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Chapter 16: The Inclusive Workplace—Level IV Inclusion through International Collaborations

Chapter 16: The Inclusive Workplace—Level IV Inclusion through International Collaborations

Chapter Overview

Overview Level IV: Inclusion through International Collaborations

The fourth level, inclusion through international collaborations, refers to the organization’s positions and practices related to the fair exchange of economic goods and services and the respectful cultural relationship with individuals and groups in other countries. It reflects the “macro” system level of international relations. The exclusionary workplace operates from a framework that is ethno-centric, competition-based, and is focused on narrowly defined financial and national interests. The inclusive work place sees value in collaborating across national borders, in being pluralistic, and in identifying global mutual interests.

The combination of business internationalization, worker migration, and work force diversity creates a challenge for companies engaged in international business. The process through which people and countries acquire wealth has undergone major changes in recent decades. The internationalization of capital markets and advances in technology has changed the prerequisites for national economic success. The increasingly more open economic markets create opportunities for the counties with surplus workforce and under-developed economies to come together with countries that can finance economic endeavors and provide jobs. However, these conditions also open up opportunities for exploitation by companies who take advantage of workers’ desperation in poor regions by employing them in abhorrent conditions and sub-minimal payment.

In order to compete in this changing environment, companies must develop intelligent systems of human resource management and open up opportunities for a diverse workforce across national boundaries. If they wish to survive and succeed in today’s changing market conditions, companies need to conduct their business in a fair and ethical way while respecting other cultures.

 Chapter 16 Outline

Chapter 16 Outline

Chapter Outline

• Level IV Overview—Inclusion through International Collaborations

a.     The fourth level, inclusion through international collaborations, refers to the organization’s positions and practices related to the fair exchange of economic goods and services and the respectful cultural relationship with individuals and groups in other countries.

b.     This level reflects the “macro” system level of international relations.

c.     Differences between an exclusionary workplace and an inclusive workplace

                                               i.     The exclusionary workplace operates from a framework that is ethno-centric, competition-based, and is focused on narrowly defined financial and national interests (e.g., this type of workplace will send local employees on international assignments to strictly enforce company’s values and norms overseas).

                                             ii.     The inclusive workplace sees value in collaborating across national borders, in being pluralistic, and in identifying global mutual interests (e.g., an inclusive workplace will hire local managers and give autonomy to its international branches).

d.     Current challenges and changes for companies engaged in international business

                                               i.     The combination of business internationalization, worker migration, and workforce diversity creates a challenge for companies engaged in international business.

                                             ii.     The internationalization of capital markets and advances in technology has changed the prerequisites for national economic success.

                                            iii.     The increasingly more open economic markets create opportunities for the counties with surplus workforce and under-developed economies to come together with countries that can finance economic endeavors and provide jobs.

                                            iv.     Opportunities exist for exploitation by companies who take advantage of workers’ desperation in poor regions by employing them in abhorrent conditions and sub-minimal payment.

                                             v.     In order to compete in this changing environment, companies must develop intelligent systems of human resource management and open up opportunities for a diverse workforce across national boundaries.

                                            vi.     If they wish to survive and succeed in today’s changing market conditions, companies need to conduct their business in a fair and ethical way while respecting other cultures.

e.     Three interesting examples of inclusive practices   

                                               i.     Hindustan Lever, the Indian division of Unilever

1.     In 1975, the company was almost forced to close its dairy because the villagers, being poverty stricken, were unable to properly feed their livestock.

2.     The management decided to invest effort and financial resources on its innovative development initiative, helping some 600 villagers reach self-sufficiency.

3.     As a result of the program:

a.     the health and income levels of the local people have improved considerably;

b.    the dairy has been operating at full capacity; and

c.     the villagers are now loyal consumers of Hindustan Lever products.

                                             ii.     Chiquita Brands International, a producer, distributor, and marketer of fresh and processed foods

1.     The rural areas in Latin American countries from which Chiquita sources bananas struggle to various degrees with poverty, illiteracy, lack of access to health care and other basic social and infrastructure needs.

2.     The company went through four stages in the process of addressing these needs: (1) raising top management awareness; (2) formulating a vision and core corporate values; (3) changing organizational behavior; and (4) anchoring the change.

3.     Through much of its 100 years history, including those as predecessor companies United Fruit and United Brands, the company has been fiercely competitive and suffered from a less than stellar reputation—the main impetus for implementing its socially oriented organizational change.

                                            iii.     Lotus Corporation

1.     Lotus developed its international inclusive initiative out of ideological conviction by reversing its previous policy not to do business in South Africa.

2.     They launched a visionary initiative with the purpose of assisting in the development of the black business community in 1992.

a.     Lotus established its South Africa social investment fund and has charged its newly hired manager with a mandate to work directly with Black-run information technology projects.

b.    Lotus created an internship program for black programming trainees in Johannesburg and brought a group of black computer instructors to its Massachusetts headquarters for advanced training.

c.     Lotus also made efforts to conduct its business dealings in the country in a way that will enhance black businesses.

    II.         Barriers and Benefits to Implementing the Inclusive Approach at Level IV

a.     Barriers

                                               i.     The primary barrier is greed, which motivates companies to go beyond a fair economic exchange and take advantage of employees or resources of a host country. Companies exploit uneducated people who live in poor nations with the purpose of gaining economic advantage.

                                             ii.     The second barrier is discrimination or inappropriate consideration of age, gender, race, or other personal characteristics with respect to the hiring and employment conditions of both local employees and expatriates (employees who move from one country to the other to do their jobs).

                                            iii.     The third is lack of respect for other national cultures, which leads to a forced implementation of values and norms that are not appropriate for the host country.

b.     Benefits

                                               i.     Benefits at the Individual Level

1.     Provided that companies today reap the benefits of an increasingly global marketplace by employing workers from different nationalities in or outside, their native countries—new jobs and international opportunities, will emerge for these companies’ employees.

                                             ii.     Organizational Level Benefits

1.     Foreign production currently accounts for more than 25 percent of multinational companies’ domestic production, new global ventures, and international collaborations allow companies to expand their geographical markets and to increase their economic activities.

2.     Given that products and services reach a growing number of men and women in countries throughout the world, sales organizations and supplier communities can improve their access to people with talent by increasing the diversity of their workforce.

3.     They can also become more aware of the specific needs of their internationally based customers, which can enable them to create valued products and services.

   III.         Fair Trade History

a.     There has been a growing movement to eliminate poor working conditions, not through laws or trade penalties, but through positive trading relations, known as fair trade.

b.     Fair trade originated in the late 1950s when a UK charity, Oxfam, started selling crafts made by Chinese refugees. This practice helped bolster Oxfam’s organizational goal of offering a lasting solution to poverty and suffering around the world.

c.     Since that time, fair trade practices have emerged to ensure that producers, laborers and farmers are paid a price that not only covers their costs, but also allows them to support their families, invest in their businesses, and invest in social and economic improvements.

d.     Several of the organizations now certify that consumer products meet fair trade guidelines, adding a certification to product packaging.

e.     The key principles of Fair Trade, as defined by The Fair Trade Federation (2008) are:

                                               i.     The creation of opportunities for economically disadvantaged producers;

                                             ii.     Gender equity—particularly making sure that women are properly paid for their work and empowered within their organizations;

                                            iii.     Transparency and accountability—including transparent management and open dialogues between importers and producers;

                                            iv.     Capacity building—to promote sustainable business practices by producers and provide management-skill development and financial and technical assistance;

                                             v.     Payment of a fair price—as agreed through dialogue between the importer and producer;

                                            vi.     Improved working conditions;

                                          vii.     Environmental sustainability; and

                                         viii.     Promoting fairer trade by educating consumers about the importance of purchasing fairly traded products.

f.      Market Expansion

                                               i.     The fair trade market has grown considerably since its start with craft items in the UK. Consumers can now buy a wide array of fair trade products including produce, coffee, tea, toys, jewelry, furniture, paper products, clothing, chocolate, rugs and other items (Fair Trade Federation, 2003).

                                             ii.     The demand for fair trade products has spread across approximately 58 countries including as of 2007 including Europe to the United States. However, the number and types of fair trade products varies from country to country.

                                            iii.     New fair trade products are regularly introduced around the world.

                                            iv.     More than any other product, coffee is experiencing strong growth worldwide.

g.     Example of the Costs of Fair Trade Goods

                                               i.     How much extra fair trade products cost varies by product and company. However, the costs can often be kept relatively close to the price of nonfair trade products, as illustrated by the coffee market.

1.     According to TransFair, coffee importers buy directly from growers at $1.31 per pound (10 cents above prevailing market rates), or $1.51 per pound (20 cents above market rates) for organic coffee.

2.     Although the prices paid by importers are not much more than the prevailing market rates, the monies go directly to the growers instead of to a middleman.

h.     Global Village and The Fair Trade Company

                                               i.     Need for Options in Japan

1.     In the 1990s, Global Village was formed in Japan through the efforts of one resident, Safi Minney.

2.     Global Village is a nongovernmental organization with the goal of providing sources for Japanese consumers to recycle and to purchase environmentally and socially friendly products.

3.     In 1995, Ms. Minney formed The Fair Trade Company, a natural outgrowth of Global Village.

a.      The Fair Trade Company was formed to provide environmentally and socially friendly products to consumers in Japan.

b.    The Fair Trade Company formed relationships with underprivileged people from around the world to use indigenous resources to produce clothing and handicrafts.

c.     All of the producers were paid a price, approximately 30% above the prevailing market prices, which would allow them to sustain a living for their families and to invest in their businesses.

                                             ii.     Fair Trade and Gender Inequality in Less-Developed Countries

1.     The issues of fair trade and gender inequalities have been an ongoing battle.

2.     Women in less-developed countries were not receiving the same working conditions in terms of quality and fairness in the fair trade workforce then that of men.

3.     Today, gender inequality is not at the level it once was, although it is suggested that more research is needed in order to fully identify how trade relations perpetuate inequality and what trade relations are necessary to advance global and gender parity.

                                            iii.     Formula for Success

1.     Despite the negative images of fair trade clothing and the higher prices of their items, The Fair Trade Company experienced 40% to 50% growth per year for the first few years.

2.     Soon they launched a small catalog which, by 1999, developed into a 100-page catalog called People Tree, listing the Fair Trade Company’s products.

3.     As of the end of 2002, the catalog had 20,000 customers in Japan, which, combined with sales to about 500 Japanese stores, led The Fair Trade Company to annual sales of $7.4 million.

4.     Ms. Minney explains that product quality was the key to her success in Japan.

5.     After gaining success in Japan, The Fair Trade Company branched into the UK market in September 2000, naming the company People Tree after its catalog. After two years of sales in the UK, with little more than word-of-mouth promotion, sales have climbed to 460,000.

6.     In 2014, People Tree was voted into UK’s Top 5 most ethical companies by Ethical Consumer (a not-for-profit UK magazine and website).

i.      Fair Trade Future

                                               i.     Fair Trade Product Certifications

1.     Certified fair trade products are common in Europe; nearly 81% of all products sold in Europe feature a certification.

2.     Transfair is working to expand their certifications beyond a few labeled products in the United States, Canada and Japan.

3.     There is general agreement that the certifications are having a profound effect on the industry and will become more common in the coming years.

                                             ii.     Fair Trade Impact on Producing Countries

1.     A survey conducted by Cooperation of Fair Trade found:

a.     Fair trade provides more than 37,500 jobs to people in Africa, with the largest number being held by women;

b.    Asia provides approximately 250,000 jobs; and

c.     South America producers employs approximately 21,000 people in fair trade.

                                            iii.     Fair Trade Cities

1.     In Europe, a growing trend is to have cities certified as a “fair trade city” by the The Fairtrade Foundation.

2.     To earn the designation of fair trade city, the city must prove that shops and suppliers are committed to selling fair trade products.

3.     Wales is leading the pack in the battle for fair trade city and was named the first fair trade city in 2002.

j.      Summary and Conclusion

                                               i.     The fourth level, inclusion through international collaborations, refers to the organization’s positions and practices related to the fair exchange of economic goods and services and the respectful cultural relationship with individuals and groups in other countries.

                                             ii.     The exclusionary workplace operates from a framework that is ethnocentric, competition-based, and focused narrowly defined financial and national interests, but the inclusive workplace sees value in collaborating across national borders, being pluralistic, and identifying global mutual interests.

                                            iii.     In order for companies to compete in this changing environment, they must develop intelligent systems of HR management, open up opportunities for a diverse workforce across national boundaries, and conduct their business in a fair and ethical way, while respecting other cultures.

k.     Questions for Discussion and Further Analysis

                                               i.     Which method do you think would work better for improving worldwide working conditions: voluntary methods via fair trade products, or laws mandating fair working conditions for imports? What would be the benefit and drawbacks of each approach?

                                             ii.     What impact do you think The Fair Trade Company’s higher prices have on sales? What might be some of the reasons that The Fair Trade Company is paying a higher premium to producers than that paid by importers of fair trade coffee?

                                            iii.     If you consulted for another clothing company wanting to implement fair trade practices, how would you use the experience of People Tree to assist this company? How would you tie the company’s diversity management practices to its newly initiated fair trade practices? How would you use both to improve the company’s image internally (with its employees) and externally (with customers, financial institutions, and stock owners)?

                                            iv.     Some might claim that the use of a high percentage of volunteers in the fair trade industry is trading one group of low-wage workers for another. What are your opinions on the topic? Is this a fair analogy? Why or why not?

                                             v.     How can we better understand the relationship between fair trade and gender inequality in less-developed countries?

 

 

 

 

Barriers and Benefits to Implementing the Inclusive Approach at Level IV

(See Figure 16.1)

Barriers. There are several obstacles related to applying the principles of the inclusive workplace to international collaborations. The primary barrier is greed, which motivates companies to go beyond a fair economic exchange and to take advantage of employees and/or resources of a host country. The second barrier is discrimination or inappropriate consideration of age, gender, race, or other personal characteristics with respect to the hiring and employment conditions of both local employees and expatriates (employees who move from one country to the other to do their jobs). And the third barrier is lack of respect for other national cultures, which leads to a forced implementation of values and norms that are not appropriate to the host country.

Benefits. Companies today can reap the benefits of an increasingly global marketplace by employing workers from different nationalities in, or outside, their native countries. This expansion creates new jobs, including international job opportunities, for these companies’ employees. From a business point of view, diversity and nondiscrimination applied to international business contacts are crucial. Skill shortages and under-utilized customer potential, and improved market understanding are only a few of the more obvious business reasons for adopting inclusive practices.

Fair Trade History

There has been a growing movement to eliminate poor working conditions, not through laws or trade penalties, but through positive trading relations, known as fair trade. Fair trade originated in the late 1950s when a UK charity, Oxfam, started selling crafts made by Chinese refugees. This practice helped bolster Oxfam’s organizational goal of offering a lasting solution to poverty and suffering around the world. Since that time, fair trade practices have emerged to ensure that producers, laborers and farmers are paid a price that not only covers their costs, but also allows them to support their families, invest in their businesses, and invest in social and economic improvements. Several organizations have formed with the sole focus of promoting and monitoring fair trade practices. Many of these organizations certify that consumer products meet fair trade guidelines, adding a certification to product packaging.

Principles of Fair Trade. The key principles of Fair Trade, as defined by The Fair Trade Federation (2008) are:

• The creation of opportunities for economically disadvantaged producers;
• Gender equity—particularly making sure that women are properly paid for their work and empowered within their organizations;
• Transparency and accountability—including transparent management and open dialogues between importers and producers;
• Capacity building—promoting sustainable business practices by producers and providing management-skill development and financial and technical assistance;
• Payment of a fair price—as agreed through dialogue between the importer and producer;
• Improved working conditions;
• Environmental sustainability; and
• Promoting fairer trade by educating consumers about the importance up purchasing fairly traded products.

Market Expansion. The fair trade market has grown considerably since its start with craft items in the UK. Consumers can now buy a wide array of fair trade products including produce, coffee, tea, toys, jewelry, furniture, paper products, clothing, chocolate, rugs, and other items. The demand for fair trade products has spread across approximately 58 countries as of 2007 including Europe to the United States. However, the number and types of fair trade products varies from country to country. New fair trade products are regularly introduced around the world. More than any other product, coffee is experiencing strong growth worldwide.

Example of the Costs of Fair Trade Goods. The extra cost to purchase fair trade products varies by product and company. Nonetheless, costs can often be kept relatively close to the price of nonfair trade products, as illustrated by the coffee market. According to TransFair, coffee importers buy directly from growers at $1.31 per pound (10 cents above prevailing market rates), or $1.51 per pound (20 cents above market rates) for organic coffee. Although the prices paid by importers are not much more than the prevailing market rates, the monies go directly to the growers instead of to a middleman.

Global Village and The Fair Trade Company

Need for Options in Japan. In the 1990s, Global Village was formed in Japan through the efforts of one resident, Safi Minney. Global Village is a nongovernmental organization with the goal of providing sources for Japanese consumers to recycle and to purchase environmentally and socially friendly products. In 1995, Ms. Minney formed The Fair Trade Company, a natural outgrowth of Global Village. The Fair Trade Company was formed to actually provide such products to consumers in Japan. The Fair Trade Company formed relationships with underprivileged people from around the world to use indigenous resources to produce clothing and handicrafts. All of the producers were paid a price, approximately 30% above the prevailing market prices, which would allow them to sustain a living for their families and to invest in their businesses.

Fair Trade and Gender Inequality in Less-Developed Countries. For some time, the issues of fair trade and gender inequalities have been an ongoing battle. Women in less-developed countries were not receiving the same working conditions in terms of quality and fairness in the fair trade workforce than that of men. The social norm was for women to stay home and take care of their family. Today, gender inequality is not at the level it once was, although it is suggested that more research

 

Formula for Success. Despite the negative images of fair trade clothing (typically because of a combination of low quality and high prices), The Fair Trade Company experienced 40% to 50% growth per year over their first several years. Soon they launched a small catalog that, by 1999, developed into a 100-page catalog called People Tree, listing the Fair Trade Company’s products. As of the end of 2002, the catalog had 20,000 customers in Japan which, combined with sales to about 500 Japanese stores, led The Fair Trade Company to annual sales of $7.4 million. Ms. Minney explains that product quality was the key to her success in Japan. After gaining success in Japan, The Fair Trade Company branched into the UK market in September 2000, naming the company People Tree after its catalog. After two years of sales in the UK, with little more than word-of-mouth promotion, sales have climbed to $460,000.

In 2014, People Tree was voted into UK’s Top 5 most ethical companies by Ethical Consumer (a not-for-profit UK magazine and website).

Fair Trade Future

Fair Trade Product Certifications. Certified fair trade products are common in Europe. Nearly 81% of all products sold in Europe feature a certification on the packaging that issues consumers that proper principles were followed. One company is working to expand their certifications beyond a few labeled products in the United States, Canada, and Japan. There is general agreement that the certifications are having a profound effect on the industry and will become more common in the coming years.

Fair Trade Impact on Producing Countries. Cooperation of Fair Trade conducted a recent survey that reached out to producers in Africa, Asia and South America. They found that fair trade provides more than 37,500 jobs to people in Africa, with the largest number being held by women. According to the survey, fair trade producers in Asia provides approximately 250,000 jobs, while in South America, producers employ approximately 21,000 people.

Fair Trade Cities. In Europe, a growing trend is to have cities certified as a “fair trade city.” The Fair trade Foundation determines the criteria and awards the designation. To earn this designation, the city must prove that shops and suppliers are committed to selling fair trade products.

Summary and Conclusion

The fourth level, inclusion through international collaborations, refers to the organization’s positions and practices related to the fair exchange of economic goods and services and the respectful cultural relationship with individuals and groups in other countries. The exclusionary workplace operates from a framework that is ethnocentric, competition-based, and focused narrowly defined financial and national interests, but the inclusive workplace sees value in collaborating across national borders, being pluralistic, and identifying global mutual interests. In order for companies to compete in this changing environment, they must develop intelligent systems of HR management, open up opportunities for a diverse workforce across national boundaries, and conduct their business in a fair and ethical way, while respecting other cultures.

Questions for Discussion and Further Analysis

9.                  Which method do you think would work better for improving worldwide working conditions: voluntary methods via fair trade products, or laws mandating fair working conditions for imports? What would be the benefits and drawbacks of each approach?

10.             What impact do you think The Fair Trade Company’s higher prices have on sales? What might be some of the reasons that The Fair Trade Company is paying a higher premium to producers than that paid by importers of fair trade coffee?

11.             If you consulted for another clothing company wanting to implement fair trade practices, how would you use the experience of People Tree to assist this company? How would you tie the company’s diversity management practices to its newly initiated fair trade practices? How would you use both to improve the company’s image internally (with its employees) and externally (with customers, financial institutions, and stock owners)?

12.             Some might claim that the use of a high percentage of volunteers in the fair trade industry is trading one group of low-wage workers for another. What are your opinions on the topic? Is this a fair analogy? Why or why not?

13.             How can we better understand the relationship between fair trade and gender inequality in less-developed countries?