U.S. companies shifting work or production abroad has led to many controversial situations such as loss of jobs to U.S. workers and quality of services or products received from abroad. However, the question of whether U.S. companies should have an ethical obligation to consider of the how workers abroad are treated, including working conditions, by the foreign contractors remains a hot topic.
Many companies, such as Nike, over the last couple of decades has been in the spotlight for partnering with “sweatshop” type factories abroad. A “sweatshop” type factory consists of an unsafe, dirty or hazardous work environment, long work shifts, child labor, and low/minimal wages. Nike’s move of partnering with factories abroad was an innovative trend to save money for the company as well as make their shareholders wealthier. In turn it made Nike billions, but the global ethical downside cost the brand much scrutiny. Nike forgot something; the majority of it’s consumers purchasing their products have ethical values. Once the public was made aware of the “sweatshop” type conditions in which their product was being produced, Nike’s bottom line was negatively affected. As a result, top-level business decisions had to be reevaluated, particularly outsourcing.
Employment labor laws globally are quite different than in the U.S. For U.S. based companies who partner with third-world companies to save money, they must take a stand to make sure they are doing it the right way – the ethical way. Outsourcing may be the new trend to save money for the parent company, but all aspects of outsourcing must be considered and continuously audited – especially for brand protection. Outsourcing abroad can be successful if done correctly and can certainly help global economics. The most important consideration is the ethical treatment and welfare of people. U.S. companies must carefully select the factories they partner with, and most importantly they should try to instill good values and ethics with the factories by ensuring safe and clean conditions, reasonable work hours, fair wages, and no abuse of child of labor. The end result of the product will most definitely prevail; a satisfied workforce will produce more and demonstrate greater profitability overall.
If a company chooses to move from outsourcing and expand its footprint globally, many ethical standards must be considered by the HRM department: culture, education, economic system, and political-legal system (499). Once the country of origin is decided of where to expand, cultural influences are a significant factor to learn and understand to ensure all aspects of the new facility are successful. These aspects include communication, religion, traditions, and values. Another factor is education and skills. As the global market for employees varies, it is critically important to select the appropriate location to attract the right talent for the positions to be filled. If hiring technical positions or call center positions that require more skill, a company may choose a location in an inner city location. If hiring factory type positions or lower skilled workers, a more rural area of the may be more acceptable and additionally help the economics of the outer city residents of the country by providing work and wages. Understanding the economic system of the country is also a must. If a country has a healthy economic system, they also tend to have greater wealth, higher comps, as well as a bigger talent pool. Socialist economics systems provide free education, but tend to pay less. On the flip side, capitalist systems don’t generally offer free education, but educated employees tend to make more money (503). Lastly, understanding and knowledge of politics and laws of the country of the new facility is very important too. For the parent company to be successful, HRM must fully understand all the labor laws as they may be quite different than those in the U.S.
Because cultures differ from coast to coast, it may be necessary for HRM to relax some of the U.S. norms to operate successfully and efficiently abroad. The reasons for relaxing the norms may be due to the labor laws in the country where the facility is located, cultural attitudes, economics, or negotiation styles. As related to comp structure, some workers may be paid more or less determined on where the facility is located. Benefits offered may greatly differ – insurance or vacation. If union negations are required, how to properly handle – employees, government, etc. When opening up a facility abroad, many considerations will need to be addressed. Personal opinion, to open a facility abroad is a big step for any company and definitely a huge responsibility from HRM standpoint. HRM has a valuable role to influence the overall organization to optimal performance. Considerable expertise is needed in this area and may require hiring an HRM employee from the host country to enhance knowledge.

Works Cited:
Noe, Raymond A., John R. Hollenbeck, Barry Gerhart, and Patrick M. Wright. Fundamentals of Human Resource Management. 6th ed. New York: McGraw-Hill Education, 2016. Print.