Research A Retail Organization
OLB 7005, Assignment 1
DuBose, Justin Z.
Dr. Jamiel Vadell
7 May 2018
Introduction to Organization
The retail chain of Hobby Lobby is an organization which has maintained a consistent presence in the news media in recent years. In 2014, Hobby Lobby won a landmark case in the Supreme Court, Burwell v. Hobby Lobby (Liptak, 2014). The nature of this case centered around an ethical concern by the Green family, who owns the chain of retail craft stores. The Green family expressed a concern that a particular mandate of the Affordable Care Act violated their personal and corporate ethical standards.
Portions of the Affordable Care Act required them to provide a form of birth control to their employees which they considered akin to abortion. The Supreme Court ruled in their favor, 5-4, and declared that other “closely held” companies could not be required to provide such contraceptives to their employees because it violated their religious freedoms and conscience (Liptak, 2014).
Hobby Lobby is a privately owned, for-profit retail chain owned and run by the Green family. Steve Green serves as the President of the company and has served in this capacity since 2004 (Green, 2018). The Green family has owned and controlled the company from its inception. David Green, Steve Green’s father, started the company out of a garage in Oklahoma City in 1970 (Shellnutt, 2017). The company, its founders, and present leadership are known as much for their conservative, evangelical Christian stance as they are for the arts and crafts they sell. This analysis will examine a recent unethical business practice by the company which resulted in negative public relations and the forced re-evaluation by the Green family of the way in which Hobby Lobby conducts business.
While Hobby Lobby made national news in 2014 for their landmark Supreme Court victory, they have recently been in the public eye due to their acquisition of ancient artifacts (Green, 2018). Steve Green, President of Hobby Lobby, also serves as the CEO of the recently opened “Museum of the Bible” in Washington DC (Shellnutt, 2017). Through Hobby Lobby, Green purchased thousands of ancient Sumerian artifacts, many of which were to be displayed in the Museum of the Bible (Shellnutt, 2017). However, after an investigation by the Justice Department, it was determined that these artifacts were actually looted from war-torn Iraq and not acquired from Israel or Turkey, as the customs forms on the items had claimed (Shellnutt, 2017).
Federal prosecutors determined that over 5,000 of these artifacts, purchased by Hobby Lobby, had to be returned to their country of origin. Hobby Lobby successfully returned these artifacts earlier this month. Additionally, Hobby Lobby was forced to pay $3 million in fines to the Department of Justice as punishment for their unethical business practices (Shellnutt, 2017). The end result of this debacle for Hobby Lobby is not simply negative press, but it also highlighted certain ethical failures within the organization and, more pointedly, within the leadership.
Perhaps the most glaring ethical failure of the part of Steve Green and the leaders of Hobby Lobby is their failure to recognize how such procedural ethical failures reflect on their own character and organizational influence. In tying leadership to ethical behavior and businesses practices, one author noted that leadership must be able to “differentiate not only between leadership and good ethical character, but also between leadership and power, authority, influence…” (Levine, 2013). The embrace of such unethical business practices on the part of Steve Green and others in leadership potentially cause their stakeholders to question their individual ethical standards as well as the way in which they use their power, authority, and influence within the company. Such an ethical oversight on the part of organizational leadership makes it difficult for stakeholders to trust the character and decision-making abilities of those in positions of authority.
Trust in leadership, and the communication of trust on the part of leadership, are vital not just to the bottom-line of the company, but also, and arguably more importantly, to the morale and buy-in of its individual members. One author places such a high degree of importance on trust and communication that he refers to it as the "emotional glue...between leader and follower" and, he adds, that the "form and quality of interactions between trusting parties" cannot be overstated (Savolainen, 2014). It follows, then, that not only the quality of communication must be carefully considered by those in leadership, but also the form of communication, as this also impacts this "emotional glue".
Another major consideration for Hobby Lobby and its leadership is the potential impact – either positive or negative – Corporate Social Responsibility (CSR) has on its stakeholders. Social responsibility and sustainability initiatives fall under the umbrella of CSR. CSR is a growing trend which is continually being embraced by a wider variety of businesses, and which ties in directly to the treatment of corporate ethics by the leadership. In fact, CSR "is a priority item on the agenda of almost every business organization" (Babin, 2011). One of the primary factors driving this business priority is "society’s rising demand for corporations to be more environmentally and socially responsible" (Persons, 2012). In the case of the acquisition of looted Sumerian artifacts, it casts an entirely negative light on Hobby Lobby in the area of CSR. While Hobby Lobby donates generous portions of their profit to evangelical, Christian causes (such as the Museum of the Bible, this example causes them to appear terribly irresponsible in regard to foreign cultures. As CSR greatly impacts stakeholder trust and motivation both inside and outside the organization, such an obviously negative business decision should cause Hobby Lobby to revisit its ethical priorities as they relate to CSR.
As a result of this corporate ethical failure, Hobby Lobby has made some corporate changes to the process of acquiring artifacts in the future. “Hobby Lobby has implemented acquisition policies and procedures based on the industry’s highest standards established by the Association of Art Museum Directors (“AAMD”). The AAMD policies have been vetted by global museum directors and lawmakers alike, and represent the gold standard for protecting ancient heritage artifacts” (Green, 2018).
By virtue of this decision, Hobby Lobby clearly recognized their shortcomings in the process by which they acquired these thousands of artifacts. These steps work both to restore and build trust in Steve Green and the other leaders of the company while also demonstrating a degree of commitment to CSR in regard to protecting ancient heritage artifacts. The larger failure of Hobby Lobby, however, was in permitting such grossly unethical businesses practices to exist in the first place.
Whether fair or unfair, the perception of organizational leadership and its embrace or neglect of ethical conduct is tied to the practices of the organization itself. To highlight this point, one author asks the question, “If leadership neither implies or requires ethics, then why is it that we still demand and expect – or at least have the illusion of demanding and expecting – that would-be leaders be ethical?” (Levine, 2013). Both the stakeholders and the general public demand that leaders of companies and organizations uphold ethical codes of conduct both personally and professionally. It is when those expectations are not met that such issues are brought to light by the press and companies are forced to explain and re-evaluate their businesses practices.
Since their public and landmark Supreme Court victory in 2014, both Hobby Lobby and the Green family have occupied a place in the national spotlight and remained under public scrutiny. With such scrutiny comes greater expectations of both ethical leaders and ethical leadership. In the case of these ancient Sumerian artifacts, Hobby Lobby and the Green family have had certain business practices illuminated as ethically questionable. This causes stakeholders and the general public to question the ethics and integrity of leaders, which, consequently, leads to a lack of trust in organizational leadership.
This is the greatest concern for both Hobby Lobby as a company and the Green family as the organizational leaders. While their decision to institute new business practices in regard to acquiring artifacts is a step in the right direction, they must re-evaluate related issues such as CSR. In other words, do our business practices fully communicate our ethical code of conduct to our stakeholders? Do they see that our practices are a result of our ethical standards and not simply as a corporate response to public scrutiny?
If Hobby Lobby and its leadership can be viewed as having high ethical standards, and those standards being evident in its corporate practices, procedures, and standards, then public trust can begin to be restored. However, as long as their business practices are seen simply as reactionary to scrutiny or punishment, then stakeholders will continue to question the ethical standards of both the organization as a whole and the organizational leaders who are making decisions.
Babin, R., Briggs, S., & Nicholson, B. (2011). Emerging Markets Corporate Social Responsibility and Global IT Outsourcing. Communications of the ACM, 54(9), 28-30. doi:10.1145/1995376.1995387
Green, Steve. (n.d.). Retrieved May 7, 2018, from https://newsroom.hobbylobby.com/team/steve-green/
Levine, M. P., & Boaks, J. (2013). What Does Ethics Have to do with Leadership? Journal of Business Ethics, 124(2), 225-242. doi:10.1007/s10551-013-1807-y
Liptak, A. (2014, June 30). Supreme Court Rejects Contraceptives Mandate for Some Corporations. Retrieved May 7, 2018, from https://www.nytimes.com/2014/07/01/us/hobby-lobby-case-supreme-court-contraception.html
Persons, O. (2012). Incorporating Corporate Social Responsibility and Sustainability Into a Business Course: A Shared Experience. Journal of Education for Business, 87(2), 63-72. doi:10.1080/08832323.2011.562933
Savolainen, T. (2014). Trust-building in e-leadership: A case study of leaders' challenges and skills in technology-mediated interaction. Journal of Global Business Issues, 8(2), 45-56. Retrieved from www.globip.com/globalinternational.htm
Shellnutt, K., Zylstra, S. E., Becker, A. J., & Isaacs, S. E. (2017, July 6). Hobby Lobby Returns 'Priceless' Artifacts Smuggled from Iraq. Retrieved May 7, 2018, from https://www.christianitytoday.com/news/2017/july/hobby-lobby-steve-green-artifacts-smuggled-from-iraq.html
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