Describe about the Organisational Behaviour for Employee Underpayment.
The present assignment aims to evaluate and examine the scandal of 7-Eleven in which franchisee underpay their employees in Australia. It includes background, structure, problems and detailed analysis of the allegations made against the company of employee underpayment.
7-Eleven Inc. is an international chain of convenience stores operating in approximately about 18 different countries. The company franchises and licenses about 55,000 stores worldwide and was recognized by the name of The Southland Corporation till the year 1999 The company is known to be the largest operator and franchisor of convenience stores internationally (7‑Eleven Profile, 2016). 7-Eleven Stores Pty Ltd has become first choice of Australia in convenience stores. It is private owned company and has obtained franchise of 7-Eleven stores from the US based 7-Eleven Inc (About 7-Eleven Convenience Stores, 2016).
7-Eleven scandal occurred in the franchise convenience stores of Australia which highlighted the unethical practices prevalent in the company. The employees were underpaid and also get threatening from the senior management of the company if they raise their voices against their exploitation. The cash-back scheme of the franchisee forces the employees to pay back their wages (Karp, 2016). The employees were also enforced to stay in the office and work for late night hours. The employees of the company were mainly international students and accordance to their visa can work only for a time period of 20 hours to complete a given work. These students were threatened by the franchisees of breaking the visa regulations if they complain to Fair Work Australia about being underpaid (7-Eleven Scandal an Ethical Failure of Leadership, 2013).The employees were told that they would have to prove their underpayment in the court. The employees who were mainly international students believed in them due to lack of knowledge. Also, there were evidences of physical violence with the students and threatening made to their families overseas by the franchisee (Karp, 2016).
The main reason for the occurrence of 7-Eleven scandal was unlawful conduct from the franchisee. According to FWO’s report, the main factors responsible for the misconduct in the franchisee was absence of auditing and monitoring by the franchisor. The head office of franchise convenience stores in Australia does not pay any attention to employee complaints (Stricter laws for franchisors? Responses to the 7-eleven wage scandal, 2016). The employees working in the franchisees were mainly international students who were threatened and as such were afraid of reporting the misconduct by their employers (Marginson et al., 2010). These all factors were responsible for the underpayment scandal of 7-Eleven.
The Fair Work Ombudsman of Australia after the occurrence of employee underpayment scandal in 7-Eleven has scrutinized the duties of franchisors towards the franchisees. However, according to a franchisee agreement, franchisors and its franchisees are individual parties who are not connected with each other. Franchisors only provide their business model to the franchisee for carrying out its operational activities. Thus, as per the Franchising Code of Conduct, franchisors do not own any responsibility for the franchisees actions towards their employees (Rouse & McKavanagh, 2016).The scandal of 7-Eleven has highlighted the importance of introducing changes in the present Franchising code of Conduct so that all franchisees carry out their business in an ethical manner. The franchisors should own a control over the business processes and procedures of the franchisee to restrict them for indulging in any type of unethical practices (7- Eleven, wages and the Franchise Code: The story so far, 2016)
This can be done by conducting audit of the franchisees on a continuous basis to govern their organizational behavior. The auditing of franchisees on a regular manner would help in the identification of unethical practices prevalent in the organization. Also, strict employment laws should be enforced on the franchisee and also they should be made aware of the serious actions that can be taken against them in case of non-compliance with these laws (Rouse & McKavanagh, 2016). The franchisors on identification of misconduct from their franchisee should terminate the franchisee agreement. The Labor Party of Australia are emphasizing on reforming the workplace laws for ensuring employees protection after the occurrence of 7-Eleven scandal. In this context, it is becoming highly important for the franchisors to analyze and examine the legal action that can be taken against them in case of unlawful practices inculcated by their franchisees (Stricter laws for franchisors? Responses to the 7-eleven wage scandal, 2016).
As per the recent Coalition laws, franchisors are entrusted with huge responsibility of controlling and reviewing the franchisee business practices in order to ensure that they are in compliance with the workplace laws. The franchisee agreement should clearly state the duties and obligations of the franchisor and the franchisee in order to abide by the recent workplace laws. The disclosure of employee wages should be properly drafted and provided to the franchisee before entering into the franchisee agreement to avoid any discrepancy in future (Stricter laws for franchisors? Responses to the 7-eleven wage scandal, 2016). There was no monitoring and reviewing of employment reports by the franchisor in case of 7-Eleven scandal. This encouraged the employers of the company to underpay their employees and lead to their exploitation. Thus, franchisors should continually monitor and review the wages reports of the employees for ensuring that they are not underpaid. Also, franchisors must design a proper communication flow so that employees of the franchisees are able to reach the head office to report any type of issues faced by them. The franchisor should introduce necessary changes in the businessstructure of the franchisees on the identification of any type of problems encountered by them to pay out the employee wages (Rouse & McKavanagh, 2016).
Thus, the occurrence of 7-Eleven scandal has emphasized on the need of adoption of a proper regulatory framework to govern a franchisee agreement. The brand image of 7-Eleven Inc was negatively impacted by the employee underpayment fraud and it has to also provide compensation to the underpaid employees. The changes introduced in the Franchising Code of Conduct would also ensure the protection of good will of franchisors in a franchisee agreement.
Thus, it can be stated after the analysis of 7-Eleven scandal that an organization should carry out its business ethically. The presence of Law of Conduct is necessary in each and every organization to govern its organizational behavior.
1. Identification of problem
Reports state that more explosive allegations have been leveled against Australia’s major convenience store chain with strong claims of a management cover-up of widespread exploitation. It has been reported that 7-Eleven is being investigated over several allegations of wage theft that have seen its network of convenience stores demonstrated as operating “a sweatshop on every corner”. Moreover, it can be seen a fresh claim has emerged that the alleged scam went all the way to the responsible senior manager as well as senior management (abc.net.au, 2016). Reports have revealed a fact that Fairfax Media has stated that it was in possession of thousands of leaked documents that allegedly implicate 7 Eleven’s head office in the scandal. It can be found from the news that the documents contain extracts of the interviews, conducted by 7-Eleven’s field inspectors, in a payroll compliance review of 225 franchisesacross the country. This allegedly found that the vast majority were underpaying the staffs. Most importantly, it can be stated that the alleged breaches of the laws of workplace were heldon the inside (abc.net.au, 2016).
Several news have found out that this organization is accused for paying their employees only $10 per hour and almost two third of the stores are unashamedlyripping off the employees. This rate is half than the actual award, i.e. $24 an hour and there is no existence of overtime reward to motivate the employees. In response to this situation, the Ombudsman proclaimed that it had launched a clear legal proceeding against this organization that allegedly underpinned two migrant staffs near about $50,000 and untrustworthy their paperwork. The workers said that they do not have any sympathy for their bosses (abc.net.au, 2016). One employee was aggressivelyrobbed two times in the stretch of 18 hours. The company has anevidence of cash back scheme;where the employees are paid the exact money on papers, but at the same time, they were blackmailed to give back half of their payment. Most unfortunate part is that the system is still running in the organization. Several media investigation has found that this fraud organization wasaccused, as the staffs were paid as little as $5 an hour and often forced the workers to work for more than 60 hours a week (abc.net.au, 2016).
Besides this severe issue, it has been found that 7-Eleven’s Australian franchised is one of the prominent examples of an ethical failure of leadership. Several investigations revealed the fact that the employees in the organization were forced to work for the long hours a day. Some of the employees were the international students and they were not even allowed to work for more than 20 hours a week (abc.net.au, 2016). The shocking thing in this case was that these international students were highly blackmailed by their respective franchisee and were said that if they complain to fair Work Commission, they would be severely dobbed in for violating their visa regulations. Therefore, it can be stated that the employees in this organization have been suffering a lot due to this overtime of the shift timing and comparatively low wages (abc.net.au, 2016).
Apart from that, it can be found that the company has been severely accused for breaches of workplace laws along with the rampant wage fraud at this corporation. The company has been pointed out for wage fraud of more than $170 billion franchise industry. Adele Ferguson (2015) has stated in the news that the fraud case of 7 Eleven scandal focused not only on a business model that encourage systematic underpayment of the staffs, but also a brutal practice of franchisee to pay the employees below the promised rate. Most importantly, it can be said that this scandal has put emphasis on reinforcing the requirement for the parliament to work together as well as implement Coalition’s measures to deliver meaningful penalties (afr.com, 2015).
From the above discussions, it has been found that this leading Australian corporation has been accused several times from several reliablesources. Since, it is required to mention that the investigation has forced 7 Eleven to repay $26 million in back pay to 680 workers. However, the news has stated that more than thousands of underpayment claims are still being processed and this is the biggest back pay claim in the Australian history. Danckert (2016) has stated that 7 Eleven wage abuse incident has been one of the major lessons for all the directors. From severalreports, it has been observed that since the scandal came into the news, it has had a profound impact on the overall reputation of the brand along with the board of directors as well as the senior executives.This incident is one of the strong warnings to all the board members and the CEOs of the consequences of non-cooperation with the law by their business (Danckert, 2016).
Therefore, it can be mentioned that for the remaining corporate Australia, it is one of the major wake-up calls to make sure that their business operations are in properly in order. Ferguson (2016) has opined in his research work that the surrounding scenario has been becoming less tolerant of rebelliousness to the laws. From these incidents, it can be seen that the organizational behaviors were hampered and the employees were morally as well as financially deprived (fairwork.gov.au, 2016).
The scientific management theoryis one of the major theories that is required to mention here, as this theory puts focus on the research work to develop the best management system for the conditions in the workplace. The managers in this case are responsible to select, train as well as develop the employees with financial incentives as rewards. Here, it has been seen that the employees were highly deprived and not only that, they were blackmailed from their responsible authorities. French et al. (2012) have stated that planning, organizing, staffing the employees as well as controlling are some of the major primary functions of this type of organization and 7 Eleven has been accused due to lack of these major functions. Human relation approach is another major approach that was hampered here and thus the employees complained against the work culture of this organization. Inhuman approach towards the employees affected their performances as well and thus they were forced to complain against the management (Haslam et al., 2014).
Besides, it can be seen that the administrative management theory as well were not followed in case of 7 Eleven. In case of administrative management theory, a clear communication can be seen from top to bottom (abc.net.au, 2016). Here, in case of this scandal, there were no clear communications, as the head executives after being accused said that they were not at all well aware of this situation and thus the situation was drastic for the employees. Hassard and Pym (2012) have stated that the main objectives of the executives are to act as the major effective channel of communication and at the same time maintainsthe smooth organizational operations.
Smith previously was the deputy chairman of 7-Elevan and now the chairman of this leading Australian organization and was highly shocked from the media investigation. This depicts the fact that he was failed to maintain his duty as an effective channel of communication among different parts of the organization and this ignited the situation (abc.net.au, 2016). Therefore, it is recommended that the Executive is required to be vocal enough to act as an effective communication channel. The chairman of any organization must have an in-depth knowledge of all organizational operations from top to bottom level; otherwise it would be tough to deal with any addressed issues in the organization. Therefore, much effectiveness of the chairman is recommended at first (news.com.au, 2015).
Secondly, it can be stated that the employees were highly de-motivated and were blackmailed, so that they do not go the higher authority to explain their situation. They were paid less than the promised remuneration and thus it was the violation of basic human rights. The Fair Work Commission says that when an employee gets paid are supposed to rely on the industry and they must be paid the minimum amount. Here, it has been seen that the employees were paid much less than the promised amount and thus it was the violation of the human rights. They must get the payment properly as per the Fair work Commission of Ombudsman (news.com.au, 2015).
Apart from that, it has been seen that the employees were forced to work for a long time and thus they were highly de-motivated at the workplace. Therefore, it can be recommended that the company must look at this part sincerely, so that the employees do not get agitated to work. Lack of motivation and incapability of the Chief Executive have dragged the situation of 7-Eleven into scandal (planforpersonalsuccess.com, 2016). These parts are especially required to focus on to deal with this scandal situation in this Australian organization. Most importantly, it is required to mention that the international students must not be threatened and forced to work for long hours.
Introduction:
The aim of the final report is to reflect the view point of on the findings of the problems and the issues related to 7-Eleven. Based on the findings, a number of recommendations will be made along with the limitations of the approach that might hinder the operations undertaken by the organization. In this respect, it has to be mentioned that organizational communication plays an important part in shaping the organizational behavior (McShane & Von Glinow, 2015). In order to fulfill these criteria, a number of organizational behavior theories will be discussed and on the basis of these findings, the recommendations will be made.
It has been observed that the organization suffers from a number of problems and ethical issues that has created negative impact on the employees of the organization. The major problems were related to the treatment of the employees in the organization. The employees were treated very badly and they were not provided the fundamental rights given to employees (Pinder, 2014). These situations create a chaotic as well as resentful situation in the organization. If the same situation keep continuing then the company has to suffer badly in its business operation. Therefore, it is important that the organization will look into the matter and approach with a number of steps to improve the degrading situation.
The organization greatly lacks on motivating the employees working in the organization. The employees do not find it reasonable enough to work with great effort and compassion. Therefore, it can be easily recommended that the primary thing that the organization might undertake is to motivate employees. Some of the motivation theories can be discussed in this respect.
Motivate employees:
According to the Maslow’s hierarchy of need, it is important for an employee to be motivated enough in order to increase their approach towards the organizational operation. In the view point of Miner, (2015), it is only when people are motivated with the help of a number of factors that might be in terms of rewards and recognition or in terms of money, employees are found to be motivated and as a result they are expected to give better result in terms of their roles and duties.
Therefore, it can be easily said that one way to fight against the declining condition of the organization, the employees have to be motivate (Greenberg, 2013). It has been found that the employees are not given proper salary and they are in fact robbed. It is therefore, recommended to stop such mal practices and focus on such activities that would result in creating a better opportunity to the employees. In this way, the situation can be made better.
Ethical approach towards working hours:
Every country and organization has certain rules and protocols that states about the ethical approach that should be followed in an organization. It has been found that the employees at 7-Eleven are not given the appropriated value of their over timing (Wagner & Hollenbeck, 2014). In fact, the employees are treated very badly. It has to be said that ethical approach is indeed important in an organization. It is recommended that the management should be careful enough to provide extra pay to the employees who will be responsible for doing over time (DuBrin, 2013). There should be a fixed tome of working and any employee working more than that should be eligible to extra pay. This is a very important concern and when people are given extra payment for their work, the employees are motivated as well. This way, better opportunities of shaping the organizational behavior is important.
It is again recommended that the management should employee a good auditing group that will be responsible to undertake the monitoring process of the entire business (Hogg & Terry, 2014). When the business operation and the working of the employees are audited and monitored, a detailed analysis of the entire working procedure is known. It is based on the understanding of the outcome of the monitoring process; the management might take responsibility to carry on better reaction towards the business operation.
Cross-culture work environment for foreign employees and students:
In the era of globalization and cross-culture work environment, it is important for the team of management to understand the needs and approaches that has to be made to undertake the cross-cultural environment (Robbins & Judge, 2012). It is important to work with the people belonging to different culture and countries. It has been found that there are a number of students from the other countries who are the employees of the company. It has been found that these groups of people are threatened that their passport and the visas will be taken off and that they have to suffer (Nahavandi et al., 2013). These things are needed to be stopped and focus should be made to improve the cross cultural environment in the organization.
In addition to these, it is also recommended that the problems and the difficulties faced by any employees should be addressed and immediate action has to be taken if any employee finds any kind of difficulty. It is only when employees are treated well in the organization, the management can expect to get better result from the employees.
Following labor law to check unlawful practices:
Every country has certain labor laws that respect the working culture of the employees. It has to be understood that the employees are hired in an organization and they are expected to perform their duties well in the organization (Hilbert, 2012). Therefore, it falls under the responsibility of the management of the company to understand the importance and the needs of the employees. The employees should be treated well and the basic necessity such as good wage, protection of health and safety approaches should be made to keep a balance in the organization. Any kind of unlawful or injustice practices should be neglected and whenever required, it is important that get feedback from the employees and make decision to improve the condition of the work place.
Increasing security in the work place:
When an employee comes to an organization, it falls under the responsibility of the employer to think of the security and the safety of the employees. One of the problems faced by the employees at the 7- Eleven was regarding the security of the workplace (Rupp et al., 2015). The employees were not at all safe at the work place and they were usually threatened with their life to the worst extent. It is therefore very important for the management of the organization to understand that serious steps should be taken in order to make the work place secure for the employees.
In order to increase the security of the organization, it is expected that there will be a team who will be responsible to take care of the safety and the security of the employees. Any employee who finds that their life is at the verge of insecurity then strict actions can be taken to combat those situations (Hogg & Terry, 2014). This is an important function of the organization and the management must be responsible to take action against any person who is responsible for not abiding the security guidelines of the organization.
Reduce the work load of the employees:
It has been evident that the employees were over burdened with the work. Moreover, the employees were not given the proper salary or wage that shall be given to them. It is for the same reason employees came out with their resent and aggression. It is for the same fact, it has been noticed that the organization faced some kind of limitations in terms of its business activities. Therefore, it is recommended that the burden of work on the employees shall be reduced and in case if they are made to do any kind of over work, they shall be paid the required amount to money to serve the employees. It falls under the responsibilities of the employees to take note of the condition of the employees and make proper arrangement that shall improve the condition of the employees.
With the detailed analysis of the case study, it has been understood that the management of the organization was not at all bothered about the employees. There was no such approach made from the side of the management about the security and safety as well as about the salary that the employees get. It can be assumed that the management of the company was not efficient enough and that there was lot of crisis in the organization. The company is very unethical towards its approach terms of serving the employees. The employees can be regarded that they remain in a situation where they can face any kind of difficult situation at any point of time. The organizational behavior and characteristics are not at all good enough to support the employees and to encourage them as well (Thau et al., 2015). It is expected that the employees are provided with such circumstances and offers that they shall find it comfortable as well as motivated to work in an organization rather than thinking about the negative impact of their position in the organization.
In this aspect, it can be easily said that the organizational behavior is very poor in terms of managing people and lot of focus has to be made to improve the condition of the organization. It has to be understood that in the competitive era and increasing globalization, it is very important for an organization to understand the needs of the employees and make the business operations keeping the best of the values of the employees (Levine, Thompson & Messick, 2013). However, no such approach is seen in the activities of the management of the organization and therefore, there is a great chance that the organization will suffer great loss in terms of its business activities.
With the complete analysis based on the different reports and the other findings, it has been clear that the organizational behavior of 7-Eleven is not at all relevant and that the management of the company is not at not efficient enough to manage the employees and their demand. It has been found that the employees are treated very badly and unethical approaches are taken to suppress the employees (Hogg & Terry, 2014). It is for these reasons that the employees are to be treated well and that it falls under the management of the organization to think of better actions that shall improve the condition of the organization. Some of the limitations that the approaches to be undertaken by the management of the organization might face are:
The actual requirement of the employees of the organization remains unknown to the actual requirement of the employees. As commented by Kanfer & Chen, (2016), problems can be solved easily when the problems are known from the people who are facing the problem. In order to understand the actual situation of the employees, it is important to ask them about their problems and issues. It is based on their feedback the management of the organization is expected to take proper steps to improve the condition of the employees. However, with the analysis of the case study, it has been observed that the management was not at all interested in understanding the view point of the employees and then frame certain better solutions to tackle the problems of the employees.
Another important limitation of the organization is that there is no such scope of the fact that supports the fact that the management of the company is ready to serve the employees with better opportunities or they might be spending good amount of money on the betterment of the employees. There are many instances that shows that the organization is not at all bothered about the comfort or the safety of the employees of the organization. There is no scope of motivating the employees’ in any term either by the means of providing incentives or by giving them rewards. In fact, the employees are being suppressed and they are not even served with the minimum requirement required to fulfill the objectives of the employees. Therefore, it can be easily assumed that the organization lacks the minimum approach made towards benefitting the employees and it is for the same reason, the employees are found to suffer.
In the view point of Robbins and Judge, (2012), communication plays a vital role in shaping the relationship of people. In case of an organization, both ways communication; between the employees and the management is an important criterion for creation of a good work environment. In order to make things better and to create a balanced life in the work place, it is important that the management and the employees working in the organization shall have proper communication with each other.
Increase of inter-personal communication:
In order to understand individual’s problems or challenges, it is important to increase the inter-personal communication among the employees and the management. Addressing the needs of the employees is important and it is by the means of understanding their consent that a better approach can be made to improve the situation of the operation of the organization.
Increase number of meetings:
By the means of regular meetings with the employees, the problems and the issues faced by the employees can be understood and it is based on the findings that proper actions could be taken easily that would help to improve the situation of the work place (Robbins & Judge, 2012). Therefore, it is also recommended that the management team should call for frequent meetings either in groups or in personal to acknowledge the factors that affect the working of the employees. It is on the basis of the findings, the management might think of better actions that could help the employees to achieve what they want. Listening to the problems and the deficiency of the employees is the key factor that shall help the organization to understand the difficulties faced by each member. Based on the findings, it is important to take necessary action.
Conclusion:
With the detailed analysis of the case study of 7-Eleven, it has been observed that the company is do not pay any attention for the betterment of the employees in the organization. Lack of motivation and unethical approaches towards the employees happen to be the most critical issue in the organization. It has to be understood that the success of any organization depends on the work and function of the employees. Therefore, it is important to motivate the employees as well as take care of their needs so that they also take pride in working for the organization. Another important factor that has been highlighted in the report is the importance of inter personal communication in an organization. The role of communication to address the difficulties faced by the employees as well as to improve the situation where the situation of cross-culture situation rises.
A number of recommendations have been made in the analysis. In this respect, it has to be said that motivating the employees and proper security of the employees are the most important factors that enhances the quality of the performance of the employees. In order to improve the condition and create a good image of the organization it is expected that the management will focus on these perspectives of employees’ performance and then work accordingly.
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