978-0132953511 Part 6 | Course Paper

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MOTHERS WORK, INC.: BRAND IMAGE AND ACCUSATIONS OF EMPLOYMENT

DISCRIMINATION

This teaching note was prepared by Carolyn E. Billick and Lusiena H. C. Wong under the

direction of James S. O’Rourke (Eugene D. Fanning Center for Business Communication;

Mendoza College of Business; University of Notre Dame).

Purpose of the Case Study

1. To focus on the problems and issues of discrimination, particularly pregnancy-related

discrimination, in the work place.

2. To help students understand the laws and regulations relevant to pregnancy

discrimination.

3. To analyze the effects of a discrimination lawsuit on the existing business, especially the

issue of corporate image.

4. To engage students in critical thinking through discussions on how to deal with potential

discrimination-related negative publicity.

Identifying the Business Problem

Frank Mullay, the company’s vice president of stores, ordered the termination of Cynthia

Papageorge, a district manager, while she was on her maternity leave. Even though Mr.

Mullay deemed Ms. Papageorge unfit for her job given her “state,” Ms. Papageorge’s

boss, Jan Dowe, refused to fire Papageorge because such an action would be illegal. Six

months after returning from maternity leave, Ms. Papageorge was released after

requesting medical leave for a shoulder injury, which was unrelated to her pregnancy.

Jan Dowe was also fired for inadequate job performance after taking maternity leave. On

June 26, 2003, Ms. Papageorge filed a lawsuit against Mothers Work, Inc. for gender and

pregnancy discrimination. Mothers Work, Inc. is now faced with responding to the

lawsuit and protecting its reputation from negative publicity.

Forecasting the Most Desirable Outcome

The judge throws out the case with little or no media attention, and Mothers Work, Inc.’s

existing businesses carry on with little impact. Since the case has already been featured in

newspapers such as The Boston Globe, however, it is likely that Rebecca Matthias and her

executive team will have to develop a strategic response highlighting the company’s

open environment and sensitivity to the needs of working mothers in an attempt to

bolster public perception of the maternity clothing company. The absence of Mothers

Work’s name on its storefronts (the brands are presented in the case) and Rebecca

Matthias’s strong reputation as a women’s advocate are assets to Mothers Work.

Identifying the Critical Issues

1. Maintaining the company’s reputation amongst employees and the public

2. Identifying stakeholders

3. Managing employee relations

4. Managing corporate communication

Stakeholder Perspectives Include:

Stockholders. Negative media attention could damage the reputation of Mothers Work,

Inc., leading to poor stock performance. This decrease in price could have a negative

impact on stockholders’ wealth. Note in Part B of the attached timeline that Mothers

Work’s stock was downgraded by analysts from “outperform” status to “neutral” in

November of 2003.

Employees. Female workers in particular might feel that they lack job security because

they could be dismissed while on maternity leave. This can also deter potential female

employees from wanting to work at Mothers Work, Inc.

Customers. A maternity retailer firing pregnant employees is not a practice that would be

received well by the customers; especially since Mothers Work, Inc.’s clientele is

pregnant women. Pregnant customers might not want to shop in a store owned by a

company who discriminates against pregnant women.

Competition. While Mothers Work is recognized as the leading maternity clothing

provider, other maternity clothing companies could benefit from a negative consumer

reaction to Papageorge’s lawsuit. Mothers Work employees may consider leaving the

company and obtain jobs with the competition. Competitors include: JC Penney, Kmart,

Kohl’s, Target, Sears, Wal-Mart, Gap and Old Navy.

Business Partners. Mothers Work is a vertically integrated company, so suppliers (other

than raw materials providers) are not key stakeholders in this case. The company does

have several prospective business partners, particularly baby product manufacturers

(cribs, bedding, etc.) who want to sell their products under the brand names included in

the Mothers Work family. An adverse ruling and negative press could cause these

partners to cancel their negotiations with Mothers Work. Meridian Venture Partners, the

venture capital firm that financed Mothers Work’s growth and expansion, may also

change its relationship with the maternity clothing company based on negative press.

Women’s Rights Activists. Feminist groups could generate a great deal of reputation

damage to the company if they were to embrace this issue. One group, Feminists for Life,

has already expressed their disapproval of Mothers Work’s practices. While small in

number, these groups could become vocal and be detrimental to Mothers Work sales.

Rebecca Matthias’s Board Memberships. Rebecca Matthias sits on the board of Drexel

University and The University of Pennsylvania’s Arts and Science school, as well as other

institutions. Her reputation as a working mother’s advocate is well known and respected

by many in the business world. Discrimination suits could cause disgrace to these boards

and lead to Rebecca’s removal from them.

Possible Solutions to the Problem

1. Improve employee relations through discussions, meetings and evaluations.

2. Educate management and employees on the laws of employment and pregnancy rights.

3. Design programs to teach managers and management how to handle pregnancy-related

issues.

4. Develop a program where employees can express concerns about executive members of

the company.

5. Publicly defend Mothers Work, Inc.’s image through ads, appearances by Rebecca

Matthias or Publicity Director, Mona Astra Liss.

Explaining How to Communicate the Solution

Since the lawsuit has yet to be tried, we cannot learn from what Matthias actually did to

solve the problem. It appears that the best way to avoid further media scrutiny is to

attempt to settle the case out of court (a method that has obviously failed to this point).

The company immediately responded to the lawsuit with indignation and stood by its

maternity policies. Mothers Work, Inc. should approach this lawsuit as a chance to

solidify their company practices and look for improvements—not be defensive and

piqued. It appears that with the Papageorge lawsuit, Mothers Work, Inc. can no longer

ignore that fact that several other employees have sued the company for similar

discrimination.

Pregnancy discrimination education should be included in employee training programs.

Rebecca Matthias and Ms. Liss should consider highlighting new educational efforts on

Ms. Liss’s television appearances or in one of her articles. Ms. Matthias is by far the most

admired and visible leader of Mothers Work, Inc., so a statement in print and on

television should be considered, especially since Matthias is admired for her support of

women in business.

Teaching the Case

1 Week Prior

Distribute the primary case of Mothers Work, Inc. at least one class period before the

discussion will take place. Students should focus on the following when analyzing and

discussing the case:

• How to protect a company’s reputation among employees and the public.

• Stakeholder issues associated with the Papageorge lawsuit.

• The possible effects for Mothers Work and its stakeholders with a winning or

losing verdict.

• How maternity laws affect employers and employees.

First 30 Minutes of Class

Spend the first ten minutes of the lesson reviewing the events and facts of the primary

case. For the next twenty minutes, students should discuss the following topics:

• Critical issues of the case.

• Key stakeholders and each party’s interests in the various rulings that could

result from the lawsuit’s verdict.

• How Mothers Work, Inc. should respond to the lawsuit; what steps need to

be taken to attain a desirable outcome.

• Communication of the above response; which mediums should be utilized.

• Effects of Mothers Work, Inc.’s public image and reputation with a favorable

or adverse outcome.

Summarize Students’ Responses

Ask students for their ideal communication strategy. What would they do if they were

present at the meeting? Issues to consider include:

 What should the company’s stance on work performance and pregnancy be?

 Do Mothers Work’s current policies seem effective?

 What changes (if any) should be made within the company? Examples include:

additional training, education, required diversity and maternity workshops, etc.

The most important audience(s) to reach and the desired outcome for communicating

with this audience:

 What is the most appropriate message to send to the target audience?

 What is the optimal amount of information to communicate?

 What tone should be used?

 What communication channels should Mothers Work, Inc. utilize?

 Who should deliver the message?

 Should print be used?

 How should the message be delivered to each stakeholder group?

 Mothers Work currently does not have a Corporate Communication division. Do

students believe this is a weakness of the company?

 How should Mothers Work evaluate the effectiveness of their communication

strategy and tactics?

 How should failure be addressed?

Last 15 Minutes of Class

Conclude the discussion by informing students of the lawsuit’s verdict (once it is

available) and solicit their reaction to this new information. What do the students think

about the actual outcome? Do they agree with the company’s actions and/or trial verdict?

It is important not to become overly involved in the legal aspects of this case, but rather

focus on the communication and reputation issues Rebecca Matthias and Mothers Work

face in light of this event.

Timeline of Events

Part A

1982 Rebecca Matthias founds Mothers Work, Inc.

1993 Mothers Work, Inc. goes public.

1997 Cynthia Papageorge is hired to oversee certain East coast stores.

Oct. 1999 Surprise visit from Frank Mullay.

April 2000 Cynthia Papageorge is fired.

June 2003 Papageorge files lawsuit for gender and pregnancy discrimination; CBS Early

Show phone interview with Cynthia Papageorge.

Part B

Sept. 2003 U.S. Small Business Administration honors Matthias for her support of women in

business.

Nov. 2003 Mothers Work, Inc. (MWRK) stock is downgraded from “Outperform” to

“Neutral” by CSFB for lagging sales.

Nov. 2003 Mothers Work, Inc. files 8-K restatement to adjust pro forma earnings estimates.

Discussion Questions

1. What facts in this case appear to be the most important to you?

2. Who are the key stakeholders in this case? How will a verdict for or against Papageorge

affect the parties?

3. What actions (if any) should Mothers Work, Inc. take? What message should the

company send to the public? Who is Mothers Work’s target audience?

4. What are the critical issues of this case? Which issues should Mothers Work confront first?

5. Since there is no Corporate Communications department, who should deliver Mothers

Work’s message? What mediums should Mothers Work use to convey its position?

6. This lawsuit has not received much media attention. Why do you think this is the case?

THE CLASSIC LOOK OF DISCRIMINATION: ABERCROMBIE & FITCH’S STRUGGLE TO

MANAGE DIVERSITY

This teaching note was prepared by Jacob K. Sorensen, MBA (The David Eccles School of

Business; University of Utah).

Purpose of the Case Study

1. To provide students with an understanding of racial discrimination and its legal context.

2. To give students insight into how race discrimination can take place and how business

decisions may be interpreted by public opinion.

3. To help students understand how marketing strategies can unintentionally influence

corporate culture and business decisions.

Identifying the Business Problem

As a clothing retailer with a long history of outfitting wealthy and famous Americans,

Abercrombie & Fitch (A&F) strived to create a “Classic American Style” in its clothing

line. Executives at A&F also pushed the classic look of A&F into modeling, advertising,

and the employees at individual stores where the company culture strongly influenced

hiring new employees that fit the A&F “look.” The clothing retailer ran into legal trouble

in 2003 when a class action lawsuit was brought against the company for racial

discrimination in hiring and employment practices. In attempting to create the “Classic

American Style,” A&F found itself facing expensive settlement costs and coming under

intense public scrutiny. A&F executives maintain that the company did nothing wrong in

its hiring and employment practices. This problem raises the issue of a company hiring

employees based on looks and how that can quickly deteriorate into hiring decisions

based upon race.

Forecasting the Most Desirable Outcome

Abercrombie & Fitch actively promotes diversity at all levels of the company in order to

create and portray a more accurate brand image of “Classic American Style.”

Identifying the Critical Issues

1. Abercrombie has a brand image that it is trying to promote and protect; however, the

societal environment surrounding the company is changing rapidly and the company’s

brand is not changing along with society.

2. Abercrombie promotes hiring employees with the Abercrombie “look” which raises the

question of whether or not a company can or should make hiring decisions based upon

looks.

3. The company claims that an anti-discrimination policy has been in place at the company

for a long period of time and does not claim responsibility in the settlement; however, the

company does not have a strong track record in regard to racial sensitivity or diversity.

4. Abercrombie settled the class-action suit and has complied on base levels with all

requirements of the settlement, but questions remain about how much the company has

really changed in response to the suit.

Stakeholder Perspectives Include:

Minority Employees/Plaintiffs in the discrimination lawsuit. Employees of color and

minorities have been relegated to menial positions within the company, working in back

rooms, after hours, and out of sight of the public. Applicants for store positions were

denied employment or treated unfairly based upon race because they did not fit within

the Abercrombie “look.” There is also a lack of diversity in Abercrombie & Fitch

advertisements and promotions.

Abercrombie & Fitch. The company maintains that it has done nothing wrong and that it

has the right to promote its brand image as it sees fit. The retailer remains obsessed with

beauty and the brand image, maintaining a marketing strategy that is extremely focused

on a narrow target audience.

Possible Solutions to the Problem

1. Abercrombie & Fitch must capitalize on the results of the class-action suit settlement and

take real action to diversify the company, realizing that “Classic American” embraces an

increasingly diverse group of people than it may have in the history of the company. This

means a shift in the corporate culture and in the thought processes that have led the

company to this point.

2. The diversity initiatives at A&F should include diversifying top management of the

company.

3. The company must show minority employees that they are valuable to the company and

to the brand by placing them in high-profile positions, such as brand representatives and

models. A&F should also rely on minority employees to contribute to the company.

4. Diversity at A&F should help shape the brand image and allow A&F to continue to

compete as a clothing retailer in a changing society, but also allow A&F to protect its

heritage as a premier clothier with a rich history.

5. All employees at A&F should be educated regarding race discrimination laws.

6. The company should revise the Abercrombie Look Book to promote diversity and to

eliminate any racial undertones the book currently employs.

Explaining How to Communicate the Solution

The clothing retailer must demonstrate that actions taken to diversify the company are

not mere compliance with the terms of the settlement, but actual changes to the corporate

culture that led to the class-action lawsuit. Abercrombie can do so for the public by hiring

and promoting qualified minority employees into the positions previously unattainable.

The company can also redefine “Classic American” in its advertisements and catalogs by

employing models of diverse backgrounds and promoting that diversity in new clothing

lines.

The company can also make a clear statement about the value of diverse employees by

promoting them as appropriate to top management positions within the company.

Teaching the Case

1 Week Prior

Distribute the case at least one lesson prior to when you will discuss it in class. Tell

the students that you intend to focus on several matters during the discussion,

including:

• That corporate culture can affect how and what decisions are made within a

company.

• That a company can make decisions to be competitive and how those

decisions can differently affect various stakeholders.

• How confidence in a brand can be weakened and how it can be regained.

• That race discrimination is a serious issue and that competing in an

increasingly diverse society requires a company to effectively manage this

dimension of diversity.

First 30 Minutes of Class

• Spend the first 10 minutes of class reviewing the main facts of the case,

including a description of A&F’s history of racial insensitivity, the class-

action lawsuit, the settlement of the suit, and A&F’s actions since the

settlement.

• During the next 20 minutes of class, students should identify and discuss:

• The various stakeholders in the case and their shared and conflicting

interests.

• How A&F’s promotion of a specific brand image led the company to

racial discrimination.

• How diverse hiring practices can help strengthen a company and lead to

competitive advantage.

• The effectiveness of the settlement on A&F’s management and continued

business operations.

• The appropriateness of hiring employees based upon their look.

Summarize Students’ Responses

Ask students how they would implement diversity initiatives at A&F that might lead to a

more inclusive brand image.

Issues to consider:

 A&F has a long history of providing clothing to wealthy and famous individuals

who helped brand the clothier as “Classic American.” How can the company

work to retool this brand image to include the diversity of modern America?

 Does Abercrombie need a change in its corporate culture in order to effectively

embrace the results of the class-action suit settlement? Can the company make

important changes to corporate culture that will affect its diversity policy with

the same leadership in place?

 Is compliance with the settlement terms enough for Abercrombie & Fitch, or does

the company need to do more to truly embrace diversity?

 What is the role of diversity within top management positions at Abercrombie

(who are mostly white males)?

Last 15 Minutes of Class

Conclude the discussion.

Timeline of Events

1892 David T. Abercrombie founds Abercrombie & Co, a store for high-end

outdoors products, in Manhattan.

1900 Abercrombie enters into partnership with Ezra Fitch; the company

relocates and reincorporates as Abercrombie & Fitch a few years

following.

1907-1960s After resignation of Abercrombie, company expands to become the

largest sporting goods store in the world; offerings expand to include

sport clothing in 1913; gains reputation of outfitting many of America’s

rich & famous, including Teddy Roosevelt, Ernest Hemingway, Amelia

Earhart, John F. Kennedy, Clark Gable and others; expands across

country through late 1960s.

1977 Company files for bankruptcy and is bought a different sporting goods

retailer.

1988 The company is purchased by the Limited, Inc and repositioned as a

men’s clothing line, to which women’s clothing was added.