Dov Charney is the CEO and founder of American Apparel. He is responsible for opening the company’s first retail store in 2003. There are about 280 stores in about 20 countries. Charney owns 57% of the company and is responsible for the double-digit loss American Apparel experienced this year (Wall Street Journal). Dov Charney has loss representation from Deloitte & Touche LLC. from flawed financial statements and lost 1,500 factory workers who were illegal immigrants (The Gazette).
Dov Charney has designed an organizational culture that may not be appealing to its shareholders. He argues that American Apparel is a “freewheeling creative environment; it’s not inappropriate to use foul language” (Dateline). This may be described to some as a ‘hostile work environment.’ Although the law in California states that it is permissible to use inappropriate language in a creative work environment, American Apparel employees have reported to be offended. Charney says he uses the “language of the street” at work and “it can get pretty salty” (BusinessWeek). Other company policies include drinks on the job for those who are working late and promoting a “highly sexual atmosphere”. He promotes dating within the organization and actively participates in relationships with his subordinates. He claims they have been consensual. Employees have noticed bonuses and incentives for those who have been in a relationship with him (Dateline). These actions can cause employees to feel as if there is favoritism among those who pursue a relationship with Charney. For those in the relationship with Charney, they may experience a quid-pro-quo situation to where a lawsuit may arise from dissatisfaction.
The organizational culture has its external affects as well the effects it has on the employees. Shareholders need to be concerned about the public’s perception of the company. Not only will opinions arise about his behavior and company policies but the public will determine if they will purchase from American Apparel based off the image Charney presents for the company. He has numerously been cited for “racy ads” that promote “recreational sex” (BusinessWeek). American Apparel’s profits are strongly dependent on sales which require the company to appeal to the public. When the public does not agree with the company’s or CEO’s actions, the company’s profits will suffer. This organizational culture could also potentially lead to more problems down the road from not abiding by the law and disrespecting his employees’ rights.
Of the bizarre behavior exhibited by Dov Charney, the most controversial is his sexual harassment law suits. Over the last few years, Charney has faced three sexual harassment charges that have given negative attention to American Apparel. Although none of the sexual harassment charges have been proven, there have been many complaints concerning a hostile work environment. Two of the three women, who brought Charney to trial, accused him of exposing himself to them. One said she was invited to masturbate with him. Another woman claimed he asked him to hire woman who he could have sex with. The list of his supposed actions are infinite. Charney maintains he has never pressured employees into a relationship, but all the complaints he has received to date point to the contrary (Palmeri, 2005).
Charney’s hostile work environment is going against the fourth principle of total quality management which is building team work trust and mutual respect. Also Charney is not following his company’s mission statement that says, “American Apparel takes very seriously the responsibility to observe high standards of Ethical conduct to protect the interests of the corporation, shareholders and its stakeholders” (www.americanapparel.net). These standards of high ethical conduct are not being displayed by the leader of the company-Dov Charney. This is creating an obvious difference between the company’s enacted values and their espoused values. It has created a work environment that employees do not feel comfortable in. In addition to the hostile environment, the conduct Charney routinely exhibits can result in an abundance of company loss due to his sexual harassment cases. These are all issues that determine the ultimate problem: Dov Charney is not a good leader for the publically traded company, American Apparel.

Works Cited
Wall Street Journal-http://online.wsj.com/article/SB10001424052748703296604576005843557996716.html?KEYWORDS=american+apparel
Dateline-http://www.msnbc.msn.com/id/14082498/ns/dateline_nbc/
The Gazette- (08/21/2010) http://www.lexisnexis.com.ezproxy1.lib.asu.edu/hottopics/lnacademic/?shr=t;csi=8355;sr=HLEAD(American+Apparel's+seams+are+splitting)+and+date+is+August,+2010 American Apparel www.americanapparel.net