Labor exploitation is the work gained from any person through threatening and not voluntarily eagerness of such person. In the era of capitalism, the workers were treated just like commodities that used to produce things. In such capitalistic environment, the labors were exploited at work by not paying them the worth they are working and enhancing their own profit. But after the advent of globalization, labors are now treated as the resources for the company who are the most prominent asset for the organization. But still the labor faces exploitation is the form of less paid, labor trafficking, workplace exploitation, domination, child labor, threats, physical harm, restriction, debt bondage etc (Fact sheet: Labour exploitation, 2009).
Company Background (Wal-Mart):
History:
Wal-Mart was founded by Sam Walton in 1962 with the opening of its first store at Rogers, Arkansas as retail store for all the consumer goods so as to make the consumer goods at single store (Heritage). With the visionary leadership of Sam Walton, it got incorporated in 1969 and was able to trade in New York Stock Exchange by 1972. Through the efforts of innovation and leadership, Wal-Mart has grown as the world's largest Discount Department stores and named as the World's Largest Public Corporation by Revenue by the 2010 Forbes Global 2000. With the expansion and strategic alliance strategy of the company, Wal-Mart successfully installed its china imported products to all over the world with extremely successful in UK and South America though unsuccessful in South Korea and Germany. It is exploring its image of the leading multinational company in the whole world through its expansion strategy to take the competitive advantage of the global market. In the process of such expansion, company is planning to provide its products and services to the consumers of Middle East specifically in UAE as it is considered as the best hub for trade all the world (Our Story).
Location & Number of Employees:
Wal-Mart serves more than 200 million times customer daily as per the requirement of the customer whether it is retail outlet or online or through mobile and other communicating devices. It operates its operation in 27 countries under more than 69 banners to provide its services to the global customers. The sales for the fiscal year of 2012 accounts for $ 444 billion while it employs 2.2 million employees worldwide and now it is planning to strengthen both the position of the company as a leading Multinational company and the Economic development of UAE (Our Story).
Project Objectives:
Our project aims at exploring the concept of "Exploitation of Workers" with special reference to the Wal-Mart Company. The "Exploitation of the Workers" has been explored by focusing on the Business Perspective, Government Perspective and the Social Perspective associated with the concept. Moreover the project aims at recognizing and exploring the importance of Good Corporate Governance to the business organizations like Wal-Mart in this business arena. Project also includes the explanation of executing the corporate social responsibilities by the companies and the financial benefits gained by them due to the same. The role played by Government and Society which motivates the company to perform its corporate social responsibility. At last the project suggested the principles of Good Corporate Governance.
Part I
Business Perspective:
Point of View of Wal-Mart about Exploitation of Workers:
Wal-Mart is one of the most terrible exploiters of workers in reality. Wal-Mart has extended its impact to parts of the developing scenario where workers are in abundance and constricts the life out of its human resource for the profit maximization. Wal-Mart has faced almost 5000 civil suits annually for the violation of human rights and workers exploitation. Wal-Mart considers its workers as the factor of production and merely commodity which is responsible to enhance the organizational production and productivity. The exploitation of workers in the Wal-Mart can easily be seen consistently through following points:
Inadequate amount of wages, salaries and other human resource benefits to employees.
Overtime services from the workers without their willingness and off-the-clock labor.
Activities against the trade union.
Gender biasness at the workplace especially against the women.
Utilizing illegal human resource by the way of third-party contractors (Lane, 2010).
Attitude of Wal-Mart towards Social Responsibility:
The Wal-Mart CSR strategy aims to save money and live better for the customers. In relation to CSR Wal-Mart follows every day low costing strategy so as to help the customers save their money, stretching their paychecks and provide the better living standard for the families. The work of the organization is not only limited to the customers but it extends the benefits for the whole community around the world. The organization perceives itself as the responsible and the opportunistic to bring out the differences that matter a lot for the societal sustainable development. Issues such as environment preservation, hunger fight, poverty, and Women empowerment, healthy and affordable food are perceived as the responsibility by Wal-Mart. Wal-Mart follows its CSR by committed towards the following efforts:
Environmental Sustainability.
Hunger and Nutrition.
Women Economic Empowerment.
Diversity and Inclusion.
Ethical Sourcing.
Veterans and Military Families (Global Responsibility).
Financial Benefits of a Corporate Social Responsibility for Wal-Mart:
The financial benefits of executing the corporate social responsibility to Wal-Mart include various benefits including the good corporate and market image and enhanced workers loyalty. The financial benefits are as follows:
Effective execution of Corporate Social Responsibility helps in increasing the production and productivity of the Wal-Mart which ultimately leads to increase in sales and profit of the company.
Corporate Social Responsibility performance helps Wal-Mart in enhancing its retail product and services differentiation which can fulfill the requirements of customers with augmented quality and full value for example: trade fair, macrobiotic goods etc.
By performing its corporate social responsibility, Wal-Mart can decrease its cost of operating the business operations. For example: Wal-Mart can get the goods and services from the suppliers at lowest cost as most possible extent, and through enhanced employees' loyalty it has to incur low cost in the process of recruitment and retention of employees and decreased the cost of employee turnover.
Corporate Social Responsibility will be helpful in the successful implementation of the business projects and the expansion of business units at maximum locations, globally. For Example: The case of Wal-Mart vs. Target in which Wal-Mart frequently faces hard legal challenges when trying to locate new retail stores and has been incapable to enter some market destinations, despite expensive and comprehensive legal conflict, where Target has achieved entry, like Manhattan, New York.
Corporate social Responsibility will enable Wal-Mart to have enhanced access to the amiable relationships with all the stakeholders including partners, customers, suppliers, and vendors, employees which ultimately helps in decreasing the risk associated with legal and regulatory fines.
The benefits of executing Corporate Social Responsibility includes good market and brand image and healthy relations with the stakeholders which ultimately helps in accomplishing the organizational objectives of profit and wealth maximization, along with various goals, mission and vision accomplishment (business case for corporate social responsibility).
Pressure on the Business Organization (Wal-Mart) from Society and Government:
Wal-Mart and other companies of US are being enforced to follow the CSR by the government and society within the organization so as to have sustainable development in environment and the economy. US government has adopted CSR under US Corporate Dialogue in 1984. In 2006, the explicit political decision was taken by commission to refrain the binding legislation on CSR principles. Various multi stakeholders' forum and societal association enforced the organizations to follow CSR for the sustainable development of the country. But still the CSR always remains as the voluntary strategy of the company. The US government and society always tries to bind the company with the CSR regulations so that the misleading of the customers and other stakeholders can be avoided. Strict regulations have been passed by the legislation for maintain the CSR specifically related to social law, labor law and the environmental law (Mickels, 2009).
Government Perspective:
Point of View of Government regarding Exploitation of Workers:
Exploitation of workers was being practiced by the communistic types of government but under the democratic government, Exploitation of workers is against the labor laws and the human rights as per US government norms. The workers should be treated as the humans and not the commodities. Government has obligated various strict legal obligation and even penalties for such illegal and societal abusing practices (Mickels, 2009).
How it regulates Business and Society to consider Social Responsibility:
The US government has enforced CSR norms within the companies through US Dialogue Code 1984 and amendment in the principles in 2006 through which it makes the organization accountable to report the human rights and environmental abuses within the company and ensuring to report as minimum as they can make. The companies are bounded to follow the strict human rights and environmental norms and failure to such norms leads to penalties for such companies (Mickels, 2009).
Influence on Governments from the Business Organization and Society:
However the government polices have bounded the US companies to strictly follow the CSR and the human rights against the exploitation of labor but still following CSR is yet kept as the voluntary action in the hands of the companies and therefore most of the companies avoid to follow such responsibility towards environment. However Wal-Mart and other global MNC's follow the CSR on the priority basis to ensure the sustainable development of the environment and the country (Mickels, 2009).
Society Perspective:
Point of View of Society about the Exploitation of Workers:
Society believe that the exploitation of workers as the communistic activity which is used to dominate the labor against their human rights. They are threatened to do the work without effective pays, harassment at the workplace and partiality which is totally not accepted by the society. Through such evil practices, poor become poorer and rich become richer which brought down the imbalance in the society and the economy. Child labor, sexual harassment, human trafficking are the parts of exploitation of labor which are considered as the curse on the society (Mickels, 2009).
Criticism of Society towards the Business Organization (Wal-Mart) and the Exploitation of Workers in general:
The societal norms strictly consider the exploitation as the strong offense against the human rights and the societal norms. Various Societal forms and associations have adopted sustainable corporate polices though a model in 1994 known as the three P's model stands for People (Human Rights), Profit (Efficiency), Planet (Environment). This triple bottom line business model helps to maintain the transparent and equitable business practices within the society (Mickels, 2009).
The Influence of the Business Organization (Wal-Mart) and Government to the Attitude of Society:
Under the influence of the societal norms and the governmental obligations, the Wal-Mart is following the CSR effectively considering the CSR as its own global responsibility. The efforts of Wal-Mart for CSR comprises of following subparts:
Environmental Sustainability.
Hunger and Nutrition.
Women Economic Empowerment.
Diversity and Inclusion.
Ethical Sourcing.
Veterans and Military Families (Global Responsibility)
Part II
The Impact of external forces on the organization (Wal-Mart):
Technology:
Technology plays a very prominent role in the successful execution of business operations of the Wal-Mart; the credit of success of Wal-Mart is definitely goes to the proper utilization of technology. Technology is an important external factor which poses both positive and disruptive impact on the employee's behavior and organizational development. Technology consistently helps in streamlining the business processes and makes the work easier and comfortable, qualitative for employees but the process of learning pertaining to the utilization of new and latest technology while maintaining the productivity may be difficult and stressful for Wal-Mart. Technology helps the Wal-Mart in strengthening its retail chain and having competitive advantage over others. The elements in the rapid introduction of new technologies leads to create various problems to the Wal-Mart viz. constant need for new training and development programs, improvement in the business operational process and records maintenance. Technologies like open sourcing, nanotechnology, and collaborative computing have a significant influence on the business operations of Wal-Mart, New Technologies have unpredicted consequences for the society when they are utilized into extensive use for commercial profit, Wal-Mart should carefully and effectively analyze only the impact of technologies on its model of business strategically, along with the hazards imposed by technology on people including all the stakeholders (Basker, April 2007).
Competition:
Wal-Mart faces tough competition with all the parallel retail brands not only in the UAE but also globally. It faces competition in terms of product and services differentiation, market segmentation, market positioning, targeting the customers, pricing strategies, promotional strategies like discount, free offers and schemes, advertising, sales promotion, celebrity endorsement in the promotion of the product and services etc. But the toughest form of all the competition is the pricing competition, Wal-Mart is one of the most leading retail brands globally and it charges very high cost for the products and services and thus faces competition with the lower cost brands (Donald, 2009)
The Organization (Wal-Mart's) Management:
Retrenchment:
The year 2006 noticed the most important retrenchment for the Wal-Mart since it carried out its global expansion in the early 1990s, in an attempt to revive the growth of sales and profit. Wal-Mart, the global largest retailer, acknowledges defeat in its long term venerable operations to penetrate effectively the retail market of Germany. On July 30, 2006, the Wal-Mart declared that it was hand over its operations in Germany to the Metro AG, a German retailer brand. Wal-Mart had been attempting to create its German stores more beneficial commercially for eight years. Wal-Mart states a pretax loss pertaining to the sales amounting $1 billion. Wal-Mart had initially declared in May 2006 that it would sell its 16 retail stores in the South Korea (Donald, 2009). As a part of its retrenchment strategy; Wal-Mart also applied the cost cutting and saving policies to the human resource of the organization. In a merger with Massmart, one of the leading retail brand chain, Wal-Mart retrenched 503 employees in the year 2010 (June 2010).
Employment Discrimination:
As per as the values and beliefs of Wal-Mart are concern, they are govern by the views of Sam Walton on which the foundation of the company is based i.e. "the respect for every individual". It aims at executing business operations with non discrimination in the process of employment. Wal-Mart aims at creating a corporate culture of mutual trust and respects which encourage an optimistic work environment. It means that it aims at treating all the stakeholders with the courtesy and fairness in all the business transactions and communication. Wal-Mart is committed at sustaining a diverse workforce and comprehensive work environment. According to the values of the company, Wal-Mart will not bear any discrimination associated with the employment and decisions of employment or in the business transactions on the basis of age, gender, color, race, caste, creed, religion, ancestry, disability, nationality, relationship status, ethnicity or any other legally secured status. It does not discriminate with its associates, human resource, customers, suppliers and other stakeholders. But on the contrary there are various facts and figure which revels the information regarding the discrimination in the employment conditions by Wal-Mart. The first and foremost issue associated with the employment discrimination is the gender biasness. Almost 2,000 women in 48 states files civil suits against Wal-Mart, complaining about the employment discrimination associated with the pay and promotions in comparison to male employees (Non-Discrimination).
The Principles of Corporate Governance:
The importance of Good Corporate Governance in the success of the organization can hardly be overemphasized. It plays a very crucial role in maintaining mutually cordial relations between f the management and all the stakeholders. The Principles of Corporate Governance are as follows:
Principle 1: Set firm foundations for Management and Supervision: In order to have a Good Corporate Governance, business organizations should formulate and communicate the concomitant roles and responsibilities of board of directors and management.
Principle 2: Organize the board in order to added value: Organizations should establish a board with effective size, composition, and loyalty to effectively discharge its duties, roles and responsibilities.
Principle 3: Endorse Ethical and Accountable process of Decision Making: Ethical and accountable decision making leads to smooth functioning of business operations and ensure Good Corporate Governance.
Principle 4: Maintain Reliability in Financial Reporting of the Company: Honesty in delivering true financial facts and figures helps in building mutual trust with all the stakeholders which is a gateway to Good Corporate Governance.
Principle 5: Communicating all the required Information Timely and Impartially: Companies must focus on disclosing all the information concern with its operations to all the stakeholders.
Principle 6: Value the Shareholders' Rights: Companies must value and respect the shareholder's rights and facilitate them by providing access to the rights.
Principle 7: Effective Identification and Management of Risk associated with the Business: Companies must create a sound risk management system of risk in order to have effective supervision and managing internal control.
Principle 8: Compensate fairly and reliably: Business Organizations should ascertain that the level and foundation of remuneration is adequate and rational and that its association with performance is clear and effective.
Principle 9: Encourage the Human Resource's enhanced Performance: Companies should identify, encourage and recognize the outstanding and expected performance of the employees, board of directors and management in the organization.
Principle 10: Identify and recognize the legal benefits of Stakeholders: Business organizations should recognize all the legal obligations of all the valid stakeholders and execute them accordingly (Principles of Good Corporate Governance and Best Practice Recommendations, March 2003).
Conclusion:
The Exploitation of workers in the business organizations is the most emerging issue of the today's cut throat competition, in order to survive and achieve the profit maximization objective in this tough competition companies exploits their workforce blindly. Exploitation of Workers leads to break the mutual trust and loyalty between human resource and the organization which ultimately affects the production, productivity, profitability and long term growth and sustainability of the business. If the business organization's production gets affected it will ultimately affect the market and customers and society's need for products and services. If the society is not satisfied with the trade and commerce activities then it will ultimately affects the stability of government and the economic development of the country. So in order to prevent the aforementioned issues and ensures the sustainable development business organizations should implements the principles of Good Corporate Governance and executes their Corporate Social Responsibilities.
