The Ineffectiveness of Self-Regulation in Promoting Human Rights

Introduction

Today, an increasing number of firms are recognizing the value of corporate social responsibility (CSR) (Preuss, Haunschild & Matten, 2009). Through CSR initiatives, firms are investing in the wellbeing of such stakeholders as employees and their communities (Aguilera et al., 2007). Ensuring that the human rights of employees are safeguarded is one of the fundamental purposes of CSR. In the pursuit of this purpose, firms have undertaken such initiatives as offering their employees safe working conditions and providing them with competitive remuneration (Cook, 2008). CSR is one of the tools that firms use as part of self-regulation. Essentially, self-regulation involves firms taking up the role of monitoring their operations to ensure that they are in line with all applicable rules, guidelines and standards (Moerel, 2012). Self-regulation is an alternative to the regulatory procedures that governments implement. Through self-regulation, firms are able to proactive and shield their operations against government interference. While self-regulation can play a critical role in the promotion of human rights, serious questions are being posed regarding its effectiveness (Maassen, Bosch & Volberda, 2004). Does self-regulation really challenge firms to be in the forefront in campaigning for the human rights of their employees?

In the sections that follow, a thorough review of the impact that self-regulation has on the human rights of employees will be offered. However, before proceeding to these sections, it is necessary to lay out the research question. The following is the question that this research seeks to solve: Is self-regulation an effective approach to safeguarding the human rights of employees? Answering this question is important for a number of reasons. One, as one answers this question, they are able to recognize the value of self-regulation. Some studies have shown that self-regulation can have a positive impact on the experiences of employees (Baron, 2016). By answering the research question, it becomes possible to either confirm or refute the findings from these studies. Two, investigating the impact of self-regulation will shed light on whether it is time for firms to move away from self-regulation and allow the government to play its regulatory role. A number of scholars have determined that the impact of self-regulation is severely limited. For example, Richard Locke (2009) and his colleagues established that “Private, voluntary compliance programs, promoted by global corporations and nongovernmental organizations alike, have produced only modest and uneven improvements in working conditions and labor rights in most global supply chains” (p. 319). Overall, answering the research question will highlight the true impact of self-regulation on the human rights of employees.

Literature Review

Before delving into the review of literature on the link between self-regulation and human rights, it is helpful to set the stage through a discussion on the role of employee human rights. Carola Glinski (2017) penned a thought-provoking article which explores the need for firms to pursue human rights through their operations. She observes that when firms promote the welfare of their stakeholders, they basically safeguard human rights. Through her article, Glinski appreciates the role that the corporate world can play in the promotion of human rights. Prakash Sethi (2011) joined Glinski in challenging businesses to incorporate the promotion of human rights into their missions. He urges businesses to develop codes of conduct which place particular focus on human rights. Basically, Sethi urges firms to understand that the promotion of human rights does not require external intervention. Enterprises can lead the way in ensuring that the rights of their employees and other stakeholders are protected at all times. Tom Campbell (2006) also made a contribution to the discussion on the role that enterprises can play in furthering human rights. In his discussion, he notes that firms should adopt a human rights approach when creating codes of conduct (Campbell, 2006). These codes should stipulate that the firms are fully committed to protecting human rights. The scholarly community clearly recognizes that self-regulation and internal mechanisms can be used to advance human rights.

Whether self-regulation truly improves the experiences of employees is an issue that has fascinated the scholarly community. The wide range of literature that examines this issue is evidence of this fascination. Susan Hart (2009) is among the scholars who have conducted studies on the impact of self-regulation. In her study, she set out to determine if workers really benefit from self-regulation programs. Before proceeding to determine the impact of self-regulation, Hart notes that the prominent role of CSR in the modern business environment is challenging firms to invest heavily in employee wellbeing. She states that “the business case for CSR-that corporations would benefit from voluntarily being socially responsible- was increasingly promoted by governments and corporations as part of the justification for self-regulation” (Hart, 2009, p. 585). Here, Hart makes it clear that self-regulation is designed to promote the operations of firms. After conducting an extensive review of literature, Hart reaches a disappointing but predictable conclusion: self-regulation is ineffective. She calls for businesses to combine self-regulation with government monitoring and states that “in terms of government policy and management practice, the business case needs to be supplemented by strong, proactive legislation, and worker involvement” (Hart, 2009, p. 585).Hart sets the stage for the research that will be carried out. The research will seek to establish if her conclusions are in line with the real situation on the ground.

Hart is not the only scholar who has attempted to establish the impact of self-regulation on employee human rights. Beth Stephens (2009) also explored how the regulatory environment influences the operations of a company. In her discussion, she notes that the pursuit of profit is an amoral endeavor (Stephens, 2009). This means that firms are willing and ready to commit violations in the pursuit of profits. As regards self-regulation and employee human rights, Beth’s assertion suggests that self-regulation is not enough to remind firms to honor the rights of their employees. Human Rights Watch is one of the most passionate defenders of human rights (Simpson & Simpson, 2009). This organization is convinced that self-regulation is ineffective and a threat to human rights. Writing for this organization, Christopher Albin-Lackey (2017) observed that self-regulation essentially allows firms to make their own rules. It is unlikely that a firm will follow rules that threaten its profitability even when these rules promote the wellbeing of its employees. Rebecca DeWinter-Schmitt (2009) added her voice to the discussion on the impact of self-regulation. While she does not find that self-regulation is ineffective, sheestablishes that self-regulation needs to be combined with industry-wide monitoring. Essentially, she notes that firms cannot rely on self-regulation alone to ensure that the human rights of employees are not violated. Guy Standing (2007) also explored the effects of self-regulation. As is the case with DeWinter-Schmitt, Standing does not conclude that self-regulation is entirely ineffective. However, he finds that self-regulation is inadequate and must be combined with public participation and external pressure for maximum impact (Standing, 2007). The scholarly community appears to be speaking with one voice concerning the effect of self-regulation; most scholars agree that self-regulation is either ineffective or inadequate.

It is true that self-regulation involves companies taking action to promote the wellbeing of stakeholders. However, the government also has a role to play. In developing countries, it has been found that governments are unable to ensure that firms comply with the rules and standards that they (the firms) set. David Graham and Ngaire Woods (2006) note with concern that firms which have adopted self-regulatory measures tend to flout their own rules with impunity. This observation points to the ineffectiveness of self-regulation particularly where strong regulatory structures are lacking. David Vogel (2007) agrees that developing nations lack the regulatory structures and frameworks to ensure that enterprises treat their employees properly. Employees who work in such environments as garment factors are subjected to hardships which amount to a flagrant violation of their human rights.Tracey L. Adams (2016) joined Graham and Woods in examining whether self-regulation indeed promotes human rights. They observe that while self-regulation is intended to promote the interest of the public, firms use it to further their own agenda. The insights from Adams’ discussion suggest that instead of promoting the human rights and welfare of their employees, firms are using self-regulation to maximize profits and boost operations. Essentially, self-regulation is an ineffective approach that merely serves the interests of companies. David Vogel (2009) is recognized as one of the most authoritative voices on the issue of CSR. In an article that he authored, he observed that self-regulation is inherently inadequate and ineffective. He states that “private regulation must be integrated with and enforced by more effective state-based and enforced regulatory policies at both the national and international levels” (Vogel, 2009, p. 68). Basically, Vogel contends that the question of regulation cannot be left to companies alone. Governments also have an important role to play.

Voluntarism is at the heart of self-regulation. Enterprises display proactivity when they choose to develop programs which enhance the welfare of such stakeholders as employees. However, as the discussion above has revealed, voluntary self-regulation initiatives are both inadequate and ineffective. Sol Piciotto (2017) echoes this in his discussion. He laments that most self-regulatory mechanisms are difficult to enforce. Since there is no external pressure, firms lack the incentive to faithfully enforce self-regulation. Ans Kolk and Rob van Tulder (2002) agree that the effectiveness of self-regulation is limited. They note that when enforcement is not carried out properly, self-regulation may fail to address such ills as child labor. Today, child labor is recognized as a gross violation of basic human rights (Herumin, 2008).

The discussion this far indicates that the scholarly community is in agreement that self-regulation does not work. For the sake of balance and a comprehensive coverage, it is important to consider the thoughts of the scholars who believe that self-regulation is actually effective. Daphne Richemond-Barak (2014) is among these scholars. Focusing her article on self-regulation in the private security industry, she notes that self-regulation has proven effective for the actors in this industry. However, she is careful to add that to achieve effectiveness, the private security industry has combined self-regulation with other approaches. For example, there are industry associations which challenge members to uphold human rights. The industry has also adopted benchmarking through which it promotes such values as transparency and accountability (Richemond-Barak, 2014). Cynthia Estlund (2009) confirms that self-regulation can deliver results. However, she notes that to achieve even higher levels of effectiveness, firms need to demonstrate more commitment. Richemond-Barak and Estlund represent the minority. As is clear from the discussion above, most scholars are of the view that self-regulation does not work.

Safe working conditions and fair pay are some of the rights to which employees are entitled (Werhane, Radin & Bowie, 2008). It is encouraging that most enterprises strive to honor these rights. However, there are still many firms which routinely violate these rights. To understand why self-regulation does not work, it is helpful to examine examples of firms whose failures have led to devastation. In 2013, over 1,000 workers lost their lives when the Rana Plaza collapsed. At this complex, thousands of workers worked for long hours making garments for such Western firms as H&M and Gap (Kasperkevic, 2016). Investigations revealed that violation of safety standards was the primary cause of this disaster. Further probes revealed that a number of factors are to blame for the tragedy. Regulatory failures are among these factors. It is believed that the garment industry is unable to ensure that its members comply with building codes (Kazmin et al., 2013). As a result, the garment companies expose employees to dangerous working conditions. The country’s government authorities have also been unable to properly enforce rules. The example of the Rana Plaza tragedy shows that when left to their own devices, companies cannot protect the rights of their employees. External pressure from such parties as the government is needed.

Theory/Hypotheses

Theory

The purpose of this research is to establish the ineffectiveness of self-regulation in promoting the human rights of employees. To achieve this purpose, the research will rely on a theory which connects self-regulation and employee welfare. The main goal of self-regulation is to challenge firms to take the lead in promoting social initiatives (Rahim, 2013). Through self-regulation, firms are able to demonstrate proactivity and responsiveness to the needs of their stakeholders. For example, a company which actively promotes the welfare of its employees presents itself as one that is committed to human rights. From the literature review provided above, it is evident that one of the factors that hamper self-regulation is lack of stringent enforcement. Self-regulation does not impose much pressure on firms. Instead, it relies on the cooperation and the goodwill of companies. For a firm to cooperate, there must be some incentive. For example, it has been shown that pursuing the rights of employees inspires them to become more productive and committed (Price, 2011). Given this fact, one would expect a firm to fully promote employee human rights in the hope of motivating employees to improve their productivity. However, it is worth noting that pursuing the welfare of employees is not entirely rewarding. There are harms and costs that firms must incur. For example, a company may need to pay its employees better wages and provide improved working conditions. These initiatives are costly. Therefore, since they are required to make capital investments, it is unlikely that firms will promote human rights of their employees. It is therefore not surprising that firms have been unable to use self-regulation for advancing employee welfare. The theory developed in this discussion recognizes that honoring human rights is a costly undertaking which discourages enforcement. It has been observed in the literature review that the pursuit of profit is an amoral endeavor. This means that firms will do all that it takes to maximize their profits. For example, a firm may hire children so as to keep labor costs down and maximize profits. Unless firms change their business model and embrace corporate social responsibility, the world should not expect to witness employees being treated properly. Through the theory developed in this discussion, one is able to understand why firms struggle with enforcement. Promoting employee human rights threatens the financial interests of companies.

Hypotheses

In a bid to achieve its purpose, this research will test a number of hypotheses. These hypotheses are given below:

Hypothesis 1

Firms that have adopted self-regulatory mechanisms struggle to enforce them.

Hypothesis 2

Employees of enterprises which have integrated self-regulation into their operations do not fare better than their counterparts whose employers are subject to government regulation.

Hypothesis 3

Companies under government regulation perform better in safeguarding the welfare of their employees.

Data/Variables

The research will be designed in the case study format. This format seems most appropriate since it allows for the comparison of firms that operate in different regulatory regimes. The operations of a company whose operations are subject to self-regulation will be compared with those of a firm that is under government regulation. The two companies will be the main source of data. Employees from the two companies will be interviewed. The interview will focus on such issues as the working environment, treatment by top leadership and the remuneration package. It is expected that there will be a stark difference between the experiences of the employees from the two companies. After the responses from the employees have been gathered, an analysis will be carried out. The aim of the analysis will be to determine the association between self-regulation versus government regulation, and the pursuit of the human rights of employees. The analysis will particularly seek to establish if the firm which has adopted self-regulation treats its employees better. No complex analysis of data will be carried out since the research is rather simple and the insights should be clear. For example, if the analysis reveals that the employees whose companies rely on self-regulation are paid meager wages, work in unsafe conditions and are treated poorly, there will be a basis to conclude that self-regulation does not facilitate the promotion of the human rights of employees.

Variables are essential components of any research endeavor. The independent variables in this research are self-regulation and government regulation. As noted above, a firm that has adopted self-regulation will be examined to determine how it treats its employees. Another company whose operations are subjected to government oversight and regulation will also be assessed. In addition to the independent variables, there are a number of dependent variables which will be the focus of the research. All of the dependent variables concern the experiences and human rights of the employees. The dependent variables are the remuneration package that the two companies offer, the state of the working conditions and the manner in which the top leadership of the two firms treat their employees. These dependent variables will allow for an understanding of the impact of self-regulation on the human resource management practices of the two companies. Control variables are also usually included in research. The primary purpose of these variables is to ensure validity (Chandra & Sharma, 2004). The market in which the two firms operate will be the primary control variable. It will be ensured that the two companies selected operate in the same environment. This will be done with the aim of preventing other factors from compromising the validity of the findings obtained from the research.

Conclusion 

The effectiveness of self-regulation in promoting human rights in the workplace cannot be guaranteed. Since self-regulation hinges on cooperation and goodwill on the part of firms, it is difficult to ensure that firms enforce their regulatory procedures. Various scholars have established that there are numerous drawbacks that make self-regulation ineffective. The fact that self-regulation suffers from lack of proper enforcement is among the drawbacks. Employees continue to bear the brunt of the shortcomings of self-regulation. Enterprises routinely violate the rights of their employees since there is no regulatory authority that holds them accountable. Employees in developing countries particularly endure hardships since the governments in these countries lack the teeth needed to ensure compliance. Moving forward, firms cannot continue to rely on self-regulation. Instead, they should adopt market-wide standards that they honor faithfully. Alternatively, the companies could submit to government regulation. Government regulation is far more effective than self-regulation.

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