligation to produce profit vs. obligation towards a community or country

·         Building new factories and then swiftly moving on as cheaper workforce becomes available

·         A companies obligation to an employee after an employee is laid off or outsourced?

Key Concepts, Theory and Models

There are many challenges with terminating a relationship with a staff member. Sometimes the worker chooses to leave a company, other times the company is forced to reduce staff numbers. The so called voluntary separations are those, when the employee leaves the company. This can be due to quitting or retirement. Sometimes severance packages are provided for workers that volunteer to leave (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.232). Typical severance packages are one or two weeks’ pay for each year the employee has worked for the company, according to J. Tavanger in his article “What to do about severance pay?”. (J.Tavanger, 2015). Senior staff, managers and CEO’s receive larger severance packages. For example, the former CEO and President of Ericsson, Hans Vestberg, received 2.34 million USD in severance after he left his position in the company. (Telecomlead, 2017)

The other type of termination, is involuntary, i.e. the worker does not want to leave the company, but is forced to. This type of situation can occur due to discharge (when a staff member is a poor fit for the company), layoffs (when the company is seeking to cut costs), downsizing, or rightsizing. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.233-235). Most of the time, lay-offs are explained by the company not being profitable. For example, Twitter laid of 9 % of their staff, due to an App idea failing to take off. All staff that had worked on the app were consequently laid off. (S.Fiegerman, 2016) As seen in the Cases 8A and 8B, Nokia has been forced to lay off thousands of people in different locations due to their poor growth. In addition, many people have criticized Nokia for laying off people in one location, only to set up factories in another cheaper location. Then, after a few years, they have laid off those new workers to once again move to a cheaper location.

Involuntary terminations are always a challenge, and so, many companies rely on HR specialists to make sure everything is done by the book. Before layoffs are considered all other options should be explored. These are for example, hiring freeze, changes in job design, pay and benefit policies etc. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.237-238). Finnish legislation is very strict on how to handle involuntary separation. Claiming that layoffs are necessary due to economic reasons, needs to be clearly visible. An employee is obliged to find all other means, then laying off a person. This can include shifting jobs, additional training etc. If a person is laid off, the company is mandated to offer said person any similar jobs that he or she is qualified for, during the next 4 months (if the person has worked for a company more than 12 years, the time is 6 months). This is stated in the Finnish law as “takaisinottovelvoite”. (Yrittäjät, 2017) 

The procedure of laying off one or more people is very regulated, and relevant spokespersons need to be notified in advance and invited in to the discussions. The first step is to notify the employees of redundancy, the following is to develop the layoff criteria. In many cases, seniority is used to simplify the criterion. Then follows the actual discussions with worker’s representatives and communicating with the laid off personnel. It is important to have more than two people present at these discussions in order to protect the employers back and to ensure everyone understands what has been agreed upon. Coordinating with the media is also an important aspect of laying off people. Sometimes staff will be upset or try to harm the company when they have been laid off, it is therefore advisable to have security on site and escort the redundant people out of the building. In many cases, sensitive data is stored at the desk or computer of an employee, therefore one shouldn’t be allowed back to the desk. After the layoffs are completed, it is important to swiftly move back into normal working pace, to reassure the ones left behind and to make sure they have psychological support if necessary. (L. Gomez-Mejia, D. Balkin, R. Cardy, 2012, p.239-240).

Literature:
 

J. Tavanger, 2012, “What to do about severance pay?”, The Armada Group,  http://www.thearmadagroup.com/hiring-managers/what-to-do-about-severance-pay (5.3.17)

L.R Gomez-Mejia, D.B Balkin, R.L Cardy, 2012, “Managing Human Resources”, 7^th Edition, chapter 6. Pearson Education Inc. New Jersey

Telecomlead, 2017, “Ericsson’s Hans Vestberg earns 2.34$ mn as severance pay”, Telecomlead, http://www.telecomlead.com/telecom-equipment/ericssons-hans-vestberg-earns-2-34-mn-severance-pay-75075 (5.3.17)

S. Fiegerman, 2016, “Twitter Cuts of 9 % of its staff and kills off Vine app”, CNN Tech,  http://money.cnn.com/2016/10/27/technology/twitter-layoffs-earnings/ (5.3.17)

Yrittäjät, 2017, “Työlainsäädönnän muutokset 2017”, Yrittäjät,  https://www.yrittajat.fi/yrittajan-abc/tyonantajan-abc/ajankohtaista/tyolainsaadannon-muutokset-2017-546475 (5.3.17)

Case 7

Summary of Case 7 A

• Employee engagement is not the same as a happy or satisfied employee
• Engaged employees go the extra mile to complete and over exceed on their tasks
• Engaged employees leads to higher profit, 6%
• Engaged employees are loyal to the company and plan their future within, not looking at other options

Summary of Case 7B

• Less than 30 % percent of today's workforce is engaged in their work
• Engaged employees leads to better performance
• Actively disengaged workers harm a company
• To build an engaged workforce:

           1. Use relevant measurement

           2. Engage all levels of an organization every day

           3. Select engaged managers and hold them responsible for team engagement

         4. State clear and realistic goals for engagement

Challenges?

• Measuring engagement and taking it apart from satisfaction
• Getting or creating engaged employees
• What to do with actively disengaged employees
• How to make engagement part of company DNA?
• How to actively uphold engagement?

Theory, Model and Key Concepts

When talking about engagement, leadership is one key aspect to focus on. Without having a clear framework laid out by the company leaders, engagement will eventually fail. Creating an engaged workforce stems from the company strategy. Each and every employee needs to know and understand the company strategy and where the company is heading. Only then will that employee be able to identify how his or her input drives towards that goal. Once that is set, the company can pursue to engage the employees and make them want t go that extra mile to achieve the strategic goal. Taking ownership of the strategy is key in creating an engaged workforce. (D. MacLeod and N. Clarke, p. 76) Not only is strategic goals important, they can also provide a purpose for an employee. Rembach states, that giving a worker a purpose to work for and towards, will lead to more engaged staff. Therefore, the strategy needs to explain why the business is useful for the society, the environment etc, in order to be really engaged in a company. (J. Rembach, 2017)

“People join businesses but leave managers” MacLeod and Clark state in their report Engaging for Success . Managers are the link between the company leadership and the workforce. They are supposed to entail and live out the company strategy and its values. If an employee sees an engaged manager, he or she  will be of the opinion, that the company is engaged. Choosing engaged managers is therefore very important. (D. MacLeod and N. Clarke, p. 80-82)  Managers are there to motivate, offer coaching and feedback. They provide the opportunity for an employee to excel at their work. They treat employees fairly and with respect, setting the tone for the whole working environment. A bad management recruitment decision can therefore be detrimental for a company's profitability and success. (D. MacLeod and N. Clarke, p. 88) One recent example of bad management and loss of income for a company, was in the South African electricity public utility company, Eskom. Due to corruption, the company had previously overpaid for coal and truck services, and had been over producing electricity made by coal. Now that the coal mines are closing and trucker’s aren’t receiving overpay anymore, the company is facing widespread strikes, causing South Africa to have problems with electricity production for its citizens. All of these issues could have been avoided by making good management decisions ( K.Heese, K.Allan, 2017)

Being listened to and heard is an important feeling in private life, but equally so in the office. If an employee feels that managers are listening to their concerns, needs, and wants, they will be more engaged. Listening is a talent that must be actively practised by a manager or anyone in a human relationship. Really taking the time to listen, and try to understand another is not an easy task. “To be able to motivate and inspire others, you need to learn how to listen in both individual meetings and at the group level.”, says S.stibitz in the Harwards Business Review. Listening is an active decision that you have to make, and you have to set it as a priority. (S.Stibitz, 2015) According to MacLeaod and Clarke, being heard in the company is key to produce and engagement employee. “The ‘ Sunday Times Top 100 Companies to Work for’ found that feeling listened to was the most important factor in determining how much respondents valued their organisation. Being heard reinforces a sense of belonging within an organisation and a belief that ones actions can have an impact.” (D. MacLeod and N. Clarke, p. 93)

It is of course clear, that none of the discussed issues will lead to engaged employees, if the organization is not based on integrity, abying to its core values. Saying one thing, and then doing another, will not go by unnoticed by employees, eventually leaving them with mixed sensations or mistrust towards a company. If a company states that it has employee safety as a top priority, but then does not provide safety training, the integrity of the company will be diminished and the workers will no longer trust what managers say. This in terms leads to disengagement from the company. (D. MacLeod and N. Clarke, p. 104)

Literature:

(D. MacLeod and N. Clarke, Engaging for success: enhancing performance through employee engagement, http://engageforsuccess.org/wp-content/uploads/2015/08/file52215.pdf (27.2.17)

J. Rembach, 2017, “9 Devastating Thruths undermining your employee engagement”, Customer Think, http://customerthink.com/9-devastating-truths-undermining-your-employee-engagement/ (3.3.17)

K.Heese and K.Allan, 2017, “Eskom debts need switched-on action”, Business Day, (27.2.17) https://www.businesslive.co.za/bd/opinion/2017-02-15-eskom-debt-needs-switched-on-action/

S.Stibitz, 2015, “How to Really Listen to Your Employees”, Harward Business Review, https://hbr.org/2015/01/how-to-really-listen-to-your-employees (27.2.17)