The Gap (Inc.) in Utilitarian Thinking


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Child labor seems to be an ever-existing problem. We hear of it in the news constantly and while the issue has been slowly decreasing, there is no sign of its eradication in the near future. One industry that seems to have the majority of issues is the textile and retail industries with massive amounts of outsourced production in third world countries. One such company is Gap, Inc. (Gap), which has been a popular source of casual and business clothing throughout the world, which, in addition to the Gap also includes branches like Old Navy and Banana Republic.   In 2007, Gap was accused of using child labor in their Indian factories and while it seemed clear that is was a misunderstanding and was strictly being addressed, it was not the first time Gap had been faced with children working on their clothing overseas.  Fortunately, we see that Gap realized their past mistakes in dealing with child labor and had put in place a new management style addressing such issues. The following review will provide a look into the story behind Gap’s influences and decisions, as well as analyze the ethical dilemmas that required redress.

Gap, Inc. Background:

Donald Fisher founded Gap, Inc, in 1969 in San Francisco, California. It began as a single store selling jeans and quickly became a 200-chain denim retailer within half a decade. By 1980, Gap was a publically traded corporation and one of the leading clothing retailers in the country. With such success, Gap began to stylize or “brand” their look and expand their merchandise base. They did this by buying out a more corporate style Banana Republic and a more casual, fiscally prudent chain, Old Navy. Now that a large portion of the retail clothing spectrum was captured within the Gap, Inc., growth was inevitable. In 2001, the company began selling internationally with chains in Canada and parts of Asia. The last piece of the puzzle was e-commerce, which Gap incorporated in their business by creating Piperlime, an online shoe retailer in 2006.  Most recently, Gap, Inc has further extended their market share into the fitness merchandise arena with the acquisition of Athleta in 2008 (Joslin et al).

Foreign Factories:

Gap, Inc.’s success has a great deal to do with their presence in foreign countries.  They outsource much of their assembly and fabrication factory work to developing nations, most of which are subject to limited, if any governmental oversight or regulation. Because of the lack of regulation of the workforce and working conditions in these countries, Gap developed a code of conduct for labor in 1992. The code relied heavily on factory owners policing themselves to ensure that they, the factory owners, provided safe and healthy working conditions for factory workers.  Because the idea of social responsibility for outsourcing was relatively new, there was little oversight of this newly implemented code of conduct on Gap’s part. The first acknowledgment that the code of conduct was not working came from a factory in El Salvador in 1995.  The issues at this factory involved employing child labor, an underpaid workforce and abhorrent working conditions.  When the workers tried to address the issues and attempted to form a union to do so, the organizers were personally threatened and over two hundred were fired.  It was these issues that provoked Gap to proactively solve the problem by setting up the first monitoring system for foreign factory workers. The agreement involved their El Salvador company as well as other factories in Central America (Ansett 297). The next year, Gap created a Global Compliance Team to uphold factory conditions and be sure the code of conduct was truly being followed. Factories were not allowed to produce clothing for them until they met all of Gap’s standards. Even though Gap now had the largest outsource factory-monitoring team, they were still publically scrutinized. Few knew about their efforts to curb unfair conditions as their public relations motif was, “to continue doing the good work but to keep quiet about the company’s efforts and get caught doing well,” (Ansett 298). Unfortunately, they were not caught doing well, just utilizing factories with poor working conditions and a very young workforce in another part of the world.

In 1999, Gap, Inc. was not the only company involved in allegations that Saipan factories were not paying their workers and provided unfit living.  However, this did not help their image after the prior allegations in 1995. Gap realized that monitoring factory work was not enough and developed more guidelines for contract factories in foreign countries (Ansett 298). In 2000, Gap was again, involved in yet another labor issue with factories in another country. This time the issue was child labor in Cambodia. While Gap did stop outsourcing from that factory, they remained in Cambodia while other garment companies elected to leave the country completely. Gap however decided to make age verification in Cambodian factories stricter. The public knew little about the positive involvement and factory monitoring and therefore continued to attack Gap for promoting and benefitting from inappropriate labor conditions, especially the most recent allegation of child labor (Smith et al 71).

A New Type of Management:

Because of this scrutiny, Gap, Inc. decided to change the way they dealt with outsourced labor. They did this with a program called Global Partnerships, which worked directly with vendor compliance officers, who continuously check up on the foreign factories, both announced and unannounced, as shown by charts below (gapinc.com).

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Stakeholders were extremely important to this movement by aiding Gap in finding out the positives and negatives of the company and discussing the new opportunities they were pursuing in foreign markets. Gap also joined with more organizations like the Ethical Trading Initiative and Social Accountability International (Ansett 300). This time, Gap, Inc. made concerted efforts to publicize their positive activities overseas. They were now fixing their public image and doing so allowed more time to focus on actual labor management rather than public relations management. Gap published a social responsibility report, allowing stakeholders and the public their first look at Gap, Inc.’s policies. They worked diligently to reverse their negative image and even turned their problems into solutions and now the world could see that.

For many years following the Cambodia child labor disaster, Gap built up its reputation as a stakeholder-friendly, socially responsible business. They were sure to become immersed in stakeholder management to build a trust with their consumers.  This way if any more discrepancies occurred, they would have a strong stakeholder base supporting their actions. Unfortunately, this new strategy needed to work for them in 2007, when child workers were discovered in horrid factory conditions in India. This time, though, Gap knew how to prevent the harsh scrutiny they faced in the past.  They cancelled their order from that factory immediately and took full responsibility in the press for the incident. Their new response was to publically accept that child labor was an issue for all companies that outsourced and that no one company could change this; however, there needed to be an overall response from all United States companies involved in the country. This fact was made clear via a statement made by Bill Chandler, Gap, Inc.’s vice president of corporate communication, “that in the reality of an issue as complex as child labor, clearly no single company can change a societal situation, so it’s going to take an industry response,” (Smith et al. 75).  To begin an industry response to the problem, Gap funded forums for retailers, non-governmental organizations and the Indian government to spread the word about child labor within India. With Gap’s strategy and stakeholder-oriented response, there was little, to no negative impact to their public image. Even though this occurrence was actually worse than the incident in Cambodia, Gap had a broader support base and quelled the issue within just a few days.

Ethical Analysis:

In examining their history with child labor from an ethical perspective, it is readily determined that Gap, Inc.’s true intentions were to be and to act in an ethical  manner and not manipulate facts for the sole purpose of public approval.  It seems that from the beginning Gap was not overtly focused on strictly public image, but more so the principle of their actions. Because of this attitude, Gap has proven themselves to be quite utilitarian.  The perfect example of utilitarian action was their reaction to Cambodian child labor. When most retailers “cut and run” from working with the country completely, Gap decided to remove themselves from that particular factory, but not the country as a whole. Their reasoning was that historically, when companies all retract from a specific country with production factories, the children dismissed from those factories are often left in a worse position (Smith et al 72).   With the companies pulling out their work, the underage workers may not be compensated for the efforts of their previously completed labor and their future employment is placed in jeopardy.  Gap was not only thinking of their public image, but the livelihood of Cambodian citizens. While their image significantly tarnished with the decision to not immediately and totally withdraw from the country, few appreciated that Gap had a larger picture in mind. It was after this incident that they changed their management style to include not just monitoring, but remediation of and response to the situation. Gap, Inc.’s social responsibility webpage explains that Gap aims to monitor and remediate with some key principles in mind. The one that best explains their utilitarian view is, “we work to fix what we find. The value of monitoring extends far beyond uncovering problems; it includes all of the actions we take to facilitate remediation in a sustainable way,” (gapinc.com). This principle succinctly details that Gap focuses on more than just public image, but rather on the best consequence for the most people. To do so, they focus on finding the root cause of the problem. Their strategy makes use of a rating system as well of an analysis table, seen on their social responsibility page (gapinc.com). Gap’s goal is to provide for and assist millions of factory workers, while providing their customers with quality products and to not be seen as just benefitting their executives and shareholders.

The Dilemma:

While this utilitarian view of Gap, Inc.’s principles makes sense on the surface, in analyzing further, it is difficult to discern if their utilitarian efforts create negative affects for their stakeholders in the United States.  As a consumer, it is never comforting to hear that you purchase clothing made by children in far away factories with unimaginable conditions. Even knowing that Gap does their best to prevent such problems, they still place the burden of uncertainty on the consumer. Here lies the ultimate challenge with consequential thinking. As we read in Calculating Consequences, utilitarianism “requires that we assign values to the benefits and harms resulting from our actions and compare them with the benefits and harms that might result from other actions. But it’s often difficult, if not impossible, to measure and compare the values of certain benefits and costs,” (Velasquez et al). It is difficult knowing as a consumer that Gap continues to work in countries where child labor will most likely always exist.

It seems that if Gap, Inc. just removed themselves from the foreign factory production style completely, it would produce best result for the company and the consumer. However, than millions of workers in all of the foreign factories would be jobless or found in worse conditions with companies that care little about monitoring and remediation. Overall, Gap’s utilitarian approach to foreign labor does actually produce the best outcome for the most people; factory workers can keep their jobs and are paid relatively fairly in manageable working conditions; Gap executives are no longer under constant scrutiny and can take pride in their labor endeavors; and shareholders and consumers can invest reasonable amounts of money in products and ownership that is not too expensive and funds socially responsible efforts. It may not be a perfect system, but the outcome is purely utilitarian by producing the most beneficial outcome for the highest number of stakeholders.

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