Question

A case study of ethical issue at Gucci in Shenzhen, China “On 8 October 2011, an open letter— was spread on the Internet. This letter was written by five former employees of the Gucci Shenzhen Flagship Store. In the letter, they alleged that employees caught an occupational disease, that there was one miscarriage attributable to excessive working hours and that there was no compensation for these hardships. Moreover, they stated that there were excessive restrictions on employees’ behavior, including the need to obtain permission before getting a drink or a snack, and strict limitations on toilet time. They stated that, while the restrictions were applied strictly to all frontline employees, including one who was pregnant, they were not applied to the managers. The letter also claimed that the employees had to pay compensation for any product that was stolen or went missing, even though these luxury products had already been insured. They also criticized Gucci’s goods exchange policies which appeared to be arbitrary and dependent on the manager’s mood. All in all, they accused Gucci of lacking systematic and humane management and complained that their rights and dignity were being violated. Once revealed online, this report aroused widespread discussion among Internet users. Further information emerged, suggesting that the case also involved falsification of records about working hours, and the imposition of forced, unpaid overtime work. Gucci implemented a system of working one full day, followed by a day off. Officially, 1 day’s work was about 10 h. But the workers complained that, on their working days, they were required to clock off at a certain time to establish a false electronic record, and then continue their work, counting goods until two or three o’clock in the morning without compensation. Some netizens labeled Gucci as a “sweatshop.” Many opined that the labor management practices of some multinational companies and brand owners failed to match their international status. Several days later, the Gucci headquarters in China issued a statement, saying that “Gucci does not and will not endorse or tolerate the alleged malpractices.” Gucci also stated that that the company had conducted thorough investigations and had implemented a series of measures, including the replacement of the store manager and assistant store manager. Meanwhile, the Human Resources Bureau within the Legal Department of Shenzhen’s Luohu District said they would further investigate the case.” (Wang, L. & Snell, R. 2012. A case study of ethical issue at Gucci in Shenzhen, China. Asian J Bus Ethics, 2:173–183.)

Consider that you are a part of the Human Resources Department for Gucci Headquarters, and answer the following questions:

1. Identify and discuss the ethical issues that have occurred in Gucci, Shenzen, China.

2. Provide at least three possible HR-related solutions for these ethical issues. (12Marks)

Answer 1

ANS 1. THE ETHICAL ISSUES THAT HAVE OCCURRED IN GUCCI, SHENZEN, CHINA WERE:

• EXCESSIVE RESTRICTION ON THE BEHAVIOUR OF EMPLOYEES LIKE NOT LETTING THEM TO GO TO THE TOILET WITHOUT PERMISSION.
• DISCRIMINATION OF FRONTLINE MANAGERS FROM THE UPPER MANAGERS BECAUSE RESTRICTIONS WERE ONLY FORCED ON FRONTLINE MANAGERS.
• EMPLOYEES HAD TO PAY FORCEFUL COMPENSATION IF ANY ITEM WENT MISSING.
• ARBITRARY GOODS EXCHANGE POLICIES OF THE COMPANY THAT DEPENDED MOSTLY ON MANAGER'S MOOD.
• LACK OF HUMANE MANAGEMENT AND VIOLATION OF RIGHTS AND DIGNITY OF EMPLOYEES.
• FALSIFICATION OF WORKING TIME RECORD AND FORCED / UNPAID OVERTIME WAS THERE.

ANS 2. THE THREE POSSIBLE HR RELATED SOLUTIONS CAN BE :

1. SYSTEMATIC HUMANE MANAGEMENT: THE FIRM SHOULD HAVE A SYSTEMATIC HUMANE MANAGEMENT SYSTEM WHERE THE WORKING HOURS ARE MANAGED FOR EVERY EMPLOYEE SO THAT NO EMPLOYEE WORKS MORE OR LESS THAN OTHER. APART FROM WORKING HOURS, LESS LIMITATIONS SHOULD BE THERE ON THEM LIKE THEY DO NOT HAVE TO TAKE PERMISSIONS FOR GOING TO TOILET. OVERTIME SHOULD BE FAIRLY RECORDED AND STATED AND NOT FORCED ON THEM.
2. REPLACE THE STORE MANAGER AND ASSISTANT STORE MANAGER: THEY BOTH SHOULD BE REPLACED BECAUSE THEY ARE THE ONES WHO ARE RESPONSIBLE FOR ALL THE EMPLOYEES' WORK AND THEIR PROBLEMS/COMPLAINTS. THEY SHOULD HAVE LISTENED TO THEIR EMPLOYEES, TOOK CARE OF THEM AND SOLVED THEOR COMPLAINTS/PROBLEMS. THEY SHOULD HAVE GIVEN THEM THE REQUIRED RIGHTS AND FREEDOM FOR TAKING DECISIONS AT WORK.
3. THE THIRD THING WHICH CAN BE ALTERED IS THE LABOUR MANAGEMENT STANDARDS WHICH SHOULD MATCH THE INTERNATIONAL STATUS OF THE COMPANY BECAUSE THESE TYPES OF COMPLAINTS/ DRAWBACKS AFFECTS THE COMPANIES AND THEIR GOODWILL IN THE LABOUR MARKET. SO, PROPER  LABOUR MANAGEMENT SYSTEM SHOULD BE IMPLEMENTED AND MATCHED UP WITH THE INTERNATIONAL STANDARDS.