As the manager of the heavy equipment company, I would recommend for the CEO to continue out sourcing the manufacturing with the firm. The news article could be misinformation and there is not a need to panic. Ultimately it is the CEOs decision to make as he/she has executive power.
Decision
It is not illegal to outsource. There are several things to consider before discontinuing the use of the firm. The article stated that the employees were being paid low wages and working longer hours. It is possible that the dynamics of that particular country economics are vastly different in comparison to that of the United States. The amount that they are being paid may be sufficient enough to support their cost of living. Manufacturing in that country could also build that country’s economy in that is creating employment opportunities for its citizens.
On the contrary, if it has been proven that the firm has practice unfair laboring ethics, the company’s CEO may have to reconsider doing business with them. Another option would be renegotiate terms and establish a code of ethics with the firm. Also, find another firm that shares the company’s code of ethics and standards.
Ethics
According to Josephson Institutes Exemplary Leadership & Business Ethics, the following are 10 benefits of having an ethics code:
- Guide employees in situations where the ethical course of action is not immediately obvious.
- Help the company reinforce – and acquaint new employees with – its culture and values. A code can help create a climate of integrity and excellence.
- Help the company communicate its expectations to the staff to suppliers, vendors and customers. Also, by soliciting feedback and questions, a company can use the code to encourage frequent, open and honest communication among employees.
- Minimize subjective and inconsistent management standards. A code explicitly outlines the rights and responsibilities of staff members and helps guard against capricious and preferential treatment of employees.
- Help a company remain in compliance with complex government regulations. The landmark Sarbanes-Oxley Act of 2002 requires public companies to have an ethics code for senior financial officers.
- Build public trust and enhance business reputations. Also, a code helps demonstrate the company’s values to socially responsible investors.
- Offer protection in preempting or defending against lawsuits.
- Enhance morale, employee pride, loyalty and the recruiting of outstanding employees.
- Help promote constructive social change by raising awareness of the community’s needs and encouraging employees and other stakeholders to help.
- Promote market efficiency – especially in areas where laws are weak or inefficient – by rewarding the best and most ethical producers of goods and services. (Josephson Institutes Exemplary Leadership & Business Ethics, n. d.)
Conclusion
The company could also increase the amount of wages, as well as provide benefits and better working conditions. This could build a meaningful relationship and improve their quality of life. Reinforcing the scientific management model establishes trust between all parties.
Taking the above approaches are both rational and political decision making that can preserve the company’s reputation, credibility and brand.