Failure of Business Ethics and its Consequences

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Failure of business ethics and its consequences

There is a need of business ethics and corporate social responsibility (CSR) in business so that business can work in efficient way for its stakeholders and can get positive out outcomes for negative out flows. Today organisations have business ethics and CSR policies but they don’t intend to follow it as prescribed. Their aim is to capture the competitive market, which every business has to do but not keeping a side benefit of society and its stakeholders. Business ethics programmes are becoming basic elements of marketing strategies of organisations which stand on three bases first code of conducts which should be undertaken by organisation, second economies and third CSR. “Good business ethics can be justified within a share-holder value maximization model as reflecting long-term enlightened self-interest”(Jones and Pollitt, 1996, online). Economies in business ethics can be justified as individual, corporate and at social level reflecting laws and social norms. This essay discusses failure of some business ethics and CSR according to the case studies where organisation didn’t bother about working environment, labour laws, infrastructural development and providing customer wrong information about the product focusing and how western market turned to be a fashion blunder on Bangladesh readymade garment industry showing how western supplier for cheap labour and production hire suppliers who even don’t have basic proper safety equipment’s and safety measures. Suppliers are just focused on delivering quantity rather than quality and safety of its stakeholders. This essay will also discuss how these western retailers have there code of conducts as well as CSR for their organisation but when they hire these cheap suppliers in developing countries they don’t even bother to check or implement its work ethics on suppliers.

Business ethics is the basic foundation to structure the firm and giving it guidance of how business should run by adopting right process by isolating the wrong one. The correct practises by a company should be adopted i.e. ethical and lawfully right because companies are responsible towards its employee, shareholders and the environment they are working in for example companies should not use child labour or shouldn’t allow its suppliers to use it either, they should lawfully use copyright material and documents for process. To perform and adopt this kind of policies company usually have a codes of conduct to manage, analyse and evaluate how they are working which is in benefit of both consumer and company. Companies try to achieve this usually by consulting different internal and external entities of firm like employee, labour union, government, local community and stakeholders. Here is discussion about some elements of business ethics as it’s a broad concept to discuss. So we would be focusing on some important aspects of it, which is providing proper infrastructure to workforce, amending proper labour rights, proper standards of work condition, compliance culture and rules, norms to be followed before giving contract to supplier assuring no wrong use of code of conducts and at the end discussing corporate social responsibility of companies and its amendment which is a part of a broader term corporate social policies. Most of the organisations are now undertaking corporate social polices to give better and efficient performance for both organisation and society. These include business ethics and corporate social responsibility. Business ethics are the set of code of conducts that systematizes the work pattern of organization and its action, consequences on social stakeholder where as corporate social responsibility sees that the action taken or consequences of work towards society are achieved in the way code of conducts are designed for the betterment of stakeholders. Ethics and corporate social responsibility are different term functioning to achieve a single goal that is betterment for organisation. Ethical analysis raises question for rightness or wrongness, goodness or badness of business behaviour. It also analysis the policies in term of fundamental values like concerning rights, equity, utility, justice and virtue measuring performance issue within business ethic context. Corporate social policies are based on decision-making processes of organisation. This essay discusses about the major western high street companies like Wal-Mart, Primark and Edinburg Woollen Mill and how they get there cheap products manufactured and supplied in their country by putting on stake thousand of life’s and giving its worker worst surrounding to work. Discussing two case of high street fashion industry suppliers and their practises and how their mangers and owners get their work done by ignoring the code of conducts and how these high street retailers are managing to over come and solve the problems in Dhaka. 2013 was the most devastating year for garment industry in Dhaka, Bangladesh where two major garment exporting companies Rana Plaza and Tazreen fashions manufacturing plant collapsed and were stuck with fire they were huge suppliers for major north American, European and British fashion industry. Both factories had large number of workforce and at the time of accident both organization accounted death for more than 2000 people specially female workforce and the investigation concluded that people here were forced to work, there was no proper fire defence equipment’s to combat fire, lack of emergency exits, illegal construction, managers cheating workforce on low wage rates and torturing them not pay if they don’t work extra time. Bangladesh is famous for deadly industry practises there has been similar case like this before workforce had been keeping trade unions warned about the wrong practices of firms and its owner there has been similar cases as Rana Plaza and Tazreen Fashions where building collapsed due to crack in walls, no proper safety measures provided at the time of disaster, illegal building construction, overcrowding factories and dangerous electrical system but this early calls went unheard by government and industry. In aftermath of Rana plaza it shook the world and told them about horrific condition and torture faced by workforce in Bangladesh and how these two incidents has changed lives of thousands of worker and their families. It has showed the world how big companies like Primark, Wal-Mart, Edinburg woollen mill talks about corporate social responsibility but do not follow them in their practices. The incident of Rana Plaza has finally leaded to some positive action by brands, retailers and the government to help adopt fair practices but it’s too late. Still these big brands are not ready to pay the compensation to the families who lost there dearest in this accident. Rana Plaza had large number of workforce employed; it was the garment section workforce, which had to face that fateful day. These suppliers’ factory employees millions of workforce which are the base of Bangladesh’s economy yet their lives are in miserable condition by both government and employers. They are the lowest paid in the world. At the time of Rana plaza collapse minimum wage was 38USD per month. As their business grew this retailers wanted to make huge profits from their clients so they hired cheap suppliers from Bangladesh where these two suppliers from. According to Wal-Mart and Primark CSR report they mention to give employee and workforce safer place to work ensuring on having proper supply chain capacity building, worker safety initiative, women’s empowerment, green and yellow factories and retail market compliance which all ensured welfare of workforce and will ensure that its suppliers also follow the same code of conducts but it all failed or didn’t workout with these retailers and they were just focused of getting shipments from the suppliers and least bothered about how they are getting their shipments and what are the condition workforces are working. According to Wal-Mart report of 2011 in which they mention their visit to supplier’s factories in Bangladesh and found that their fire, electrical and structural safety were not proper and these remain the major cause of not meeting the criteria of companies code of conduct. But than too they didn’t ceased the contract with these suppliers knowing all the conditions later that year in a report from international labour right forum (ILRF) that how labour were discriminated and weren’t paid properly and there working condition weren’t good as well the report also found that suppliers make them do work for 19hrs a day in a week and to get extra work done employers forced workers to do long shifts and locked them in the factory which was the major cause of high death rate. These were also main cause of loosing many lives in Tazreen factory where people were trapped and locked in with fire and couldn’t come out of the factory. In the after math of these two incidents it was clear that high street high street retailers who hired these supplier firms did not inspected there factory facilities and working condition of employee as a part of code of conduct these suppliers were shown and given fake documents and foul information about the working hours of labour they hired later it was found that these suppliers maintained two books of register one for labour and other for retailers. It was responsibility of these high street retailers to have inspection and safety measure checks as a part of there business ethics audit according to the safety and ethic frame work it is responsibility of employer to provide safe working conditions as it helps achieve organisational excellence and integrity in strategy and excellent operational performance to achieve this. Some organisation have integrated four basic fundamentals under their ethics and corporate social responsibility (CSR) the first one is value for human life i.e. life of employee or worker supersedes the making huge profit or achieving the target sales, second integrity i.e. always doing taking up fair practises and telling actual conditions as to what type of conditions and environment that they have to work in as being loyal and committed towards employee. Third justice i.e. doing fair dealing with employee and stakeholders and establishing trust between all parties enrolled in a organisation. Fourth good of the many as it’s based on achieving excellence for all the people working for organisation so that the target can be successfully achieved as a common goal either by organisation or as a team of organisation. But all of this ethics were failed to achieve by either by owner or employer on Tazreen and Rana Plaza where human life was of no value as owners of this factories just focused on producing huge outputs to deliver it to retailers keeping on stake quality of product produced and employee’s safety. As it always responsibility of employer or manager to keep workforce updated about the actual conditions and to eliminate work for safety of employees in this case manager of Tazreen factory where people were locked inside the factory to do extra hours of work to achieve the target sales and to get product ready as soon as possible there was no authority to take immediate action to free people from burning building which was the cause of many deaths but in case of Rana Plaza where employees were came out knowing the actual case where building walls were developing cracks but they were forced to get back inside and to continue their work by the manager by giving them false promise that the repair work has been done and its now safe to work in the factory building which lead to be cause of many deaths. There is equal failure of government and its policy because these policies were never followed or practised by the suppliers both in terms of paying and providing labour proper wages. These suppliers were forcing labour to do more work as well as threatening them not pay if they don’t work for 18-19 hours a day, they were as well locked in the factory. According to the labour laws of Bangladesh government under section 100, 102, 108 of 2006 it is clearly stated that a labour is allowed to work forty eight hours a week if he tends to work above this time he should be paid more than normal wage rate defined by government and there should be a register maintained by the organisation stating labour work hours and extra hours worked by him for securing compliance with the provision of this sections. As well under this act a labour or employee should only be given job if he has an appointment letter of government or identity card with a photograph of his on government card provided to him. But in both incidents it was both retailer and government was to be blamed because no single code conduct was followed by either of them, registers were maintained and recorded but different for retailer and government stating different figures they were getting false record sign by labour as they weren’t literate and educated this was also one the drawbacks of failure of government policies but government should also empowered the labour workforce and educated them for their rights and should have kept a vigil on suppliers false practises. It was equally responsibility of the high street retailers to check and inspected these facilities of suppliers before giving them contract they should have inspected them according to their code of ethics but both government and retailers failed to undertake their ethical responsibility. These high street retailers were getting their garments manufactured in these Bangladeshi factories but were denying that they didn’t new that their garments were manufactured in here but later in the investigation it was found that these western high street retailers had direct links with the suppliers i.e. Tazreen and Rana plaza factories in investigation researchers found brand labels, clothing and documents in the rubble which were linking to major American, European and British retailors. When Tazreen building collapsed it were manufacturing garments for Lidl, Tesco, Primark and Edinburg Woollen Mill But according to retailers only Primark accepted connection with this factory rest denied that they didn’t how their products were manufactured there specially Edinburg woollen mill who was having large consignment shipped from Tazreen denied and their label said manufactured in Scotland but they were originally manufactured here at Tazreen which also show that how big retailers like Edinburg Woollen Mill cheat consumer by giving them false information about product and its manufacturing according to code of ethics and government rules it is mandatory to give exact specification about the product and in the documents found it was clearly seen that this was there unauthorised production done at Tazreen and in accordance to this they didn’t accepted to pay compensation to the families who either lost their family members or got severely injured in the accident and according to corporate social responsibility it was there duty give them compensation and help these family to give them better life and empower them by providing education and work. In the case of Rana plaza building collapse there were highest death rate around 1132 in the investigation it was found that it was manufacturing cloths for major U.S. and European high street retailors and before collapse there was a major shipment of Wal-Mart manufactured was manufactured in Rana plaza. Company did accepted that it had a contract with a supplier in Rana plaza but that ended a year ago because the quality of product didn’t matched the standards required, they were getting work done by labours on long shifts and they harboured child labour which was against the code of conducts of Wal-Mart. In another investigation it was found that suppliers and factory owners in Rana plaza were getting contracts and orders from agents and these agents were giving unauthorised contracts on behalf of the retailors. In the case of Rana plaza building collapse there were highest death rate around 1132 in the investigation it was found that it was manufacturing cloths for major U.S. and European high street retailors and before collapse there was a major shipment of Wal-Mart manufactured was manufactured in Rana plaza. Company did accepted that it had a contract with a supplier in Rana plaza but that ended a year ago because the quality of product didn’t matched the standards required, they were getting work done by labours on long shifts and they harboured child labour which was against the code of conducts of Wal-Mart. In another investigation it was found that suppliers and factory owners in Rana plaza were getting contracts and orders from agents and these agents were giving unauthorised contracts on behalf of the retailors.

To conclude I would say business ethics and CSR is necessary as it basic structure of organisation but it is much more necessary to implement it, failure of not implementing it could again give rise to incidents like Rana Plaza and Tazreen factory where structural damage of building and not availability of safety measures to combat fire this was due to ignorance of code of conduct or ethics that wasn’t practised by suppliers or inspected by high street retailors and there is equal fault of government that it couldn’t inspect these kind of practices which were followed by organisation within the country. There should be proper labour law enforced in organisation and high street retailers should adopt organisational ethics while hiring suppliers inspecting there work facilities, equipment and labour working conditions before giving contract to suppliers and should keep a strict vigil on them and their activities so that no law is harmed like in case of Tazreen where people were forced to work long hours and were locked inside the factory which was violation of labour law. Organization and government as well should educate work force about their laws so that there is no violation with workers and if there is any problem they no what measures to take like if these suppliers cheat them on payment or making them work overtime. Proper working condition should be provided to workforce. It is duty of organisation to build a factory or facilities according to right norms and measures so that at time of any emergency there are enough measures available to save both human lives and equipment and it is also duty of retailors to inspect suppliers factory on same norms and condition before hiring them on contract there should be a factory inspection by the retailors and should as well check for hazard safety measures adopted by their suppliers so that at the time of any emergency workforce have right tools to combat the it with proper safety equipment, which were missing in both Rana plaza and Tazreen factory and people were struck inside the factories as there were no fire emergency exits or any safety device to stop fire in case of Rana plaza where there was structural damage in the building and people were made to work, there was no proper inspection conduct either by supplier and retailor on building’s safety issue which was the cause of collapse of building. In a report by BBC according to their inspection it was found that Edinburg Woollen Mill has been violating consumers law under law right to information about the product to consumer by providing wrong information on labels of cloths which says made in Scotland but the majority of garments are manufactured in Bangladeshi factories which is also a unauthorised production done by company.

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