2019-01-25T10:34:27+00:00 Assignments

discusse and analyze the case Hutong Enterprises (HE) in the light of global corporate governance and CSR

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Hutong Enterprises (HE) Case Study Analysis

This paper discusses and analyzes the case Hutong Enterprises (HE) in the light of global corporate governance and CSR. The company faces challenges where it has been involved in forceful termination of long term employment contracts while suggesting short term contracts for the aggrieved parties.

Contradictions between Espoused Culture

            Based on HE company’s reputable corporate culture, one cannot expect that the company can be involved in such unethical and dishonorable act towards its employees. These contradictions are deemed to occur because the company has well defined values and a culture that promotes the welfare of the employees. HE’s HRM policies are founded on the company’s core values which calls for maximization of the employees’ value. This is where the company promotes the well-being of every employee and aims at maximizing the benefit of the employees. The company’s actions hence contradict its own core values in respect to the employees’ well being. It is unanticipated to establish that Hutong Enterprises is involved in practices that leads to coercion of its esteemed employees and provides no remedy to ease the situation.

Garriga & Melé (2013)  in a study argues that it is very complex for an organization to implement all the corporate governance and CSR principles without the slightest deviation since the reality is a bit complex than what is expected. The authors further argue that it’s very challenging for global corporate organizations to abide by their core social corporate values at all times due to the changing nature of the external business environment. In the case of HE Company for instance, the company decides to relieve around 5000 employees from duty as a result of the institution of the 2005 Labor Contract Law. The contradictions between the organizations’ CSR values and consequent actions are therefore expected from time to time based on the changes in the external factors.

The contradictions can only be resolved through dialogue and ethical consideration of the organization upon its actions towards the employees. Although the company may have been forced by the prevailing circumstances to go against its culture of maximizing employees’ well being, it should reconsider its actions based on the extent it has aggrieved them. Additionally, the company should adapt to a culture that is not likely to harm either the stakeholders or the shareholders such as HE’s “mattress culture”. The company should identify a better approach to achieve maximum benefit from its workers other than its current approach. Brammer, Jackson & Matten (2012) indicated that business organizations should always take accountability of their actions towards the people inside or outside the organization. Multinational companies are expected to promote quality life among their workers and customers by avoiding business cultures that seem to hurt this principle.

Perspective of the Challenges

            The challenges that HE Company is facing revolve around ethical issues rather than moral issues. This is because the issues under consideration prompt the organization to evaluate alternatives on whether their actions are right or wrong. For instance, considering the first challenge that HE is facing which involves termination of 5000 employees’ long term contracts, it leads to the question of whether the company right to do so wrong. In the second scenario where HE emphasizes its workers to uphold the “mattress culture” leading to some committing suicide, it begs the question of whether the company is correct in demanding such from its employees. Moral issues on the other hand involve a misconception of belief between parties where either of the parties clings on to their beliefs and assume them right (Craft, 2013).  This however is not the issue in this case since the issue at hand begs the question of whether the actions of the company are justified or not.

The company’s actions seem selfish since they are aimed at maximizing their benefits and do not take precaution to the effects caused to the employees. In the first account for example, termination of 5000 long term employment contracts only maximizes the benefit of the company in the light of the new labor law with little consideration on the impact to the employees. In the second dispute account, the “mattress culture” demanded by the organization fails to consider the impact it brings upon the employees and the company is only interested in leaping high productivity. The theory of virtue ethics requires parties involved in an issue to maximize the benefit of each other from their actions. An action should not benefit one party while the other suffers. The theory holds that selfish acts are unethical and wrong. Connectively, the utilitarianism theory of ethics argues that for an action to be ethically correct it should minimize the amount of pain and maximize happiness (Merritt, 2000). This is contrary to the actions of HE.

Implications of the “Tiger Culture”

The “Tiger culture” adapted by HE does not inevitably lead to exploitation of the workers but it depends on how the company practices it and its mode of corporate governance and CSR. It is possible for the company to accommodate it needs and those of its employees while practicing the tiger culture. Every multinational company is committed to achieve competitiveness in the global market through high quality service and output. These can merely be accomplished through a devoted and engaged workforce whereby the workers are expected to exert extra effort to achieve the organization’s goals. With adequate adherence to CSR, the “tiger culture” cannot cause misuse of workers. Raelin & Bondy (2013) indicates that socially responsible organizations give room for transformative leadership hence enhances the accountability of the organization towards its shareholders, stakeholders as well as the employees. It also gives room for the employees to communicate their expectations from the organizations and the reward for their commitment and engagement. According Mateescu (2015), effective corporate governance and CSR enables an organization to harmonize its objectives with those of the employees to avoid workers exploitation.

CSR and proper governance systems create a balance between the needs of the organization and the needs of the people inside or outside the organization. However, some companies fail to observe the global corporate governance systems leading to affliction of some parties dealing the organization (Peni & Vähämaa, 2012). Although, HE Company complies with the local laws and regulations its policy on employee commitment does not seem equitable. The “tiger” culture adapted by HE seems to exploit its workers due to lack of additional compensation for the extra effort on the job. The culture cannot lead to exploitation where the company is socially responsible for its workers. Companies tend overlook the needs of their employees in their quest for maximizing profits while their CSR are only concerned with the external business community. Business firms are currently adopting strategic CSR which involves actions that oriented to maximize the social performance of the organizations which indirectly induce higher profitability. It is possible for an organization to achieve its business objectives while at the same time maximizing the needs of the workers (Garriga & Melé, 2013).

Advice to CEO

            HE CEO needs to ensure that the actions of the company are motivated by ethical guidelines. This is where the CEO should evaluate every impending action that is likely to affect people within and outside the organization in the light of ethical principle to ensure that such actions are the most appropriate. For instance, termination of permanent employment contracts without any ethical consideration was injurious to the employees. It would hence be necessary for the CEO to seek ethical guidance before taking such actions. Additionally, the CEO should ensure that future actions of the company do not contradict the core values of the company. Although HE is very committed to recognize the effort and contribution of its employees based on its core values, it is visible that the company contradicts the same through its actions. For example, the company’s mattress culture contradicts the organization’s health and safety policy. Finally, the CEO should publicly apologize to the employees and provide a remedy for the current issues facing his company. This may help in improving the company’s image to the society.

Advice to Union Leader

            Jensen (2011) indicates that a union leader should lobby the complaints of the employees to the relevant legal authorities and to the board of directors. Further, the union leader should bargain for equitable treatment of the employees. The union leader should not allow that the company complies with the codes and ethics of governing the employees. He should regularly review organization’s practices towards the employees especially those that touch on ethical responsibility of the organization towards the workers. In this regard, he would be in the best position in whistle blowing the unethical deeds of the organization. According to Lakshman et al (2014), it is the responsibility of a union leader to ensure that an organization does not mishandle its employees hence he should always be upbeat with the slightest complaint of the workers and provide a remedy.

Conclusion

            Good corporate governance is the key to excellent public relations within and outside an organization. Where the resources are too scarce to meet the needs of the people in an organization, good governance is the only factor that facilitates their welfare (Chen, Li & Shapiro, 2011).  The HE case serves as an example of corporate governance and CSR issues in companies in the global business environment. It is visible that sustainability and critical adherence to CSR by organizations is challenging and the company’s actions may not correspond to the stipulated CSR values (Brammer, Jackson & Matten, 2012).


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