The Foxconn SuicidesA Case of Organizational

Behavior’s Project

Lectured by : Mr. Irfan Habsjah

Prepared by :

HESTY OKTARIZA014200900073

MGT 2009 Class 3

President University

2010

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About Foxconn Technology Group is a Taiwanese multinational company with its

main plant operating in Shenzhen, China. Foxconn is hands down the largest

manufacturer of electronics, computers and computer components in the world.

They produce items such as the Mac mini, iPod, iPad, iPhone, Dell Computers, HP

motherboards, Wii, Xbox 360,, Playstation 3, Amazon kindle, and Cisco Equipment

which are just the few name of their clients. This behemoth company employs a

small army of employees, over 300,000 in its Shenzhen campus factory alone.

The Group's principal activities are manufacturing, processing and selling

computer, communications and consumer electronic (3C) products. Products

include computer terminal, computer, electronic calculator and peripheral

equipment, as well as thermal modules and consumer electronic products.

Operations are carried out in Taiwan and other countries. The Group exports its

products to Asia, the United States of America, Europe and other countries.

Foxconn Business Philosophy

Since 1974, Foxconn had always been guided by three Foxconnian visions;      

Through the most efficient "Total Cost Advantages" to make comfort of

electronic products usage an attainable reality for all mankind;

Through the proprietary one-stop shopping vertical integrated eCMMS

model to revolutionize the conventional inefficient electronics outsourcing

model;

Through the devotion to greater social harmony and higher ethical

standards to achieve a win-win model for all stakeholders including

shareholders, employees, community and management.

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Issue on Organizational Behavior :

Why have suicides spiked at Apple iPad supplier Foxconn in China?

A ninth employee killed himself Tuesday at the Chinese electronics supplier Foxconn, which makes the Apple iPad and Sony Ericsson phones, turning attention to working conditions at the firm's huge complex.

By Peter Ford, Staff Writer / May 25, 2010 , Beijing

A spate of suicides among Chinese workers making the Apple iPad, Sony Ericsson phones, and other electronic items has drawn fresh attention to working conditions in the factories supplying consumers worldwide with must-have gadgets..

At 6.20 on Tuesday morning, 19-year-old migrant worker Li Hai threw himself to his death from the roof of a building at electronics manufacturer Foxconn in the southern boom town of Shenzhen. He was the ninth company employee to kill himself this year. Two other would-be suicides have survived their injuries. Foxconn’s massive complex, employing more than 400,000 people, has a reputation for strict discipline, says Geoffrey Crothall, spokesman for the Hong Kong based “China Labour Bulletin,” which monitors working conditions in China. “It’s a tough place to be and you have to be tough to survive.”Terry Gou, founder of Foxconn’s Taiwanese parent company Hon Hai Precision Industry, insisted Monday that his firm does not run “a blood and sweat factory.”

Pays social security, offers cheap housing

By Chinese standards, Foxconn is not a bad employer. The company pays social security contributions for its employees, offers cheap housing and food, and pays overtime at the legal rate. It has no difficulty attracting young migrant workers from the countryside.

Company officials, professing bafflement at the recent suicides, recently took reporters on a tour of the newly built dormitories and swimming pools that Foxconn offers its workers.

But a report in the respected “Southern Weekly” newspaper in Guangzhou, China, earlier this month, written by an intern who spent a month working undercover at Foxconn, painted a grim picture of alienation.

Workers are required to stand at fast-moving assembly lines for eight hours without a break and without talking, the journalist reported. Workers, sharing sleeping accommodations with nine other workmates, often do not know each others’ names.

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They do not have much time to get to know each other. The basic starting pay of 900 RMB ($130) a month – barely enough to live on – can be augmented to a more respectable 2,000 RMB ($295) only by working 30 hours overtime a week.

“Today’s migrant workers have higher expectations than their parents, but reality has not changed,” says Liu Kaiming, a workers’ rights advocate with the Institute for Contemporary Observation in Shenzhen. “They cannot bridge the gap between their dreams and reality.”

The string of suicides this year at Foxconn “is not all that shocking in terms of numbers,” since it is “not grossly abnormal” compared with the national suicide rate, according to Michael Phillips, head of the Beijing Suicide Research and Prevention Center and the leading foreign authority on suicide in China. He puts the national suicide rate at about 15 per 100,000, based on incomplete data. By comparison, the US rate is 11 per 100,000.

Apple connection

The episode has drawn widespread attention in the local press, however, because of Foxconn’s work for Apple, says Mr. Crothall. The company’s Taiwanese origins may also be a factor, he suggests, pointing to the way that the state-run news agency Xinhua and official Communist party organ the People’s Daily have been out front in the reporting of the suicides.

The company has taken a number of steps to try to halt the suicides, ranging from setting up a helpline and offering rewards to employees who point out their colleagues’ unusual behavior to hiring counselors and bringing in Buddhist priests to exorcise the factory and pacify the spirits of those who died.

Dr. Phillips, however, worries that a copy-cat effect has set in, with each suicide prompting another, which will be hard to break.

In the longer term, argues Mr. Liu, companies such as Foxconn “must be encouraged to make their factories places with social networks, with sentiment, where people feel they can fit in.”

Crothall believes the solution might be simpler. “If you raised basic wages to a decent level workers would not feel the need to do excessive overtime,” he suggests. “Then they would have more time to socialize, to be with their friend and just generally to have a life, which at the moment they don’t have.”

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Case Analysis :

5W & H of The Foxconn SuicideWHAT happened?

Spate of suicide. From the case above, it’s been eleven suicide attempts on which

only two people survived. This notorious incidents has drawn world’s attention on

the work conditions in the factories.

WHERE did it happen?

Foxconn campus at Shenzen province, China.

WHO were involved?

Foxconn Technology Group and it’s employees are the two main parties which are

involved. However, there are also some company such as Sony Corp, Dell, Apple,

HP, Nokia and many other big companies which is affected with this case

because their relation as Foxconn’s customer.

WHEN did it happen?

This event involving Foxconn in 2009-2010 where the momentum regarding the

suicide pick up dramatically in 2010. Below is the timeline of the events :

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WHY did it happen?

Why did those workers commit to suicide? The obviously answer is addressing to

management military-style work culture that showed the mistreating of employees

whose age are relatively young, so their psychological has not ready enough for

too much pressure and job’s burden. Meanwhile, most of them have little

education and have no skills so they have no choice but to do this kind of job.

In regard to organizational behaviour’s point of view, people in highly emotional

states will recall negative things, and it seems like Foxconn failed in managing

emotion at the organization itself . Instead of took the official steps to alleviate the

suffering of its employees, Foxconn ignore the stress that happened among its

labor and let it being strain that fatally ended as suicides.

To elaborate more about the reasons behind this incident, the following causes of

stress can be considered as the possible answer :

Occupational demand. It is a fact that most of Foxconn’s employees are

working on unpleasant phhysical condition. Workers are required to stand

at fast-moving assembly lines for eight hours without a break and they don't

even talk to the people working next to them, verbal abuse by superiors

and “self-criticisms” they are forced to read aloud, They are working,

sharing sleeping accommodations with nine other workmates, often do not

know each others’ names. They don't do anything but working there

Overload task. The belief that one is required to do more work than

possibly can be completed in a specific period is indicated the condition in

Foxconn. The employees have to work long days and many of the staff

were working at least six days a week do 100 hours of overtime per month..

So it was very common to hear of people being burnt out.

Responsibility on others and rule juggling. There are also cultural and

economic factors to consider. China is in the midst of the largest and most

rapid process of urbanization the world has ever seen. The creation of a

"mass society" is often accompanied by adjustment difficulties, and the

national suicide rate—14 per 100,000—is high by international standards.

China's rural youth often can't rely on the support of parents, since that

generation has little conception of the world their child is entering.

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Lack of social support. Suicide clusters are a global phenomenon among

young people, who are highly suggestible. The atmosphere in its Foxconn

dormitories is like a large university, with the young workers living away

from home for the first time and encountering the unsual new experiences.

Several of the recent suicides seem to have been related to love affairs

gone wrong. What happened in Foxconn showed that employees got no

support in terms of solving their emotional lability.

The second question is, why the company enforce a harsh working condition?

They claimed that the military conducted is aiming to ensure security at Foxconn.

But still,perhaps the final answer is to maximize output by optimalized efficiency of

it’s labor and create competitive advantage for their clients.

HOW to solve the problem?

Nevertheless, suicide is too complex as an issue to rush to conclusions. While we

wait to see what new facts emerge, for the time being Foxconn seems to be taking

its responsibility to its workers' health seriously and deserves the benefit of the

doubt.

However, in my opinion there are two main steps needed to get over of the case

above, both for the employees’ welfare and recovery of the company’s reputation

itself.

First, kind of short-term actions to prevent more suicide should be taken into

account. If they can’t overcome it, then the deaths could strain Foxconn's

relation with its high-profile clients as nobody wants to buy a product that's

associated with a facility where people take their own lives. These efforts

could be done by managing psychologycal side of the employees and

compensating with the economical consideration. Based on the stress

prevention approaches theory, Foxconn should provide tertiary prevention

by treating symptomps caused by stressor and generate social support , for

example having counselors, psychiatrists and Buddhist monks to offer

psychological, emotional and spiritual support to the workers. Furthermore,

in Foxconn if you want to earn more money you must work overtime. Since

most of the employees can't afford the cost of living in Shenzhen with their

salary. The high housing prices and living costs push them into more work

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day and night. Secondary prevention to avoid this problems comes from

economical consideration, which is by raising the wages to decent levels so

they won't feel they need to rely on overtime. That would give the

employees time to socialize, relax and work through whatever issues they

have.

The second alternative solution is through long-term primary stress

prevention. By radically changes the military-style work culture and

management system of Foxconn will improve not only the performance of

the organization but also the notorious brand reputation in advance. This

creates an added responsibility for companies in China to be not just an

employer but also act in parenting their employees. Finally, as it quoted

from the head of the Institute of Contemporary Observation "To work in a

big company, (with a campus) as large as a medium-sized city, they need

the feeling of a family to handle the severe working pressure, the company

cannot make these young people be just money-making machines.". Thus,

Foxconn need to create a new atmosphere of it’s people management

culture.

From the solutions above, it is important for Foxconn to pick a quick and real

actions to survive from the public blaming spotlight. I personally will prefer both of

the solutions for ensuring the tragedy will not happen anymore in the future.

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References

Foxconn Main Site (2007), see :

http://www.foxconn.com/CompanyIntro.html

The Christian Monitor (May 25th, 2010), “Why Have Suicide Spiked at Apple

iPad Supplier Foxconn in China”, see : http://www.csmonitor.com/World/Asia-

Pacific/2010/0525/Why-have-suicides-spiked-at-Apple-iPad-supplier-Foxconn-in-

China

The Wall Street Journal (May 27th, 2010), “The Foxconn Suicide”, see :

http://online.wsj.com/2010/05/27/The-Foxconn-Suicide.html

Digital East Asia (May 28th, 2010), “Foxconn Suicide : A Solemn Timeline”, see:

http://www.digitaleastasia.com/2010/05/28/foxconn-suicides-a-solemn-timeline/