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Mark Parker, Chief Executive Officer of Nike, Inc. (Nike), received a report regarding ethical issues in the company, specifically, workplace harassment. The report was the result of an internal survey by other female employees of the company after several senior women executives resigned in 2017. The survey asked women or female employees if they were victims of gender discrimination or sexual harassment. The findings of the survey were embodied in the report.
Arpita Agnihotri and Saurabh Bhattacharya
Harvard Business Review (W18614-PDF-ENG)
September 27, 2018
Case questions answered:
- Did Parker respond to complaints made by female employees of Nike out of an ethical concern or as a reputation management strategy?
- Why did the HR department at Nike fail to respond to the harassment issues? Does Nike’s HR Department has an opportunity to improve?
- Why did gender discrimination take place more at the senior level at Nike? Why is this significant? Why is it important to resolve this issue? Explain in the context of Nike.
- What is severance pay? Why did senior executives like Edwards receive generously compensation packages, even when they resigned amid the controversy?
- What is workplace harassment? Was there a clear case for legal workplace harassment at Nike? If not, should Parker have let the executives go, resulting in a loss of talent?
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Case answers for Nike: Ethics Versus Reputation in the #MeToo Era
Case Study – Nike: Ethics Versus Reputation in the #MeToo Era
Nike, Inc. (Nike) experienced the resignation of senior women executives in 2017 (Agnihotri & Bhattacharya, 2018). Misconducts of some employees drove the resignation. These were brought to the attention of Mark Parker, the Chief Executive Officer of the company.
The departure of these executives resulted in an internal survey by other female employees of the company. It entailed asking women if they were victims of gender discrimination or sexual harassment.
The findings suggested that female employees had frustrating experiences working at Nike. The Human Resource (HR) department was claimed to ignore misconduct in the past. The reputation of the company at Glassdoor was poor since victims posted their negative experiences on this platform. Immediately after the findings were submitted to Parker, eleven senior executives of the company resigned or asked for early retirements.
The following is a case study for ethics and reputation at Nike. The company supported an unethical work environment and a poor organizational culture.
Background of the Case
Parker was in the dilemma of maintaining the reputation of the company, especially the executives, and creating an ethical work environment. Among the executives that resigned was Trevor Edwards, the president of the Nike brand. The CEO announced that Edward has resigned in response to the report but covered the misconducts of discriminating and sexually harassing women employees to the media. Besides, he was awarded a stock option valued $9 million and a severance package worth $525,000 (Agnihotri & Bhattacharya, 2018).
This package was criticized in the media because Edward was associated with covering male employees that harassed their female colleagues. He was the proposed Parker’s successor, and the CEO was hailed for addressing the issue based on the report. However, employees were suspicious of Parker’s response that he was not aware of the problems. The CEO attributed the claims to the #MeToo campaign. He introduced a mandatory training on bias, which questioned if the HR department was to blame for the poor work culture.
In 2016, Parker had addressed the issue of violence, race, and policing in the United States (Agnihotri & Bhattacharya, 2018). It was in support of the controversial problems that African-Americans faced when dealing with law enforcement officers. He declared the commitment of the company in supporting marginalized people and his commitment to fighting discrimination.
In a sustainability survey that was carried out in 2016, it was found out that 52% of the workforce was non-white (Agnihotri & Bhattacharya, 2018). However, it was established that the whites held 77% of director positions in 2017. In another survey, Nike held the 10th position of the most preferred workplace for millennial women.
The survey focused on attributes like diversity, workplace culture, and initiatives that were related to women. However, it involved 197 respondents of the company, but the entire workforce during the time of the survey was 74,400 (Agnihotri & Bhattacharya, 2018). This suggested loopholes and possible bias in the findings.
The HR department of Nike overlooked problems with gender discrimination and harassment. Although the company had anti-discriminatory policies, the department did little to address the complaints. Some employees considered themselves as marginalized after being harassed by their supervisors and denied promotions opportunities. During the staff meetings, they reported harassment, but the problem was ignored.
In some categories of production, like basketball, women were discriminated against by being excluded (Agnihotri & Bhattacharya, 2018). The ones that raised gender discrimination issues were ignored.
Men that were less qualified than women were promoted, with some women reporting being insulted by their supervisors. Others had their employment contracts terminated after reporting discrimination to the HR, although they had an impressive performance. The management of Nike had an insular group that was led by Edwards, which perpetuated gender discrimination and harassment, where the members protected each other.
The complaints were directed to Glassdoor by some employees by criticizing the company for the inappropriate culture. The employees expressed their frustrations by the “boys” club that was protected by the management. Among the descriptions of this club that were raised include ageist, sexist, disrespectful, entitled, and pampered. Parker needed to respond to these issues.
In 2017, he terminated David Ayre, the chief HR, for behaviors that were described as condescending (Agnihotri & Bhattacharya, 2018). The officer had confessed to his misconduct and admitted the need for counseling.
David had created a hostile working environment at Nike. However, his departure was also announced as a retirement by the company. The executive was praised for being strategic and for supporting the company in the implementation of its HR strategies. Parker demonstrated disappointments over the misconduct issues and apologized for allowing a hostile workplace culture.
The CEO reviewed the HR operations, especially compulsory management training and the internal reporting processes. The company also expressed its commitment to promote diversity and inclusion, which encompassed the representation of people of color and women.
Although the findings of the internal survey initiated the change, the reported misconduct had already impacted the growth strategy of Nike. The company failed to meet its annual revenue target of $50 and extended the timeline by two years (Agnihotri & Bhattacharya, 2018).
The rate of growth for apparel and footwear reduced, although that of competitors increased. The company was under stiff competition from brands like Under Armour, Lululemon, and Adidas, which was threatening its leadership position in the market.
One of the possible solutions that Parker could have adopted is to…
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