Foxconn free essay sample

Hence, the interplay of high unemployment levels and limited capital investment has caused the phenomenon of sweatshops. Although no set definitions of sweatshops exist, they are effectively the consequence of developing nations suppressing wages and sacrificing working conditions to compete to attract foreign investments (Arnold Hartman, 2003). Notable characteristics are extreme exploitation (wages and work hours), poor working conditions, military-like discipline and intimidation of employees (Radin Calkin, 2006). These characteristics have often been associated with Foxconn, the world’s largest contract electronics manufacturer (40% of world’s electronic items) for brands such as Apple, Dell, HP and IBM (Wagstaff, 2012). However, the focus of our report is on the fourteen committed suicides, four failed suicides, and eligibly twenty additional attempts during eight months in 2010 (SACOM, 2010). This report will attempt to analyse the unethical practices that lead to these horrendous outcomes. This report will use Utilitarian, Kantian and Rights ethical theories to analyse wages, working conditions, management style and development/training in Foxconn. Recommendations will made in light of this research. 1 Background Alternating ethical views can be applied to sweatshops to recognize different facets and levels of unethical practices. Firstly, utilitarian theory focuses on the outcomes and argues it is ethically acceptable if an action can produce more good than harm. Secondly, virtue ethics focuses on the innate qualities of the decision maker or manager (Beauchamp, Bowie, Arnold, 2009). Thirdly, Deontology ethics focuses on the motivation of the action for ethical judgement. However, Radin and Calkin (2006) suggested these theories lack the robustness to make strong moral arguments against sweatshops. However, Arnold and Bowie (2005) argues that Kantian’s second categorical imperative to never treat others as a means but always as an ends portrays strong foundations for employee actions. Also, human rights ethics is an extension of Kantian views from the perspective of the employee, in that employees have rights to freedom and subsistence (Arnold and Bowie, 2005). These two ethical theories will be the focus of our report. Dignity is explored heavily in Kantian and human rights ethics. Kim and Cohen (2010) identified in Asian cultures dignity is primary defined by what people thinks of you, given that Foxconn is an Eastern company, an examination of dignity is strongly encouraged. Furthermore, Lucas, Kang and Li (2012) identified that Foxconn employees suffered from mortifications of their self-worth and self-value (loss of dignity) as a result of working under a total constitution system. There has been growing consensus that stakeholder theory can be used as a normative ethical theory (Palmer Stoll, 2011). Freeman’s stakeholder (1984) theory suggests it is unethical to ignore consequences of a firms’ actions on other stakeholders, namely employees. Why not just increase wages and improve conditions? Maitland (2005) suggested if supplier companies were to bear these costs, it would in turn make them competitively disadvantaged, reducing their foreign investments and hence required to reduce employment; a vicious cycle. Similarly, if a Multinational Corporation (MNC) increased wages without respecting local social factors such that a person working for Nike could earn more than a professor in Beijing University, this will severely damage social dynamics. A counter-argument to Maitland’s case was proposed by Arnold and Bowie (2005) who contents that increasing wages and conditions do not have to be associated with overall decreases in welfare. Arnold and Bowie contents that MNC’s can bear the costs without causing hardships in communities they operate in and increasing wages and conditions can subsequently boost employee morale and increase productivity. This idea is consistent with Arnold and Hartman (2005) where companies can obtain strategic advantages when enforcing ethical practices. Arnold and Hartman found that better working conditions and wages were associated with reduction in absentees, staff turnover and in turn, recruitment and training costs. 2. 0 Explanation Firstly, Utilitarian perspective proposes the† greatest happiness principle† (Beauchamp, Bowie, Arnold, 2009) which aims at maximizing good and minimizing harm. According to the theory Utilitarian ethics bases ethical judgment on consequences of action, therefore it is considered ethical action if the outcome is able to provide the greatest good for the greatest number people. There has been debate regarding the meaning of â€Å"good†, but for our report, let us use individual preferences, which is largely supported by actions, as the meaning of â€Å"good†. For example, within our context, it is considered satisfying one’s preference if one choses to work. Another element of utilitarian is that everyone is to count for one and no one countered as more than one. Kant’s ethical theory more specifically his second imperative (â€Å"Act so that you treat humanity, whether in your person or in that of another, always as an end and never as a means only) sets a great foundation of the duties of an employer to one’s employee. Kantian view states one has an â€Å"obligation† to always treat an employee as an end and never exclusively as a means, because by not doing so, one would be ignoring their dignity, and ignoring one’s dignity is equivalent to treating them as capital or mere machines (Beauchamp, Bowie, Arnold, 2009). According to the Kantian View, an employer must respect their employee’s moral dignity beyond the value of price alone (negative obligation) and also, to support and develop their rational and moral capacities (positive obligation). There are some correlativity between the Kantian’s obligation theory and rights theory. Kantian suggests that the manager has the right to respect the employee’s dignity, while the rights theory argues the employee has the right to freedom and subsistence (minimal economic security) which according to Arnold and Hartman (2005) are the basic human rights. Therefore, this report will apply Kantian views to management and rights ethics from employee perspective. Moreover, Arnold and Hartman (2005) have compiled basic rights and universal codes that are applicable within the business context (Table 1). Simply put, human rights are natural rights must be free from interference from other parties given the appropriate justifications. Table 1: Arnold and Hartman (2005) The average wage of Foxconn employee in 2010 was around $143 per month (Moore, 2010), although low, it is relatively higher than its competitors, Seven wolf the famous cloth manufacturer in china offers $120 and YIQI, which is a largest car manufacturer, earn $115 per month. Evidently, based on wages alone, Foxconn appears to be the best option. Hence, there are huge numbers people, with limited skills willing to work which effectively produces over supply of wrokers for limited positions. Effectively, application for work at Foxconn is voluntary and made by the individuals. According to preference utility, action represents preference which represents increase in utility, with this in mind, Foxconn increases utility for its workers. From this interpretation Foxconn has not comprised ethics. This becomes more apparent if hypothetically Foxconn was not to exist, Foxconn employees would be subject to no work or lower work wages. 3. 1. 2 Marginal Utility However, when comparing the marginal benefits of a worker and Foxconn owners, utilitarian views condemns these actions. Figure 1 illustrates the steep revenue increase experienced by Foxconn, yet the employees are not compensated as proportionally. According to Utilitarian theory, everyone counts as one, and the having majority good given to the lowest numbers (CEO and management) is unethical. Similarly, stakeholder theory suggests that Foxconn’s actions should considered employees because they are affected by these prices. [pic] Figure 1: Foxconn Revenue: Chan Pun (2010) 3. 2 Kantian Views As previously stated, Kantian views will largely be explored from the managerial standpoint. 3. 2. 1 Means not Ends Kantian’s second categorical imperative clearly states to treat one as an ends and never as a means. Pratap and Dutta’s (2012) reports that Foxconn workers are being treated worse than machines, because it costs to replace machines but workers can be replaced by another one without any cost (Figure 2). Furthermore, Chinese Labour law states that employees are to work no more than eight hours a day, and forty four hours a week, and no more than three hours overtime a day or thirty six hours a month, but Foxconn employees regularly exceed these legal limits. SACOM (2010) indicated it was cheaper to uses human capital than machines, a rarely phenomenon in Western society. Notably, one of the victims of suicide allegedly worked one-hundred-and-twelve hours overtime a month. Evidently, Foxconn compares human capital directly with machines clearly violated the Kantian principles. Moreover, in 2010 it was independently confirmed that 137 workers were poisoned by a chemical called n-hexane which was used to clean iPhone screens. N-hexane is known to cause eye, skin and respiratory tract irritation, and leads to persistent nerve damage (Damon, 2011). It was later noted that Foxconn intentionally used N-hexane for cleaning because it was cheap and not listed for prohibit use in China laws (Charles, 2012). Kantian views argue that human life has dignity and should not be valued based on price alone, it appears Foxconn has made decisions based on costs. This is clear violation of Kantian ethics. [pic] Figure 2: Not Machines (SACOM, 2010) 3. 2. 2 Respecting one’s dignity According to Kantian views dignity separates humans from machines, humans have dignity because they are capable of moral activity and autonomous self-governance. Dignity arises from self-worth based on respect and honour. Kim and Cohen (2010) and Lee (2008) found differences between dignity in Asian and Western cultures, in that Asian dignity is earned, derived from relations of and focus on duties, while Western dignity is more inherent and individually based and focused on rights. Also, unlike Western cultures where dignity is absolute and equal amongst people, in Asian cultures dignity is hierarchical where one could have more dignity than another simply based on job status and wages. Lastly, within the Chinese context, dignity is associated with the term â€Å"face† which incorporates personal integrity, family honour and social respect (Lee, 2008). Coupling these with Kantian views, it accentuates that Foxconn employees derive dignity more from treatment from management and work responsibilities. It was found that managers from Foxconn were not qualified and used militarization management procedures for theft (David, 2010). Workers were forced to sign confidential agreements that consented bag checks. Moreover, workers were often prone to bag checks before leaving factories and random apartment checks if stock was missing. Also, any bad behaviour were publically scrutinized on noticeboards to be seen by peers. According to SACOM (2010), these humiliating checks and inhuman punishment (toilet and floor cleaning) were factors that cause suicides in from workers. Clearly there is a lack of trust by management, according to Kantian views it also suggests a lack of respect for employees as moral beings. Furthermore, Foxconn workers are largely objectified to repetitive labour intensive work. More importantly, Foxconn has no intentions to train, develop or promote these workers. Due to the huge extra costs, employees’ training and development are regarded as an unconsidered question for Foxconn’s senior management (Savitz, 2012). As long as the workers on the assembly line can operate the machines which is needed for the working position (Su, 2010), the employee training is ended. Simply put, their missions are to complete their works, and it is impossible to have any further improvement space. This case effectively encapsulates the main Kantian unethical actions of Foxconn. Firstly, employees are given the same degrading work until they quit or becomes customary. Secondly, no development or training is given to either develop their moral and employability capacities (beyond that of required) clearly compromises the Kantian ethics. 3. 3 Rights Ethics This section will investigate the degrading of basic human rights such as dignity, freedom and subsistence. Foxconn as a total institution is a pervasive theme in this section. 3. 3. 1 Total Institution causes loss of control and dignity According to Lucus, Kang, and Li (2012), Foxconn operates as a total institution. By definition, a total institution is a place of residence and work where a high number of individuals live an enclosed and formally administered life, separated from society for an extended time. Sayer (2007) states that one is dignified with the ability to control oneself, competently and appropriately exercising one’s power (Autonomous control). However, one of the main characteristics of Total Institution is the high degree of control. For example, by living within close proximity to production plants, it meant that workers were made to work at untimely hours. Furthermore, food, drink, sleep and even washing routines were all scheduled like production lines. According to Chan and Pun (2010) this reduced employee’s sense of control, and in turn freedom and dignity, which are innate human rights (Arnold and Hartman, 2005). Moreover, SACOM (2010) identified a number of CEO Terry Guo’s maxims displayed to indoctrinate employees. Such slogans included, â€Å"Hungry people have especially clear minds†, â€Å"Work itself is a type of joy† and â€Å"Work hard on job today or work hard to find a job tomorrow†. Although these messages are not clear obligations enforced by Foxconn, however these messages imply the subtle threat of losing their jobs, which jeopardizes employee’s ability to make decisions free from external influences. 3. 3. 2 Lack of Meaningful relationships reduces Dignity According to Kim and Cohen (2010) and Lee (2008), dignity in Asian cultures are built by value of self-worth given by others, simply put, social relationships facilitates dignity. While it is illogical to suggest that no social interaction means no dignity, social relationships clearly adds incremental value to dignity. Lucas, Kang, and Li (2012) discovered during work hours employees are to reframe from communicating to one another and must wear mask. This effectively creates conditions of anonymity to the extent that in a room of ten, most individuals do not even know each other’s names. Combining multiple theories together it suggests that lack of social interactions reduces dignity, which reduces one’s self-esteem and inevitability reduces one’s ability to self-governance (control). Effectively, both Kantian and rights ethics are worthless here. 3. 3. 2 Subsistence With reference table 1, working conditions, freedom from forced labour and right to bargain wages collectively are rights that have been unfulfilled. In addition, Figure 3 clearly identifies the unethical wages of Foxconn workers. This coupled with excessive unpaid overtime wages, demonstrates that an employee’s subsistence (human right) is not satisfied. [pic] Figure 3: Wage rates of Living Wage, Minimum Wage and Foxconn wage (SACOM, 2010) 4. 0 Recommendations I acknowledge that sweatshops and unethical standards exist as a consequence of globalization and economic development which causes asymmetry of power, but I contest that unethical standards can be avoided, if not reduced. Therefore, my recommendation includes a two part approach that empowering the workers and making it strategically advantageous to be ethical. I hope these policies will reduce the supply of lowly-skilled labour force, increase the competitiveness of workers and align the interests of organizations and ethical behaviour. Firsty, rather than focusing on increasing wages and working conditions, Foxconn should adopt training and development programs for its employees to improve their current dignity, employability and skill set. Consistent with Kantian view one should develop employees as moral beings, but also extents Kantian view by developing their mind and skills. Morally, I believe both counseling and social interactions within Foxconn can hugely benefit self-esteem and dignity within workers. Also, trade unions independent of Foxconn and government are required to give employees power of speech. Furthermore, by educating and developing skills for existing employees, it gives them the opportunity to either promote internally or strive for more skill based job elsewhere, while also giving opportunities for new employees. Arnold and Hartman (2005) suggested improving labour-related standards can be associated with increased productivity, employee morale and loyalty and brand reputation. I believe it is very important to make these benefits salient and replicable. The World Trade Organisation can play a vital part not only by enforcing laws, but making these unethical practices more observable by consumers. As a result of public scrutiny, it forces MNCs to act ethically by improving or changing their suppliers. This will produce a domino effect on the suppliers to either improve working conditions and wages or lose foreign investments. Effectively, my goal is to change the market in that suppliers are competing for foreign investment with favourable working conditions rather than low prices. 5. 0 Conclusions This report has demonstrated how sweatshops have failed ethical standards from an Utilitarian, Kantian and Rights perspective. Utilitarian views have portrayed the disproportional marginal benefits received by Foxconn over its employees. Kantian ethics has illustrated unethical management techniques such as treating workers as machines by forcing excessive workload and ignoring their rights for dignity. Rights ethics has extended on Kantian ethics by focusing on the employee. It was reviewed that under the Total Institutional characteristic reduced worker’s sense of freedom, control and in turn dignity. Recommendations were made to empower employees and marketing positive strategic advantages for ethical standards. It is hope these recommendations will not only reduce low skilled labour, but also improve employability and morality amongst workers The ethical views in this report accurately highlighted unethical practices of Foxconn, however this approach is too passive and reactive to company actions. More research is needed to develop a more comprehensive and robust theory that actively sets guidelines and codes of conducts that can be used by management. Future research is required to provide a clear definition of sweatshops before laws and codes of conduct can be used to condemn them.