Forever 21 Files for Bankruptcy

Retailer Forever 21 has filed for bankruptcy, and employees are not happy. In its Letter to Customers, posted on the website, the company explains the process:

This does NOT mean that we are going out of business – on the contrary, filing for bankruptcy protection is a deliberate and decisive step to put us on a successful track for the future.

Hundreds of employees are planning to unionize with United for Respect, which also represented employees from Sears and Toys R Us during their bankruptcies.

The Washington Post reports employees’ reactions to the Forever 21 decision:

[S]everal employees cited past instances where Forever 21 swiftly closed stores with little warning or explanation, which prompted their concerns over how the company would treat employees amid bankruptcy.

Unions are seeing opportunities in retail employees. Private-section union membership has been shrinking in the U.S. and is now only 6.4%, compared to 33.9% of government workers. As retail employees get discouraged by their employers, union organizing activity has been increasing.

Cover image source.

Image source here.

Discussion:

• Analyze the Letter to Customers. Which principles of communicating bad news are followed? How could the message be improved?

• Explain the ethics of a company filing for bankruptcy. Use an ethical decision-model, such as that in Chapter 1, to determine the effects.

• What’s your view of retail employees unionizing? What are the benefits to employees and potential downsides of union activity and of forming a union?

Harvard Admissions Decision

A federal judge has decided that Harvard did not discriminate against Asian students during the admissions process. The Crimson, Harvard’s student newspaper, provides an analysis of the case.

In its defense, Harvard revealed its admissions process, which included personality ratings. The plaintiff group, Students for Fair Admissions, criticized the system as disadvantaging Asian students. However, in her decision, the judge cited testimony from admissions counselors, shown here.

The judge explained the role of diversity in her decision:

Ensuring diversity at Harvard relies, in part, on race-conscious admissions. The use of race benefits certain racial and ethnic groups that would otherwise be underrepresented at Harvard and is therefore neither an illegitimate use of race or reflective of racial prejudice.

Although she decided in Harvard’s favor, the judge did provide recommendations to Harvard:

 She recommended that admissions officers participate in implicit bias trainings, maintain clear guidelines on the use of race, and monitor any race-related statistical disparities.

She said the task of considering race in admissions is a “a particularly delicate job” to execute lawfully.

Image source.

Discussion:

• What’s your view of this case? Read more about the case in the judge’s decision.

• What’s your own experience during the college admissions process? How might this affect how you view the case?

• Analyze the Harvard Crimson article. What business communication principles do the author follow?

WeWork Co-Founder and CEO Steps Down

WeWork announced that Adam Neumann will leave his position after controversy about the company’s financial situation and the co-founder and CEO’s behavior. Within a week, the company went from preparing for an IPO to facing criticism that led to this ouster and a delayed public offering.

The company valuation has been reduced from about $47 to $15 billion based on governance issues and what the Wall Street Journal calls “ballooning losses.” The Journal also reported on Neumann’s “eccentric behavior,” including a heavy-party lifestyle that recently involved bring marijuana on a plane to Israel and saying that he might like to be the prime minister.

In its news release, WeWork provided scant information and a few quotations, including this from Neumann:

“As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade. Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”

Neumann image source.

WeWork office image source.

Discussion:

• Compare the company’s news release to others announcing CEO departures. How does this one differ, and why would the company take this approach?

• What are the communication objectives of Neumann’s statement? How well does his quote meet those objectives? What else, if anything, should Neumann say or do?

Amazon Response to Employee Walkout

Like many around the world during the Global Climate Strike, hundreds of Amazon employees walked out of their offices yesterday. Employees have been urging Amazon leaders to take more steps to reduce fossil fuel dependency and wrote an open letter back in April. The pressure seems to be working.

On Thursday, CEO Jeff Bezos announced The Climate Pledge, with the following commitments:

• Commits to net zero carbon by 2040 and 100% renewable energy by 2030

• Orders 100,000 fully electric delivery vehicles, the largest order ever for electric delivery vehicles

• Invests $100 million in reforestation projects around the world to begin removing carbon from the atmosphere now

• Launches new sustainability website to report progress on commitments

The Pledge encourages other businesses to sign on, with Amazon leading the way. Bezos said, “We’re done being in the middle of the herd on this issue — we’ve decided to use our size and scale to make a difference.” Amazon employees reacted positively.

Discussion:

• Analyze the employees’ open letter. What persuasive strategies do they use? Look for examples of logical argument, emotional appeal, and credibility. What organizational strategies do the writers use?

• The Amazon announcement doesn’t mention employees’ influence in the decision, although news articles and employees make the connection. Should Bezos include this recognition? Why or why not?

• Describe a CEO’s dilemma in situations like these. When is it appropriate for leaders to meet their employees’ demands, and when should they resist? Did Bezos take the best course of action?

Online Reviews Written by Attractive People Carry More Weight

A study published in Consumer Marketing found that reviews written by more attractive rather than less attractive reviewers lead to “enhanced brand evaluation.” The Cornell and Penn State researchers swapped out photos of reviewers to test the impact of bias.

Marie Ozanne, assistant professor of food and beverage management in the School of Hotel Administration, explains the result:

“More often than we think, we are replicating our offline behavior online, and we don’t know the impact of all our general offline thinking on our online thinking. Hopefully, understanding it can help us be more conscious about it and find ways to focus more on the information that matters.”

Negative reviews didn’t see the same effect, which Ozanne believes illustrates how people think about products or services. When reading negative reviews, people may think more deeply about the product or service, and then the reviewer’s image becomes less important.

Image source. (Confession: I added a period after the first sentence.)

Discussion:

• To what extent do you rely on online reviews?

• How do you think appearance might influence your judgment—of online reviews or in other situations?

• How can you ward against the effect of appearance bias?

CEOs Advocate for Gun Safety

CEOs are encouraging senators to pass stricter gun regulations, such as background checks and a “Red Flag” law that allows guns to be taken from someone who poses a threat. The leaders of 145 companies sent a letter asking for the following:

“That’s why we urge the Senate to stand with the American public and take action on gun safety by passing a bill to require background checks on all gun sales and a strong Red Flag law that would allow courts to issue life-saving extreme risk protection orders.”

The Trump Administration has implemented a ban on bump stock devices, which allows a shooter to fire in more rapid succession, and President Trump has supported more thorough background checks for gun buyers.

Image source.

Discussion:

• What’s your view of CEOs taking on this activist role? What is driving them, and what are the potential risks?

• What observations do you have about the companies that are represented—and perhaps about those that are not?

• Analyze the letter by considering the audience, communication objectives, organization, writing style, and so on. What works well, and what could be improved?

Google Reassures Employees They Can Speak Out

The National Labor Relations Board has ordered Google to allow dissent among its workforce. Although you might think of Google as a place of open ideas, some employees feel stifled.

The first public incident was the infamous “Google Memo,” which argued conservative ideas about women. The employee was terminated—a decision some thought essential for the company, and others thought unfair.

More recently, employees have complained that management puts restrictions on what they can say, including how they express attitudes about the company on social media. But employees in the U.S. are allowed to engage in potential union organizing activity, which includes discussing pay and issues with management.

The Wall Street Journal explains the agreement between NLRB and Google, which does not include a statement of responsibility:

“The settlement orders Google to inform current employees that they are free to speak to the media—without having to ask Google higher-ups for permission—on topics such as workplace diversity and compensation, regardless of whether Google views such topics as inappropriate for the workplace.”

Image source.

Discussion:

• What is the value of allowing debate in the workplace? What are the drawbacks?

• How can managers draw the line between employees’ right to dissent and what’s right for the company?

• Have you expressed political opinions at work? When and how were they received? Have you ever felt uncomfortable during others’ discussions? What did you do?

Howard Schultz Update

Former Starbucks CEO Howard Schultz has decided not to run for president, after all. He communicated the news in an email and on his website. In the email, fonts changed in the middle, but it looks better online. At right are the first few paragraphs.

The full message explains his reasons, which include the election process and his health.

Discussion:

• Analyze the message. Consider the audience, communication objectives, writing style, organization, and reasoning. What works well, and what can be improved?

• At what point does he announce the news?

• What are his strongest and weakest arguments for not running for president?

• What causes fonts to change in the middle of an email, and how can you avoid this in your own writing?

Creative Charts

The Wall Street Journal created a chart to show what Americans value—and how those values have shifted over time. The graphic is a variation on a line chart with generations represented by color.

Understanding the chart may take a while. At first glance, the generation identifiers at the top look like headings, but they point to small bar colors.

The information is interesting, and some points probably aren’t surprising. Older Americans value patriotism, religion (which the poll describes as “belief in God”), and having children more highly than do younger Americans.

Discussion:

• Assess the graphic design. How intuitive do you find the chart? What works well, and what could be improved?

• What are your reactions to the data? What do you find surprising—and not?

• What implications do you see for companies’ attempts to keep employees engaged at work?

The Purpose of the Corporation

The Business Roundtable published a statement, The Purpose of the Corporation, signed by 181 of its 193 members. The Roundtable, a corporate lobbying group, includes CEOs of the largest U.S. companies.

In essence, the CEOs write that they have responsibilities beyond shareholders—to customers, employees, suppliers, and communities (including the environment). The statement is a step to improving the perception of businesses as solely driven by creating shareholder value through short-term profits.

Skeptics abound. A writer for the Washington Post called the statement a “truism”:

“What’s significant about the statement is what it does not say. The corporate signatories do not suggest in any way weakening the fiduciary duties of the boards and managers of ordinary for-profit shareholder corporations to manage such companies’ affairs for shareholders’ benefit.”

The CEO of Allstate and head of the U.S. Chamber of Commerce wrote an opinion piece in the New York Times encouraging businesses to pay people more if they’re serious about serving more stakeholders.

A writer for Forbes argued that these companies are multinationals and have global responsibilities as well. He also accused the executives of being self-serving, warding off criticism about executive compensation.

Others noted company CEOs who didn’t sign, for example, Alcoa, Blackstone, GE, NextEra, Parker Hannifin, and Wells Fargo (whose representative said the CEO is interim and wasn’t asked to sign). Some companies, for example, Kaiser and State Farm, say they didn’t sign because they don’t have shareholders.

Discussion:

• What’s your view of the statement: significant, placating, diverting, or something else?

• Assess the statement itself. Consider the audience, purpose, writing style, organization, and so on. What works well, and what could be improved? What’s extraneous and what’s missing?

Backlash After President Trump Fundraiser

Equinox and SoulCycle customers are not happy about a fundraiser for President Trump sponsored by the companies’ owner, the chairman of a real estate firm. Threats of boycotts and cancelled memberships provoked quick responses from both companies.

SoulCycle CEO Melanie Whelan also said, “SoulCycle has nothing to do with the event and does not support it. … We know who we are and we know what we believe in, and nothing will ever change that.”

Capitalizing on the brands’ distress, other fitness companies are offering discounts and free trials to try to win business.

Soul Cycle image source.

Discussion:

• More company executives feel inspired towards political activism. What are the advantages and risks?

• Did the real estate company owner, Stephen Ross, act inappropriately by hosting a fundraiser? Why or why not?

• Analyze the companies’ statements. What persuasion strategies do they use to rebuild each brand?

• Compare the statements. Does one work better than the other? What criteria do you use to compare them?

Another Blackface Disaster

Belgium’s Africa museum hosted an event for which people arrived in pith helmets, blackface, and other offensive and stereotypical clothing. Understandably, the Congolese community is upset. As one representative said, "Ethnic, exotic or African is not a costume that you can put on and take off.” You can read about Belgium’s occupation of the Congo to understand the history.

The party was organized by a separate company, Thé Dansant, and one organizer defended the party: “Even if one person painted his face black, it was not meant to be offensive. Many people of African origin were enthusiastic about the concept and were present.”

So far, the Royal Museum of Africa is trying to distance itself from the event and hasn’t issued a statement or apology.

Museum image source.
Party image source.

Discussion:

• What’s your view of Thé Dansant’s response?

• What is the museum’s accountability? What should the leaders do or say?

Employees Pressure Walmart to Consider Role in Gun Violence

Walmart is in a tough spot after recent shootings. Some employees are pressing the company to do more to fight gun violence, but no policy changes are planned. After previous attacks, Walmart stopped selling assault-style weapons and raised the minimum age to purchase guns and ammunition, but it’s unclear whether the leaders will do more. Employees are asking Walmart to stop selling firearms and to disallow customers from carrying guns into the stores.

The company seems divided about employees’ activism. Chief Executive Doug McMillon wrote, ”We are proud to be woven into the American fabric as a place for all people. We are more resolved than ever to foster an inclusive environment where all people are valued and welcomed.” At the same time, the company blocked two employees’ access to Slack, encouraging employees to use “more constructive ways for associates to offer feedback such as emails or conversations with leaders.”

A study recently published in the International Journal of Business Communication found that employees are more likely to “express dissent to managers and coworkers” when they are more socialized in the company and when they believe their company is “more ethical and reputable.”

A Wall Street Journal article explains the risk for Walmart to take more action against gun sales:

“[A]ny change to its gun policies risks alienating Walmart’s core customers, who often live in more conservative-leaning rural and suburban communities. The company faced some consumer backlash after raising the minimum age to purchase guns to 21.”

Image source.

Discussion:

• How can the company balance employees’ and customers’ perspectives? What else, if anything, should company leaders say and do?

• Did the company do the right thing by blocking Slack access? In what ways are email and conversations more or less “constructive”?

• What leadership character dimensions are illustrated by this situation?

Republican Google Employee Claims Bullying

Google engineer Kevin Cernekee was fired because, as the company claims, he downloaded information and used software inappropriately, violating company policies. But Cernekee says he was fired because of his political views, particularly because he was outspoken and conservative.

Cernekee is an “outlier,” according to a Wall Street Journal article that describes how rare his beliefs are at Google:

“Some 95% of Google employee donations to candidates in the 2018 midterm elections went to Democrats, according to the Center for Responsive Politics, citing public disclosures.”

Google contends that open dialogue is encouraged and valued, but some of Cernekee’s internal posts were deemed offensive. In one, Cernekee wrote that “many Googlers strongly disagree with Social Justice theory and even more Googlers are concerned about the ‘internet mob’ shaming and intimidation tactics employed in support of this agenda.”

This situation echos the 2017 case when another Google employee was terminated after his memo criticizing diversity and inclusion initiatives at the firm was made public.

Discussion:

• What’s your view of these situations at Google? After researching these two cases further, do you tend to side with the terminated employees or with Google management?

• How do you think your own political views might influence your feelings about these situations?

Capital One's Response to the Breach

A hacker got access to 140,000 Capital One customers’ credit information and social security information, and about 106 million people were affected by other leaked information. Officials arrested Paige A. Thompson, who goes by “erratic” and was a former Seattle technology company software engineer.

In a bar chart, a BBC article puts this breach in context of others. Capital One’s press release describes the company’s quick response:

“Capital One immediately fixed the configuration vulnerability that this individual exploited and promptly began working with federal law enforcement.”

The release also includes a statement from Chairman and CEO Richard Fairbank:

"While I am grateful that the perpetrator has been caught, I am deeply sorry for what has happened. I sincerely apologize for the understandable worry this incident must be causing those affected and I am committed to making it right."

In addition, as expected, the release includes information for customers, offers free credit monitoring, and provides an FAQ.

Image source.

Discussion:

• Analyze the press release. Consider the audiences, objectives, organization, tone, and so on.

• How well does Fairbanks demonstrate humility in the press release? What other leadership character dimensions are illustrated? How well does he inspire confidence in Capital One?

• Analyze the BBC chart shown here. What works well about the chart, and what else would be helpful to understand these breaches in context?

How to Deal with Being "Ghosted"

Too often, employers stop responding to candidates. Even after an in-person interview, candidates never hear back. The CEO of a job search platform advises people to follow up in a few ways:

• Send one email a week. Be thoughtful about your messages to express interest; maybe share new research about the company .

• Try different channels. For example, send a LinkedIn message instead of email, but only once.

• Reach out to others. Contact another recruiter or the hiring manager directly.

All of these actions come with risk, but the writer argues, and I agree, that the risk is worth it. None of these follow-ups are too annoying, and you may turn the tide in your favor.

Ghost cartoon image source.

Be a Human image source.

Discussion:

• Why do you think employers ghost applicants? Consider what incentive they have to follow up.

• What’s your view of these follow-up approaches? Which are you more or less comfortable doing?

Government Scandal in Puerto Rico

Gov. Ricardo A. Rosselló says he will not resign despite protests about private messages that included personal attacks and crude language. With 11 of his top aides, Rosselló participated in chats via the messaging app Telegram. Almost 900 pages of text are now public, and we see insults about other officials with references to people’s sexual orientation, gender, and weight.

The news comes after government corruption chargers earlier this week. The governor admitted, “I committed inappropriate acts,” but also said, “I have not committed illegal acts.”

In a news conference, Rosselló used the words “improper” and “shameful,” but didn’t agree with the reporter that the chats were unethical.

Discussion:

• Should the governor resign? Why or why not?

• What’s your view of the private chats? Should government officials be able to message each other freely? Why or why not?

• How well did the governor respond to the reporter’s questions? Did he convince you?

Suicide Among France Télécom Employees

Management couldn’t fire employees at France Télécom, so, according to critics, they harassed them hoping they would quit. But at least 35 committed suicide under the pressure, and some reports claim the number is closer to 60.

France Télécom was privatized and rebranded as Orange in July 2013. The company wasn’t keeping up with technological changes and, according to executives, were saddled with state employees, who are protected from termination. In 2007, Didier Lombard, the former chief executive of France Télécom, said they would get to their ideal number of layoffs “one way or another, by the window or by the door.”

A New York Times article describes the environment: “A grim universe of underemployment, marginalization, miscasting and systematic harassment was established at the huge company, according to testimony at the trial.” Managers tried changing job responsibilities for some workers, but employees were left without tasks or with tasks they couldn’t do.

With France’s high unemployment rate, employees felt they had few options. Union members, shown here, express their support during the trial in Paris. We’ll see whether the judges find company executives guilty.

Discussion:

• How did management justify its practices? On the other hand, how could they have acted differently?

• What experience do you have with international labor laws? Describe differences and how they might affect business decisions.

• Should France reconsider its lifetime employment protections?

• What leadership character dimensions are illustrated by this situation?

Nike Flag Shoe Controversy

Nike pulled shoes with flag decorations and is taking some heat for the decision. The shoes featured 13 white stars, reflecting an early version of the American flag created by Betsy Ross in 1776. But, according to a Bloomberg article, “The design recently has taken another meaning for some Americans as far-right groups have claimed it as a symbol of their cause. It has also been criticized as evocative of an era when slavery was still predominant in the U.S.“

Former NFL quarterback Colin Kaepernick, who endorses Nike products, and others asked the company to remove the shoes because they are considered offensive. The company complied but is facing backlash from some groups, and the Air Max 1 USA sneakers are selling for up to $2,500 a pair. The company also issued a statement:

“We regularly make business decisions to withdraw initiatives, products and services. Nike made the decision to halt distribution of the Air Max 1 Quick Strike Fourth of July based on concerns that it could unintentionally offend and detract from the nation’s patriotic holiday.”

Sneaker image.
Colin Kaepernick and sneakers image.

Discussion:

• What’s your view of the sneaker image: offensive, patriotic, or something else?

• How do you assess Colin Kaepernick’s role in the controversy?

• Did Nike do the right thing in pulling the sneakers? Why or why not?

• Assess Nike’s statement in response to the controversy. What else, if anything, should company leaders have said?

Noncompete Agreements for Interns

A Wall Street Journal article reports that college interns are increasingly asked to sign agreements that restrict their job choices in the future. “Noncompete, nondisclosure and forced arbitration agreements,” which have been common for senior-level employees, have made their way down the ranks.

Now, interns are asked to sign agreements on their first day with a company, and they don’t always understand what they’re signing. An agreement can prevent a new grad from, for example, accepting an offer with a competitor within a geographic region.

Some agreements are important for companies to protect their intellectual property and preserve confidentiality, but critics say they go overboard. Also, such agreements may not hold up in court, particularly when they affect low-skilled workers.

Bottom line: interns should be careful about what they sign. An agreement may be more of a deterrent and might not inspire legal action, but students shouldn’t have to feel as though their choices are limited right after graduation.

Signing image source.
Noncompete image source.

Discussion:

• What’s your experience with these employment agreements?

• What would you do if asked to sign one?

• What should companies do differently to protect themselves?