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Considerations of boycotting and blacklisting in relation to recruitment and recruiting. How to identify the blacklisted company.

QUESTION:
Why is a company blacklisted? Is the company I'm considering a blacklisted company?

ANSWER:
Although blacklisting is a concept and a practice that is known and practiced in all parts of the world, it is also fairly occult. That is to say, it is not discussed openly. However, this is a column trades on being nontraditional in its discussion of career and recruiting issues. Therefore, we will discuss the issue of blacklisting.

Definition
Blacklisting refers to being put on a list of those who are avoided because they have met with disapproval by a particular group or because they are being boycotted (the other, more acceptable term for blacklisting) for socially reprehensible conduct -- whether real or perceived. The official definition of boycotting given in the FindLaw Legal Dictionary is, "to engage in a concerted refusal to have dealings with (as a store, business, or organization) usu. to express disapproval or to force acceptance of certain conditions ... Note: A boycott of a business by its competitors, suppliers, or buyers that has the effect of preventing the business's access to the market is a violation of the Sherman Antitrust Act."

Sometimes this sanction is meted out by a community group because the business trades with one person who has transgressed in some minor way and come into disfavor with a powerful and influential group. Sometimes the blacklisting or boycott is because the business or the country engages in a practice that causes global distaste.

Blacklisted companies will demonstrate telltale signs (much like the candidate's "Telltale Resume") of damage that are similar to those of a company that has done itself a disservice. Some of the signs are contracts that begin only to be aborted in the early stages with polite withdrawals. Another sign is inordinately difficult negotiations. In addition to withdrawn existing businesss, there will be a near cessation of business and orders stop coming in or only a mere trickle seeps through the door.

The financial portrait will show high expenses and a great deal of marketing or development exertion that is not accompanied by a complementary increase in revenues. This will result in lower net profit and a decreased per share value, if it is a publicly-traded company. If it is a private company, the balance sheet will show low profit to earnings ratio or marginal net profit, if any. And those are just the paper signs.

Other signs of trouble will be low morale. Many times the company's woes can stem from internal strife and unhealthy internal competition that tends to be suicidal in nature. But we'll touch on corporate culture in another issue. For today, we're discussing external indicia of blacklisting and not corporate culture suicide.

Examples
Companies that continued to do business with South Africa before apartheid was abolished is a good example of companies that have been blacklisted and is one reason why. The boycott was to force the companies to stop doing business with a country that had a social policy of discrimination and to force the country to change its policy.

Another example of blacklisted companies is the tobacco companies, especially Philip Morris and R.J. Reynolds. A boycott of not only the parent companies but also their subsidiaries has raged for quite a number of years in order to force them to stop manufacturing cigarettes and cancer-causing tobacco products. There were also allegations that their tobacco products were treated in some fashion to make them addictive and cause users to crave and purchase more of the product, to their detriment and eventual deaths.

Global Examples
There are still other examples of blacklisting. On the international front, a public blacklisting of bribers was enabled by the World Bank in September of this year. The companies found guilty of using bribes would be barred from seeking bank-financed accounts for aid contracts. Still another foreign blacklist was created in October 1999 when a blacklist of Israel's friends was drawn up in Jordan. It named those who had crossed the borders and invited cultural exchange. And the United States was called to task in 1997, in addition to being reprimanded for its interference in sovereign affairs, for its restricting business ties with Burma.

Examination of a Blacklisted Company
Let's look at the profile of a company we know has been blacklisted or boycotted. Philip Morris is among the major tobacco companies. Its products, both non-tobacco and tobacco have been openly boycotted and people urged to join the boycott for a number of years.

In March of this year, the stock took a major dip from its historic highs. That dip coincided with the defenses it had been making in the high courts in relation to the tobacco companies tort litigation. However, the stock began a bumpy rise that appears to be moving back to its early 1997 levels. Part of the reason for this recovery is the public relations campaign the company has instituted to publicize its public service programs in the areas of scholarship, domestic violence and community development. The analyst also attributes the stocks recovery to increased prices and improved product mix. Worldly Investor, 11/30/00.

Recruiter's Role
Recruiters will use this information in a number of ways. First, the company's financial resume gives some clues to whether it will be able to pay the recruiter's search or finder's fee. This information also dictates how well the company will be able to compete in offering an industry and area competitive compensation package. Furthermore, the financial picture may have some effects on corporate morale and atmosphere. So another consideration when looking at the company's financial resume is whether the company put itself into its current position because of unwise business practices or because of external pressures due to some other factors.

The recruiter is akin to a marriage broker when it comes to matching candidates and companies for open searches. It is in the recruiter's best interests to counsel the company hiring officer when there are missteps that can affect their being able to attract and keep the best talent for their operations. And to the extent that information of this sort comes to the recruiter's attention, they can offer suggestions for alternative steps that will lead to a healthier practice that will ultimately lead to better placement of high-caliber candidates who add value to the company and its processes.

The Company Under Consideration -- Analysis and Conclusions
As for whether the company you are considering is a blacklisted company, I cannot answer your question directly. Blacklisting is a rather informal manifestation and in America, there is no real "list" that says "do not do business with this company." And even if a list were to exist that noted undesirable companies, that matter would not show up in any type of formal search on the company's name or other identifying information. However, there are a few tools I use to evaluate companies to get a company resume and determine whether it is sound and growing.

However, I've taken a few minutes to look up the company you are considering. I used one of my most reliable company information services to gather the following analysis and conclusion:

The company stock has gone from $12 per share in January 2000 to $20 per share in early March and now is fluctuating around $8 per share (all share prices are approximate). There was a major share value drop in mid-April and the stock hit its lowest point around mid-October but appears to be making a comeback. So overall, the share price reflects that the company is holding its own well.

The company's news shows it is still on a good footing as far as competing and gaining contracts. However, yes, it has suffered a "goodwill impairment." There have been some company net profit downturns compared with gross earned revenues. These phenomena are attributed to acquisition costs and e-commerce dynamics, respectively. So the answer to your question is "no," the company has not been blacklisted. Instead, as in the conclusion to "When Things Go Wrong," the company made egregious customer service or product delivery errors and it is now recovering from the consequences.

This was an excellent question that not many candidates take into consideration when interviewing or vying for an opportunity. It takes good, solid research of the company in order for not just candidates but also recruiters and other companies to know whether this is the right place to invest your efforts.

I hope this has helped you in making your decisions.


Originally published November 28, 2000

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