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HP: Are Companies Paying Suppliers Enough to Allow for Good HR Practices?

Tuesday, Feb. 12, 2013

Hewlett-Packard Co. announced this week that it would tighten oversight on its Chinese suppliers' use of student interns and temporary workers. Chinese factories often resort to interns and temporary workers to supplement its workforce while avoiding the costs associated with full-time employment, and reports of abuse of these workers are on the rise: such as long hours and being underpaid. In response to these trends, HP is imposing a limit on the number of student workers allowed at its suppliers, as well as mandating that they must be working in an area related to their field of study. While labor groups view HP's announcement as a positive step forward, many fear that the source of the problem is directly linked to HP not paying high enough supplier fees, forcing suppliers to cut corners to win contracts. Is HP obligated to take additional steps toward addressing this problem?

  Patrick: While additional steps toward preventing labor force abuse should be taken, HP is not obligated to increase the amount they pay in supplier fees. Let's not forget that HP isn't the only moral agent here, suppliers and factory owners have a role to play as well. Accordingly, it is the responsibility of suppliers and factory owners not to take contracts that they cannot legally fulfill. Aggressive negotiation is well within HP's right and does not serve as an excuse for factory worker abuse. Despite this, HP should consider additional measures toward preventing this problem; such as, increasing the screening that suppliers and factories must go through, as well as implementing a penal system for transgressions.

  Kirk: I think you let HP and other firms off too easily. The competitive bidding process inevitably leads to visible and hidden cost reduction. HP needs to do something concrete to demonstrate it is willing to pay for safe and humane working conditions. Imposing one or more standards, such as limiting intern workers, will likely lead to cost cutting elsewhere unless HP and other global forms that outsource can "lean against" bad practices by deep engagement and communication with suppliers.

H-P Steps Up Oversight of Chinese Suppliers

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Comments Comments

Joe Schmid said on Mar 1, 2013
In the absence of a joint venture or forming a separate Chinese company where there is a degree of control, the ability of a buyer to dictate terms about how a supplier goes about their job in fulfilling a contract is limited. In this case the local Communist Party decides who gets to show up for job interviews, and without an employment agent who embraces your best interests you get what they give you. The broader issue is what is the appropriate organizational level ethics framework for sourcing from countries of dramatically different values, from Communist controlled to authoritarian governments dominated by an oligarchy? What is "lean against" then? Is it feet on the ground inspection and compliance teams similar to those in place for quality assurance? Or is it withdrawal from countries whose business ethics environment is not the same as ours abandoning those who are employed there letting them fall back into conditions of absolute poverty? I was told by an African country media executive that justice is relative. He noted that when we close a factory here in the U.S. and reopen it in a third world country, people and the press here will assert it is unjust and unethical. At the same time people in the third world country, speaking from their perspective and standards of living versus ours, will herald the opening of the factory as both just and ethical. Cooperative education programs and internships are well established since the early 1900s here in the U.S. Anyone who has participated in these would attest to the fact that the compensation is minimal. So the question becomes are business ethics specific to local, regional, or global? Is the benefit/harm analysis specific to the location? - Like - 2 people like this.
Joe Schmid said on Mar 2, 2013
In the absence of a joint venture or forming a separate Chinese company where there is a degree of control, the ability of a buyer to dictate terms about how a supplier goes about their job in fulfilling a contract is limited. In this case the local Communist Party decides who gets to show up for job interviews, and without an employment agent who embraces your best interests you get what they give you. The broader issue is what is the appropriate organizational level ethics framework for sourcing from countries of dramatically different values, from Communist controlled to authoritarian governments dominated by an oligarchy? What does lean against mean? Is it a feet on the ground inspection and compliance team similar to those in place for quality assurance? Or is it withdrawal from countries whose business ethics environment is not the same as ours abandoning those who are employed letting them fall back into conditions of absolute poverty? I was told by an African country media executive that justice is relative. He noted that when we close a factory here in the U.S. and reopen it in a third world country, people and the press here will assert it is unjust and unethical. At the same time people in the third world country, speaking from their perspective and standards of living versus ours, will herald the opening of the factory as both just and ethical. Cooperative education programs and internships are well established since the early 1900s here in the U.S. Anyone who has participated in these would attest to the fact that the compensation is minimal. So the question becomes, are business ethics local, regional, or global? Is the benefit/harm analysis specific to the location? - Like
Patrick said on Mar 12, 2013
Joe, You make a great point that ethical dilemmas take place in real life contexts where culture, standards of living, and governmental policies must be taken into account. While I agree with you on this point, I would be hesitant to embrace an entirely relativistic business ethics, in response to your question. Looking at the example of opening a factory in a third world country, one could determine that the factory is just and ethical simply because the native people embrace it, despite minimal pay and harsh working conditions. My concern with this view is that it supposes that in order for an injustice to occur, the victim must know that he is being treated unfairly. Furthermore, it seems to promote the idea that the "worth" of an individual, i.e. their human dignity and the treatment they are entitled to in light of that dignity, is relative to their income level. So while agree that cultural and political forces are significant factors in moral calculations, I do not think that those supersede fundamental human rights that apply regardless of those cultural and political contexts. Thanks for posting. You bring a great deal of depth and knowledge to the discussion and we look forward to hearing your thoughts on future posts. - Patrick - Like
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