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Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

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Business Ethics Lecturer: Piet Westerhuis
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Page 1: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Business Ethics

Lecturer: Piet Westerhuis

Page 2: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Employees and Business Ethics

Lecture 2

Page 3: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Overview

• The specific role of employees among the various stakeholder groups

• Core ethical topics of employees’ rights and duties• Ethical issues and problems faced in business-employee relations• The duties of employees and the company’s involvement in

enabling employees to live up to their duties• The notion of corporate citizenship in relation to employees• Basic issues and problems of managing employees in the context

of globalization• Explore the notion of corporate citizenship in relation to employees• The implication of sustainability for workplaces and for specific

working conditions

Page 4: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Ethical issues in the firm-employee relation

Page 5: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Management of human ‘resources’: an ethical problem between rights and duties

• The term ‘human resource management’ and its implications have been a subject of intense debate in business ethics

• Humans treated as important and costly resource

• Consequently, employees are subject to a strict managerial rationale of minimising costs and maximising the efficiency of the ‘resource’

Page 6: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Rhetoric and reality in HRMRhetoric Reality

‘New working patterns’ Part-time instead of full-time jobs

‘Flexibility’ Management can do what it wants

‘Empowerment’ Making someone else take the risk and responsibility

‘Training and development’ Manipulation

‘Recognizing the contribution of the individual’

Undermining the trade union and collective bargaining

‘Teamworking’ Reducing the individual’s discretion

Based on Legge (1998)

Page 7: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

RightsRights of employees as stakeholders of the firm

Page 8: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

DutiesDuties of employees as stakeholders of the firm

Employee duties Issues involved

Duty to comply with labour contract

Acceptable level of performanceWork qualityLoyalty to the firm

Duty to comply with the law Bribery

Duty to respect the employer’s property

Working timeUnauthorized use of company resources for private purposesFraud, theft, embezzlement

Page 9: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Discrimination

• Discrimination in the business context occurs when employees receive preferential (or less preferential) treatment on grounds that are not directly related to their qualifications and performance in the job [race,age,gender,religion,disability,nationality]

• Managing diversity prominent feature of contemporary business

• Institutional discrimination: discrimination deeply embedded in business

Page 10: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Women in top management positionsFemale Directors in FTSE 100 Companies 2000-2008

Source: Singh, V. & S. Vinnicombe. 2007 & 2008

2000 2004 2008

Female held directorships(in % of total directorships)

69(5.8 %)

110(9.7 %)

131(11.7 %)

Female executive directors

11 17 17

Female non-executive directors

60 93 114

Companies with 2 women directors

14 19 39

Companies with no women director

42 31 22

Page 11: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Sexual and racial harassment

• Issues of diversity might be exploited to inflict physical, verbal, or emotional harassment

• Regulation reluctant – Blurred line between harassment on one hand and ‘joking’

on the other– Influenced by contextual factors such as character,

personality, and national culture

• Companies increasingly introduced codes of practice and diversity programmes

Page 12: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Equal opportunities and affirmative action

• How should organizations respond to problems of discrimination?

• Equal opportunity programme– Generally targeted at ensuring procedural justice is promoted

– Affirmative action (AA) programmes: deliberately attempt to target those who might be currently under-represented in the workforce

• Recruitment policies• Fair job criteria• Training programmes for discriminated minorities• Promotion to senior positions

Page 13: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Reverse discrimination

• In some cases, people suffer reverse discrimination because AA policies prefer certain minorities

• Justification for reverse discrimination– past injustices have to be ‘paid for’– rewards such as job and pay should be allocated fairly

among all groups

• Stronger forms of reverse discrimination tend to be illegal in many European countries

Page 14: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Employee privacy

• Four different types of privacy we may want to protect – Physical privacy– Social privacy– Informational privacy– Psychological privacy

Page 15: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Health and drug testing

• Highly contested issue• Two main issues

– Potential to do harm– Level of performance

• Despite these criticisms, such tests have increasingly come common in the US

Page 16: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Electronic privacy and data protection

• Increasingly relevant as technology advances and electronic ‘life’ becomes more important

• Computer as a work tool enables new forms of surveillance – Time and pace of work– Usage of employee time for private reasons

• E-mail and internet

• Issue of privacy in situations where data are saved and processed electronically– Data protection

Page 17: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Due process and lay-offs

• Ethical considerations in the process of downsizing– Right to know well ahead of the actual point of

the redundancy that their job is on the line– Compensation packages employees receive

when laid off

Page 18: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Employee participation and association

• Recognition that employees might be more than just human ‘resources’ but should also have a certain degree of influence on their tasks, job environments, and company goals – right to participation

• Financial participation – allows employee share in the ownership or income of the corporation

• Operational participation can include a number of dimensions:– Delegation– Information– Consultation– Codetermination

Page 19: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Evolution of trade union membership

1970 2003 Absolute change in %

Australia 50.2 22.9 -27.3

Canada 31.6 28.4 -6.5

Germany 32.0 22.6 -9.5

Italy 37.0 33.7 -3.3

Japan 35.1 19.7 -15.4

Sweden 67.7 78.0 +10.3

United Kingdom 44.8 29.3 -15.5

United States 23.5 12.4 -11.1

Based on Visser, 2006: 45

Page 20: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Working conditions

• Right to healthy and safe working conditions one of the very first ethical concerns for employees

• Dense network of health, safety and environmental (HSE) regulation

• Main issue is enforcement and implementation• Newly emergent HSE issues relate to changing

patterns of work• Ethical issues in the context of:

– Excessive working hours and presenteeism– Flexible working patterns

Page 21: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Excessive working hours and presenteeism

Excessive work hours • Thought to impact the employee’s overall state of

physical and mental health

‘Presenteeism’• phenomenon of being at work when you should be at

home due to illness or even just for rest and recreation

Page 22: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Flexible working patterns

• Another way of saying that management can do what it wants?

• ‘Non-standard’ work relationships– Part-time work, temporary work, self-employment and

teleworking – Less secure legal status for periphery workers– Potential for:

• Poorer working conditions• Increased insecurity• Lower pay• Exclusion from training and other employment benefits

Page 23: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Fair wages

• The basis for determining fair wages is commonly the expectations placed on the employee and their performance towards goals– Note discussion about excessive compensation for

executives after the stock market collapse of 2008

• Problems of performance-related pay (PRP)– Risk

• salaries and benefits become less secure

– Representation• individualized bargaining

Page 24: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Freedom of conscience and freedom of speech in the workplace

• Normally guaranteed by governments• Situations in business where freedom of speech

might face certain restrictions• Speaking about ‘confidential’ matters related to the

firm’s R&D, marketing or accounting plans– Usually unproblematic, since most rational employees would

find it in their own best interests to comply with company policy

– Some cases where those restrictions could be regarded as a restriction of employee’s rights

• Whistleblowing – can involve considerable risk

Page 25: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

The right to work

• Fundamental entitlement of human beings established in the Declaration of Human Rights

• The right to work in a business context cannot mean that every individual has a right to be employed

• The right to work should result in every individual facing the same equal conditions in exerting this right

Page 26: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Employing people worldwide

The ethical challenges of globalization

Page 27: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

National culture and moral values

• Different cultures will view employee rights and responsibilities differently

• This means that managers dealing with employees overseas need to first understand the cultural basis of morality in that country

• Raises the question of whether it is fair to treat people differently on the basis of where they live– Relativism vs. absolutism

• Absolutism: ethical principle must be applicable everywhere

• Relativism: view of ethics must always be relative to the historical, social and cultural context

Page 28: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

The ‘race to the bottom’

• Many critics argue that MNCs play a role in changing standards in countries

• Globalisation allows corporations to have broad range of choice of location

• Developing countries compete to attract foreign investment

• Large investors tend to choose country with most ‘preferable’ conditions– Lowest level of regulation and social provision for employee

• Leads to ‘race to the bottom’ in environmental and social standards– Argument that MNEs have a duty to promote minimally just

social & political institutions where they operate if these do not exist, because of duty to avoid harm

Page 29: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Migrant labour and illegal immigration

• Growing mobility of workers is a recent phenomenon of globalization– Typically north-south, can also be in other regions (e.g. UAE)– Workers can also be attracted to particular industries in areas

where there is no local labour (e.g. mining)

• Numerous ethical issues here. Examples:– Migrant labour often leads to questionable social phenomena

(e.g. drug use)– Migrants are often from poor countries; willing to accept pay &

working conditions normally unacceptable in host country– Migrant workers are often in a country illegally (but a record of

employment may later be the basis for legal residency)

Page 30: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

The corporate citizen and employee relations

Page 31: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

The corporate citizen and employee relations in a global context

• Anglo-American and European models: differences– Continental Europe takes interest of employees into account

to a greater degree than the Anglo-American model– ‘Co-determination’

• In developing countries– Level of regulation (or at least enforcement) is often poor,

though employee protection often strengthens over time (e.g. China’s 2008 Labour Contract Law)

– Corporate actions therefore often voluntary ‘good citizenship’

• Ruggie’s framework for responsibility in human rights– ProtectProtect (states’ duty to prevent abuses)– RespectRespect (firms’ duty to respect human rights)– RemedyRemedy (general duty to create systems to remedy abuses)

Page 32: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Towards sustainable employment

Page 33: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Re-humanized workplaces

• ‘Alienation’ of the individual work in the era of industrialised mass production

• Brought tremendous efficiencies and material wealth, but have also created the prospect of a dehumanised and deskilled workplace

• Attempts to re-humanize the workplace– ‘empowering’ the employee– ‘job enlargement’– ‘job enrichment’

• Success of such schemes contested• Suggested that ‘humanized’ approach might be more

appropriate and effective in some cultures (e.g. Scandinavia) than others

Page 34: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Wider employment

• Large numbers of unemployed people becomes the norm in many countries due to mechanisation

• This threatens:– Right to work– Social fabric of particular communities– New technologies herald the ‘end of work’? (Rifkin 1995)

• From sustainability perspective: ensure that what work exists is shared out more equitably

Page 35: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Green jobs

• ‘Green jobs’ are:– In industries making environmentally-friendly products– Workplace & organization of labour is also more

environmentally sustainable

• Gained attention in late 2000s; part of broader debate on restructuring economies to be more sustainable

• Examples of specific measures:– Car-pooling– Paperless office– Video-conferencing rather than business travel– Home-based teleworking

• Potential benefits are social, economic and ecological

Page 36: Business Ethics Lecturer: Piet Westerhuis. Employees and Business Ethics Lecture 2.

Summary

• Discussed the specific stake that employees hold in their organizations

• Discovered how deep the involvement of corporations with employees’ rights can be

• Corporate responsibility for protection and facilitation of these rights is particularly complex and contestable when their operations become more globalized

• Considered corporate citizenship and employee relations in different contexts


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