Ethical issues in Herbalife's recruitment and business practices

Herbalife: Ethical Issues

Herbalife is a company selling herbal products for health and dietary purposes. In order to do this, the company recruits interested people to help them sell their products. The way in which this is done is however questioned for its apparent unethical nature. The aspects of the case, together with the ethical issues involved, are discussed below.

Ethics

Donaldson (127-128) provides three broad theories of ethics that can be applied to the situation of Herbalife. The first of these is deontology. According to this theory, a sense of duty accompanies all actions. This dictates that some acts are morally obligatory, regardless of the practical or economic consequences of such an act. The second theory pertains to rights. Especially during the new millennium, the issue of human rights has been at the top of business agendas. This then is also one of the major theories regarding ethics in business. Finally Donaldson cites utilitarianism as the third major theory of ethics. This entails the idea of rightness in terms of more good than ill being produced through the actions taken.

Rights

Secondly, in terms of rights, Herbalife has no regard for the rights of its distributors. The right to choose from a position of full knowledge is compromised by the company's non-disclosure policy. As a result, any hopeful person signing up for the "Work From Home" position has to invest at times thousands. These thousands are reported to be very difficult to make back. Thus the openly dishonest actions perpetrated by Herbalife infringes upon the rights of citizens to earn what they are promised.

A further right that is violated is the citizen's right to live in an environment that is pleasing in both a healthy and aesthetic sense. The "Work From Home" advertisements attached to public places results in a loss of the aesthetic sense. The advertisements are both cheap and unpleasing to the eye. Furthermore the citizens cannot complain to any concrete party, since no business name is displayed on the advertisement.

Solomon (363) identifies four stances relating to disputes regarding rights in business. First, there is the absolute stance, which precludes any tolerable alternative. Only one opinion is seen as the correct one. Secondly the hypothetical stance is more empathetic, providing for a recognition of the other view. Thirdly, the procedural approach does not adhere to substantive principles, but is a fair process to resolve disputes. Finally there is the local agreement, by which substantive principles and systematic procedure are replaced by consensus reached by means of negotiation.

Because of Herbalife's non-disclosure policy, it precludes any possibility of amiable dispute resolution. The stance forced upon its opposition is then one of absolutism. It is very hard to contact the company's managers regarding complaints about its practices. This lack of communication results in a lack of ability to proceed in an amiable fashion. This also violates the rights of citizens to complain about any actions they do not see as fitting with their own well-being. And this in itself is a violation of a fundamental business principle, as stated by Hawkin (in Welford & Starkey 5):

The promise of business is to increase the general well-being of humankind through service, a creative invention and ethical philosophy."

One should perhaps also keep in mind the rights of the company. Has every effort been made to contact the company? Is it truly impossible to enter into debate with the company? The complainant in the article appears to have decided with very little help to expose Herbalife and its perceived unethical practices. The only contact that has been made is with former and likeminded distributors. Have all measures been exhausted before creating a Web site exposing the practices of this company? It has to be conceded that Herbalife does not make it easy to contact them. The fact that the business name is not attached to advertisements for the company, does substantiate the idea that Herbalife is aware of the essential deception that is engaged in.

Utilitarianism

In terms of utilitarianism then the actions of this company results in very unuseful results indeed. The market for their products is absolutely saturated by the thousands of sellers already working from their homes. Thus not only does the chances of making any money from this venture become extremely slim, the very usefulness of signing up with the company becomes obsolete. While the products delivered by Herbalife may be useful for its users, the underhanded practices by this company in order to recruit ever more home workers and the aggravation caused by its illegal practices negate any utility or pleasure that may be derived.

A related issue is the environment. Apparently the advertisements not only detract from the physical pleasure derived from the environment; it also constitutes a large part of the pollution in the area. Plastic envelopes used for small advertisements for example often litter pavements. The larger advertisements also contribute significantly to pollution. This is another violation of accepted business principles. The business world is becoming increasingly aware of the need to prevent pollution. Yet Herbalife has made no attempt to curb the environmental hazard posed by their paper ads.

It is argued that Herbalife recruits the perpetrators of the above-mentioned pollution as independent contractors, and that the company itself cannot be held responsible for their actions. However, the contention could also be that those used for distribution of company products are obliged to adhere to company policy. The problem is then with the policy that allows illegal and environmentally hazardous practices rather than with those who unknowingly engage in such actions. It is illegal in some states to put cardboard advertisements on telephone poles and other such public places.

It is important to inform the public of a company that is recruiting workers under a false pretext. All business principles are violated by Herbalife in this regard. Neither human rights nor environmental principles are respected. Herbalife's products may in fact be worthy, but the actions taken to market these products, and the way in which people are deceived to spend ever increasing amounts of money so that they can make money, are clearly unethical.

If the public is then to be informed by whatever means available, it should be verified that actions taken against the company are in themselves legal and within the right of the perpetrator. It should be kept in mind by both businesses and individuals that deceptive practices are not sustainable. The laws and principles of business have been brought into place for reasons of order, and to ensure the maximum benefit to all. Strong legislation should be in place to curb actions that are not deontological, within the rights of human beings or utilitarian.

Herbalife has trespassed a number of principles with its practices of recruiting home workers. I believe that an action to expose the company for this is within sound ethical principles.