Ethical Misconduct at 7 Eleven: A Case Study

This presentation discusses the case of ethical misconduct at 7 Eleven in Australia, where illegal work practices and worker exploitation were revealed. It explores the impact on the company and emphasizes the importance of ethical conduct in business. The case study provides insights into the development of a fair global business environment.

7 ELEVEN
CONVINIENCE
STORE
ETHICAL MISCONDUCT –ILLEGAL AND
EXPLOITATIVE WORK PRACTICE

CASE STUDY
 In the year 2015 trouble arrived at one of the most well known
convenience store chain 7 Eleven in Australia . ABC’s documentary
series Four Corners reveled how the company use illegal work
practices by curbing labor cost at the cost of the labors. The
employees were paid half their minimum wages and were harassed at
their workplaces. The famous cash back practice existed where the
employees were paid their right wages in their bank accounts but
they were forced to give back half their pays to dodgy franchisees,
away from CCTVs and biometrics. The young and foreign youths were
targeted the most. The end result of the scandal saw the resignation
of both its Chairman Russ Withers and CEO Warren Wilmot. Not only
this but the court also imposed penalties exceeding $1 million for
worker exploitation.
 The above case study will help in elaborate explanation of ethical
issues and will show how moral philosophy and inter and intra
cultural organizational support will help in reducing ethical dilemma
for the same leading to the development of a fair global business
environment.

WHAT THEY SAID…
 EMPLOYEES SIDE:
 “We worked like slaves and no one cared!!!!”
 “The sad thing is nobody was listening, not even 7 eleven…we gave
our souls to the store ,but they don’t cared”
 EMPLOYERS SIDE:
 “This model will only work if we underpay our employees”
 “Guest work regulations were to be levied on permanent employees
in order to minimize cost”

ANALYSIS
 The case was a clear case of ethical misconduct rom the employer side. The
company did not abide by the code of conduct of ethical norms and they levied
their own laws for their own benefit in profit making irrespective of the employee
side.
 The cash back scam gained momentum quickly but 7 Eleven had not done
enough to address it.
 The work culture was so exploiting that the employees were bound to take legal
actions against the organization.
 The structural framework was so feeble that they themselves sacked senior
employees prior any notice, changed business models overnight and overhauled
the board of directors as well.
 The scandal suggested that there was some ethos in place in the organization
but “bad ethics is good business” has been their motto.
 New compensation schemes were formulated but that sill cannot pay all the
employees their desired wages and thousands more remained unpaid.
 The fair work act system only imposed fines on those whose cases were
considered but systematic underpayment prevailed.

.
 7 Eleven has been named twice the “Franchisor of the year”. They
continued to fulfil their motto until they got caught.
 Getting caught is not the end result but the impacts that will have
politically, legally, socially and economically was beyond imagination.
It takes years to build good reputation but seconds to ruin it.
 Business ethics is all about keeping the bastards honest. Business
ethics remain within the business arena when everything goes right
but when one misdeed comes in the eyes of public it no longer
remains within itself. It becomes a global phenomenon.
 The wage scandal in 7 Eleven has shivered the position of the entity
in Global market and people will think twice while linking them to the
organization.
 Not only Australia and western countries but eastern and middle
eastern countries will show little respect for 7Eleven because most
exploited employees were Indians and from other such neighboring
countries.
 The inter and intra cross cultural organizational support gets
pampered and impacted badly on the society.

.
 The wage fraud scandal has victimized 7 Eleven badly. In order to
stamp out the situation it has spend a lot of money in changing the
ongoing systems such as payroll centralization, introduction of
biometric system of attendance but until and unless the work culture
changes such commendable measures will not be fruitful.
 The flawed business model and illegal code of cash back has made
some of the franchise highly profitable but they still preferred
ripping off their staffs.
 A number of worker laws called labor laws are being formulated for
the safety and welfare of the employees but in spite of that if labor
exploitation continues that is rally a black day in the history of any
nation.
 Sources has confirmed that the workers were not only frightened but
also badly beaten and were forced to give back their wages. The
management in this case should play important role in handling such
situations but lack of ambiguity caused such misconduct in the
organization.
 Overtime, double shifts work and other such inhuman measures were
imposed causing difficulty among the workers to meet such
conditions.

.
 Under Australian act an employees is expected to work 20 hours on
weekly basis, but at 7 Eleven the employees were forced to work 40
hours but were paid for only 20 hours. The company also blackmailed
its trainee employees about their misdeed, if the trainees anyhow
leaks their information to the immigration department then they will
be sacked.
 The aggressive franchise agreement forced the franchise owners to
act as per the company rules and were bound by their self made
laws.
 The company is under corporate scrutiny for the last three years and
court case is still going on. But the concern is not this. The bigger
concern is related to humanity and ethical conduct. Do humanity has
became so insane? Money, an extrinsic objective motivation, has
become so important? Do all humans given up their morality?
 This case will explain all these if thought from humanitarian point of
view.

CONCLUSION
 The case of 7 Eleven has pointed out many things that need to be
given proper attention and its high time.
 Firstly be it an organization or people in general we all have our
duties towards mother earth and corporate social responsibility is one
such noteworthy duty of ours.
 Every organization should have their own ethical code of conduct and
should abide by them through thick and thin. Management should be
flexible and transparent and decision making should be eco-friendly.
That is not only organizational profits but individualistic profits should
also be considered at large.
 People are the most costly resource needed for an organization to
run. Their support cannot be denied at any point of time. If people
gets upset the long term survival of the entity will be under danger.

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 So to sum up it could be said that if corporate ethics are not fair then
the entity of the organization will suffer. And 7 Eleven is a burning
example of it.
 The saying “tit for tat” is apt in every sphere of business. If you do
good, good will come but if you harm it will harm you back in the long
run. The condition of 7 Eleven is just the same.
 Business professionals are examples of how to comply with ethics
and so ethical conduct is a must for corporates. This will lead to
corruption free nation and global recognition will enhance without any
obstacle.
 Limited Corporate frauds will help in increased global economy and
humanity will also become more reliable and inter-relationship will
strengthen.

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REFERENCES
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Reamer, F. G. (2013). Social work in a digital age: Ethical and risk
management challenges. Social work, 58(2), 163-172.
Berg, L., & Farbenblum, B. (2017). Remedies for migrant worker
exploitation in Australia: Lessons from the 7-eleven wage repayment
program. Melb. UL Rev., 41, 1035.
Terry-Armstrong, N. (2016). 7-Eleven: A case study of a flawed franchise
model. Busidate, 24(2), 8.
Fraser, M. (2016). Investigating 7-Eleven: Who are the real bad
guys?. Griffith Journal of Law & Human Dignity, 4(2).