Zara Organizational Behavioral Issues

Introduction 

Zara is not only a true manifestation of contemporary globalization but also having a manifest organizational behavior issue that represents one of the major organizational culture problems kindled to a globalized market, hence, its choice for the instant project. Zara has over 2000 stores situated in 88 countries and spread across all five continents (Economist, 2016) . Albeit the company was founded and is still based in Spain, its supply chain has completely outgrown Spain even as it dominates the global fashion industry. Most of its raw materials and its manufacturing processes are undertaken outside Spain so is most of its sales. It is this aspect that makes Zara the focus of the instant study. Secondly, Zara is a high-end product company. It not only sells the kind of product that a majority of the global population cannot afford but also selects high-end areas to position its global chain of stores (Economist, 2016) . This elite only concept is among the contemporary global organizational culture issues. The elite only concept is also closely associated with discrimination. Therefore, a study on Zara would enable an understanding of whether the concept of the elite only, and high-end enterprises having a discriminatory organizational culture, is a reality or mythical. It is on this premise that Zara has been selected . After a careful ab initio analysis of the available reports on complaints facing Zara, it seems possible and indeed probable that discrimination from a racial and economic perspective is actively or passively part of the organizational behavior of Zara and is common enough to inform its organization culture. 

Methodology 

Three main issues were investigated against Zara. One of them was local with the other two having an international scope. The local issue related to an accusation of racial discrimination by Zara against African Americans, both in their employees and as customers. The second was accusations of running manufacturing ‘sweatshops’ in several third world countries. Finally, there was an accusation of active Anti-Semitism in their products. 

Discrimination against African Americans OB Issue 

The first method used to investigate this claim was a literature review and included a careful perusal of available literature regarding the accusation. Different news outlets were compared with regard to this issue to assess veracity. Further, this analysis was used to understand the scope of the problem and how well it can be investigated further. The next step after the literature review was to make actual visits to eight local Zara outlets. This was mainly to assess the nature of the outlets , understand how they dealt with their customers and also make a casual assessment of the visible racial dynamics. These racial dynamics include the number of colored employees, their obligations, and ranking balance. Finally, through referral, three confidential Skype interviews were conducted, two on African American members of staff and one on a white member of management staff. Preparation for the interview as well as drawing up of the questions took a careful analysis of Chetty et al. (2014). This also drew attention to the ethical issues of protecting the identity of the interviewees at all costs. This protection of identity also informed the way questions were framed and how the answers were given to avoid inadvertent exposure. The second ethical issue entailed a careful framing of the questions to avoid offending the interviewees based on cultural issues (Chetty, 2014). It is based on the analysis of the conclusions drawn herein were made. 

The Labor Violations OB Issue 

On the issue of labor violations, most of the accusations made were undertaken in populous third world countries including India and Brazil (Antunes, 2012). The approach undertaken to investigate the same was based on an intensive literature review relating to the accusations made. The review was made both on the accusations received against the company as well as the responses made by the company regarding this accusation. The veracity of the accusations was made based on comparing the different reports made about the subject as well as analyzing the responses made by the company about the same. 

Anti-Semitic Accusations 

There were two major accusations of anti-Semitic products. The first related to a handbag that had been sold and clearly contained the picture of a ‘swastika,’ a sign used but by the Nazis, and representing a movement reputed for antis-Semitism (BBC, 2007) . The second was the sale of a children’s piece that closely resembled the uniform worn in the Nazi anti-Semitic concentration camps. The methodology used to research this OB issue was a literature review of both the accusations made as well as the response made by Zara. A careful perusal of the products complained about was also made to establish the veracity of both the accusations as well as the response thereto by Zara. 

Organization Description and Analysis 

The Leadership at Zara 

Zara is seemingly built around one man, Amancio Ortega Gaona. He founded the company in 1975 in the city of Galicia, Spain together with his ex-wife Rosalía Mera. Gaona has done little else in his life apart from running Zara from the same neighborhood of A Coruña in Galicia. Yet, over a period of only 42 years, Gaona has risen to be the second richest man in the world after Bill Gates with some reports placing him as richer that Bill Gates. The personal character of Gaona is very informative about the management and leadership at Zara. For a start, Gaona can be considered as a miser. In spite of his massive wealth, Gaona still frequents the same coffee house in his native town and also shares lunch with his members of staff (Economist, 2016) . This character has informed the success at Zara but also the negative organizational culture at the organization. The company has the leanest possible leadership structure as shown in the diagram below. It is also placed under the absolute control of the headquarters that have remained in Galicia. Indeed, the store managers globally report to the headquarters and not to the regional or country heads. This places Gaona in active control of the behemoth. 

Technology is used to eliminate most of the middle levels of global leadership so that local leaders report to the top leadership. This policy is established on the basis of both having absolute control over the operations of the company as well as saving any extra management cost. This had been the ideal leadership for many global brands including companies such as Toyota and Samsung Electronics ( USA Today, 2013) . It is however after several catastrophic issues arose within this company premised on decisions made at the global headquarters, that a different approach was made . The new global enterprise approach entails a powerful global, regional and country leadership that has a level of autonomy. This regional and country leaders control their segments based on local operating procedures and only seek overall guidance from the global headquarters. 

The culture of cost-cutting also controls the philosophy under which the organization operates. From the purchase of raw materials, labor, and other operations, Zara management considers the cheapest option as the best options. This stands in sharp contrast with the high-end nature of the goods sold as well as prices they fetch in the market. The spendthrift nature of Zara, as well as the contrast between it and the high cost of its goods, is, however, a closely guarded secret which has, however, come out several times through scandals. 

The Racial and Cultural Discrimination Issue in America 

From an overview perspective, the most actively made accusation about racial discrimination for the company relates to accusations of shoplifting. It has repeatedly been indicated that staff members, at the tens of high-end stores in the USA, have made inordinate accusations of shoplifting against African American shoppers. This has been seen as a means to discourage colored shoppers into the said stores. According to the research conducted herein and analysis thereof, it is clear that racial discrimination at Zara stores is institutional. The stores have a concept that has been dubbed as ‘special order.' This is a code name for a walk in customer who seems highly likely to shoplift. The ‘special order’ call requires that a member of the sales team follow the targeted walk in customer throughout their stay within the outlet. Interviews conducted herein confirmed deductions made by media reports that almost all African-American shoppers who visit a Zara in the USA are dubbed as ‘special order’. Latino shoppers also have a higher propensity of being dubbed as ‘special orders’ while less than 10% of which shoppers will be considered as such. 

The accusations of racial discrimination and stigmatization among American employees was also adjudged as valid and substantial based literature review and the interviews conducted. Zara is accused of favoring white (preferably Spanish), male and straight (preferably Christian) employees who are considered as the most favorable. Indeed, one of the former lawyers and executives at the company, Ian Jack Miller has argued that he was a rising star in the company based on the assumption that he fit the prerequisites indicated above. However, at one point it was realized that he was Jewish and gay and this exponentially changed the way top management treated him. He was discriminated against, harassed, not assigned any duties and eventually terminated without probable cause. The interviews conducted on employees revealed a well-established culture of seeking to discouraged African America, Jewish and LGBT employees. 

Individuals who fell under this category would be discriminated against, given unfavorable working conditions and even have their services terminated under flimsy excuses. These allegations by the interviewees were collaborated by the fact that in June 2015, a class suit was filed by the firm of Sanford Heisler, LLP against Zara for US$40 million. Among the allegation made was reprehensible racial profiling including peddling of photos of Michelle Obama as a hotel waitress and Barack Obama as a member of the Ku Klux Klan. Members of the Jewish community as well as the LGBT community were also part of the lawsuit and claimed discrimination based on those affiliations. The totality of the foregoing confirms that indeed, employee discrimination based on race and culture has been ongoing at Zara in the USA. 

From a historical perspective, the US has had ignoble history from a perspective of racial discrimination. During the Jim Crow era, racial discrimination was not only legal but also institutionalized. Most high-end restaurants, hotels, and stores could legally prevent colored people from accessing them or being attended to them. The Jim Crow era ended in 1964 with the passage of the Civil Rights Act. However, many organizations have to date been accused of using circumspect machinations to keep colored communities from their premises. Incidentally, organizations that engender this kind of conduct have been found to be both elite only and high end. This two prerequisites also define Zara which can lead to the conclusion that as an elite only and high-end store, Zara does not want colored communities shopping therein. It would however not only be illegal for Zara to bar colored shoppers but also the conduct would elicit a lot of negative publicity. This explains why Zara would use an informal and witty approach such as harassing colored shoppers through accusations shoplifting to discourage them. However, this conduct is not only devoid of ethics but also in line with the traditional notion of superiority of races. Globalization has ensured that commerce can be carried out all over the world. This has introduced companies to trade in nations that uphold laws and have cultures that are exponentially different from those of the original area where these companies began. Seeking to use underhand tactics to avoid a segment of the populace that a company considers to be different or inferior is reprehensible. 

The Labor Human Rights Issue 

Zara has been accused severally of outsourcing labor to third world countries and doing so in a manner that breaches the fundamental right of the third world workers. The concept of globalization has created a philosophy where entrepreneurs comb the world for the cheapest source of each and every component in the supply chain. Among the most expensive component in the developed world is labor thus the necessity for seeking cheaper alternatives in the third world countries. It is, however, an express provision of the Convention C122 - Employment Policy Convention, 1964 (No. 122) – ILO that the dynamics of demand and supply cannot be applied to employment (Islam, 2014) . This is because employees are actual human beings who must be treated with dignity in spite of their desperation to work. Zara has however been accused of running labor camps in Brazil and India where employees are underpaid overworked and housed in subhuman conditions (Antunes, 2012) . A careful analysis of this accusation and the responses made by Zara clearly confirm their veracity. 

The Anti-Semitic Products Accusation 

According to BBC, (2007) Zara at one point offered for sale handbags that contained a large and brightly colored picture of the Swastika. The Swastika is an ignoble historical symbol that was used by the Nazis. Among the concepts embraced under Nazism was racial superiority for the White Europeans as well as pathological hatred for Jews. It was premised on this hatred that the Nazis conducted the Holocaust that is credited for the massacre of over 6 million Jews. From the end of the Second World War, the Swastika sign has always been associated with anti-Semitism. However as reflected in the picture below, Zara offered for sale a handbag that had a large and well-displayed swastika for global sale (BBC, 2007) . The handbag was only withdrawn from sale after a global uproar triggered by customers who say the said swastika. The explanation given by Zara was that its members of staff had not noticed the Swastika. 

This explanation would have been more believable had Zara not made and offered for sale pajamas that look precisely as Nazi concentration camp uniform for Jews ash shown below 

Again, Zara claimed genuine error and indicated that the design was based on the Sheriff’s star on which the pajamas had been based (Kaufman, 2014) . The combination of the two products, as well as allegations of anti-Semitism as indicated above, provide definitive evidence that racism and elitism inform part of the organizational culture at Zara. 

Recommendations 

Leadership Change Alternative 

The commercial success of Zara cannot be disputed, having grown from a local outlet to a global brand in just over forty years. However, the concept that since the company began in Spain by white Christian people, this is the ideal humans should not arise and must be eliminated from the OB and organizational culture of the company. The first plausible solution to the leadership problem at Zara is a change in leadership. The company has always had an aggressive approach to leadership which can be credited with the meteoric rise of the company from a small town store in Spain into a global behemoth. The company has however finally reached its zenith and it is time to employ caution in the place of aggression. 

The focus of top management of the company should therefore not be towards aggressive growth stratagems but rather the avoidance of any catastrophic circumstances that would cause the great organizing to go to ruin. Within the perspective change of leadership, the company can embrace both a generational change as well as the engagement of technocrats to run the company (Emery & Pierce, 2013) . The generational change would be fundamental since among the accusations made against the company involves the traditional problem of racism. Traditionally, racism was an acceptable legal notion that was even institutionalized. Today, accusations of racism can lead to a massive class action suit that can be debilitating even to a global corporation. Further, this accusation can create massive negative publicity through informal regulators more so through social media, a fact that can create massive losses for a global company. 

Policy Change Alternative 

The alternative recommendation would be based on the change in OB through the development of new policy relating to the negative organizational culture that the company has been accused of . First among this OB policy changes would relate to the issue of racism. The contemporary global business environment demands zero tolerance to racism. Since Zara has already been earmarked as a company that engenders racist tendencies, it is imperative that the company not only makes such policy changes but also market the making of the said changes. Zara should ensure that the world is aware that the company does neither encourage nor condone acts of racism and the same has been clearly communicated to members of staff. This would signify a manifest change in the way Zara operates and also elicit positive publicity (Emery & Pierce, 2013) . 

In relation to the labor issues, Zara ought to make another policy change based on the understanding that the company does not make profits at the expense of human rights. The company should issue global policy statements that include changes in the way employees are treated . This changes should include standard working hours, globally acceptable pay rates as well as good labor relations. As a sign of goodwill , Zara should invite reputable global regulators to evaluate their labor relation standard thus creating positive global publicity which would endear the company to its customer base. 

Final Recommendation 

Leadership entails a combination of the policies of the company as well as the style of the individuals in leadership (Emery & Pierce, 2013) . A change of the leaders at Zara would, at the moment, be necessary but may also be misconstrued by the public. Further, a change of leadership from the perspective of individual leadership is secondary to change of leadership policy (Emery & Pierce, 2013) . The Zara leadership can be allowed to stay and with the issue being solved through an absolute overhaul of policy as aforesaid. However, there should be a formal deregulation of leadership with stores in different countries being allowed to report to local leadership thus creating a more dynamic leadership structure. Credibility for the current leadership can be earned through allowing for external evaluation and monitoring for the leadership changes as aforesaid. 

Conclusion 

It is clear from the foregoing that the OB, as well as the organizational culture at Zara, is flawed in several ways. Further, the company is already facing negative publicity and the advent of class action suits based on the said OB and unless the situation is comprehensively addressed , it can lead to major adverse consequences for the company. The above research had enabled an understating on how a small enterprise can suddenly grow into a global super-brand and during the aggressive process of growth develop some negative OB. This negative OB can, if not properly addressed and remedied, lead to a negative organizational culture. It takes years of hard work and great strategies to create a global super brand. However, repeated incidences of negative publicity coupled with class action suits can bring a massive company down in a relatively short time. It is, therefore, necessary to evaluate OB carefully to ensure that it remains positive and negative attribute arising either from the headquarters or the nations where the company spreads do not infect the company’s organizational culture. 

References 

Antunes, A. (2012, March 28). Zara Accused Of Alleged 'Slave Labor' In Brazil. Retrieved April 13, 2017, from https://www.forbes.com/sites/andersonantunes/2011/08/17/zara-accused-of-alleged-slave-labor-in-brazil/#74de7a861a51 

BBC. (2007, September 19). Business | Zara withdraws swastika handbags. Retrieved April 13, 2017, from http://news.bbc.co.uk/2/hi/business/7002765.stm 

Chetty, S. K., Partanen, J., Rasmussen, E. S., & Servais, P. (2014). Contextualizing case studies in entrepreneurship: A tandem approach to conducting a longitudinal cross-country case study.  International Small Business Journal ,  32 (7), 818-829   

Economist. (2016, December 17). The management style of Amancio Ortega. Retrieved April 13, 2017, from http://www.economist.com/news/business/21711948-founder-inditex-has-become-worlds-second-richest-man-management-style-amancio 

Emery, C., Calvard, T. S., & Pierce, M. E. (2013). Leadership as an emergent group process: A social network study of personality and leadership.  Group processes & intergroup relations ,  16 (1), 28-45 

Islam, R. (2014). Employment Policy Department EMPLOYMENT Working Paper No. 161 

Kaufman, A. C. (2014, August 27). Zara Apologizes For Pajamas That Look Just Like A Concentration Camp Uniform. Retrieved April 13, 2017, from http://www.huffingtonpost.com/2014/08/27/zara-anti-semitism_n_5722162.html 

USA Today, (2013, March 26). Management changes 'huge turning point' for Toyota. Retrieved April 13, 2017, from https://www.usatoday.com/story/money/cars/2013/03/26/toyota-management-changes-bob-carter/2021639/