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Mattel Inc.’s Business Ethics and Virtue Ethics

Introduction

Virtue ethics are central to the success of any organization. This paper applies three virtue ethics (justice, fairness and honesty) to the case of Mattel Inc. The paper starts by defining the three virtues and proceeds by applying the virtues to the organizational crisis in the company. Lastly, the paper offers a succinct conclusion.

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Justice

Justice is fair treatment and due reward in line with moral or legal principles. Justice, as used in business ethics, entails evaluations of fairness and the ability to handle what others regard as unjust. The criteria used to judge whether there is justice in a certain situation depends on the perceived rights of persons and on the objectives of the involved parties. In other words, justice deals with the perceptions of people based on their rights and duties at the work place.

Honesty

Honesty is the value without which businesses cannot long live. It mirrors an upright personality, a commitment to the truth, and a negation to lie, mislead, or steal (Hartman, 2008). Honesty is the greatest benefit that a dealer can bestow on his clients. It is also the greatest benefit that a vendor can give himself, since it makes others to have confidence in him.

Fairness

Fairness involves ideas of equality, reciprocity, proportionality, impartiality and justice. There are three classifications of fairness: “procedural fairness, distributive fairness, and retributive fairness” (Wierzbicki, 2010, p.15). Procedural fairness centers on the perceptible fairness of actions leading to outcomes. Distributive fairness focuses on distribution of products, resources or costs. Retributive fairness focuses on rule contravention and the harshness of sanctions for actions that contravene the norms.

Honesty

Mattel Inc lied about making changes in the dormitories. The company’s Global Manufacturing Principles (GMP) recommended a maximum of 12 workers in every room. The aim was to provide the employees with adequate privacy and to reduce noise levels. Apparently, shift changes caused lots of noise in the dormitories, which disrupted sleeping employees (Sethi, Veral, Shapiro, & Emelianova, 2011). Results from three audits indicated that all dormitories contained 30 workers in each room, which was a contravention of GMP standards. In reaction to the initial audit, managers at Mattel Inc promised to make appropriate changes in the re-configuration of the bigger rooms (Seth et al., 2011).

The subsequent round of audit indicated that the company did not effect this change. At the time of the third round of audit, Mattel had declined to effect required changes in the dormitory arrangement, irrespective of past promises to do so. As the audit program ended, Mattel again guaranteed International Center for Corporate Accountability (ICCA) that the company would embark on required changes in the dormitories.

The company also lied about check out time for its employees in Indonesia and Malaysia. The two factories had an electronic system whereby employees recorded their time for entering, but failed to record their exit time. Despite the fact that the first audit report identified this gap, the management did not respond accordingly. Rather than making necessary changes, the management claimed that recording time out was not necessary since all workers left at the same time.

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In this perspective, Mattel acted like narcissistic organizations. According to Duchon and Drake (2009), “narcissistic organizations use self entitlements, denial and rationalizations to justify anything they do” (p.1). Eventually, the company lost its identity as an honest company through giving consecutive lies about the dormitories to ICCA. Top management provided rationalizations to validate their behavior and safeguard the protective identify (Duchon, & Drake, 2009).

Apparently, the management would have made clear their position about reconfiguration of the dormitories using logical reasons, rather than lying. If not so, the management would have asked ICCA to allow them sufficient time to effect required changes. By so doing, the company would have wined the trust of ICCA and consequently, their customers and business partners. Besides, the management would have acted honestly by allowing workers to record time-in and time-out of the company. This would ensure that any worker who works overtime receives compensation.

Justice

Mattel Inc denied justice to its workers by establishing mandatory dormitory requirements. In the Indonesian factory, the company forced employees to pay dormitory fees, as a condition of their employment. This was a violation of GMP standards. When ICCA raised the issue, the company’s management argued that most employees were young and new to urban life (Sethi et al., 2011). This argument was not convincing, as some employees were married adults.

The management also argued that employees voluntarily agreed to this condition at the time of recruitment. Later, the management decided to excuse some employees from compulsory dormitory requirements. All married and permanent workers were free to reside outside without any further charges. In addition, some non-permanent and unmarried employees chose to lease private residences while still paying the dormitory fee. Apparently, these workers felt that the company denied justice to them and their satisfaction levels must have been low.

Rather than establishing mandatory dormitory requirements, the management would have allowed workers to choose areas of residence where they would be comfortable. Those who wished to stay in the dormitory, especially those new to urban life, would have done so while others looked for private housing outside. This way, the company would have granted employees their personal rights. Although the company would suffer loss due to reduced income from rent, satisfied employees would be more productive and hence, bridge this gap.

Other incidences of injustice were in the Malaysian and Chinese plants. Supervisors at the Malaysian factory forced employees to work overtime even when they were unwilling to do so (Sethi et al., 2011). This was gross contravention of GMP standards. The standards only allowed workers to work overtime on a voluntary basis. In Chinese plants, top management refused to record the exact time when employees left the factory so that they would not be accountable for any overtime dues. ICCA’s second round of audits established that Chinese factories used different time variances, which enabled them to surpass required work hours. Supervisors in these factories also created subjective policies that denied employees overtime payments.

For the sake of justice, Mattel Inc would have followed all laws, permits and standards recommended by GMP and the China Labour Laws. GMP clearly outlined the issue of forced labor. Rather than forcing employees to work, the management would have negotiated to complete the work with willing employees. This way, the management would have safeguarded the rights of all employees, as outlined in the GMP and China Labour Laws. The management would have also enhanced record keeping practices in the company. This would have in turn facilitated the capturing of all employees work time, including overtime, for proper remuneration. The management would as well have considered hiring more workers to ensure that no worker works more than the legally mandated work time.

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Fairness

Mattel Inc was not fair to its workers in various ways. In Mexico, the management of MX3 did not provide any sitting arrangements. Workers remained standing throughout their work periods. In China, employees lived in a dormitory that was almost fully dilapidated. Rather than improving living conditions in the dormitory, managers had a different perspective. They claimed that the dormitory existed long before the launch of GMP and therefore it was unfair to assess the dormitory using GMP principles (Sethi et al., 2011).

Many China plants also imposed monetary deductions from employees’ income. Managers in these plants used cash fines as a form of disciplinary tool (Sethi et al., 2011). It is worth noting that the individual fines imposed by the factories were within the limits allowed by GMP. However, the regularity of the fines, the huge amounts of money acquired from fines and the utilization of these fines raised eyebrows.

The company also ill-treated workers by imposing mandatory monetary deductions for dormitory rooms, even in instances where employees did not live in the dorms. Further, it was not fair for employees to live as 30 people in every room, whereas GMP required a maximum of 12 people in a room. Apparently, there was a lot of commotion in the rooms, particularly during shift changes. As a result, employees lacked sufficient sleep and their right to privacy.

To be fair, the Mexican plant would have made some sitting arrangement for the workers. Standing for long hours makes a person fatigued and reduces productivity. Another aspect that needed consideration was the situation of the dorms.

Further, the management would have reduced the number of people residing in a room to enhance privacy and reduce commotion. Lastly, the management would have monitored the regularity of fines to avoid imposing very hefty fines on same individuals. Most workers spend all their money on basic needs and fees for their children and it is therefore unethical to impose heavy fines on them (Markkula Center for Applied Ethics, 2012).

Deontological Theory

Considering all other normative theories, deontological theory is the most effective in evaluating Mattel’s case. According to Hartman (2008), deontological ethic is “principle-based” (p.13). The theory only focuses on rules and pays little attention to consequences of actions (Cafaro, n.d.).

This theory is the most appropriate in evaluating Mattel’s situation because the case revolves around compliance with GMP. Managers at Mattel established GMP to act as a framework for every facility manufacturing their products in every location of production. GMP included laws dealing with “wages and hours; child labor; forced labor; discrimination; freedom of association; working conditions; legal and ethical business practices; product safety and product quality; environment; customs; evaluation and monitoring; and compliance” (Sethi et al., 2011, p. 486).

Following the launch of GMP, top managers in the company decided to establish Mattel independent monitoring council (MIMCO). MIMCO acted as the company’s external auditor. Its main role was verifying the company’s compliance with the GMP code. MIMCO took each plant at a time and evaluated it thoroughly against all the rules contained in the GMP. Although the council offered various recommendations concerning compliance, there is no part where we find the same council describing actions that followed compliance or noncompliance. For instance, the council does not explain the effects that poor housing conditions had on employees. This corresponds to deontological theories, as they do not consider consequences of actions.

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In conclusion, Mattel Inc was not keen on implementing GMP standards in key areas such as working conditions and payment of wages. As a result, many employees at the company were unhappy. If the company’s management were fair, honest and just, it would have been possible to implement these standards. Consequently, employees would have been more comfortable at work place.

References

Cafaro, P. (n.d.). Virtue ethics (not too) simplified. Web.

Duchon, D., & Drake, B. (2009). Organizational narcissism and virtuous behavior. Journal of Business Ethics, 85(3), 301-308.

Hartman, E. M. (2008). Socratic questions and aristotelian answers: A virtue-based approach to business ethics. Journal of Business Ethics, 78(3), 313-328.

Markkula Center for Applied Ethics. (2012). Ethical challenges in human resources. Web.

Sethi, S., Veral, E., Shapiro, H., & Emelianova, O. (2011). Mattel, Inc.: Global manufacturing principles (GMP) – A life-cycle analysis of a company-based code of conduct in the toy industry. Journal of Business Ethics, 99(4), 483-517.

Wierzbicki, A. (2010). Trust and fairness in open, distributed systems. New York, NY: Oxford University Press.

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StudyCorgi. (2020, December 22). Mattel Inc.'s Business Ethics and Virtue Ethics. Retrieved from https://studycorgi.com/mattel-inc-s-business-ethics-and-virtue-ethics/

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"Mattel Inc.'s Business Ethics and Virtue Ethics." StudyCorgi, 22 Dec. 2020, studycorgi.com/mattel-inc-s-business-ethics-and-virtue-ethics/.

1. StudyCorgi. "Mattel Inc.'s Business Ethics and Virtue Ethics." December 22, 2020. https://studycorgi.com/mattel-inc-s-business-ethics-and-virtue-ethics/.


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StudyCorgi. "Mattel Inc.'s Business Ethics and Virtue Ethics." December 22, 2020. https://studycorgi.com/mattel-inc-s-business-ethics-and-virtue-ethics/.

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StudyCorgi. 2020. "Mattel Inc.'s Business Ethics and Virtue Ethics." December 22, 2020. https://studycorgi.com/mattel-inc-s-business-ethics-and-virtue-ethics/.

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StudyCorgi. (2020) 'Mattel Inc.'s Business Ethics and Virtue Ethics'. 22 December.

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