A CASE FOR SUSTAINABLE HRM
You work as a HR manager in a small but growing company that develops software and manufactures specialised technology parts to produce Artificial Intelligence (AI) technology for medical devices. You generally have a good relationship with employees and in the past they have frequently made suggestions that have led to improvements in production and addressed the high safety standards essential for the products you make. Terms and conditions for workers at the company are very good. At a recent meeting you find out that senior management are considering offshoring some production to a developing country. The primary reason is the cheaper labour costs but you have a number of concerns about this proposed restructuring. You wonder about the environmental impact of such a decision, given that parts will still have to be shipped back to the home site to complete production. You’re also uncomfortable with the suggested location as you have heard awful stories about health and safety standards and general pay and conditions for workers there. This sits very uneasily with you as you firmly believe the role of HR is to protect employees’ welfare. You mentioned this to a colleague who brushed off your concerns saying ‘it won’t be our problem as we won’t be directly employing anyone there – we’re outsourcing’. You know it makes sense to cut costs in the short-term as new competitors are entering the market at an increasing rate, but you feel really strongly from both a moral and business perspective that this is a bad idea in the longer term. You don’t think you could stay working for the company if they implement this change. Currently employees engage in a thorough safety check and inspection process at every point of production and the impeccable safety record of your products is the main reason sales are high and the company is expanding. It would be disastrous for the company’s reputation if the products were compromised in any way. It seems to you that this is a real possibility if production is offshored to a site where employees are less skilled and safety standards are so poor. Senior management obviously don’t understand the tacit knowledge about the product current employees possess. They are only considering bottom-line costs. You think you could negotiate a deal with workers (who are currently looking for a pay rise) that would better address the future of the company although you’re still not fully sure how. You need to convince senior management to focus on the environmental and social implications of their proposal and longer-term business success rather than short-term profit. You really feel the loyalty and commitment of workers who have given years of service to the organisation can be successfully harnessed to ensure corporate success, however that is measured.
Senior management have agreed to a meeting and you want to convince them that there are better options for the future of the company that are both profitable and ethical.
Question:
a. What are the potential ethical issues that arise from the proposed offshoring plan?
b. What are the HRM challenges that arise from these issues?
c. Outline the business case and ethical rationale for your suggested alternative to offshoring. Do you think it will be possible to convince senior management to follow your suggestions?
