The ethical mission for Everlane was more radical until the current Covid 19 pandemic that has caused a different image of the Company’s ethical status leading to a hot debate on whether the organization still holds to the ethics it had promised. In 2020, Everlane Company faced a public relations crisis, encountering backlash after laying off several employees. While this decision was made purposely due to the economic impacts of the Covid 19 pandemic, it coincided with employee unionization efforts that have also led to many questions about the Company’s ethical promise (Babicheva, 2019). Following the laying off, many of the Company’s former employees also reported that Everlane was not ethical and accused the Company of exercising anti-Black and anti-union. It had a toxic internal culture.
Background Information
Everlane is one of the famous companies headquartered in San Francisco, USA, and was founded in 2010 with the mission to disrupt the fashion industry with radical transparency. Based on the current notoriously secretive and shady fashion world, Everlane’s operation of transparency, especially in terms of pricing, serves as a fundamental aspect of their business culture. As a great innovative US apparel retailer, Everlane employed radical transparency by always ensuring to disclose detailed information about costs it incurred and the factories manufacturing its clothes (Testa, Friedman, and Paton, 2020). This Company has also been known for prioritizing ethics and sustainability overall in its period of operation. For instance, Everlane committed to supporting its suppliers by addressing their needs and eliminating virgin plastics from its entire supply by 2021.
Issues Discussion
Everlane has been astounding, not only ethical and sustainable but also fashionable. This fashion company fits nicely with the subdued minimalist and carefully curated aspirational lifestyle popularized by Kinfolk and Cereal and also capitalized on the normcore trend of the 2010s. Another essential benefit Everlane has been offering to the market is its relative affordability and clever pricing for its products (Testa, Friedman, and Paton, 2020). Their clothes were not cheap, so they signaled quality, but were not as expensive that young professionals could not afford. Following this marketing strategy, Everlane has been rising and doubled its sales for many consecutive years, expanding its collections to include everything from denim to shoes.
In many ways, 2022 seems to be a year of reckoning for the fashion industry, including Everlane Fashion Company. While the environmental movements in the present day have continued voicing concerns about the unsustainable nature of our consumption habits for years, the outbreak of the Covid 19 pandemic has fundamentally shattered the industry and forced brands to rethink their future operations (Gerlick, 2019). Following the consequences of the pandemic, many consumers have changed their purchasing habits, and the most affected companies are the clothing companies, as many have been forced to halt their manufacturing and even close some of their stores. Everlane’s case is a perfect example of the companies that have faced these consequences leading to substantive ethical issues for this Company.
Following Everlane’s case, it is essential to note that every organization worldwide has an image of their better selves, including how and when they act ethically or at their best. They probably also have an image of what an ethical community, ethical business, an honest government, or an ethical society should be. In the present day, ethics has to deal with a wide range of acting ethically as individuals, creating ethical organizations and governments, and making an organizational society more ethical in the way it treats everyone. In times of any ethical situation, organizations should use the appropriate framework when deciding to avoid painting different images to what they might have labored to build for years (Gerlick, 2019). Every organization ensures that their ethical decision is based on their feelings, religion, law, and accepted social practice or science. According to Week 3 concepts, decisions about right or wrong permeate everyday life and play an essential role in every level of life, such as acting properly as individuals, creating responsible organizations and governments, and making society more ethical.
The problem with the Statement
The most significant ethical concern that still lingers in many scholars’ minds is how Everlane could have moved forward based on its stated values and continued to both meet its customers’ needs as well as earn its profit amidst the economic effect of the Corona Virus pandemic and the significant change in the consumer consumption (Testa, Friedman, and Paton, 2020). The issues further create critical questions on the steps that Everlane might have used in deciding to lay off employees to survive the economic challenge. An intensive analysis of the seven steps for ethical decision-making learned in Week 4 can help in determining if the decision was ethical or not.
Analysis of the Problem using the 7 Steps for Ethical Decision Making
To understand and judge or identify whether Everlane followed ethical measures or not, it is essential to know how the Company structures its workforce. For instance, Everlane has full-time employees such as the retail workers and employees situated at the Company’s headquarters and part-time workers such as the customer service team. Following the outbreak of the Covid 19 pandemic, these employees work from home, and their workload is theoretically capped at 29 hours, which is below the standard 40 hours required by the Company. Using this understanding, it can be identified whether the Company used appropriate steps in its decision or not. Week 2-5 class reading provides seven ethical steps for decision making in times of a crisis that are essential for any organization in a dilemma such as Everlane. These steps include Stating the problem, checking facts, identifying relevant factors such as internal and external, developing a list of options, testing the options, making a choice, and finally reviewing the first six steps to determine their efficacy.
Step 1: State the Problem
It is always crucial that the Company’s management facing the crisis communicate the crisis interest to all their stakeholders before making any decision that might affect them. Based on Everlane’s Case, it can be deduced that the Company works on the assumption that its employees understood the global economic impact the pandemic had brought to their business (Yang, Sliusarenko, and Ferraro-Doucette, 2020). For this reason, they decided without appropriate discussion to whom the decisions could affect. This action led the Company to face a public allegation of hypocrisy and sell an image to the world that did not reflect their adverse experiences inside the Company. These accusations could result from a misunderstanding of the nature of the crisis and the consequences it brought forth.
Step 2: Checking fact
It is hard to imagine that there is a fashion label out there that is not being impacted by the coronavirus outbreak. It is important to note that everyone is also affected, from the designer to the marketing assistant to the person sewing the clothes. These facts significantly explain the reasons Everlane made its laying off a decision that has led it to a crisis questioning its promise for transparency. Following the economic effect of the pandemic, Everlane was not profitable and did not have a cash balance; therefore, it had to eliminate all part-time associates across the board (Yang, Sliusarenko, and Ferraro-Doucette, 2020). However, the employee’s accused the Company of being unfair when laying off their members as they felt the process affected the black employees more.
Step 3: Identification of Relevant Factors such as Internal and External
If only the Company had talked to their workers about how best to handle the situation rather than post ions notes on the internet, the crisis would not have expanded to this extent. For example, most of Everlane’s product does not have third-party certification of fair labor and sustainable practices and lacks the Company’s comprehensive certification either (Mandarino, 2016). This factor is essential because you can make whatever claims you want without third-party verification, but no one will know better. Although the Company listed several certifications, they did not specify what percentages of products have them.
Step 4: Developing a list of Options
According to the rational model, every organization needs to have a variety of options in times of any crisis to help reduce the decision’s impact on their stakeholders (Week 2 Reading). Everlane, alternative measures such as reducing the payroll instead of laying the employees off could cause more effect.
Step 5: Testing Options
Some of the appropriate tests that could be used in testing the option include the harm test, which tests if the preferred option could cause less harm than the other, and the colleague test, that focus on how the stakeholder could describe the problem and the option for the problem (Week 5 Reading). Due to a wrong choice of option, Everlane was accused of discriminatory measures.
Step 6: Make a Choice
The appropriate choice would be based on the five previous steps that consider the nature of the problem and the possible consequences of the options. The final step, seven, involves reviewing all the six steps to check if any mistake could be made in the decision-making (Babicheva, 2019). I believe Everlane did not consider all these steps leading to their accusation from the stakeholders.
Recommendation and Conclusion
The most significant issue at Everlane that has contributed to the questioning of the Company’s missions and promise of transparency has been that the Company did not know which employees were part of the unionizing effort and attributed the layoffs to the economic pressures of the pandemic. The workers described these actions as union bursting and unethical decisions for a famous company (Babicheva, 2019). Everlane would have cared for both the life of its business and that of the employees. Instead of laying them off, it would have simply increased the rate of the employees working from home and maximizing internet making so that they could not bear much loss to lead them into laying off the worker. Another thing I would recommend is on reviewing the options for the ethical decision. The criteria for laying off employees need to be equal and not suggest any form of discrimination. For instance, all employees’ payroll could have been reduced by a specific percentage to avoid some of the raised discriminatory claims.
References
Babicheva, E., 2019. Building the fashion business of the future: Everlane and its radical transparency. SAGE Publications: SAGE Business Cases Originals.
Garlick, J., 2019. Transparency in Apparel: Everlane as a Barometer for Global Positive Impact. The International Journal of Ethical Leadership, 6(1), pp.87-95.
Mandarino, K., 2016. Niche Brands: Understanding how niche fashion startups connect with Millennials. Week 2-5 class notes.
Testa, J., Friedman, V. and Paton, E., 2020. Everlane’s Promise of ‘Radical Transparency’Unravels. The New York Times, 26.
Yang, R., Sliusarenko, A. and Ferraro-Doucette, E., 2020. Everlane: a ‘radically transparent fashion company disrupting the industry. International expansion strategy.
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