Racial Bias in America and around the World 1

Racial Bias in America and around the World

Charles Porter

BIS 345 Organizational Ethics

Professor Willmott

April 2nd, 2019

Arizona State University

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Introduction to Case Study Paper

In this paper I will introduce several case studies about racial bias in United States and

around the world. I will talk about the actions taken by the parties involved and try and show

how the company in question tried to fix the solution, or how they failed at their attempt to fix

the solution. I think it very important currently that for racial profiling, and bias to leave

workplaces, and places of business. I feel that CEO of companies should have to answers to

these type scenarios anymore, and yet 2019 we are still having too. However, when these awful

situations arise what can a company do to save face? What happens when it just one individual

that is cause this problem? Should entire company suffer because of one “Lone Ranger” decided

to be ignorant? Who needs to be held accountable for these actions, and what can upper

management do to stop this from happening in the future?

I am in the industry of multi-national, multi-cultural backgrounds. I think these case

studies tend to intrigue me because of how diverse my company is, and the workplace I go to

everyday. I think it very important for situations like this to be out in the open that way we all

can learn from someone else’s mistakes, and hopefully we can as society move on from this

outdated mindset.

Within this case study I will examine what CEOs like Kevin Johnson (Starbucks), Gil

Heaton (Central Manchester University), Chang Yen Chang (Scamander Beach Resort Hotel),

and finally Peter Bijur (Texaco). Each one of these men handled situations completely different.

All if these cases will span from 1994 to 2016. In each case study, I wanted to show what has

gone on for decades in the United States and around the world. Each one of these men are high

ranking officials within their respected companies. I will show how each man affected their

company positively or negatively by their response to a serious racial bias claim.

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Summary

I will start off my case paper with the Starbucks Corporation and end with Texaco. In

each of the case studies, I will go over what happened to bring each company under a

microscope of scrutiny. I show how companies like Texaco and Starbucks try to turn a negative

situation into a positive situation. On the other end of the spectrum, I will show how Central

Manchester University and Scamander Beach Resort Hotel had a negative effect on their

companies.

Every one of these case studies are different when it comes to how the situation came

about. In the Starbucks case, a store manager caused an issue that was detrimental to every

partner in the company. In Manchester, an upper official was the one guilty of causing a racial

bias situation by only giving grief to a man of different color skin. While in Scamander a

recruiter/ manager made his subordinates make them think they were family to get them to work

harder, and finally in Texaco a taped meeting exposed how high-ranking officials felt about their

minority subordinates. I will show how every company had to pay either with a money payout

or a hot on their reputation.

I will specifically try put my foot in the shoes of a CEO of a company that has been in a

situation of racial bias.

Starbucks Ethical Case- Study 1

The Starbucks Company prides itself in being one of the most accepting, diverse, and

ethical companies in the world. The company spans into numerous countries around the globe.

Starbucks has been a leader in ethical sourcing and ethical practices for decades. However, in
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May of 2018 that came into question with an incident reported in the city of Philadelphia. I will

discuss what Starbucks did to put out the fires, and how they did their best to keep their ethical

reputation, and the results of the aftermath.

In this case study, I decided to study a company and job that is very near and dear to me.

My profession I will focus on later will be Upper Management to a Fortune 500 company. I will

investigate the Starbucks Coffee Company, and their ethical leadership. I chose this profession

for many reasons, 1) I am a current partner with Starbucks Coffee Company, and 2) I was

impacted by the results and aftermath of the Philadelphia incident. I wanted to examine a leader

that I am familiar with, and what he had to do to weigh out the options of making sure something

like this does not happen again, and how it can impact his fellow partners. I am someone who

works for the company the issue at hand not only affected me but numerous partners around the

United States. I think it is imperative to highlight the action of few impacted many people.

According to ethicalsystems.com, the definition of an Ethical Leader is: “Being an ethical leader

means going beyond being a good person. Ethical leaders make ethics a clear and consistent part

of their agendas, set standards, model appropriate behavior, and hold everyone accountable.”

(Trevino, Myers, & Epley, 2018). I believe that Kevin Johnson held himself very properly, and

ethically. He set standards and showed the world that Starbucks will not tolerate hate in our

company.

I will examine the ethical behavior, and actions were taken by CEO Kevin Johnson and

what Starbucks had to do and needed to do to keep their reputation as an ethical and accepting

environment. I will speak about ‘The Third Place” mindset and the training that was set into

place for all partners; so, we could all understand how to deal with everyone in an ethical

manner.
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In May of 2018, to African American gentlemen came into Starbucks as anyone else does

on an average day. On that day, however, Starbucks would be questioned about its policies, and

how they treat everyone. The manager of the Philadelphia Starbucks asked the two gentlemen to

leave, and they refused. The manager decided to call the police. The issue was not that they

would not go, the problem that came into question was a racial issue. A woman sitting nearby

started to record the whole incident, and like them; she too had been there for a while without

getting anything. For some reason, the manager picked out these two gentlemen and decided to

ask them to leave. The question at hand was she asking them to go because they were not

patrons? Or was it because they were two black men?

As most of us know people reacted to the issue as a racial issue. The manager had put the

company in a challenging situation that was not unprecedented at that time in Starbucks history.

What would Starbucks do to right this ethically wrong situation and save face? Kevin Johnson

chose to fly out to Philadelphia and talk to the men face to face and see what Starbucks could to

not have this not happen again. His action showed firsthand how serious Starbucks took this

situation. He wanted to get a better understanding from the two men personally. He would not

tolerate any actions of this type in his stores. After speaking with the men and some leaders of

Philadelphia; Starbucks implemented an unconscious bias training, and “Use of Third Place

Policy,” (Tangdall, 2018). The practice took place on May 18, 2018, and all 8,000 stores and all

distribution centers were required to go through the training. The training and policy were to

help partners stick to the Starbucks code of conduct and implement a place of belonging no

matter what background anyone comes from.

Because of Kevin Johnson leadership and the help of former CEO Howard Schultz

Starbucks was able to weather the storm, and now is backtrack a being known as a place to come
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and enjoy a cup coffee. The actions of one partner change the landscape for the entire company.

With ethical leadership, Starbuck had to implement new policies and reaffirm that Starbucks is

an excellent place to work and come to and bring your business.

As I have mentioned many times in this paper, I am a partner for Starbucks, and seeing

what happened in Philadelphia was a big eye-opener to all of us in Starbucks. Many of us were

shocked and appalled by what happened and became irritated that one of ours would act in such

a manner. I have been with the company for almost five years, and never once have associated

my company as an unsafe place, and not accepting of everyone. I learned that not to take things

for granted. I very grateful for the environment that I work in, but there are people out there that

do not always share the ethical background Starbucks has tried to lay out.

I learned that no one is exempt for needing refresher ethical business practices; even your

CEO needs to have a refresher occasionally. Also, though you run a company, and historically

Starbucks has been known for an accepting atmosphere, we cannot take that for granted, and we

need to hold people accountable to those policies. Ethics is not only for leaders but for everyone.

The manager of that store was not showing an excellent display of ethics and sensitivity to their

co-workers and the patrons that were in the store. If the manager would remember the Starbucks

code of conduct, they may not have lost their job and would not put Starbucks in such

predicament.

Central Manchester University NHS Foundation Trust- Study Case 2

In June of 2012, a very well-known and respected employee at Central Manchester

University was accused of racism within its ranks. Elliot Browne secured one million pounds for

legally showing that he was racially discriminated against and fired unfairly by his peers.

Browne was in charge of three departments, and when those departments were having issues
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being able to secure funds, Browne was wrongfully bullied and harassed by Gil Heaton the

trust’s chief nurse and deputy chief executive.

Browne proved that his treatment was far worse than those of his counterparts that were

of white skin. When Browne originally sent in a grievance to the trust it was not taken seriously

and was dismissed, because of this action Unite (the unions that represented Browne) claimed

that the trust only had 2% of its workforce was black and that the trust dismissed 25% of the

grievances sent by the black employees.

When a company does not take claims of discrimination serious and/or racial bias, this

can hurt the morale of employees, because they feel the company does not care. In Browne case,

his personal life took a hit, and he lost confidence in himself. He thought that no one would

listen to him or want to help him. Luckily for him, his Union took the matters serious a took

legal action against his former employee. In this case, NHS was entirely in the wrong and treated

a loyal employee incredibly wrong. Mr. Browne spent 34 years with the company, and NHS

treated him like he was worth nothing. According to the article, this is how NHS does business,

and not the first claims have been filed.

If they were ethically speaking the leaders of NHS would have taken claims serious in the

first place, they would not have needed to payout 1 million pounds to a former employee. In a

situation like this, the CEO needs to take action. He or she needs to preserve the integrity of

their company, and not let this happen.

Scamander Beach Resort Hotel- Case Study 3

Starting back in 2007, Chang Yen Chang recruited Malaysian workers through

newspaper ads to come work at the Scamander Beach Resort Hotel in Australia up until 2014.

According to reports Mr. Chang purposely recruited Malaysian workers because they are known
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to be okay with working six or seven days a week. He would go as low as calling his workers

family knowing they would work harder for him if he considered them family. It is widely

known that Chinese and Malaysian workers work hard for the family and friends, and because

Mr. Change and the employee he was exploiting were the same that they were on the same

“wavelength.”

According to the reports, he would pay his white Australian employees proper wages and

paid the Malaysian workers up to 28,000 dollars less. Mr. Chang would give proper pay

increases to the Australian workers but would provide significantly less raises to the Malaysian

workers. There would be times the Malaysian workers would work overtime with no pay, and he

exploited this because of their poor language skills. According to the article, Mr. Chang violated

numerous violation that protected workers under the Fair Work Amendment (Protecting

Vulnerable Workers) Act. This act was put into place after several migrant workers were taken

advantage of over the years.

In this case, an employer was taking advantage of a culture's views of family and friends

and use for his selfish goals. He knew that if he told them that he considered them family, he

would be able to get those employees to work harder than the white Australian employees, and in

doing so, he knew he could get them to work more extended hours and more days. Taking

advantage of culture, the way he did is very bold, and very low. To him, the Malaysian workers

were only a means to an end. He did not care for them, or care for their culture. He exploited a

strength within their culture and used for his selfish advantages.

When this case was settled the Hotel company that employed Mr. Chang had to payout

211, 104 dollars to the employees he mistreated. In the end, Scamander Beach Resort Hotel had

to pay finical payout for the misconduct that one employee had to other employees.
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Furthermore, the company might have taken a hit on their reputation, and other foreigners may

look for another place of employment instead of working for Scamander Beach Resort Hotel.

When Scamander Beach Resort Hotel advertising for jobs in local Malaysian papers or job

postings future candidates will remember what happened here and possibly think this how they

conduct business and look somewhere else for work. The fact this had gone from 2007-2014

shows that upper management needs to be more involved with their employees. Upper

management needed to raise red flags before the Scamander Beach Resort Hotel was sued for

racial bias and discrimination. Not paying employees correct wages because of color, race, or

culture is exceptionally unethical and needed to be stopped years before 2014. A lump sum of

money does not take into consideration the pain and suffering that these employees went through

before they made their case to federal court.

1994 Texaco Racial Bias- Case Study 4

In 1994 Texaco was hit with a significant lawsuit due to the way they treated, spoke and

dealt with minorities in their company. According to documents released to the public, many

high-ranking officials used derogatory phrases and racially insensitive words when talking of

their minority workers. In August of 1994, many executives had a meeting and unknown to

them one of the other executives started to record their “comfortable” conversation. In that

meeting it was evident how Texaco executives thought of their employees with different color

skin, dealt with their promotions, and even how they spoke about them behind closed doors.

One official was recorded calling them “Black Belly Beans,” and “Nigger” (Eichenwald,1996).

Another executive Robert Ulrich was overheard talking about “'I'm still having trouble with

Hanukkah,'' Mr. Ulrich said. ''Now we have Kwanzaa.'' (Eichenwald,1996).

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In 1994, six employees representing 1,500 other employees brought the lawsuit to Andrea

Christensen, the lawyer that would serve the employees in the upcoming trial against Texaco. In

her statement, she was shocked and appalled by what she heard, and knew these actions were

completely against Texaco policies. The future lawsuit would end the was called “The end of

the good ol’ boys’ era” (Kraul, 1996).

In 1997 after two years of dragging out the lawsuit Texaco settled on a 176-million-dollar

settlement, and immediately gave some 1,400 employees a 10 percent pay increase. Leading to

up to the settlement the CEO of Texaco Peter Bijur suspended all executives that were involved

during the lawsuit. Bujir than launched a program were all executives had to visit all branches of

the company and apologize for the actions in person. Later Bijur sought after advice from civil

right activist to make sure this does happen again, and get their advice on how to handle this

situation in the future. Bujir also reemphasized Texaco’s policy on discrimination and

restructured policies with their human resource department.

Texaco could avoid all of this if they held certain people accountable before it was

released and recorded. When an employee needs to go to the length of recording meeting

because of what is being said about a group of people tells me that this situation might have been

brought up before, but no one would listen or do anything. It is unfortunate that something like

this terrible issue continued to happen until it was released to the public. I applaud Peter Bijur

for the actions he took in correcting the wrongs that others created. As the CEO of a company

with 22.3 percent of your employees are minorities, there should have been strong policies in

place before all this went down. The human resource department should discuss with the CEO

to implement policies and training that way Texaco may have been able to avoid a situation of

the magnitude. I think Peter Bijur should have held a press meeting when all this came to light,
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and let people know this is not how things are done at his company. He should have been

transparent and got ahead of the situation before Texaco got sued.

Conclusion

In all these case studies there is one theme that needs to be addressed. The CEO of a

company needs to be aware of racial discrimination happening within their company. It is

imperative that the leader of the company handles delicate situations with patients, sensitivity

and be utterly transparent of the indiscretion that occurred. The CEO needs to take matters into

their hands and fix hellacious situation such as the four mentioned in this paper. The one thing

that Peter Bijur and Kevin Johnson had in common is they took matters into their own hands and

tried to make the situation better.

As a leader, you cannot be afraid of conflict. What both men did in their situations is

they changed policies and were completely transparent about how they would implement change.

Racial discrimination has been going on forever. However, as the CEO of a company you

cannot be the one participating in these acts, and you need to condemn them when they do

happen. In the Starbucks case and Texaco case the individuals that caused the issues were let go

or suspended by the company. You cannot allow one or multiple people discredit a company by

their racist actions. Taking advantage of workers, and talking down to them or about them needs

to be addressed immediately. People should know that the company they work for will listen to

them if they have an issue with racial biases. All the companies had to pay out a finical

settlement to compensate for their lack of policies that they did not have. I think it is essential

for a CEO to go over their policies regularly to make sure that what is excepted in today's society

coincides with the policies of the company.

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Everyone should be created equal, everyone should get money equal, and everyone needs

to feel comfortable where they work. If every one of these CEOs had held their upper

management team accountable before all these allegations came to light, their company would

not need to payout or have a smear on their reputation. I know it is impossible for a CEO to

control everyone within their company. However, they must make sure they hire people that will

uphold the policies the way they are supposed to be supported.

References

Eichenwald, K. (1996, November 04). Texaco Executives, On Tape, Discussed Impeding

a Bias Suit. Retrieved April 10, 2019, from
https://www.nytimes.com/1996/11/04/business/texaco-executives-on-tape-discussed-impeding-
a-bias-suit.html
En Yi, L., Ai Xin, T., Hui Xin, C., & Lin, Y. (2017, March 11). Case Studies of Texaco's
Racial Discrimination Lawsuit (1994) and Malaysia Airline Flight MH 17 by (Lee En Yi-
005059, Teresa Pang Ai Xin-005079, Chong Hui Xin-005088, Ng Yu Lin-005040). Retrieved
April 10, 2019, from
https://abelprblogforhumans.wordpress.com/2017/03/01/texacos-racial-discrimination-lawsuit-
1994
Kraul, C. (1996, November 16). Texaco Settles Race Bias Suit for $176 Million.
Retrieved April 10, 2019, from
https://www.latimes.com/archives/la-xpm-1996-11-16-mn-65290-story.html

Tangdall, S. (2018, August 29). The CEO of Starbucks and the Practice of Ethical
Leadership. Retrieved March 17, 2019, from
https://www.scu.edu/ethics/focus-areas/leadership-ethics/resources/the-ceo-of-starbucks-
and-the-practice-of-ethical-leadership

Trevino, L., Myers, D., & Epley, N. (2018). Leadership. Retrieved March 14, 2019, from
https://www.ethicalsystems.org/content