case does forever 21 foster positivity

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Does Forever 21 Foster Positivity?

Forever 21 was founded in downtown Los Angeles in 1984 by a Korean-American immigrant couple, Do Won Chang and Jin Sook. They are known as Mr. and Mrs. Chang and still run the privately held company. Today, it employs about 35,000 people and runs 600 stores worldwide, with operations in the United States, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, Latin America, Mexico, the Philippines, and the United Kingdom.161 The company made about $4.5 billion in 2015.

The Changs are born-again Christians and try to run their business using Christian values. Mrs. Chang told Bloomberg Businessweek that she prayed about whether to open their first store. God told her to do so and promised she would succeed. The couple attend a daily prayer meeting at their church, where Mr. Chang leads a Bible study and Mrs. Chang is a deacon. The pastor noted that the Changs have contributed millions of dollars to worldwide missions.

The Changs’ faith is represented in their stores, where every bright yellow shopping bag includes a reference to John 3:16. This Bible verse says, “For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.”162

Forever 21’s Key Values

  1. Supplier and Vendor Social Compliance and Ethical Sourcing. The company commits to caring “not only for our employees but also for the employees of hundreds of vendor manufacturing facilities throughout the world which make our products. We want all of these employees also to work in safe and healthy environments.”
  2. Support Charities. “At Forever 21, one of our core values is to encourage giving, to lend a helping hand to those who need it most.”
  3. Environmental Sustainability. “Forever 21 is committed to reducing its environmental footprint throughout its global operations.”163

Are These Values Being Lived at the Company?

Forever 21 has experienced a number of lawsuits and controversies regarding different aspects of its operations.

  • The US Department of Labor issued a subpoena in 2012 to force Forever 21 to reveal “how much the company’s suppliers pay the workers who make its clothes. Anecdotal evidence suggests the salaries are well under the current US federal minimum wage of $7.25 an hour.” After the company failed to provide the information, a US District Court judge ordered the company to provide the requested data.164
  • A class-action lawsuit accuses the company of “failing to provide meal breaks, rest periods and overtime wages. Plaintiffs … claim that requisite bonuses weren’t paid which qualify as overtime, and that the company failed to cover business expenses as required under law.” Although the case has not been settled, plaintiffs “may be entitled to up to $4,000 in penalties as well as any due wages.”165
  • The company decided to reclassify 1 percent of its workforce to part-time status, working a maximum of 29.5 hours a week. This level of work is just “under the 30-hour full-time designation assigned by the Affordable Care Act, which requires companies who employ 50 or more workers to provide health insurance coverage for their full-time employees or face a penalty. Newly part-time workers who were enrolled in medical, dental, vision and voluntary plans will also see their coverage cut off on August 31 [2013], and they won’t be able to receive paid time off.”166 These actions led to a social media firestorm, resulting in comments such as, “A true Christian thinks of others first and is not greedy. Tell me, just how rich do you need to be?” Another person wrote, “Jesus Christ would never, NEVER do this to anyone, ever.”167
  • Forever 21 agreed to pay $100,000 in penalties to the Occupational Safety and Health Administration (OSHA) for safety violations at its Westfarms Mall store in Farmington, Connecticut. A store inspection revealed that emergency exits and hallways were blocked by store inventory. Boxes were “piled as high as 10 feet and stacked in an unstable manner so that they blocked exit routes or could fall onto workers. The company contested the citations and penalties but has now reached an agreement in which it agrees to abate the cited hazards.”168 The company has been cited 12 times for similar violations at other locations.169
  • Page 291Two recent lawsuits involve LGBTQ issues. Mickael Louis claimed extensive harassment that occurred while he was working at Forever 21 in Brooklyn. One boss said, “I love muscular black guys like you,” and another showed him “cell phone videos of him having sex with men.” Louis’s boss “constantly addressed Louis as ‘Honey,’ [and] another manager—Andy Liu—allegedly came up with a different offensive nickname—‘Nutella.’” Liu also told Louis, “Look out for the black people, they are going to steal.”170 The second case pertains to Alexia Daskalakis, 22, formerly known as Anthony Daskalakis. Daskalakis claimed her problem began when she began transitioning to a woman. Her boss allegedly started treating her with “‘increasing contempt’—yelling at her in front of coworkers and calling her ‘useless.’” Another manager called her a “hot mess.” She was ultimately fired.171
  • A former employee sued Forever 21 because it allegedly requires “employees to be on call for shifts but does not compensate them for it.” The employee said, “These on-call shifts are no different than regular shifts, and Forever 21 has misclassified them in order to avoid paying reporting time in accordance with [California] law.” One expert suggested that the company “appears to be in direct violation of California law, which requires that employees be compensated with ‘reporting time pay’ (which is equivalent to their regular hourly rate) for being required to report to work but being asked to work less than half the actual shift.”172
  • The company was sued by other companies and labels such as H&M, Diane von Furstenberg, Anna Sui, and Anthropologie (50 in all) for copying their clothes. H&M, for example, sued for “copyright infringement, false designation of origin and unfair competition.” H&M claims Forever 21 copied its Beach Please tote bag. Von Furstenberg, Sui, and Anthropologie won settlements.173

What Are Employees Saying about the Company?

Here is what employees wrote on Glassdoor and Indeed.com in 2016:174

Pros: “Great management staff, everyone really tries to do the right thing.” “Everything is always new and interesting, there is never a dull moment!” “Flexible schedule and fast environment.” “First dibs on new clothes.” “I enjoy all my coworkers; it isn’t hard for me to get along with people.”

Cons: “Zero support or direction from corporate and district managers, technology lacks compared to other stores and sales suffer.” “It is difficult to attain a good work–life balance with consistent overnight shifts and last minute schedule.” “No structure and no recognition.” “Ugly acting people. Everyone is miserable from the customers to the employees. . . . Place is always messy.” “The management at this job, for the most part, is not the best. They don’t always treat everyone fairly, including each other.”

Apply the 3-Step Problem-Solving Approach to OB

Step 1: Define the problem.

  1. Look first at the Outcomes box of the Organizing Framework in Figure 7.4 to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and a current state. State your problem as a gap, and be sure to consider all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.
  2. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. Identify the perspective from which you’re defining the problem—is it that of the Changs, employees, or other labels and retailers?
  3. Use details in the case to identify the key problem. Don’t assume, infer, or create problems that are not included in the case.
  4. To refine your choice, ask yourself, Why is this a problem? Explaining why helps refine and focus your thinking. Focus on topics in the current chapter, because we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using material from this chapter, summarized in the Organizing Framework shown in Figure 7.4. Causes will appear in either the Inputs box or the Processes box.

  1. Start by looking at Figure 7.4 to identify which person factors, if any, are most likely causes of the defined problem. For each cause, ask, Why is this a cause of the problem? Asking why multiple times is more likely to lead you to root causes of the problem.
  2. Follow the same process for the situation factors.
  3. Now consider the Processes box shown in Figure 7.4. For any concept that might be a cause, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at root causes.
  4. To check the accuracy or appropriateness of the causes, map them onto the defined problem.

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Step 3: Make your recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recommendation is desirable and feasible?

  1. Given the causes identified in Step 2, what are your best recommendations? Use the content in Chapter 7 or one of the earlier chapters to propose a solution.
  2. You may find potential solutions in the OB in Action boxes and Applying OB boxes within this chapter. These features provide insights into what other individuals or companies are doing in relationship to the topic at hand.
  3. Create an action plan for implementing your recommendations.
 
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