Levi's - Balancing ethics with profit
The iconic value of the Levi's brand is essential to its business.
Levi's effectively created what became the uniform of youth in the 1950s and '60s. During the Soviet era, when the product was frequently smuggled across the Iron Curtain, it was for many a symbol of freedom.
Its policy of being a responsible employer in developing countries, where poverty and social problems are endemic, is not something it shouts about. But it's at least partly designed to maintain that good name.
Levi's is able to pursue such a policy, at least in part, because it remains a private, family-run business. That means it doesn't have to answer to big shareholders on Wall Street, who might want a greater emphasis on short term profitability.
But not everyone awards Levi's top marks as an employer. A number of workers at its factory near Cape Town in South Africa have been sacked for failing to reach production targets. The local trade union has taken up some of their cases and says the targets are either too high or training is insufficient.
The company argues that by sacking workers who fail to perform to its standards, it is only acting as it must do as a commercial organisation. But the trade union is concerned that there's a discrepancy between Levi's proclaimed commitment to ethical employment standards, and how it actually operates.
Virtually every US company has a corporate responsibility programme, a set of ethical practices by which it operates. Levi's, however, was one of the first companies to pursue this practice, and it correspondingly attracts a lot of attention and expectation. The company's head of corporate responsibility in Europe, Patrick Neyts, explained what a difficult balancing act it is between maintaining ethical standards and keeping costs down.
‘Finding the balance between efficiency and social responsibility is a challenge to most companies’, Neyts says, ‘and a challenge that we gladly undertake…..If we didn't do that [operate on an ethical basis] and had a significant allegation against the company that was true, how much would we spend to rectify that allegation, to defend ourselves? So you could look at it from that cost perspective, and then it becomes quite cost-offsetting. But basically it's just the right thing to do.’
There's no doubt that Levi's corporate responsibility programme is about "doing the right thing". It is also, in a world where consumers are increasingly conscious of corporate malpractice, a canny business decision.
|^^ Back to top||<< Back to Globalisation|