first ten pages of greatness
Topic: bachelor's essay
Recently several large companies, including Abercrombie and Fitch, Wal-Mart and Gap, have faced civil lawsuits for a variety of reasons. Often these companies are accused of encouraging illegal or unethical practices throughout the ranks of their stores. Abercrombie and Fitch’s management does not admit to any wrongdoing. However, it is worth researching how the company’s management, purposely or unintentionally, communicated its acceptance of illegal hiring practices to stores and managers nationwide. Also interesting is, what image restoration and crisis management Abercrombie engaged in after settling in court for discriminatory hiring and other illegal practices. It is necessary to study the company’s history, the lawsuit settled in court, corporate behavior before and after litigation, and how Abercrombie’s corporate communication affects other companies while advancing communication theory.
Company History
The retailer Abercrombie and Fitch traces its corporate lineage to a sporting goods retailer that started up in 1892 and outfitted Dwight Eisenhower and Theordore Roosevelt (Zimbalist, 2005, para. 3). In 1950, a New York article declared it the retailer of Ernest Hemingway’s hunting gear, a notable honor in a time when Hemingway was an international celebrity (Edwards, 2003, para. 22). In 1977 the company filed for bankruptcy. In 1979 “its name was sold to Oshman Sporting Good …and was resold in 1989 to The Limited” (Greenhouse, 2003, para. 9). In 1992, former Limited CEO Leslie Wexner hired Mike Jeffries to rejuvenate the Abercrombie and Fitch brand (Berner, 2005, para. 8). In 1996 Abercrombie separated from The Limited (Greenhouse, 2003b, para. 9). Mike Jeffries transformed Abercrombie and Fitch into the company the public knows today by moving away from outdoor sporting goods to fashionable apparel for the 16 to 25 demographic.
After achieving success with one demographic, Abercrombie expanded with subsidiaries, all targeting different age groups. Abercrombie operates five Ruehl No. 925 stores which is “an even higher-end label for those who have outgrown Abercrombie,” 167 Abercrombie kids’ stores and 260 Hollister Co., for mid-teens (Berner, 2005, para.15). Abercrombie employs 22,000 people, amassed $1.7 billion in sales in 2003, and has 700 stores including its subsidiaries (Greenhouse, 2004, para. 12). Abercrombie and Fitch’s main competitors are often considered American Eagle Outfitters, Gap and J. Crew, because all the companies target customers who are 16 to 25 years old and sell brand emphasized clothing. Abercrombie and Fitch always has an ample amount of athletic cut, tight-fitting polo shirts; torn jeans; and graphic tees in an attempt to form a young, preppy image.
Discriminatory Hiring Practices Lawsuit
In 2004, Abercrombie and Fitch settled “two federal class-action discrimination lawsuits filed…in San Francisco and Camden, N.J., and a third suit filed … by the U.S. Equal Employment Opportunity Commission” by paying $40 million to plaintiffs and $10 million in court costs (Strasburg, 2004, para. 2). Petitioners included the Mexican American Legal Defense Fund, the Asian Pacific American Legal Center, the NAACP Legal Defense and Educational Fund and the Lieff, Cabraser, Heimann & Bernstein law firm (Greenhouse, 2003, para. 15).
Abercrombie was not found guilty, but in the settlement accepted the judge’s recommendations, which include ongoing court supervision. The court recommended hiring a vice president for diversity, 25 diversity recruiters and more minority and female brand representatives to reflect the potential applicants.(Greenhouse, 2004, para 2). The hiring of more minority and female representatives is considered a benchmark. “These benchmarks are goals, rather than quotas,” (Lieff, Cabraser, Heimann & Bernstein, 2006) which suggests the company may be considered in violation of the settlement even after meeting the benchmark. Abercrombie agreed to have someone monitor their compliance, provide diversity training for hiring managers, and allow store managers’ fulfillment of diversity goals to affect their bonuses. “The settlement requires Abercrombie to stop focusing on predominantly white fraternities and sororities in its recruitment” and feature more minorities in its advertisements and catalogs (Greenhouse, 2004, para. 2). A compulsory change that customers won’t notice, but will greatly affect employees, is the new internal complaint procedure. (Lieff, Cabraser, Heimann & Bernstein, 2006).
Abercrombie’s communications director, Tom Lennox told Greenhouse that “brand representatives are ambassadors to the brand,” Mr. Lennox said. “We want to hire brand representatives that will represent the Abercrombie and Fitch brand with natural classic American style, [and] look great,”(Greenhouse, 2003c, para. 15) but what looks great and is adequately American can become a discrimination issue. To find new employees with the natural, classic, American style, workers were encouraged to go to fraternities and sororities and ask attractive members to apply at Abercrombie. According to Donna Harper of the St. Louis Equal Opportunity Commission, companies who only hire tall applicants may inadvertently discriminate against Mexican-Americans or Asian-Americans who are shorter on average. Attorney Stephen J. Roppolo explained that “hiring someone who is attractive isn’t illegal per se [but] if I think Caucausian people are more attractive than African-American people, then I may inadvertently discriminate in an impermissible way”(Greenhouse, 2003c, para. 23). Unintentionally or not, the former director of Justice Department’s civil rights division, Bill Lann Lee, announced that “the percentage of minority and women managers at Abercrombie were far below industry averages” (Greenhouse, 2004, para. 7).
Since the settlement, Abercrombie and Fitch has recalled its seasonal mega-catalogs, which Tom Lennox has claimed is not due to pressure to portray more minorities in its catalogs. It has also recalled its “Look Book” which gives strict requirements for employees’ appearance at work. The new associate handbook features an African-American, possibly biracial, woman on the cover, and discusses employee appearance very little. The associate handbooks clearly states: “Diversity: Abercrombie associates represent American style. America is diverse, and we want diversity in our stores” (Abercrombie and Fitch, 2005, p. 25). The fact that this statement is under the Appearance/Look Policy section of the handbook suggests management is aware their previous Look Policy discouraged diversity.
Schlegelmilch (2005) also posits on Abercrombie and Fitch’s ability, or inability, to communicate its core ethics to consumers and employees. Abercrombie has created an especially exclusive and controversial image, partly in response to the clothing industry’s obsession with image. Their exclusivity has come across as racist, and their controversial advertisements have been called unethical and not family friendly.
Controversial Advertisements
The company’s controversial image management based on sexualized images and attractive college students has been well covered. Abercrombie and Fitch continued with their sexually suggestive catalogs and advertisements for years, probably because they believed it only increased sales. Analysts agreed that because Abercrombie “used advertising so racy that it drew complaints from parents, which of course made the clothes even more appealing to kids” (Berner, 2005, para. 2).
Abercrombie eventually responded to the pressure of boycotts from consumer groups and conservative religious groups, like the American Decency Association. Bill Johnson, president of the American Decency Association, believed Americans, “were troubled over Abercrombie’s practice of marketing pornography in the catalog” (Parija, 2003, para. 9). The Cincinnati, Ohio based group Citizens for Community Values paid for shock advertising in Wall Street Journal and USA Today. (American Family Association, 2003, para. 2). The headline of the advertisement of “How to Steal Clothes at Abercrombie!” is followed by an explanation of “Imagine for a moment that we were to begin a campaign telling teenage kids how to steal clothes at Abercrombie!...But we’d just laugh and say, ‘Oh it’s just harmless fun, youthful and spirited.’” (American Family Association, 2003, para. 3). The ad accuses Abercrombie of selling pornography and encouraging promiscuity under the guise of an all-American, youthful image. The advertisement accuses board members by name of various immoral, unethical acts. (American Family Association, 2003, para. 6).
Despite selling approximately 200,000 copies of each quarterly catalog, Abercrombie recalled the provocative publication on December 9, 2003. “The company’s 280-page holiday book included nude young adult models in highly suggestive poses, as well as articles on sex – elements apparently intended to boost the clothing retailer’s brand among college-age customers” (Parija, 2003, para. 4). In 2003 the catalogs were permanently discontinued after threats from several groups (Zimbalist, 2005, para. 6).
Uniform Lawsuit
Abercrombie’s Appearance/Look Policy brought more legal issues than the discriminatory hiring practices civil suit. The company paid $2.2 million in 2003 to settle a dress code lawsuit brought by the state of California. According California labor laws, if employees must wear a specific style or brand of clothes to work, it is considered a uniform, which must be paid for by the employer (Greenhouse, 2003a). In court, “the state alleged that the company’s “Appearance/Look Policy” was enforced in a way that required store employees to by the company’s clothes” (CBS News, 2003. para. 3). Abercrombie is accused of breaking this law and another law that bans businesses from forcing employees to patronize their employers. Employees have accused the company of paying less than minimum wage, after accounting for the Abercrombie brand clothing they were forced to buy (Greenhouse, 2003a). In the settlement, Abercrombie agreed to reimburse 11,000 former employees for clothes purchased while working in their stores between January 1, 1999 and February 15, 2002. Each former employee will be paid between $200 to $490, depending on their position and duration at Abercrombie and Fitch, Hollister Co. or Abercrombie. (CBS News, 2003, para. 7).
Public Relations Crisis
Before Abercrombie faced the discriminatory practices lawsuit, it received negative press attention for its approach to race. Chisholm observes that most corporations mistakenly believe they are prepared, “to handle such a major public relations snafu – especially one that develops as a result of an advertising campaign’s creative execution or stereotypical caricatures,” (Chisholm, 1998, para. 6). Caricatures like the one featured in Abercrombie’s Spring 2002 line can lead to a public relations crisis. Abercrombie sold several racially offensive designs, and “one shirt shows Chinese laundry workers with conical hats and the phrase, ‘Wong Brothers Laundry Service: Two Wongs Can Make It White.’” The shirts were pulled after criticism from The Organization of Chinese Americans and other groups, but the controversy didn’t stop. Consumers began selling and bidding on them on eBay (CNN, 2002).
The discriminatory hiring practices lawsuit combined with the controversial shirts was just unacceptable by many business analysts. Myrna Marofsky, president of workplace diversity consultant ProGroup, sees a need for Abercrombie to make an overt statement through change. Marofsky believes, “if they hadn’t been involved in this previous situation with the Asian community [over the T-shirts], I would give them the benefit of the doubt. You can only be naïve once, and then you either don’t care of your perpetrate an idea” (Edwards, 2003, para. 51).
Crisis Management was necessary after Abercrombie faced a civil lawsuit and negative press attention in many media outlets, especially minority targeted publications. Black Enterprise magazine covered the discrimination lawsuit and believed, “The firm’s marketing materials have long featured largely all-white images” (Brown, 2005, para. 1). Similar accusations were made in Jet magazine’s “Minorities Win Bias Lawsuit” (Jet, 2004, para. 1). Crisis prevention largely depends on “the equity a marketer has developed with the minority consumer” (Chisholm, 1998, para. 12). If a company has developed a strong relationship with minorities, they are usually aware of minority consumers’ opinions and the need crisis prevention over crisis solution. (Chisholm, 1998, para. 12).