Many organizations today are faced with an ethical dilemma or moral dilemma. Challenges arise from within the organization when right and wrong are not clearly stated by the company in case a situation arises. Basically, in any situation, choices must arise but when the undesirable choice is made it is likely to cause harmful moral consequences (Trevino & Nelson, 2016). Nike as a global business organization is faced with numbers of ethical challenges. The Daily Collegian reported about the sweatshop ‘story of abusive working conditions and child labor’ on March 21, 2016. Other news agencies also reported on Nike’s ethical dilemma including the Guardian, the business insider and bloggers included. Nike was confronted with child labor in their factories, meager wage despite overtime, poor working conditions, and environmental pollution.
Ethical dilemma, therefore, is considered to be a situation in which the management of the company finds it hard to make decisions that will not affect one party and favor another section or an individual. The management of the company, therefore, is expected to put into consideration various aspects while faced with this situation. For instance, the management the company, as well as its employee, are expected to conduct themselves in a professional manner to ensure that they do not spoil the positive reputation of the company. In this case, the management that effectively handles ethical dilemma in an organization will be in a position to attain positive corporate image and at the same time enable the members of the public to develop a positive attitude towards the management as well as all operations conducted by the respective company.
The paper will examine the ethical challenges facing Nike, the theoretical concepts and how they influence the managerial practices in Nike, Inc. The company must establish a framework to be used in the evaluation of magnitudes of the ethical acts. Managers are not supposed to ignore such actions that seem bad or good but instead deduce a means of solving the issues to save the company. In addition, the paper will also put into consideration of various merits that comes along with effective handling a particular ethical dilemma in an organization. On the other hand, the paper will also shade more light on the challenges that an organization will likely to face if it does not effectively handle the ethical dilemma in an organization. Also, the paper will shade more light on the strategies that can be employed by both the management as well as employees of an organization to be in position of effectively and efficiently handling the ethical dilemma within the organization thus enabling the organization to effectively attain its set goals and objectives within any particular time and the same time being able to meet its clients demands.
Nike sweatshops
Nike sweatshop debate highlighted several ethical issues that the Nike Corporation was accused of by the international community and human rights activists (Slater, 2016). The company acted for its own good despite arguing that they had the people’s interest at heart. The main challenge that faced the corporation and which received a global criticism was child labor. Therefore, in this case, the organization was featured to be in an ethical dilemma in that in its perception, it acted based on the interest of the people. That is, the company was trying to give back to the society by offering employment to the needy people in the society to enable them to effectively and efficiently meet their daily needs. On the other hand, the company is considered to have violated the provision of the Labor Act that fights against child labor among other employment related matters. Therefore, the company faced a lot of critics from the international human rights watch thus being in a dilemma on the realistic decision to make that will not affect either of the two parties.
Child labor was the worst ever ethical dilemma to hit the Nike corporations. Many activists cried foul of the inhumane acts the company was undertaking never caring for the child’s live. Around the world, it is reported that children aged 5 to 17 work in factories to earn a living as well as fend for their families, this condition is at worse in the Asian factories. Because of the strict working regulation within the United States, many companies shifted their manufacturing plants to the third world countries. Countries like Vietnam, South Korea, China and Taiwan became the best locations of the factories because of readily cheap labor and favorable government regulations governing the labor market.
Nike was one of the multinational company that chose to move to the third world countries especially Asia to reap the benefits of cheap labor. All seem so well since the company and the stakeholders were reaping the huge benefits in terms of dividends and sales. Nike took advantage of the poverty in the third world countries to maximize adequate profits from its investments. In this case, studies indicate that the company offered employment opportunities to both elderly as well as the younger generations. Therefore, basing on this, the company was helping the entire society meet their goals in life, the company was considered to be against the law in that it employed the minors thus it had to face the law and answer for its actions.
Poverty is said to be the main driving force for child labor; more than 200 million children around the world are in the labor market. Most of them work under cruel environments; some are under slavery, forced military recruitment, drug trafficking, prostitution, and pornography. Among the many children is a 12-year-old child in Sialkot Pakistan employed by Nike to make shoes and other sports apparels. He is working because his family depends on him to remain alive. In case the child stops working, the family will remain broke and will never meet their daily needs.
Nike for long has been accused of using child labor in their production of sports equipment and sports clothing. The Pakistani government has laws governing the labor market, but the laws are flawed, it has taken the Pakistani government ages to terminate child labor. It has taken the intervention of the United States customers to take action and stop the menace through a boycott of Nike’s products made by kids. The United States terms child labor as illegal and against human rights, any company in the United States found guilty of the offense was highly charged. The world trade organization encourages its members to shun from importing goods made by minors to stop this inhumane act.
The poverty in Pakistan and the rising inflation rate allowed all these to happen, the per capita income of Pakistan stand at $1,990 per year. With a rising population of approximately one million, a common Pakistani is perceived to survive with $5 per day while the low income hardly survives. Therefore, to increase the GDP, reduce the inflation rate and intensify the trade surplus, the Pakistan government have allowed direct investment of foreign companies with no much restriction to their inhumane acts.
Sialkot is reportedly the province with the highest number of children in the labor market and is the region Nike produces the highest number of their goods. Sialkot has the cheap labor markets in the entire region of Pakistan. The government of Pakistan trades its citizens for their happiness; they operate under the utilitarian theory which does not uphold humanity. Child labor is unethical and must be stopped by the corporation; children are to be given their rights to education.
It is reported that the workers at the Nike sweatshops are given very low wages. The employees in Vietnam, for instance, working for the Nike Corporation earn $1.60 per day that is almost 20 cents per hour. This is a very high difference as compared to the same employee working for Nike in the United States earning $10 per hour. Despite making a very high profit from the sales of the sports apparel and equipment made from these employees, they never bother to increase their daily earnings to the required standard. The daily living wage in Vietnam is just $3 per day which means the employees of Nike must work extra hours to meet their daily target. This has forced parents to allow their children work in the same factories to help raise money for daily upkeep.
The Nike employees complained of poor working conditions. The lighting was poor and the factories very dirty which caused health problems. The workers worked with improper clothing despite working in very ash conditions. The Nike Corporation never bothered to improve the working conditions of their workers because the host governments had no laws governing working conditions. It was until the international community condemned these acts that working conditions were improved in Nike sweatshops.
Many children have suffered because of child labor; the company, the government, and the consumers have a part to play to ensure child labor is eradicated. Nike Company must ensure they develop a more substantial exit strategy for the child laborers. The corporation must choose humanity over their happiness and release the young children from their factories. Nike must pay the parents working for them more so that they can take their children to school. The customers need to boycott all products made by children, and the Pakistani government must enact rules governing child labor.
Theoretical concepts
There are a number of theoretical concepts that can be applied in examining the sweatshop dilemma critically. The two ethical theories are the Utilitarian theory and ethical egoism theory, the theories are discussed with reference to the sweatshop dilemma facing the Nike Corporation.
Utilitarian and ethical egoism approaches
Ethical egoism theory is an ethical approach that allows the moral agent make decisions according to his/her own interest (self-interest) never keeping in mind the interests of the others. This approach was used in the Nike sweatshops; the needs of the employees were totally ignored. Most of the employees worked under very poor working conditions for very low wages, and many were children. This likely cause’s psychological breach, the employees feel they are mistreated, misused by their employees who may break the trust that existed between employees and employer.
The management feels they benefit the workers from the third world countries because they give them work opportunities which were not there and not easily available. The management of Nike feels the children employed to support their families and to end the child labor will mean that their families will live miserably (Binci & Giannelli, 2016). Child labor is perceived to bring greater good than bad; each person plays to accommodate the other person for each to achieve the stipulated goal.
According to the utilitarian theory, the management is allowed to make decisions basing on the happiness the action will promote. The more the happiness, the better the act, the less happiness perceived, the act will be seen as bad (mill 1). Nike management knew that use of child labor is unethical but because it brought more happiness to the company and the children’s families they chose to apply it in their production (Dewey, 2016). From the employment of sweatshops as well as child labor, Nike enjoyed cheap labor hence higher profit while the family gets a source of income for their daily upkeep. Child labor is justified as long as it brings pleasure and happiness to the majority of persons. In this case of the 12-year-old worker, utilitarian ethics justifies his working because his family depends on him.
Utilitarianism approach never minds of how happiness is produced the managers tend to look at the benefits over means (Hollander, 2016). The Nike shareholders and the management looked at the profit; they never bothered to look at the working conditions of their workers. With utilitarianism, ethical decisions like justice are likely to be submerged. Therefore, the management of the company, in this case, are expected not only to put into consideration the returns that an organization makes from its investment but also, the company is expected to come up with a realistic and reliable mechanism that enhances effectiveness and efficiency of operations in the company. In this case, the top management in an organization should ensure that it opens the channels of communication within an organization thus being in position to receive and respond to employee grievances thus being able to work together towards a common goal of ensuring that the organization attains its objectives and at the same time meets its client’s demands.
On the other hand, the Nike corporation management must know that workers and children are human beings and for humanity matters. Children must be treated as children, and no person must take away their happiness for other people’s satisfaction and happiness. Therefore, the management should ensure that it avoids child labor and at the same time ensure that it offers competitive remuneration to its employees thus enabling them to boost their living standards. That is, having this into consideration the company will be in the position of avoiding ethical dilemma situation in an organization thus enhancing consistency of operation within the company.
In relation to the above, the management of the company is expected to have adequate strategies to be able to handle this particular situation effectively. That is, the company should ensure that in its operations it ensures that it puts into consideration all the provisions of the Employment Act thus being in a position to avoid unnecessary conflicts with responsible bodies. In addition, to attain quality work in an organization, the management of the company is expected to ensure that it has motivated a workforce that will enable it to meet its set goals and objectives within any particular period of time. In this case, the management is expected to provide its employees with good working condition, proper employee remuneration as well as involving employees in decision-making process thus winning increasing their motivation. Therefore, in this aspect, leadership and decision-making process in an organization is considered to be a vital element that will enable an organization to effectively and efficiently attain its set goals and objectives through its employees.
Conclusion
Leaders are the main drivers to ethical victory; each leader must act ethically and solve situations in an ethical manner. The leaders must lead in an ethical manner; they must treat their juniors honorably to encourage healthy interaction within the workplace. This will enable them to run the organization smoothly and even implement organization goals and initiatives in the right manner. Good leadership governed by ethics works both visible and invisible manner. The visibility aspect lies in how the leader interacts with the other members that are in speech and in action. The invisible aspect is evident in the decision making, how he/she sets organizational values and how he makes ethical decisions in complex situations.
A leader must maintain ethics all the time to prove to others that ethics is part of daily living and the world upholds that. Leaders learn ethical leadership through experience; every good thing develops over time. A leader can learn through role models or past experience he/she has undergone as a leader. Ethical leadership can also be acquired through cultural or religious teachings or at times from learning in philosophy, literature and or history. Leaders must always act according to the vision and mission of the organization. Ethical situations must be handled based on the organizational culture and decision-making framework. A leader must not introduce his/her own model of solving ethical dilemmas unless the company admits so.
Before handling any ethical issue, a good leader must bring it for discussion and scrutiny. What one person may think as good others may perceive as bad. A general solution can be arrived at which can be accepted by all stakeholders. That is, the management of the company should ensure that it adequately motivate its employees through involving them in decision-making process thus being in a position of making an informed decision. An informed decision, in this case, is considered to be a decision that will involve opinions from the top management level in the company as well as the views of all employees in an organization. Therefore, through working together as a team an organization the organization will be in the position of meeting its client’s expectation at any particular time.
In our case, Nike leaders must ensure the ethical dilemma (sweatshops) is solved immediately and amicably. This is to save the company’s reputation for its customers how to feel the company is exploiting its workers and making a profit from child labor. The leaders in Nike Corporation must ensure the working conditions in all their factories are improved, and wages increased for all employees. The management must also ensure the employment age is revised and rules must be enacted guarding child labor. The Nike leaders/management must be taught on ethical issues and how best to solve certain tough situations as far as labor is concerned. Productivity must be their driving force in decision making.
Reference
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Cho, S. H., Fang, X., Tayur, S. R., & Xu, Y. (2016). Combating child labor: Incentives and information transparency in global supply chains.
Dewey, J. (2016). Ethics. Read Books Ltd.
Distelhorst, G., Hainmueller, J., & Locke, R. M. (2016). Does lean improve labor standards? Management and social performance in the Nike supply chain. Management Science.
Fernando, M. (2016). The Complexity of Leadership. In Leading Responsibly in the Asian Century (pp. 53-69). Springer International Publishing.
Hollander, S. (2016). Ethical Utilitarianism and The Theory of Moral Sentiments: Adam Smith in Relation to Hume and Bentham. Eastern Economic Journal, 42(4), 557-580.
Mansuri, G. (2006). Migration, school attainment, and child labor: evidence from rural Pakistan.
Overall, J. (2016). Unethical behavior in organizations: empirical findings that challenge CSR and egoism theory. Business Ethics: A European Review.
Slater, J. (2016). Sweatshop Labour in News Media: The Economics of a Social Issue. Footnotes, 2.
Trevino, L. K., & Nelson, K. A. (2016). Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
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