Compare Ethical Operations in Global Organizations
OLB 7005, Assignment 7
DuBose, Justin Z.
Dr. Jamiel Vadell
17 June 2018
Comparing & Contrasting Aflac and Amazon
Two global corporations – Aflac and Amazon – have recently been in the news for their treatment of corporate ethics. One of these global organizations, Aflac, is consistently ranked as one of the most ethical companies in the world. Conversely, Amazon has been in the news for recent unethical businesses practices which were discovered at a Chinese factory manufacturing their products. The following chart is a comparison and contrasting of such practices by these companies.
Stringent ethical code of conduct for suppliers
Stakeholders of Aflac (consumers, employees, administration, beneficiaries, etc.) have confidence that products are of the highest quality. This includes both quality in production as well as (and most importantly) quality in the moral and ethical treatment people and businesses practices.
Code of conduct for suppliers disregarded
Not only do current suppliers receive negative publicity from their association with the company, but potential additional suppliers are frightened from aligning themselves with Amazon. Not only does current production take a negative turn, but future production is limited as well.
Proactive community service
Communities welcome the presence of Aflac in their lives. Communities recognize the benefits Aflac brings and encourage their business. Aflac is seen as a welcome presence due to their proactive involvement in serving local communities.
Failure to hold agencies accountable
While certain accountability structures exist on paper, Amazon suppliers were discovered not to hold partnering agencies accountable. The result is that agencies are subjected to scrutiny and investigation to ensure that accountability exists. This not only creates a public relations headache, but also slows production and strains business relations.
Investment in sustainable business practices
Aflac prioritizes corporate social responsibility in their corporate business practices. They allocate a portion of their profit to ethical sustainability initiatives. This allows stakeholders to invest time, money and energy into the company with confidence.
Taking insurance payments without providing benefits
This action constitutes a serious breach of trust between the company and primary stakeholders – employees. Records must be carefully examined in order to reimburse payments or to retroactively cover insurance premiums. It will extensive trust-building by the company to rebuild trust.
Working to affect positive change throughout industry
Aflac not only seeks to positively affect local communities, but also the entire insurance industry. Investors and stakeholders are assured that their business practices are not only ethically good for their employees and company, but for the entire industry.
Overworking employees with excessive overtime
Not only were employees not paid proper overtime wages, but they were subjected to excessive working hours by the company. This constitutes a legal violation by the company, requiring law enforcement officials to become involved in company affairs. This also contributes to a loss of trust in the company by the community and stakeholders.
What Constitutes an Ethical Culture?
The above companies of Aflac and Amazon have both been featured in national news for their ethical cultures as organizations. The primary difference is that one company, Aflac, is praised for their positive ethical culture while the other company, Amazon, is criticized for their negative ethical culture. The above chart delineates some of the major differences in what each ethical culture receives praise and criticism. Understanding what constitutes a positive or negative organizational culture is imperative for organizational leaders of all sizes, regardless of their field or sphere of influence.
The first major difference in the two organizations is their code of conduct for suppliers. In the case of Aflac, their code of conduct includes corporate values which guide their business practices (Aflac, 2016). Additionally, they provide a toll-free number for employees to call to report any suspected ethical violations by employees and suppliers (Aflac, 2016). In contrast, Amazon has been cited by multiple media sources for their failure to uphold such supplier codes of conduct at a factory in China which produces their Echo products (Chamberlain, 2018). These failures include mistreating employees – overworking and underpaying them – as well as failing to comply with labor laws in the countries in which they operate which, in the case of this supplier is China (Chamberlain, 2018).
Another major difference in these two organizations is their treatment of community service and investing in sustainability initiatives corporately. Aflac continues to be recognized by Ethisphere as one the world’s most ethical companies due to their sustainability initiatives (Ethisphere, 2018). Aflac retains as a corporate sustainability working to eradicate pediatric cancer (Aflac, 2015). Additionally, they work in their local companies with Habitat for Humanity to build homes for individuals and families in need (Aflac, 2015). Conversely, Amazon finds themselves under attack as an organization due to the lack of sustainability initiatives by one of their factories in China. In fact, the management at this factory was specifically cited for not only failing to give back to the community, but for taking from their own employees (Chamberlain, 2018). Foxconn, the company operating the Chinese factory for Amazon was noted for accepting insurance payments from employees without applying them toward their benefits (Chamberlain, 2018). In doing so, Foxconn was deceptively, and unethically, taking from their own employees who were already underpaid and overworked. This is more than a simple failure to invest in corporate sustainability initiatives in this instance, but highlights a deeply unethical view of workplace culture, employees of the company, as well as the community at large.
Best Practices for Ethical Culture
Research in organizational leadership highlights several best practices for global organizations to consider in pursuing ethical leadership and an ethical organizational climate. Thanetsunthorn (2014) concluded that various cultures have vastly different understandings and levels of sustainability engagement depending on their uniquely cultural contexts. She concluded, for example, that cultures with a more highly structured view of social classes have lower levels of social engagement. Peng et al. (2012) researched this same correlation between corporate social responsibility initiatives and power distance index (PDI) and came to the same conclusion. Similarly, Ho et al. (2012) and Peng et al. (2012) discovered a clear and statistically significant association between culture and corporately social responsibility awareness and performance.
In the case of Amazon, this factory was operating in an environment in which corporate social responsibility and organizational ethics and are not prominent organizational and cultural factors (Thanetsunthorn, 2014). Consequently, research has demonstrated that organizations are inherently less likely to be concerned with corporate ethics and sustainability initiatives and projects. Organizational leaders at Amazon, like all other global organizations, must take extra precautions to ensure that such initiatives are in place and being followed. These operational environments lend themselves to poor ethical cultures and stringent codes of conduct because they are not culturally reinforced. These oversights can lead to certain unethical organizational climates remaining unaccountable for extended periods of time. The result is that once such a climate is exposed, it provides a major setback for organizations financially, operationally, and in public relations.
Amazon now finds their company in a reactionary position due to ethical violations being uncovered by an auditing firm. Aflac, on the other hand, has proven to be extremely proactive in both their corporate approach to ethics as well as their approach to sustainability initiatives. Ethisphere, which annually publishes a list of the world’s most ethical companies, has listed Aflac in their prestigious list every year since their inception in 2007 (Aflac, 2016). This is due, in part, to Aflac’s awareness of the cultures in which they operate. Sirmon and Lane (2004) discovered that cultures subscribe to certain values, and that these values shape individual attitudes toward other individuals as well as corporate entities. Recognizing this, Aflac publishes and trains their employees on their corporate values and encourages and allows them to express those values both within the organization and in the communities in which they live and work. This is just one of the reasons that Aflac continues to be recognized and praised as a globally ethic company.
Research has reached several conclusions regarding what constitutes an ethical climate and culture for global organizations. Organizations must be culturally aware of ethical constructs in the environments in which they operate. This is true both of knowing what cultures value and proactively seeking to align corporate values to cultural values, as Aflac continues to do. This also includes knowing the gaps in cultural ethics and proactively planning to compensate for anticipated ethical shortcoming, as Amazon failed to do. Both perspectives are needed by global organizational leaders to ensure an overall ethical climate across various cultures.
Ethisphere delineates that positive cultural ethics include: ethical codes of conduct, proactive community service, investment in sustainable business practices, and working to affect positive change throughout the industry. In the case of Aflac and other companies that are routinely recognized as ethical organizations, there is intentional and focused effort on their part to meet such requirements. In this singular case of Amazon and their Foxconn factory in China, these were not organizational targets and now the company is suffering in more ways than one because of their failure to prioritize such efforts. This proves that efforts to create an ethical organization are recognized as are failure to put forth a corporate effort to prioritize ethical climates.
Organizations and organizational leaders who operate on a global scale must not neglect these best practices which are encouraged and supported by research. Organizationally which are ethically-minded and culturally-aware will be rewarded not only by positive publicity, but this will also be reflected in an improved profit margin. As communities and individuals recognize the value companies bring into their lives, they will invest their lives into the company in more ways than one.
Aflac. (2015). Code of business conduct and ethics. Retrieved from investors.aflac.com/corporate-governance/code-of-conduct.aspx
Aflac. (2016). Corporate social responsibility report. Retrieved from https://www.aflac.com/about-aflac/corporate-citizenship/corporate-social-responsibility-report/default.aspx
Chamberlain, G. (2018, June 17). Amazon supplier in China will tackle illegal work practices. The Guardian. Retrieved from https://www.theguardian.com/technology/2018/jun/17/amazon-foxconn-china-will-tackle-illegal-work-practices
Ethisphere. (2018). Leading practices and trends from the 2018 world’s most ethical companies: An ethisphere research report. Retrieved from https://bela.ethisphere.com/practices-trends-2018-wmec/
Ho, F. N., Wang, H. M. D., & Vitell, S. J. (2012). A global analysis of corporate social performance: The effect of cultural and geographic environment. Journal of Business Ethics. 107(1), 423-233.
Peng, Y. S., Dashdeleg, A. U., & Chih H. L. (2012). Does national culture influence firm’s CSR engagement: A cross country study. International Proceedings of Economics Development & Research. 58(9), 40-44.
Sirmon, D. G., & Lane, P. J. (2004). A model of cultural differences and international alliance performance. Journal of International Business Studies. 35(4), 306-319.
Thanetsunthorn, N. (2014). Ethical organization: The effects of national culture on CSR. Organization Development Journal. 3(1), 89-109.
NG, LR, NCU, USAR
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