Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 19

CAN OFFSHORING BE DONE MORE ETHICALLY?
As we saw in Chapter 5, human resource planning involves several options to meet an organization's needs for talent. One option is to outsource activities that can be performed more effectively and efficiently by a contractor. In today's global marketplace, outsourcing decisions frequently involve offshoring activities to companies in lower-wage locations. However, the reasons why labor costs are lower in another country include lower standards for working conditions-even conditions that would be considered unethical in the parent country.
As a result, this kind of decision can open up a company to criticism, as Apple has faced with regard to its contractors in China. Apple's employees develop and market new products, but manufacturing of iPhones, iPads, and other products is done by contractors in China. The largest of these is Foxconn, a manufacturer of consumer electronics sold under other companies' brands. Foxconn has been criticized for permitting unsafe working conditions, including the accumulation of aluminum dust thought to have caused two serious explosions in its factories. Foxconn workers have reported working long shifts, as long as 12 hours a day, six days a week, some of them standing throughout their work shifts.
Apple is the customer, not the owner, of these facilities, but it tries to exert influence. It has developed a supplier code of conduct laying out standards that contractors must meet in order for Apple to continue buying from them. Suppliers are expected to provide safe working conditions, hire fairly, treat workers with dignity, and follow environmentally responsible practices. Apple sends auditors to visit the factories to check that suppliers are meeting the standards in the code of conduct. It publishes supplier responsibility reports that detail how well the suppliers are meeting the standards. Since Apple began keeping records in 2007, however, more than half of its suppliers have violated at least one requirement every year. Typical problems include employees working more than 60 hours per week; other problems have included using underage workers, paying less than minimum wage, and violating safety requirements. Apple insists that each violation be corrected, and it notes that contractors are showing improvement each year. But former managers of Apple and the China factories have claimed that Apple expresses far more interest in the cost, quality, and speedy delivery of its products than in the working conditions of the people making them. Apple insists that it meets and in some areas exceeds the standards for its industry.
What ethical standards for human resource management do you think a company should require from all its operations worldwide? In what areas of HRM, if any, should ethical standards be relaxed to match the prevailing norms of a particular country?