Introduction
In the context of ethical issues, this report mainly focuses on the issue of Amazon disregarding worker rights globally. Using the 5Ws, PESTEL, and the 7-step decision-making tool whilst encompassing various theories to analyze the ethical issue in-depth and comprehensively. It is evident that the company’s relentless pursuit of profit margins to maximize its shareholder profits has resulted in the company exploiting its workforce in the end. Does this bring the faultiness of corporate social responsibility, and is it high time for businesses to adopt corporate governance instead?
The selected Issues
Working Conditions are the environmental, physical, and social factors affecting an employee’s well-being and performance at work. Amazon has been criticized for offering its employees poor working conditions, which put their health and safety at risk (Annierpalmer, 2023). For example, in 2023, Amazon workers at Deltona, Illinois, New Windsor, and Waukegan were exposed to “ergonomic hazards,” which put them at high risk for musculoskeletal disorders and back injuries (Annierpalmer, 2023).
Unionization is collective bargaining and employee representation for better labor rights. Amazon has a history of undermining its workers’ unionization efforts (Edayadi et al., 2023). For example, Amazon spent approximately $4.3 million on anti-union consultants and deployed illegal and legal anti-union tactics (Edayadi et al., 2023).
External Environment using 5Ws
The external environment that led to Amazon facing the issue of disregarding working rights is the legal environment.
The labor market and competition (who): Amazon operates in a highly competitive environment, which creates immense pressure for the company to reduce its production costs to price its products just right compared to its competitors (OECD, 2020). Also, the labor market has a high surplus for low-skilled workers, especially in developing countries, which allows Amazon to exploit these employees without facing significant repercussions.
Labor laws and regulations (what): Weak labor laws and regulations enforcement enable Amazon to disregard worker rights with minimal accountability (LeBaron & Rühmkorf, 2017). In addition, the company’s lobbying efforts can influence legislation in its favor.
Globalization (where): As a global company, it takes advantage of labor standards as they vary with countries (LeBaron & Rühmkorf, 2017). As a result, the company can source labor from countries with weak protection laws.
Economy (when): the increased growth of e-commerce across the globe and the development of supply chains have resulted in increased demand for products from Amazon (Reinartz et al., 2019). As a result, Amazon pushes its workers over to meet the product demand, which can result in worker rights violations.
Shareholder pressure and corporate culture: Amazon faces relentless pressure from its shareholders on profitability and growth (Lowe et al., 2020). As a result, the company tends to prioritize shareholder profit maximization, hence overlooking corporate governance.
Analysis
Working environment
Although Amazon has created remarkable mechanisms to guarantee its customer’s efficiency, satisfaction, and excellent experiences, it has not demonstrated the same degree of dedication to safeguarding the health and welfare of its employees. The company has an ethical issue of unhealthy and unsafe working conditions and employee treatment (Thorbecke, 2023). It exposes its employees to harsh working conditions, especially during peak shopping season. For example, reports indicate that warehouse workers experience high frequency in performing tasks such as lifting heavy items, which exposes them to high risks of unhealthy conditions such as musculoskeletal disorders. Based on the 7-step decision-making model, the ethical issue of harsh working conditions in Amazon arises due to the pursuit of profit, which results in the prioritization of efficiency instead of the safety and health of the employees. From a moral rights approach, as discussed in week 5, employees have a right to work in a safe and healthy environment, a principle violated by the actions of Amazon company.
In addition, Amazon has pay issues for its workers, whereby some employees experience low wages and unequal pay (Litman et al., 2020). For example, warehouse workers receive 26% less wage than the average monthly earnings of workers in some counties in the US (Hirsch, 2023). The workers work for long hours and limited breaks since they are required to meet various deadlines and targets. Due to personal and financial hardships, this forces them to depend on government assistance programs. According to stakeholder theory, the decision to treat the employees well is an ethical component that must be practiced by organizations such as Amazon (Parmar et al., 2010). Stakeholders such as the employees play a critical role in an organization as treating them in the right way encourages them to remain committed and involved in a company’s functions and activities even during turbulent times such as the COVID-19 pandemic. This is supported by week 4, which suggests that a company owns stakeholders such as employees’ corporate social responsibilities. Amazon has violated the corporate social responsibilities of employees since they have a right to fair and equal wages as required by the justice rule of decision-making, as discussed in week 4.
Unionization and undermining of collective rights of the workers
Amazon has an ethical issue of trying to control and restrict the workers from forming unions. This has been an issue for the company since its launch in 1994 (Palmer, 2020). In reference to the 7-step decision-making model, it discourages the unions to prevent the employees from engaging in a collective action of airing their complaints concerning their working conditions and treatment by the company. Also, it exerts increased control over the employees through surveillance technologies, which can be perceived as a way to monitor the employees from organizing collective action. This is because these technologies track employees’ movement, undermining their privacy. These actions of Amazon to prevent the workers from unionization violate deontological ethics. Deontology’s ethical approach requires the application of duties and rules; thus, organizations should make decisions based on what is morally correct without considering the actual consequences. Ethically, the employees at Amazon have the right to freedom and be allowed to form unions due to the impact they have on the employees and the entire community.
Recommendations
Shift from CSR to Corporate Social Responsibility
Amazon must shift from corporate social responsibility to corporate governance, given its track record of neglecting its employees’ working conditions. It is evident from the results that the current CSR initiatives of the company are not comprehensive and do not cover the needs of all stakeholders, such as the employees. By prioritizing corporate governance, the company will encompass comprehensive policies that include all stakeholders (Wang et al., 2016). Also, it will shift the company’s brand focus from focusing on growth and expansion and the well-being of its key drivers, the employees. This transformation will clear the systematic issues of workers’ rights at Amazon and demonstrate the company’s commitment to comprehensive, responsible corporate practices. In addition, according to Bocean et al. (2022), a company prioritizes social responsibility (SR) results in an open and positive working environment whereby employees’ rights are respected. This is because a company operating ethically provides employees with job satisfaction and increased engagement in organizational activities. Ethical and moral standards play a critical role in providing a framework for differentiating between wrong and right. Thus, these values are likely to assist Amazon in avoiding unethical behaviors, which can have consequences on its reputation and lead to legal consequences.
Encourage open dialogue and transparency.
Amazon can encourage open dialogue and transparent policies to ensure that it makes decisions that positively impact most of the organization’s stakeholders. From a utilitarianism rule of decision-making perspective in week 4, decisions and actions taken should positively impact more people. Encouraging an open dialogue and transparency will expose unethical behaviors in the organization. Also, this provides an opportunity for resolving the existing ethical challenges to create an ethical working environment. Through open dialogues, the employees understand the drawbacks and potential benefits of unionization (Mishra et al., 2014). This contributed to making informed decisions based on the interests and values of all individuals in the organization. When employers and their workers engage in open and transparent communication, it builds trust and respect between them. Due to fair bargaining, Amazon will act within the ethical boundaries, resulting in an equitable and balanced agreement and preventing conflicts and disruption of the organizational functions and activities.
PESTEL
Political: Amazon is subjected to different political conditions as it operates in the global landscape. This includes different trade policies, government regulations, and taxation, which impacts its operations in some regions (Alshmrani, 2021). For instance, the company faces complex tax regulations in the US as they differ from state to state, making it challenging for the retail frontier to collect and remit taxes. However, the tax system in Europe is more standardized, reducing the challenges it faces to remit and collect taxes (Kim, 2017).
Economic: Varying economic conditions impact Amazon’s sales directly. The reason is that economic conditions are directly linked to a consumer’s purchasing power. Exchange rates, inflation, interests, and commodities directly impact the company’s revenue (Alshmrani, 2021). For example, earlier this year, the interest rates were high, which led to a decrease in its earnings during the second quarter from $8.7 billion in revenue to $ 6.7 million as the purchasing power was low.
Social cultural: Amazon, a multinational company, is faced with different cultures in the host countries where it operates. For instance, customer preferences differ from country to country, influencing the demand for its products subjectively (Kvasničková Stanislavská et al., 2023). Customers in developed countries such as the USA and Europe prefer organic and eco-friendly products; however, in emerging and developing economies such as India and Africa, affordable products are in the highest demand (Kvasničková Stanislavská et al., 2023).
Technological: Amazon relies heavily on technology to optimize its operations, which has resulted in the company investing in improving innovation (Alshmrani, 2021). For instance, the company has invested in machine learning and artificial intelligence to be able to predict its customer’s preferences and tastes to optimize personalization on product recommendations, hence increasing the customer’s shopping experience.
Environmental: Amazon is committed to drastically reducing its carbon emissions to net zero. For example, the company claims to reach the net zero target by the year 2040, which shows its commitment to climate change (Amazon, 2021). In addition, the company is innovating eco-friendly materials which it uses for packaging.
Legal: Amazon faces a spectrum of legal challenges, such as labor disputes, antitrust issues, and intellectual property issues. For instance, in 2013, the company faced a lawsuit from Lush Cosmetics for allowing the sale of imitations through its platform (Constatine, 2013).
Conclusion
In conclusion, Amazon clearly disregards its workers’ rights through reports of poor working conditions and its anti-union practices. This underscores the company’s prioritization of maximizing shareholder profits over its employees, its driving force. Amazon’s relentless pursuit of maximizing profits comes at its worker’s expense. Despite the company’s vast resources, it falls short of fulfilling corporate social responsibility, which depicts the sustainability approach’s inadequacy. Therefore, the company should adopt corporate governance as it ensures stakeholder value has been prioritized, just as shareholder profit maximization.
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