With increasing competition between firms due to globalization, the success of any organization today heavily depends on how the organization relates with its customers and publics. Such relationships define how the public will treat the organization and its products. Ethics and social responsibility of companies and organizations has been a subject of interest in the recent past. The rise in knowledge of consumer rights and consumer protection rights by the law has been the major cause for the establishment of public relations departments charged with managing relationship between a company and its employees, a company and its customers and a company and its neighbors. These departments concentrate on protecting the image of the company through formulating measures and procedures to be implemented.
Such procedures include following ethical practices. This paper seeks to establish business code ethics of Nike Inc. Nike Inc has had its image change from time to time with changes in its corporate social responsibility programs. The company has seen the worst in terms of acute public criticism for its unfair trade practices. The chief defense companies in such situation provide as the cause of such occurrence is because of information difference between the company and the public with the company claiming that the public is misinformed or does not have sufficient information about company operations. This paper will establish the relationship between Nike Inc and its employees, Nike and its customers and Nike and its publics and competitors.
A major analysis of Nike’s code of ethics for employees, customers and other publics will be provided by the paper. A collection of past ethical praises and complains from Nike’s customers, employees and its business rivals will be provided. The paper will also strive to ascertain the degree of truth in such allegations through researching on the ways that the public relations department handled such issues.
Nike Inc rose from a simple partnership between two people to be one of the world’s biggest brands. This success has attracted a lot of attention and focus on its business strategies. Despite its glamorous reputation, Nike, like many of the world’s big brands, has had to fight a lot of critics accusing them of unjust business practices. These criticisms may or may not hold any truth but they definitely have had an impact on the reputation of the company and how the company and its products have been perceived in the market. Before a perfect understanding of the business ethics of Nike is established, it is imperative to establish a general understanding of ethics and corporate social responsibility in the society today.
Today, many organizations seek to be on the good side of their publics. This pressure to conform to the rules of business practices emerges from the current consumer awareness on their rights and also the rights of people living in areas where a business is located. Ethical regulations are increasing by the day with business losing most of their ground to consumer and public rights. Also, organizations are using any possible strategy to make profits through impressing the public by conducting themselves in the most descent manner such as preventing human right violations and environmental pollution. Corporate social responsibility is the way that organizations use to effectively address these problems.
The degree of their effectiveness in solving these problems cannot be clearly established as it depends on the problem and the approach used to solve it. Different groups have made it their job to ensure that businesses certain business code of ethics which is exercised through organizations improving their corporate social responsibility. Initially consumer campaigns organized by the government were the major tool used to pressurize businesses to conform to these regulations. Over the years, nongovernmental organizations have joined in and almost taken over the cause. With a high number of corporate scandals witnessed in the 90s, governments imposed ethical regulations to be followed by any organization wishing to be in business.
The major issues that these regulations govern include, labor issues such employing, compensating, and firing of people in organizations, quality of products, environmental pollution among other issues. Business ethics is closely related to corporate social responsibility. As already mentioned, they form the core of business relation to the public. These strategies vary from organization to organization. Although business ethics and corporate social responsibility may be related to the extent that one can be used in place of the other, there are major differences between the two strategies. Providing the difference between the two is beyond the scope of this paper.
The paper only focuses on providing a clear understanding of business ethics. This knowledge will be important in analyzing the business code ethics of Nike Inc. Business ethics programs gained popularity after governments started to provide regulations, corporate fines and sentencing guidelines to be used for companies which do not follow these guidelines on how they are to treat their publics. Business ethics therefore evolved over the years not by the will of businesses but by the fear of the consequences of not implementing these programs in their organizations. In businesses today, corporate ethics programs are designed to provide methods that can be used by an organization to manage risks by providing a systematic early warning mechanism that the organization can use so as to avert such risks. They protect the organization from harm on its reputation by first addressing the ethical issues that can be the possible sources of harm. These ethical programs help the organization be able to identify the acceptable and unacceptable behavior then the organization will be saved from potential damages that are related to loss of contracts, penalties arising from such actions and also damage to the organization’s reputation.
This may seem different from the functions of corporate social responsibility regulations that ensure that organization’s have a positive impact in the places that they operate in. Although the difference between the two may seem to be very wide, it is important to note that both of them aim at protecting the reputation of the company. Business ethics in the above statement works as a strategy of averting possible issue that may affect the reputation of the company. This may make business ethics look as a means of future potential issues that may affect the reputation of the company. It is worth noting that individuals working in business ethics departments are also involved in solving already existing ethical issues that may affect the reputation of the organization.
While solving an already existing problem may seem to be an effective way of addressing such problems, it also helps in minimizing the damage that can be done by such problems. Corporate social responsibility programs in organizations build and support what the company thinks should be the appropriate way that certain things should be done in the society. For example a company manufacturing cabbage disposal pins may take it that they have made it their business to see that the environment is clean and they are putting in place measures to ensure that the objective is realized. They may use this to avert future ethical problems as well as ensuring that their organization profits from their strategies.
In some cases, corporate social responsibility programs act as a marketing strategy of an organization. Given that employees of the organization are involved in the corporate business ethical programs of the organization, such programs therefore involves advising the employees of the organizations to be responsible on their behavior towards fellow employees and also the company’s business associates and stakeholders. Business ethics therefore ensure that areas of potential harm in the relationship of an organization and its suppliers, shareholders and its customers are established and the corrective measures are taken.
Such problems as un-honest contracts or faulty supplies information or even incorrect profits information published to the shareholders of the organization are provided by the code of ethics in the organization. Such code of ethics also advice the organization’s public on what they can do whenever the organization does not deliver what they promised. Business code of ethics also focuses on protecting the well being of those in the organization.
Business ethics help show the responsibility of an organization to its stakeholders especially those they deal with directly. For example, an organization may establish business ethics program aimed at providing protection of its employees against such issues as sexual harassment by their superiors, racial discrimination in work place, providing equal pay for its employees and others. Such programs aim at protecting the rights of its employees. Although there may be legal regulations on such issues, very few organizations today put in place ethical programs to protect individuals in the organization. There are still high numbers of unethical practices by organizations today despite the harsh government regulations. Still, the public today more than ever before demand that organizations be responsible for their actions
Nike Inc has grown to be one of the world’s big brands. It owes this big growth to its customers, shareholders and its employees. This growth has seen the company establish numerous branches in many places in the world.
This growth comes with is a big responsibility. As expected from a company of its status, the company has put in place business ethics to standardize its procedures in the different regions. These procedures help regulate its business practices such as pricing of their products, employees treatment and working conditions in their factories.
One of the key aspects in Nike’s business ethics is recognizing that they have major competition from business rivals. These competitions should not be a reason for the company to use unethical means to gain advantage and realize profit in its business (Nike Inc. CR report, 2007-2009). First and foremost, Nike’s success or failure is as a result of the collective actions of all those in Nike. This therefore implies that the action of every individual in its team will affect the reputation of the company in one way or the other. Employees therefore are expected by the company to be trustworthy, honest, fair, and loyal to the company as well as its customers.
Every individual is made aware that their actions can affect the reputation of the company hence they should conduct themselves in ways that promote the image of the company. This is achieved through ensuring that they use proper judgment and common sense when they are conducting business for the company (Nike Inc. CR report, 2007-2009). Nike also is aware of the importance of providing a good working environment to its employees. A working environment that is free from the discrimination, harassment of any type is important in improving the performance of the employees and also their personality. With this knowledge, Nike ensures that employees work in a harassment and discrimination free environment.
Working environment in Nike is free from discrimination or harassment based on sexual, racial, gender, age, religious, ethnic, sexual orientation, marital, ethnic, military status, political affiliation of an individual. This regulation helps to put in order the role of managers, subordinates and other employees of the company in relation to protection of the above right of every individual in the company. The regulations manage relations between co-workers, managers, customers, visitors and vendors in the organization.
Having identified the ethical codes to be observed, the company has also established an elaborate system that can be used to report cases of harassment and discrimination when they occur. It should be noted that all cases of harassment and discrimination may not be legally protected. Such cases as abusive language, rudeness to superiors, insensitivity, and intimidation to a person or a group of people may not be protected by the law and therefore cannot be counted as discrimination or harassment.
In such cases, they are counted as discrimination and harassment as long as they do not follow company policy. This is because all the employees of the organization are expected to maintain a working environment free from any type of harassment and behaviors that are considered inappropriate. Employees are advised by the company to report any cases of harassment or discrimination that they may have experienced or witnessed in the company. Another aspect of Nike’s business ethics is its commitment to realizing that their business does not in any way affect the environment. The company states that it is committed to ensuring that all their business practices follow all environmental and health safety laws and regulations. Employees of the company are advised to report any of its business practice that they think that is unhealthy, hazardous to the environment and to those working in the organization. Nike Inc. is committed to ensuring that their business practices in the environment are socially responsible.
This is through use of scientifically tested and at the same time economically viable technologies in the business practices Given that not only the employees of Nike represent the image of the company, its sales people, representatives, temporary workers, consultants and contractors are also expected to promote the company image by following the regulations for company employees as long as they are conducting business for or with Nike. The company therefore diligently selects those who will represent them or those who will conduct business on their behalf. The company also retains those who have in the past carried out their selves in the most appropriate conduct. This means that the company may not retain any of these people or companies whenever their conduct may be questionable.
Even if Nike conducts itself in the most respectable way and its business partners do not follow the same, Nike’s reputation would be still at stake. This therefore means that Nike should also ensure that their sourcing practices should also be socially responsible. For example industries that manufacture Nike’s products worldwide are expected to follow the same code of ethics.
Also, independent contractors should be socially responsible to ensure that their working environment conforms to the expectations that the company has put in place. Also, as a business leader, Nike does not only do what the law expects them to do but what they as a company think is a socially responsible practice. This social responsibility is also expected of Nikes partners and other business associates. To achieve this, the company has developed codes of practice which is to be followed by its partners and associate. These codes of ethics ensure that the business associates and partners provide a good working environment for its employees through ensuring that there is no harassment, and that the places of work should be safe and healthy. Every member of Nike’s team is expected to report any type or traces that indicate these codes of conduct are not properly followed by any of the business partners. Another aspect that Nike watches in its business practices is by looking at the products that it produces. Nike is always committed to providing innovative and inspiring products to its consumers.
These products sometimes may not be safe for use by the customers and may jeopardize the health of its users. To effectively solve this problem, Nike is committed to making sure that its products are first tested for safety before they are released to the public. This responsibility to the public has given Nike a competitive advantage over its rivals. This is because such practices ensure that the company gains the confidence of the consumers and hence the competitive advantage over its rivals. All products that are produced by the different Nike manufactures are expected to be designed and then produced to meet the standards of Nike before they are released to the market.
Nike’s business ethics also touches on its import and export laws. Nike ensures that it complies with the laws on export and import in all the countries that they do business. In some cases, following these rules may result to loss of some business opportunities but still ensure that Nike’s imports are not delayed or penalized. It also means that Nike benefits from reduced import duties and therefore can benefit from other opportunities. In order to achieve this, Nike ensures that it is aware of transactions and the relevant regulation that are related to doing business in the place they are working. Nike is also expected to follow all anti-boycott laws in all the countries that they do business. Anti-boycott laws are laws that ensure importers do not discriminate on a single exporter. Another important part in Nike’s business codes of ethics is on its privacy.
Nike has the right to protect its information, ideas and other intellectual properties. In most cases, employees of Nike are aware of the company’s confidential information. Such information may include, organization plans and strategies, sales figures, designs of its products, negotiations and deals between the company and others, trade secrets, software and other information from suppliers and customers. Given the nature of business that Nike is dealing in being very competitive, disclosure of such information to the company’s competitors can be very fatal to the survival of the company businesswise. To ensure that it correctly insulates itself from such occurrence, Nike expects all its employees to get its consent before they reveal any information about the company for any purpose be it commercial or private reasons.
Employees also are expected not to reveal any of the company’s information through electronic or other means to the public. Another part in Nike’s code of ethics is on records and reports for the organization. Employees of the company are required to be very thorough in their reporting by ensuring that they do not make any false or misleading statements. This also goes to employees who run records in the different departments in the organization. The employees are expected not to make misleading statements, omissions, artificial entries, or misrepresentations in Nike’s accounting records or other documents for communications purposes. The company expects that employees keep proper records for transactions or any dealings done by the company.
The company also expects its employees to be truthful and ensure that any communication to the government and public for whatever reason should be factual and they should be keep records that can be shown as prove or evidence. This information should also be complete, accurate and are provided whenever they are needed. The employees are also expected to safeguard these records information in a manner that can be easily accessed whenever needed by company officials. Records are also to be stored and destroyed in accordance with the company’s records policy. All employees of Nike and its representatives are also responsible for safeguarding the company property by handling them with care and ensuring that they are not misused. Still on matters information, according to the company, its computing and all the related information are considered corporate resources and they have an immense value to the company. Nike therefore recognizes their importance by ensuring that they have implemented proper security to prevent any cases of unauthorized entry or access to such information.
This is to prevent any cases of unauthorized disclosure, modification, or destruction of information considered by the company to be private; and also so to prevent any cases of disruption of disruption of communication between the company and all its publics. This code of ethics further provides that Nike is recognizes the importance of computing and information processing services to its competitors and therefore is willing to abide by the rules and regulations that ensure that Nike will not use the other companies’ software without license from them. Nike also ensures that its employees use computing and other information processing assets of the company in the internet or any other electronic online communication in accordance with the objectives of the company. Given that Nike values its private information, it is aware of the importance of individual privacy. In this, the company is willing to ensure that the privacy of their customers is maintained at all costs. All private information of the employees of the company is guaranteed by the company. All employees of the company are therefore not allowed to use the private information of the consumers or fellow employees in ways that they are more than required to accomplish a given task.
This means that employees of the company are not allowed to use customer or fellow employees’ private information for personal benefit or benefit to others other than the company. On Fraud and theft, the company expects its employees to conduct themselves in the most honest way possible. Employees of the company are expected to be honest, trustworthy, loyal and fair. This therefore means that acts such as theft, embezzlement of property, fraud or misappropriation of property of Nike, its employees, stakeholders and the customers of Nike is highly prohibited and the company will take serious legal actions against employees who condone or engage in such behavior. Nike also values integrity and honesty. These values are very important when making important decisions such as who to be in business with or fixing prices on company products or even deciding the quality of products or service to the company customers. These values are also so important to the company when they are choosing their suppliers or distributing agents for their products.
Nike employees are therefore expected to make such decisions based on the proper factors such that employees are expected not to accept or receive any gifts or any favors when there is an expectation of exchange for another or returning a favor or favors. Any employee that receives a gift, gratitude or any favor that falls outside company regulations and that such favor may hinder or influence their proper decision making, are expected to report such cases to employee relations departments of the company. Employees of the company are also advised to seek information regarding the regulations that have been put in place by the company to regulate such occurrence.
Employees therefore are expected to report to the company such occurrence before they make the decision to receive such favors. Equally, the company expects its employees not to give out gifts, gratuities or any other favor so as to influence the decision of other business or government officials into returning favors. The company employees are expected not to make any improper payments to government or civil service officials or other individuals so as to influence them. In accordance with the U.S law on Foreign Corrupt Practices Act, it is criminal for any of the Company employees to make any payments to foreign government officials, civil servants, holders of any public office and also political parties and their leaders so as to gain favors related to obtaining business opportunity or maintaining business continuity of the company in that country. It should be noted that some countries openly accept the use of bribes; however, this does not mean that Nike will not be committing a crime under Foreign Corrupt Practices Act. In some countries the Foreign Corrupt Practices Act allows companies to make some special payments under given special conditions. Nike employees in such situations are advised to contact the company’s legal departments so as be advised accordingly on such matters.
Today, everybody wishes to diversify their ways of earning their income. Every employee has the right to make income by engaging in business activities other than the job they are engaged in. Nike fully recognizes this right of their employees and therefore does not restrict their employees from engaging in business, financial or employment activities besides their job at Nike. However their engagement in those activities should not in any way conflict with the responsibilities at Nike beside them being legal. Nike expects its employees not to engage in business activities that will conflict with their current position in the company. This means that the employees of the company are not expected to use their positions in the company for personal benefits.
For example, employees of the company are not expected to use their position in the company to extend favors to people or business owned by people that they are directly related. An employee is expected not to deal on behalf of the company with businesses owned by people they are directly related as this may affect their judgment and they may easily give out favors that may conflict with the company interest. Conflicts of interests in the employees of the company is recognized by the company and therefore the company advice its employees not to take opportunities to themselves that are discovered through the use of property of the company, information or position. To easily exemplify this, Nike will not allow their employees to be owners of businesses that directly deal with Nike such as suppliers. This is because in many ways such employees may be tempted to irregularly award favors to themselves (their businesses) through the use of their positions in the company. When employees work at Nike, they may become aware of several company secrets, property or information that may not be known by anyone outside the company. Such information may include material information that may influence people take interest in the company and may want to be financially involved in the company activities for example through buying company shares or buying the shares of another company that is doing business with Nike now or in the future.
Such dealing is known as insider trading. The employees of Nike are expected not to use such material non public information for their personal benefits or those of people they are closely related to. The company has policies against such dealings and it is also punishable by the law. Employees are prohibited from deciding to buy shares or stocks of the company based on information about the company that is not available in the public domains. The Employees are also not expected not to pass information that is not available to the public that may influence their friends, family members and spouses to buy stocks or shares of the company or business that the company deals with.
This also applies to cases where such material information may lead to the employees or their relation disposing through selling their shares in the company through stock exchange. Today, there are numerous penalties (criminal and civil) for insider trading. Nike is aware of the nature of its business being very competitive. Such situations require that the company markets its products anywhere in the world.
Such cases may lead to cases where business may use unfair means to gain the competitive advantage over others. Nike is committed to using just means to compete with its rivals in the global market. The company employees are therefore required to comply with all the antitrust and trust laws irrespective of the place they work in. Nike expects that all its services, products manufacturing, sale and distribution must comply with the highest ethical standards. Antitrust laws are laws that restricts actual or potential business competitors agreeing to fix prices, boycott certain suppliers or consumers, fix bid or even control the production and distribution of a given products or product line.
Other laws prohibit the company from fixing prices for its products in dealer shops or disparaging their competitors or misrepresenting their own products or services. Other laws prohibit the company from stealing the trade secrets of their competitors to use it against them. They also cover issues such as issuing bribes and kickbacks. Antitrust laws are enforced by the government and failure to comply with these laws attracts many penalties and fines and in some cases imprisonment.
These laws are basically aimed at ensuring that there is fair competition between businesses and serves to protect both businesses and their consumers. Employees of Nike are expected to comply with the laws, rules and regulations that are about competition. They are expected by the company to report any cases that they suspect of non compliance. This means that employees of the company are expected to compete with others but fairly. They should not use deception, misrepresentation, and use of confidential information of their competitors to gain unfair advantage over their competitors, customers and even suppliers.
It is very often that big companies sponsor political candidates of their choice because they have the capacity. In Nike, the company does not allow their employees to use company money and other resources to sponsor political parties and their leaders unless in cases where the law permits. This also applies to use of company resources for political causes. In any given context there are individuals who will still do wrong despite the regulations being very clear on such matters. Also in any given context, there are individuals who will still do the right thing and report any cases that do not follow company protocol. Such individuals, the later, more often than not suffer for their actions of reporting errand individuals to the superiors.
Such actions are called retaliatory actions. Nike is aware of this and requires that all its employees respect the regulations of the company on such matters. Nike expects its employees to report any incidence of harassment, discrimination or violation of any law or company regulations that they suffered or witnessed. Nike will take the necessary action and deal with such situations appropriately. Nike also does not tolerate any cases of retaliation against an employee who reported unlawful activities or violation of company regulations. Nike is a big company and is located in many countries. Given its status, it has many laws and regulations to govern many of its practices.
Given that these laws and regulations may vary from region to region according to the business practices of the region, Nike makes sure that its employees are fully informed what is expected of them. Such communications serves to inform the employees on how they are to conduct themselves and the consequences of their actions or inactions. This is because some actions of the company employees can seriously affect the performance of the company, injure the reputation of the company or may lead to the company being fined for the actions of its employees. Because of this, the company has taken it to be their responsibility to regularly update the employees on their performance. Such information tells the employees what they ought to improve and also suggest behavior change so as to improve on their performance. In some cases, the management of the company may see that the performance of an employee may be beyond help and there is no way that they can offer positive contribution to the company or the employee has through their behavior or action has seriously affected the performance or reputation of the company and their continued stay at the company only leads to further damage. In such cases the company leaves managers the discretion to handle such cases in ways that they see fit such as termination of contract or taking legal or civil action against such employee. The question of ethics and what is right and what is wrong is not always as straightforward as it may seem.
Ethics is a very complex matter and requires a lot of knowledge for an individual to decide what is ethical or unethical. In some situations, some action or behavior is considered ethical under a given context and is not ethical in another. This means that a lot of ethical concerns are more contextual and requires an individual to have a thorough knowledge of their surroundings. For this reason, Nike code of ethics is not fixed as it allows adjustments to be made to comply with what is expected to be ethical in the different cultures of the locations they operate in.
Employees of Nike are therefore expected by the company to be fully conversant with the cultures and the laws of the places they operate in. This is achieved through the company providing legal and cultural advice to its employees so that they can handle the different situations they find themselves. Whenever they are unsure of the correct action to take, Nike employees are advised to always contact their managers for effective advice. However, there are guidelines that have been put in place to help the employees whenever they want to decide if an action is ethical or unethical. Employees are always advised to use it before deciding they handle any activity that may seem to be unethical. Before employees decide on anything they need to know whether what they want to do is legal, the company policy on such action or behavior, how the action or behavior is going to affect others and how people will react to it and also how they will feel after they have made their decision. Although the above guideline may be simple, it always helps employees whenever they are in a dilemma in solving ethical issues. As already mentioned, Nike depends on its reputation and customer trust for its growth.
This means that the company values the information that public offers about the company and its employees. Some of the ethical situations may not be as clear when one is in the organization as when one is outside the organization. For this, the company takes public opinion on their actions very seriously. Nike has established toll free lines which can be used by the members of the public to report cases of injustice or unethical doings of the company or its employees. The company promises to investigate and take necessary action against any of its errand business partners, suppliers and employees. The company also promises to change its business procedures to suit the culture of the place they do business in. This is in line with realization that culture is dynamic and some actions or behaviors that were considered ethical may change to be unethical due to change in culture and expectation of the people on the company.
Communication between the company and its employees therefore is very important to the growth and survival of the company in many ways. Communication between the company and the public is also important for the company in cases where employees fear retaliatory action on them whenever they report errand members of the company especially reporting one’s superiors. In recognition of the above, Nike has put in place elaborate communication lines to be used by the public to contact the company. These lines are toll free and are available in all the areas that Nike does business.
Also the public can directly make their complain directly to Nike’s head office whenever they feel that the top management in the local Nike is not taking necessary action or its top management has been implicated in some of the unethical dealings that the customers wishes to inform the company.
Many large multinational organizations have put in place code of ethics that help them regulate their business activities and also maintain their profile in the public. The numerous social responsibility acts by organizations also is a marketing strategy aimed at improving the company image in the public domain. Today, it is impossible to find one single multinational corporation or business that has not publicized their company business ethics or do not reveal their corporate social responsibility programs. As long as these companies face competition from their rivals, they always use their business ethics and social responsibility programs improve the performance of the organization through creating a positive image for the organization in the public domain. Today, the public demands organizations to be more socially responsible.
Organizations are expected by the public to conform to the social rules and be ethical in all their operations. Long gone are the days when industries and business went on with their operations without caring the impact of their actions to the immediate surroundings. Today, companies are not only expected by the public to care for the actions for the environment but also help those who live in the community they are doing business in. The law expects the businesses to make sure they take care of the environment through checking their industrial wastes to ensure that they do not cause environmental pollution. On the other hand, the public expects the business to be socially responsible and introduce activities that are aimed at improving the livelihood of people in the community. This is achieved through businesses establishing corporate social responsibility programs.
Given that businesses are well aware of the above expectations of the public, they use these strategies to market themselves through improving their image in the public. A business that has a positive public image competing with a business with a bad public image will definitely have an upper hand in terms of improving their performance through improved sales, finding suppliers and also employee commitment. This therefore has triggered the rush by organizations today to improve their public image through corporate social responsibility acts. Another approach is through use of ethical standards.
Ethics represents what is considered the right thing to do under given circumstances. Because businesses want to be seen by the public to be doing what is considered right and that their employees have the right behavior and act ethically, businesses publish their code of ethics to improve their profiles in the public domain. For reasons of marketing, codes of ethics are made and published by relations departments of companies. The degree to which the employees or the company itself follows these codes of ethics is not very certain. There are many cases where organizations have very impressive social responsibility programs and their employees do not follow the simple regulations and expectations of the society. From these, we can easily deduce that codes of ethics are just but tools of marketing. However, there are companies and businesses that stick to their rules of trade and are socially responsible.
Their employees follow the codes of ethics of the organization. The pressure to gain competitive advantage in business is the main reason why organizations and their employees fail to stick to their codes of ethics. Like many other businesses in the century, Nike Inc has been reviewing its codes of ethics from time to time to match with the times that it has found itself in. The changes in legal, cultural and societal expectations on businesses today make businesses see the need to review their business codes of ethics. Although these business codes of ethics may be brilliant and make business look holy, there are still cases where these ethics only exist in company books and the employees of the company do not see the need for practicing these codes of ethics. Nike for example has found itself in many occasions being accused of being socially irresponsible for their actions towards the communities they live in and their business rivals.
Although most of these claims are said by the company to be most of the times inaccurate and are just malicious claims by their competitors, there are cases where the company has been proven to be engaging in unethical and unacceptable business claims (Painter-Morland and Werhane, 179). A good example of such case is the May 2006 case Fraser Consultancy; a UK based firm released research indicating Nike among other cloth and sport manufacturing companies as the most evil organizations. The Research claimed that Nike and Adidas subjected their workers in their factories located in third world countries to very poor working conditions. These employees according to the report include minors (Maich, 1) who work for dismal pay and sometimes are expected to sleep in the factory floors. This is not the first time that Nike had been accused of such unethical business practice. In the early 1990s, Nike was one the companies that endured most public criticism for flouting labor regulations.
Also in 1996, CBS News ran a program depicting inhumane treatment of employees in some of the Nike’s factories in Asia. The program showed how workers in the factories were mistreated by the supervisors. It also showed how the workers were lowly paid for the extremely jobs they were doing under the poor working conditions (Spar, 20). Other allegations included sexual harassment of women in the company factories in Vietnam and poor pay way below expected international standards. As prove, the program provided evidence such as interviews with the workers and also managed to secure some of the employment contracts signed by the company representatives in the Asian region.
Other similar claims that were made on the conduct of Nike in the region included the 1997 Reuters’ report which indicated that some women were forced to run around the Nike manufacturing factory resulting to some of them losing consciousness (Spar, 20). Such reports in the media always spark civil and legal and public actions against a company. For this case there was increasing pressure on the international community to take action against the errand company. Nike had to bow under the immense pressure from different directions. One of most the noticeable action that was taken against Nike is the establishment of the Vietnamese labor Watch (VLW). This group was formed to monitor the labor activities of Nike in Vietnam. The activities of this watchdog alongside other civil societies and international agencies provided prove that indeed the Nike factories in Vietnam were subjecting their employees into inhumane working conditions despite their contribution to the company’s success and exponential growth.
It was also found that, these inhumane working conditions were similar in almost all Nike factories in Asia and other third world countries (Ballinger and Olsson, 53). Among the major crimes against Nike as established by VLW, media, other civil society groups and NGOs which were started to investigate the irregular labor activities in Nike factories include: violations of numerous labor laws which included not meeting the minimum wage required by the international standards, also not providing proper working conditions to its employees. The working environments in Nike premises were found to be unsafe and unhealthy for its workers. There were no proper health and safety regulations put in place by the company to protect its workers. However, the most serious allegations against Nike were on harassment of employees in the factories by the superiors and child labor. There were numerous cases of sexual harassment of women by company supervisors but the top management of the organization did nothing to fix this.
This perhaps increased civil society and international community pressure on the Nike to improve its social responsibility acts (Van Tulder and Kolk, (a) 265). Most critics of Nike cite its child labor practices as the reason they would really want to see change in the company business activities (Wokutch, 224). This is also the major reason there has been a major focus on Nikes corporate social responsibility. The media has acted on many occasions as eye openers by revealing some of the worst labor practices of Nike.
However the company for a long time has been in denial on the reality of existence of these practices. This is because of the existence complexities on the company to manage and monitor all the companies that it had subcontracted to. Among the reasons that the company used as their defense is that these companies are not run by Nike but other people who have been given the contract by Nike (Van Tulder and Kolk, (b) 274). This means that the companies that have the subcontracts run their factories the way they want and Nike had no right to interfere with what they were doing. It was also difficult for Nike to control such factories since their management was not that established by the time they were being accused of such claims.
During that time, the management of Nike felt that they were being crucified for actions they did not commit. Nike and many other multinational clothing companies that had subcontracted their manufacturing to factories operating in Asian countries felt that it was the responsibility of the factory to see to it that their places of work were safe and free from unlawful activities. However, the international community, NGOs and the civil society saw it that it was the responsibility of Nike as multinational company to ensure that they were not in business with factories who were flouting labor rule. In fact, Nike was accused for encouraging these factories to use child labor and pay minimum wages to its employees so as to reduce costs. What was expected of Nike was to only give business to factories which maintained ethical standards in running their business (Van Tulder and Kolk, (b) 276). Also in their defense Nike was only doing what every other company dealing in their kind of business was doing, that is, outsourcing its manufacturing activities to third world countries where they can benefit from cheap labor therefore reducing running costs.
By this Nike was starting to accept that they were actually using child labor and most of the allegations in the media were correct. After Nike had accepted that it had been engaging in unethical business activities, it started to take responsibility for their actions. The company begun to establish strong corporate social responsibility programs that ensured that the company “repaired” its tainted image. Although there were codes of ethics in the company before, updated version of company business code of ethics was launched to salvage the image of the company. Most of the codes of ethics in the updated version aim at addressing the concerns that were raised about Nikes business activities in its contracted factories in Asia. It contains regulations that any factory or contractor that is do business with Nike should meet before they get the opportunity.
Although there have been difficulties along the way in fully implementing these codes of ethics and social responsibility campaigns, Nike has made tremendous improvement in its image. One of the biggest problem that the company faces is on implementing standards on some of its contracted factories in Asia as many other Nike competitors are still using unethical labor practices to reduce their costs. As mentioned above, in Nike’s code of conduct (Nike Inc. CR report, 2007-2009), Nike had major improvements on what was expected of the contractors that had been given business by the company.
The new regulations had additional regulations on salary and wage issues, harassment of employees, child labor, termination of contracts among others. Nike expects these programs to be applied in its businesses around the world. Contractors are expected to put copies of the company’s code of ethics available for the employees in languages that they fully understand. On labor, Nike expects its contractors not to use any form of forced labor.
Child labor which has been a thorny issue to the company is effectively addressed. According to the company code of ethics, a contractor should not employ any individual below the age 18 years to produce footwear, anyone below the age of 16 to produce accessories or equipments. In summary, Nike expects its contractors not to hire anybody below the legal age limit after they have been given the contract by Nike (Nike Inc. CR report, 2007-2009). On compensation, Nike is committed to seeing that the contractors pay the employees the at least the minimum wage or at least the existing market wage. No contractor is allowed to make deductions of employee salary on grounds such as disciplinary actions. Also employees have the right to be given detailed records or inventory of their earnings whenever they wish.
On top of this, a contractor is required by the company to allow the employees all the benefits allowed to them by the law. Such as each employee has the right to rest after a given time of working and an employee may only accept to work overtime when they have been fully compensated for the extra hours they have worked. A contractor is liable to pay an employee overtime benefits whenever an employee works beyond the time that is expected by the law. The company also expects a contractor to fully inform its employees its working hours in the time of hiring. Also, all contractors are required to keep proper documentation that can be easily retrieved when there is need for inspection by the company to check if the contractor complies with the company code of ethics and also the law.
The contractor is also expected to avail all these documents to Nike or any other company assigned by Nike to monitor their contractors. Nike has the right to call for these documents any time without prior notice.
Having established Nike’s code of ethics and social responsibility programs, what now remains is to evaluate if these codes of ethics and social responsibility programs have had any significant impact on improving the working conditions of Nike contractor factories and also on the employees of Nike. According to (Nike Inc.
CR report, 2007-2009), Nike today has almost 1200 trained production people who work in the factories of Nike every day. These people are Nike employees. This greatly improved the safety and health standards of the company factories. Initially people with no initial training were hired by the contractors. Also the company now has sought the services of labor officials who are based in all parts of the world where Nike has factories. They are charged with monitoring the day to day activities in Nike factories and also contracted factories. These individuals ensure that the company’s business code of ethics is fully implemented.
They also talk one on one with the employees of the company to get their views on ways that their work place can be improved. Any cases of labor laws being flouted by the contracted companies are reported to the company and Labor Departments of the resident countries. The company has also trained its management on labor standards so as to improve the quality of their service.
All these are done by the company in cooperation with International Labor Organization with the aim of improving the labor standards in the company. In summary, Nike Inc has undergone major transformation since its reputation was tainted by unethical labor and other business ethics. With the establishment of major corporate social responsibility programs, the company has continuously sought ways to improve its tainted image. Its code ethics has been a guiding the company in restoring its image.
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