Apple, Foxconn, and MBA Students

On February 21, ABC News’ Dateline ran a story about Foxconn, the Chinese firm that manufactures consumer electronics for major corporations, including Apple.  China may be thousands of miles away, but the Foxconn story raises an important business question that MBA students and C-suite executives face when studying and leading organizations.

The issue the Foxconn situation highlights is the struggle businesses face balancing shareholders’ interests and employees’ well-being.  MBA students learn that the executive’s role is to maximize shareholder value.  However, the question then becomes to what extent (if at all) should shareholders’ interests outweigh the safety and well-being of a firm’s employees?

Now it is important to keep in mind that Apple is not the only firm that manufactures products through Foxconn, it is simply the most renowned.  And Foxconn has taken steps to try and prevent future fatalities, in light of recent suicides and explosion fatalities.  The company placed suicide nets on its buildings and replaced humans with robots at a manufacturing site that had been rocked by a deadly explosion.  So the question for all businesses then becomes: At what point do the needs of employees outweigh the needs of shareholders?

When should organizations take steps, at the possible expense of their profits, to protect their employees’ well-being?  In the United States, the term “work-life balance” is frequently thrown about when talking about employees’ well-being.  But well-being has multiple definitions spanning various geographic locations and cultures.  At the Foxconn facilities, the employees’ well-being can potentially be attributed to working hours, the repetition and monotony of their jobs, living conditions, or limited opportunities for social interaction.  These factors are important to consider because they directly affect employees’ well-being, and the employees are the life-blood and energy that keep a company operating.

Employees should be treated as important and valuable stakeholders in a business’ success.  That is easier said than done however, considering most executives (and executives-in-training, such as MBA students) are instructed to maximize their companies’ shareholder value.  Certain firms, particularly technology startups, go out of their way to provide excellent care and rewarding perks for their employees.  Diverse offerings ranging from flexible work schedules to office air hockey tables to on-site massage therapists enhance employees’ well-being.  And these offerings also take away from a firm’s bottom-line.  I am personally interested to see if the business leaders of tomorrow focus more on caring for their organizations employees, or if we continue to see corporations place an emphasis on maximizing shareholder value and wealth.

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