Dov Charney was a Canadian born business man who started his career at an early age importing t shirts from the United States and selling them to his friends. His fascination with American made products such as t shirts led him to move to the United States and with the support of his father started manufacturing in South Carolina in 1990s.
By 2003 Charney had opened his first retail shop and employed over 1300 people.
“Charney is producing clothes that kids want to wear, that shops want to stock, and that have begun to change the imprintables business. Macklem, K. (2003, Apr 14)”
Fashion the Observer mentioned American Apparals as the Lable of the Year. It published in The Guardian writing, “Our winner is the brand that turned a sexy T-shirt/spandex leggings or skinny jean combo into the uniform of Britain’s twentysomethings in 2008, (Vernon, 2008)”
His products we the benchmark at the time. Everyone wanted to buy them.
American Apparel has been named one of the top 15 suppliers for the United States Department of Defense. The manufacturing company, who makes and supplies uniforms for the military, was given the Gold Star Award by the Defense Logistics Agency. (Desazo, 2015) His company even manufactured clothes for the army.
But even with his huge success, Don Charney faced problems. He was charged multiple times with sexual misconduct and his image started declining in the organization as well as the general public. Through September 2014, the company incurred $8.2 million in insured litigation costs and $1.2 million in uninsured costs due to Charney’s sexual liaisons, court papers said (REUTERS, American Apparel details allegations of sexual misconduct by ousted CEO, 2015). This along with his move to expand his retails aggressively made the company lose a lot and reach liquidation. According to FORTUNE magazine American Apparel filed for its second bankruptcy protection in just over a year, weighed down by intense competitive pressures facing U.S. teen retailers and a rocky relationship with its founder. (Reuters, 2016)
Forbes magazine explains about a Canadian company purchasing American Apparel in its article titled “American Apparel Sells To Canadian Firm And Will Close all Stores. (Bisnow, 2017)”
Another article in FORTUNE says, “American Apparel spokeswoman Arielle Patrick said the company was laying off about 2,400 workers in Southern California. The company had 2,166 employees at its headquarters in Los Angeles, and 959 employees at the nearby South Gate manufacturing facility. (REUTERS, 2017)”
This case shows how important it is for the leader to have values as people follow you not only for your success but for the values you believe in and practice. When other companies were outsourcing manufacturing for cheaper labour, he started a business right in his town and made huge profit giving job opportunities to a lot of people. Don Charney’s even though was famous, innovative, modelled the way by challenging the process in the manufacturing business had a bitter fall.
Company investigators also discovered Charney had kept videos of these sex acts on a company server, the papers said. The company said he also sent employees emails with pornographic videos and photos, and accused him of using ethnic slurs against certain employees. (REUTERS, American Apparel details allegations of sexual misconduct by ousted CEO, 2015) A leader needs to have respect towards his employees regardless of their gender and race. A leader without these values will not have followers and without followers the leader will cease to become a leader and this is exactly what happened to Don Charney.
Shared values help structure an unseen guidance for the people in the organization. For example people understand that fraudulent activity such as theft or bribery is wrong. This become an ethical rule for all and thus is a shared value. Similarly sexual harassment with employees is morally wrong. This is another shared value. Without shared values the ethical structure in an organization crumbles resulting in grievances and will even affect the growth and sustainability of the organization. “…when you are the leader, other folks’ values need to be considered if they are going to be committed. Because we know from our research that commitment flows from a strong sense that personal values are clear and shared, it’s important to discuss values at the beginning of a project. (Kouzes & Posner, 2003)”
Macklem, K. (2003, Apr 14). Doing the rag trade right. Maclean’s, 116, 40. Retrieved from https://search.proquest.com/docview/218566091?accountid=158986
Bisnow. (2017, January 17). American Apparel Sells To Canadian Firm And Will Close All Stores. Forbes .
Desazo, B. (2015, January 13). American Apparal earns Gold Star Award. THE Selma Times - Journal .
Kouzes, J., & Posner, B. (2003). THE LEADERSHIP CHALLENGE Workbook. San Francisco: Jossey-Bass.
REUTERS. (2015). American Apparel details allegations of sexual misconduct by ousted CEO. CNBC. Retrieved from https://www.cnbc.com/2015/06/24/american-apparel-details-allegations-of-sexual-misconduct-by-ousted-ceo.html
Reuters. (2016, November 14). American Apparel Just Filed for Bankruptcy Protection Again. FORTUNE . Retrieved from http://fortune.com/2016/11/14/american-apparel-bankruptcy-protection-again/
REUTERS. (2017, January 17). Bankrupt Retailer American Apparel Begins Laying Off Thousands of Workers. FORTUNE . Retrieved from http://fortune.com/2017/01/16/bankrupt-american-apparel-layoffs/
Vernon, P. (2008, Nov 30). Laabel of the Year: American Apparal. The Guardian International Edition . Retrieved from https://www.theguardian.com/lifeandstyle/2008/nov/30/style-awards-2008-american-apparel