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Management And Employees
The Ethics of HRM and IR
Chapter 6
Group MatesMuhammad Faizan Talpur, Jameel Ahmed Jamali, Darshan Kumar, Saqib Mehar,Muhammad Owais Dhedi, Sajan Khwaaja
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History of Capitalism;Different Forms of Capitalist
ProductionBut why go into history in the first
place?
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Keeping the past and the futurealive is one and the same thing (Henry Fonda)
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Putter Out System
Aim, shoot and let the ball movefreely toward the flag-hole..
Work Contractors assignedProduction to the Individualsbased in cottages and paidthem on a piece rate basis(page 142)
In Pakistan, Clothing and Toymanufacturing are goodexamples of Putter out System
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A Picture is a Thousand Word
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Collective bargaining is an un ending process, whichlegitimates trade union participation in the regulationof capitalist market (page 145)
Union can take strike for the protection of labor rightbut the right is limited to the dominance of Capitalistways.
Industrial Relations Or TheCollective Bargaining
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Industrial Relations Or TheCollective Bargaining
Why there is need of union protection ?? Weak individual. Wage conflict.
FunctionsProtection of material rights
Security Status Dignity
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Industrial Relations Or TheCollective Bargaining
But is it the Interest of the Capitalist and GovernmentsTo recognize these collective rights of labour? (page145)
IR emerged because The means to achieveaccumulation was different for different people For Property Owners, Lowering Costs
For working Class, Increasing wages
Thus IR is de-legitimized in post-Fordist Capitalism
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Business ethics teaches to follow a leanproduction system.
To empower individual worker to get best results.
Capitalist employees (maximization-seeking)should be empowered as they will disciplinethemselves and lead to enhanced quality of business !
Ethics of HRM
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Ethics of HRM Individual employees firms most important assets.
Japanese HRM head is second to the CEO.
Principles:
Expect every individual to do a good job. Provide an environment in which individuals can work well
and creatively. Recognize personal achievements Treat Every Individual with Concern and respect
This is pure Kantianism (Categorical imperative).
Managers and employees must choose the Same end of accumulation
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IR to HRM, Or Fordist to Post-FordistWhy this Change?
Unionism Can be replaced by active participation of individual employees in the management process inother words HRM
The Change can also be tracked to; Cultural Values Technology
Market Imperatives The Choice of Organization itself..
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Ethical Responsibilities of
LeadershipEthics and Capitalism?
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Choose Your Path..
For everyone who knew Anita, it was about much more thanthat: you couldn't help but be inspired by her love of life, her vision of the world and her passion for changing it
(Adrian Bellamy) Chairman, The Body Shop
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Managers Rule No Private Property in Capitalism remember?
Why was that? Capitalist systems of production transfer control
from workers to managers.
In Pre-capitalism, it was the self-employedworker who decided how long they should workand what they should produce.
In capitalism (Fordist and Post-Fordist) manager takes crucial decisions aiming toward profitmaximization.
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How to Control?
Etizoni (1961) Claims 3 ways of leadership control
Coercive (use of Force and Punishment)
Remunerative (Pay and Incentives) Normative and ethical (Social rewards and
Deprivations)
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The Taylorist System Disciplining workers to ensure production on the basis of
time schedules.
Standardized work system.
No scope for recognizing worker as individual.
Reasons: Lessens managements dependence on individuals.
To make workers as easily replaceable as parts of machines .
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Bureaucratic System (Rigid) Vertical strong hierarchic structures.
Job descriptions are usually fixed (No re-definition required).
Individuals have to perform special tasks according to pre-
designed steps (creativity, initiative, multiple-roles are notencouraged).
If standardized technologies are in use and marketuncertainties are unimportant, utilitarian/Kantian argumentscan justify this bureaucratic structuring of management.
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Post-Fordism ideas Business ethics discourse presumes the existence of post-Fordistorganization.
Employer-Employee relations seen as b/w individuals not groups.
Acceptance of the atomization and disorganization is considered asnatural, irreversible and inevitable.
Leadership is expected to stress individual initiatives and enterprise.
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Organic System (Flexible) Needs to be adopted when Problems/Requirements cannot be
broken down along the perfect hierarchy. Individuals have to perform their special task in the light of their
knowledge of the tasks of the firm as a whole. Jobs have to be continually redefined (through interaction with
others). Interactions run laterally as much as vertically. Communication b/w ranks resembles lateral consultation rather
than vertical command.
Business ethics discourses justifies such organicmanagement formal and informal organizational structures
(page 155)
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Changing from mechanistic to organic system has its
costs: Disturbs intra-organizational power and resource, distributional
systems and status structures. Such changes will be resisted. Top management will need to force/persuade employees to
shift. Threatens the power and status of top management (including
CEO).
THE SHIFT
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There is no unique, OptimalBusiness Ethics system as there
is no optimal managementsystem (page 157)
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Whats happening in Pakistan?
Creating a post-Fordist structure is costly and impractical.
Business families retain a strong grip on major national
firms.
They have commitments to other values religion,
tribal, families, etc.
If Pakistani workers do not accept capital accumulation as
an end; They have no claim to any rights with capitalistorder!
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Employee Desire/Wants
Employees have a standard and stablehierarchy of needs. Material need
Higher need
According to goldthorpe hierarchy of need of employee is not fixed and isdetermined by workers orientation towork .
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Who to admit??
Correctly oriented workers Civil society. Competitiveness,ambition,individual
achievement .
Incorrectly oriented workers Religious society
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Beliefs
1. Main purpose of life is rising standards of living.
2. Participate in capitalist production .
3. There is no alternative.
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Work Participation
Work participation differs from collective bargaining
Workers participation on the other hand is theparticipation of the worker in management
Justification- Overcome conflict.- Overcome alienation at work place.- Increase productivity.
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No and Never!!
Work participation is apposed by Utilitarian. Reduce efficiency.
Slow decision making. Reduces power of union. Un necessary and superfluous.
Post Fordist dismiss union objection toworkers participation.
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Who to trust?
Management believes on their trust worthy workers.
Integrity. Competency. Benevolence.
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Fordist Rights
It recognized the collective rights of workers.
Trade unions were accepted as representatives of workers interest.
Unions had rights to collective bargaining and for demanding management participation.
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Post-Fordism(Fordist rights over-rided)
Collective agency is delegitimized. Every rational employee is to be a utility maximiser for
himself.
It frees the economy from influence of associations /groups which obstruct the operation of competitivemarkets.
P-F asserts the right to free association and the rights to
voluntarily withdraw ones labor.
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Employee Rights / Duties Individuality; Privacy; Freedom of conscience; Right to report
wrong.
Individuals Join and leave the firm through contracts.
Every employee is an agent of the firm.
He/She is to accept the purpose and structure of the firm in returnfor a wage.
Employees primary moral obligation is to obey the employer.
Right to participate in management and to organize. The employee must work for the achievement of the goals of the
organization and not for his personal interest.
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An employee is to remain impartial (benefit thecorporation) if a conflict of interest arises.
The individual employee must expect to be treated with
concern and respect.
He/She should be paid a fair wage.
That wage should be freely accepted by the employee,and not forced upon him.
Job design should aim at increasing meaningfulness,responsibility and consequential awareness of employees.
Employee Rights / Duties
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Employer Rights / Duties
The employer is to provide remuneration for the services of the employee.
An Employer cannot pay a wage below the minimum leveldetermined (not by state but) by state support payments tothe unemployed.
Legislation has been institutionalized in most capitalistcountries that requires the employers to have a minimumhealth and safety standards (at the work place).
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The Employer should not force the employee intoaccepting a wage.
The employer should adequately compensate theemployee for the risk taken.
The employee doesnt elect the manager (employer) andtherefore has no rights to limit his authority.
Employer Rights / Duties
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Informal Rights & Obligations
Capitalist Organization are dedicated to profit\wellbeingmaximization.
There are conflicts between Individuals and groupswithin the capitalist organization, Individuals are pursuing their own interest. Different views regarding profit maximization. Different views about the strategy of the firm so the
firm synchronies with the national strategy.
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Cont
Individual seeking for prestige and power doesn'tperceive the best interest of the organization.
Typical self-promotional tactics are: Blaming others for failures. Denying information to others. Promotion of ones ideas and interests. Image building of himself.
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Cont
Ingratiation and flatiery. Creating networks of mutual obligations. Acquiring control over scarce resources.
Sometimes the individuals perception is that thesetactics wont interfere in profit maximization, but they
will in most cases hurt others.
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Cont
Using political tactics is justified in utilitarian point of viewif it contributes to increasing efficiency and wellbeing.
It is unethical on utilitarian grounds if it has beenpracticed for achieving personal goals and it damagesthe organization.
An employee has a utilitarian duty not to participate insuch practices.
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Cont
Political tactics which exploit others emotions areunethical on Kantian grounds, unless it has beenvoluntarily accepted by all members.
The use of these tactics are unethical if,
The person doesnt accept participation. If he doesnt has any other option except leaving the
firm. He cant use the same tactics against you.
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Cont
Political tactics providing privileged tosome individuals, violate the principle of distributive equity.
For e.g. The trader who is also the son of thechairman of the board.
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Cont
According to ethics of care, Firms may be seen as networks of
relationships b\w individuals therefore a
caring organization should focus on thenurturing of personal relationships.
Authors of business ethics argue that caringfirms also have high level of efficiency.
But there should be a balance.
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Downsizing And The EmploymentContract
Employees are loosing their jobs due to privatization anddownsizing in Pakistan.
Business ethics recognizes that employees are not freeto choose.
If the workers are loyal to organization they have a rightto expect fair treatment.
Due process gives right to employee to present his pointof view.
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Cont
Business ethics recognizes the moral rights of employees which should be taken into account whendownsizing: Workers should be informed of decisions. Representative of workers should be allowed to
participate in the above decisions. The cost should in principle be borne by the owners.
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Cont
The contractual rights of employees should befully respected.
Workers should also be financially
compensated. Workers right to participate in the above
decision should also be recognized.
Whistle blowing ( ti g
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Whistle blowing (reportingMalpractices)
The Capitalist law states thatemployees should keep the firmsmatters secret
Justified on both Kantian andUtilitarian grounds
External whistle blowing is allowedonly when internal whistle blowingis not possible
Whi tl bl i g ( l f h
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Whistle blowing (rules for theemployees)
Obtain accurate information about themalpractice
Determine personal involvement
Alternative to public exposure
Avoid bad faith
Whistle blowing (steps by the
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Whistle blowing (steps by theorganization)
Avoid persecution or isolation
Set up an effective multi-channel grievance andreporting system
Ethical training
Di i i i d Q
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Discrimination and Quotas
Discriminatory Practices: Recruitment advertisement specifying race,
religion, gender etc
Requiring qualification, not necessary for the job Promoting people of a particular social group Different remuneration for the same job
Positive discriminationQuotas
Islamic Evaluation of Capitalist
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pemployment
Orthodox View
Employment intended to accumulate wealthis condemned by the shariah
Both haram and mushtaba (doubtful) contracts are to beavoided (Imam Ghazali)
Islamic trade union organizations, under the leadershipof Ulemas should be established to overthrow thecapitalist order (Hussaini, Banma)
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Revisionist View
General Interest.
Shariah caters to welfareof people.
A just wage (Siddiqui)
Sufficient to satisfy needs(Chapra)
This view after the 70shas shaped to justify HRMrather than trade unions
Employer-Employee
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Employer-EmployeeRelationship
Traditionally: Master : Slave
Two Laws making andgoverning bodies. Provisional Federal
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July 2004 ILO Conventions
Abolition Of Forced Labor Minimum Age for workers Freedom of Association Weekly Rest for workers Equality of treatment Abolition of worst forms of child labor
Employer-Employee
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Employer EmployeeRelationship
Labor Laws inherited from India at the time of creation
Labor laws marked as concurrent subject
Pakistanis Labor force counts upto 37.15Million
Core Provision of IRO (industrial relations
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Core Provision of IRO (industrial relationsordinance) 2002
Workers representation as an enterprise A joint work council set up in case of 50+ employees 30% or more should be of labor force.
Also taking functions of previous work council. Settlement of issues through negotiations Facilitate good and harmonious working conditions
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Procedure for Appeals Appeals first in labor courts
If party is aggrieved by decision of labor court can submit an appeal in high court
B i i d U i R l
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Bargaining and Union Role
Bhuttos Regime
Played a vital role in union movement.
Roti Kapra Aur Makaan Financial sectors nationalized. Unions were made making these nationalized
organisation a symbol of corruption Politicians became union heads Workers remained where they were. Unions became stronger and productivity fell.
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Result of Strong Union Crisis
Get rid of undesiredworkers.
Employees resistedRetrenchment
Lockouts
Well performing firmsclosed down
Unemployment
G d ll W k R li d
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Gradually Workers Realized
Workers realized the problem Unions no longer play important role Emergence of HRM system HRM champion of all workers Due to HRM unions role is now insignificant
Human Resource Management
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Human Resource ManagementSystem
Flaws which led to HRM development Personnel department did not have a good
Reputation except Defense
Political influence. HRM Systematic Approach towards management Rely on system rather than individuals
Succession Planning.
HRM i P ki t
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HRM in Pakistan.
The initiative goes to multi national firms Introduces new concepts of HRM
Competition led HRM Into local market Established Employer-Employee trust
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Compensation Management
Strategy developed keeping four factors inmind. Organizational goals Identifying potential sources Object of attracting qualified people competitiveness
Compensation Strategies
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Compensation Strategies(govt.)
Cash Payments Fringe Benefits
Housing Subsidizing
Long term benefits Pension
Medical benefits
Compensation Strategies
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Pay for performance Prefer short term benefits over long term Allowances Bonuses
Compensation Strategies(pvt.)
E hi l P bl
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Ethical Problems
Minimum wage set is Rps 4600 Increase in salaries to get employee.
Inflated compensational packages Serious concern on long term compatibility
Do nsi ing
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Downsizing
Firing unnecessary employees toreduce costs.
Unorganized workers over organizedones.
Massive dismissal of employees
Golden handshakes
Z.As efforts to promote associatednorms collapsed
C l i
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Conclusion
Organizations in Pakistanhave to play a key role inimproving employee -employer relationship, thus
maximizing utility andpursuing their ultimategoal.