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Contrasting Social Demands with Company Mission

Info: 3756 words (15 pages) Dissertation
Published: 10th Dec 2019

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Tags: Business Analysis

  1. Contents

1 Summary

2. Visualise the Dilemma – Original Approach

2.1. Dilemma: The shareholder vs society dilemma

3. Values

4. Kohlberg’s Model – Becoming a Moral Leader

5. Conclusion

5.1 Key Learnings:

1           Summary

The dilemma concerns the societal demands and needs against the organisation’s goals, mission, values and vision. Are the Global Sourcing and Operating Guidelines in line with actual needs of society?

The garment industry in India contributes 17% of its foreign earnings and employs over 35 million workers across five major garment production hubs. India is the second largest producer of textile and garments with a total export revenue of US$10.17 billion during 2008 -2009 (“Brief Guide to Garment Manufacturing and Child Labour in Garment Sector in India,” n.d.)

India is a country known for the exploitation of child labour that does not place high standards of social responsibility. Suppliers prefer to place a greater importance on the quality of the product but do not exercise the same importance of control on child labour.

In the case of AVANDA, the dilemma for Jake is what will happen to the children working under the minimum age of 15, if his team were to terminate the terms of engagement of the two new suppliers who did not fully comply with the Global Sourcing and Operating Guidelines. However, the working conditions that the suppliers provide are very good compared to a majority of suppliers, namely: new factory buildings, safe working conditions, safe machines and equipment, healthy and safe working conditions and a staff canteen (N. M. Pless & Maak, 2012). (see Exhibit 1)

Jake and his team have to weigh up the very good working conditions against the child labour issue.

In recommending a final decision, it’s important to take into account the various shareholders that could be impacted by any decisions (Maak & Pless, 2006). These are summarised as follows.

Stakeholder Stakeholder Concern How to address the concern Priority of stakeholder concern
Governance Board The use of Child labour work force Undertake a review of all suppliers to ensure they meet and comply with AVANDA Global Sourcing & Operating Guidelines – Child Labour. High
Governance Board The use of child labour work force &

media exposure

Consult with suppliers to understand why they are employing children’s and what support can be provided to the families to avoid them sending their children to work. Turn a bad story into a positive story. Explore apprenticeship program initiatives High
Retail Distributors Prices Increase Address the importance of AVANDA’s Terms of Engagement Medium
Japan K.K Withdraw of shareholders Take the necessary steps to implement the above actions High
Families of children sent to work Children forced to work in poor condition factories or turn to prostitution Explore financial support or initiatives to assist families High

Table 1 Shareholder Evaluation

In understanding the societal issues and the impacts to AVANDA the following action plan is proposed.

Adopt a reconciliation plan based on:

  • Relationships – develop good relationships based on trust, communication and understanding of current issues.
  • Respect – Understanding the social issues faced by families in poverty regions of Bangladesh.
  • Opportunities – Explore opportunities to ensure children gain access to education and have life opportunities.

The following key actions support the reconciliation plab:

  1. Training and monitoring: Develop systems to train and monitor suppliers and contractors to ensure a no child labour workforce situation.
  2. Financial support:  Explore financial support to families forced to send their children under the minimum age of 15 to work.
  3. Apprentice programs: Explore opportunities with suppliers to develop workplace apprenticeship programs to develop the workforce
  4. Government agencies: Work with Government agencies and NGO’s to establish labour inspections programs.
  5. Brands and buying agents: Review all brand buying agents – Low price rates put pressure on suppliers.

2.     Visualise the Dilemma – Original Approach

As discussed by Schraa-Liu and Trompesaars, “today’s leaders need to perform effectively in an environment of uncertainty and ambiguity while reconciling the diversity of interest, needs and demands of multiple stakeholders”(Schraa-Liu, Tong; Trompenaars, 2006 p 107). Adopting mindfulness practices will also allow you develop a greater sense of focus, clarity, creativity and compassion towards your decision making process (Davidson, 2017)

Leaders need to alter their mindset and view the challenges in an open manner and tackle them as dilemmas (Schraa-Liu, Tong; Trompenaars, 2006).

In the case of AVANDA, the dilemma for Jake is what will happen to the children working under the minimum age of 15, if his team were to terminate the terms of engagement of the two new suppliers who did not fully comply with the Global Sourcing and Operating Guidelines. However, the working conditions that the suppliers provide are very good compared to a majority of suppliers, namely: new factory buildings, safe working conditions, safe machines and equipment, healthy and safe working conditions and a staff canteen.

Jake and his team have to weigh up the very good working conditions against the child labour issue.

To distinguish and visualise the dilemma, the four organisational perspectives that Jake faces are represented by each of the stakeholders (see Figure 1).

Figure 1 The Four Basic Organisational Perspectives (Schraa-Liu, Tong; Trompenaars, 2006)

The Global Sourcing and Operating Guidelines: the reference document enforced by AVANDA to guide decisions and behaviour as accompany everywhere it does business (see Exhibit 3).

Shareholders:  Board of Directors, Japan K.K publicly listed shareholder, internal employees of AVANDA (see Exhibit 2)

External Perspective: Indian Government, buying agents, Non-government organisations (NGO’s), suppliers, contractors, Unions, and other agencies

Employees: 11, 400 worldwide employees, Bangladeshi work force, communities

2.1. Dilemma: The shareholder vs society dilemma

The dilemma concerns the societal demands and needs against the organisation’s goals, mission, values and vision. Are the Global Sourcing and Operating Guidelines in line with actual needs of society.

The garment industry in India contributes 17% of its foreign earnings and employs over 35 million workers across five major garment production hubs. India is the second largest producer of textile and garments with a total export revenue of US$10.17 billion during 2008 -2009 (“Brief Guide to Garment Manufacturing and Child Labour in Garment Sector in India,” n.d.)

India is a country known for the exploitation of child labour that does not place high standards of social responsibility. Suppliers prefer to place a greater importance on the quality of the product but do not exercise the same importance of control on child labour. In particular, the garment industry prefers to employ children because they are thin, have nimble fingers and can work quicker. The outcome of these conditions is that by the time they are in their mid-teens the problems they develop are poor eyesight from long hours, their fingers are badly damaged and their growth is stunted by years of sitting in uncomfortable conditions. There are no unions to fight their case. The unfortunate issue is that children form part of the economic security for families in rural and stricken poverty areas to supplement their families income. It is not uncommon for families to sacrifice their children’s education and wellbeing as earning members of the family.

By adopting the Schraa-Liu and Trompesaars reconciliation multi-step procedure, we can summaries the dilemma as follows.

 

Step 1: Elicit the dilemma:

Issue Dilemma
Children employed under the minimum age of 15
  • Non complaince of AVANDA Global Sourcing & Operating Guidelines
Good working conditions
  • Put a stop to children under the minimum age of 15 working – potential dilemma they could be forced to go and work in alternative factories with poor conditions or prostitution.
Child Labour (Prohibition and Regulation) Act 1998 (“The Child Labor (Prohibition and Regulation) Act 1986,” n.d.)
  • Prohibits child labour under 14 years of age working in hazardous conditions
  • Prohibits child labour working in some garment manufacturing industries
  • Prohibits child labour working between 7 p.m. to 8 a.m.
Minimum Wage
  • What are the wages paid to children
Right to Children to free and compulsory Education(“The Child Labor (Prohibition and Regulation) Act 1986,” n.d.)
  • Families sacrificing their children’s education and wellbeing as earning members of the family
Other
  • Local laws and regulations

 Step 2 and 3: Chart the dilemma

This is graphically represented in the following dilemma grid (see Figure 2).

Shareholders vs social needs

Financial Gain

Financial gain through serving community

Long Term Gains

Community Needs

Figure 2 The Dilemma

 

 

Step 4: Define Possible Solutions

  • Review all suppliers in Bangladesh to ensure that they are not engaging in child labour and comply with the Global Sourcing and Operating Guidelines.
  • Take the necessary steps to remove all children employed under the minimum age of 15.
  • Work collaboratively with the suppliers to find skilled adult workers.
  • Explore options of financial rewards/incentives to suppliers for providing very good working conditions to avoid having to find cheap labour to compensate for the cost of providing the good working conditions.
  • Explore initiatives to work with the families with working children under the minimum age of 15 years old to put in place financial support to ensure the children attend school.
  • Explore ways to introduce workplace apprenticeship programs for the educational benefit of younger people as stated in Global Sourcing and Operating Guidelines.

 

 

 

Step 5: Reconcile the dilemma

Global Requirements

Child Labour vs Education

Interaction with stakeholders across different cultures to make decisions

Community Needs

Figure 3. Reconcile the dilemma

Step 6: Reconciliation Action Plan – A strategy for Creating Ethical Trading and Social Responsibility. (see Figure 3)

The following reconciliation action plan is based on the following framework:

  • Relationships – develop good relationships based on trust, communication and understanding of current issues.
  • Respect – Understanding the social issues faced by families in poverty regions of Bangladesh.
  • Opportunities – Explore opportunities to ensure children gain access to education and have life opportunities.

The following key actions support the framework.

  1. Training and monitoring: Develop systems to train and monitor suppliers and contractors to ensure a no child labour workforce situation.
  2. Financial support:  Explore financial support to families forced to send their children under the minimum age of 15 to work.
  3. Apprentice programs: Explore opportunities with suppliers to develop workplace apprenticeship programs to develop the workforce
  4. Government agencies: Work with Government agencies and NGO’s to establish labour inspections programs.
  5. Brands and buying agents: Review all brand buying agents – Low price rates put pressure on suppliers.

3.     Values

As discussed by Draft, “ A leader is a visionary, empowered and committed to serving others and a higher cause” (Daft  2016, p. 176 ). It can be argued that today’s leader needs to develop a new style of leadership placing a greater demand on society to provide good in return.

Leadership is an influence relationship among  leaders and followers who intend real changes and outcomes that reflect their shared purpose” (Daft, 2016,” What does it mean to be a Leader? p. 5). (see Figure 4)

Leader

Figure 4 What Leadership Involves, Source (Daft, 2016)

Reflecting on the Values Circles (Maak & Pless, 2006, p 38) and applying them to AVANDA case study the following were used to guide my decision making. (See Figure 5)

Figure 5 The Core Dimensions of Responsible Leadership. Source (Maak & Pless, 2006)

Societal Values: The unfortunate issue is that children form part of the economic security for families in rural and stricken poverty areas to supplement their families income. It is not uncommon for families to sacrifice their children’s education and wellbeing as earning members of the family.  We can either explore opportunities to provide financial support for families of children forced to work, to allow them to attend school.

Organisational Values: These are the core pillars of the organisations foundations and one must ensure they are not disconnected with the dilemmas one is faced. When making decisions it’s important to recognise and understand these value and consult with the relevant stakeholders at every aspect of the decision making process.

Individual Values: These are the values in which I stand for and play and important part in my decision making process. As discussed by Maak & Pless,” They are developed through life, and are usually deeply ingrained in a persons character and thus part of their identity” (Maak & Pless, 2006, p. 37). They allow me to apply logic, reasoning and creating relationships with both internal and external stakeholder as part of the decision making process.

4.     Kohlberg’s Model – Becoming a Moral Leader

In review of Kohlberg’s model (see Figure 6 ) and reflecting on my initial solution to Jake’s dilemma, it is fair to say a conventional level was applied.  My first action was to put a stop immediately on the use of child labour under the minimum age of 15 pending a review of the global sourcing and operating guidelines. As discussed by Draft, this very much in-line with a level 2 Conventional approach, “ people at this level follow rules, norms, and values in the corporate culture” (Daft, 2016, p. 175).

Figure 6. Source: Based on Kohlberg, “Moral Stage; and Moralization:The Cogrutive-Developmental Approach,”in Moral Development and Behavior Theo1y, Research, (Daft, 2016 p. 174)

5.     Conclusion

As discussed by Schraa-Liu and Trompesaars,” responsible leaders recognise, respect and reconcile the multiple demands, interests, needs and opposites stemming from their intrinsic responsibility towards employees, customers, suppliers, communities, shareholders, the society at large m NGO’s and the environment” (Schraa-Liu, Tong; Trompenaars, 2006, p. 118).

Would I approach the decision making case differently? Yes. By understanding now the relational intelligence (Maak & Pless, 2006) the values circles (N. Pless, Sabatella, & Maak, 2017) and reconciling dilemmas (Schraa-Liu, Tong; Trompenaars, 2006), I would be able to apply these techniques to:

  • Reach deep within myself to find the courage to stand up for ethical principles that may influence others financially or emotionally based on their actions – Courage and moral leadership(Daft, 2016 p. 167)
  • Adopting collaborative approach in resolving the dilemma – Internal organisation vs external stakeholders. Can we work with our supplies to provide financial support to families forced to send their children to work.
  • Allocate the decision making process to those that are closer to the dilemma, supplier and customer – Internal organisation vs shareholders. Built trust with suppliers to monitor the use of child labour.
  • Adopt a relational approach, develop trusting relationship with the suppliers and families with working children
  • Using mindfulness techniques to search within myself as part of the decision making process (N. Pless et al., 2017)

5.1        Key Learnings:

How to be aware:

Individual: What do I need to do to make myself more aware?

AVANDA: What do I need to do to raise awareness within AVANDA?  How to increase transparency.

Vision:

Individual: Where will I be in 5 years?

AVANDA: Where do I see ANVANDA in 5 years?

Imagination:

Individual: Will I be a better leader/manager or a better individual?

AVANDA: Can I influence the culture?

Responsibility:

Individual: I know I cannot fix the child labour issues in India, but how can I maintain my own responsibility as a leader?

AVANDA: How can I deal with the CEO”s and CFO’s behaviour towards the child labour issue and what can I do to avoid a negative impact on AVANDA?

Action:

Individual: How can I motivate and become a good role model that portraits trust and walks the talk?

AVANDA: What do I need to do to find the courage and take action, and voice my opinion on the values and vision?

Society: What can I do that will help the current social issue?

References

Daft, R. L. (2016). The Leadership Experience. Cengage Learning.

Davidson, G (2017). Mindfulness. Mind Training for Responsible Leadership

Maak, T., & Pless, N. (2006). Responsible leadership. Routledge.

Pless, N. M., & Maak, T. (2012). Case Study AVANDA Local challenges for global norms : When is different different and when is different wrong ?

Pless, N., Sabatella, F., & Maak, T. (2017). Responsible Leadership and Ethical Decision-Making. Mindfulness, Reperceiving, and Ethical Decision Making: A Neurological Perspective. Emerald Publishing. Retrieved from file:///Users/Old Mac/Documents/sente_6_library.sente6lib/Contents/Attachments/Pless/2017/Mindfulness, Reperceiving, and Ethical Decision Ma.webarchive

Schraa-Liu, Tong; Trompenaars, F. (2006). Towards responsible leadership through reconciling dilemmas. In Responsible leadership (p. pages 138-154). London ; New York : Routledge, 2006 online resource (273 pages). Retrieved from http://search.library.unisa.edu.au/record/UNISA_ALMA51124968770001831?apicr_redirect=true&cred=BDAAAAA2Dky60-j2lioIpZjTYE-TJOCqMP3m_sDzcgpO-u89ljfsSiceOyqkuC4A32h909djC9H4L7A-ng75bsBKnyeJAoJHBQQ0tQhTCrP0YrJVAg2

The Child Labor (Prohibition and Regulation) Act 1986. (n.d.). Retrieved from https://pencil.gov.in/child labour compressed.pdf

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