PROBLEM-SOLVING APPLICATION CASE (Does Forever 21 Foster Positivity?)
Description Source: Organizational Behavior: A Practical, Problem-Solving Approach ISBN: 9781259915451 By: Angelo Kinicki Use 3-Step Problem Solving Approach Does Forever 21 Foster Positivity? (Pages 290-292) Forever 21 was founded in downtownPage 290 Los Angeles in 1984 by a Korean-American immigrant couple, Do Won Chang and Jin Sook. They are known as Mr. and Mrs. Chang and still run the privately held company. Today, it employs about 35,000 people and runs 600 stores worldwide, with operations in the United States, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, Latin America, Mexico, the Philippines, and the United Kingdom.161 The company made about $4.5 billion in 2015. The Changs are born-again Christians and try to run their business using Christian values. Mrs. Chang told Bloomberg Businessweek that she prayed about whether to open their first store. God told her to do so and promised she would succeed. The couple attend a daily prayer meeting at their church, where Mr. Chang leads a Bible study and Mrs. Chang is a deacon. The pastor noted that the Changs have contributed millions of dollars to worldwide missions. The Changs’ faith is represented in their stores, where every bright yellow shopping bag includes a reference to John 3:16. This Bible verse says, “For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.”162 FOREVER 21’S KEY VALUES Supplier and Vendor Social Compliance and Ethical Sourcing. The company commits to caring “not only for our employees but also for the employees of hundreds of vendor manufacturing facilities throughout the world which make our products. We want all of these employees also to work in safe and healthy environments.” Support Charities. “At Forever 21, one of our core values is to encourage giving, to lend a helping hand to those who need it most.” Environmental Sustainability. “Forever 21 is committed to reducing its environmental footprint throughout its global operations.”163 ARE THESE VALUES BEING LIVED AT THE COMPANY? Forever 21 has experienced a number of lawsuits and controversies regarding different aspects of its operations. The US Department of Labor issued a subpoena in 2012 to force Forever 21 to reveal “how much the company’s suppliers pay the workers who make its clothes. Anecdotal evidence suggests the salaries are well under the current US federal minimum wage of $7.25 an hour.” After the company failed to provide the information, a US District Court judge ordered the company to provide the requested data.164 A class-action lawsuit accuses the company of “failing to provide meal breaks, rest periods and overtime wages. Plaintiffs . . . claim that requisite bonuses weren’t paid which qualify as overtime, and that the company failed to cover business expenses as required under law.” Although the case has not been settled, plaintiffs “may be entitled to up to $4,000 in penalties as well as any due wages.”165 The company decided to reclassify 1 percent of its workforce to part-time status, working a maximum of 29.5 hours a week. This level of work is just “under the 30-hour full-time designation assigned by the Affordable Care Act, which requires companies who employ 50 or more workers to provide health insurance coverage for their full-time employees or face a penalty. Newly part-time workers who were enrolled in medical, dental, vision and voluntary plans will also see their coverage cut off on August 31 [2013], and they won’t be able to receive paid time off.”166 These actions led to a social media firestorm, resulting in comments such as, “A true Christian thinks of others first and is not greedy. Tell me, just how rich do you need to be?” Another person wrote, “Jesus Christ would never, NEVER do this to anyone, ever.”167 Forever 21 agreed to pay $100,000 in penalties to the Occupational Safety and Health Administration (OSHA) for safety violations at its Westfarms Mall store in Farmington, Connecticut. A store inspection revealed that emergency exits and hallways were blocked by store inventory. Boxes were “piled as high as 10 feet and stacked in an unstable manner so that they blocked exit routes or could fall onto workers. The company contested the citations and penalties but has now reached an agreement in which it agrees to abate the cited hazards.”168 The company has been cited 12 times for similar violations at other locations.169
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