Question

Your friend manages a retailer that has a history of superior profitability. She believes that one of the principle sources of competitive advantage for her enterprises are low labor costs. The low labor costs are due to her hiring of minimum wage workers, the decision not to give them any benefits (such as health benefits), and her consistent opposition tounionization at your company (the workforce is not unionized). Although she acknowledges that this approach does lead to high employee turnover, she argues that the jobs are low skilled, and that it is easy to replace someone who leaves.Is your friend's approach to doing business ethical? Are their ways of achieving low labor costs that do not rely upon the hiring of mini- mum wage workers? Would you council your friend to use an alternative approach?

Answer 1

The approach to doing business is completely unethical as it involves violation of labor rights as well as basic human rights where the labor are uinderpaid without any benefits, are being exploited and are not allowed to form a union to put forward their concerns.

Below are the ways to achieve low labor costs that do not rely upon the hiring of minimum wage workers -

1. Lowering the overall costs by improving the processes from an efficiency standpoint.

2. Implementing technologies that increase the productivity of the workers.

3. Automating the processes to remove additional workforce.

Yes, the individual can be counselled to use the alternative approach as the current approach is not only unethical but also illegal.