Crane and Matten

Employees and Sustainability

Ethics

Lecture 1

© Andrew Crane and Dirk Matten, 2016. All rights reserved.

 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(ulaşmak) 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

Crane & Matten: Business Ethics, 4th edition

 Ethical issues in the firm-employee
relation

Crane & Matten: Business Ethics, 4th edition

 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’
• Human resource competes with other
resources(technology)
• HR should not be treated as a «means»

Crane & Matten: Business Ethics, 4th edition

 Rhetoric and reality in HRM

Rhetoric 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 Undermining(baltalamak) the trade

individual’ union and collective bargaining
‘Teamworking’ Reducing the individual’s discretion

Based on Legge (1998)

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 Employee Rights and Employee Duties

• Central ethical issues in HRM revolve around

rights and duties.
• Employee rights:
– Entitlements of workers with respect to their
employer, based on a general understanding of
human rights and often codified in employment
law.
• Employee duties:
– Obligations of workers towards their employer,
based on individual contracts and wider
employment laws.
Crane & Matten: Business Ethics, 4th edition
 Rights of employees as
stakeholders of the firm
Employee rights Issues involved
Right to freedom from Equal opportunities, Affirmative action, Reverse
discrimination discrimination, Sexual and racial harassment
Right to privacy Health and drug testing, Work-life balance,
Presenteeism, Electronic privacy and data protection
Right to due process Promotion, Firing, Disciplinary proceedings
Right to participation Organization of workers in works councils and trade
and association unions, Participation in the company’s decisions
Right to healthy and Working conditions, Occupational health and safety
safe working conditions
Right to fair wages Pay, Industrial action, New forms of work
Right to freedom of Whistleblowing
conscience and speech
Right to work Fair treatment in the interview, Non-discriminatory
rules for recruitment
Reverse discrimination is a term for discrimination against members of a dominant or majority group, in favor of members of a
minority.
Affirmative action gives preference to women, black people, or other groups that are often treated unfairly.
Crane & Matten: Business Ethics, th
Presenteeism is the act of staying at 4
workedition
longer than usual, or going to work when you are ill, to show that you work hard and
 Duties of employees as
stakeholders of the firm

Employee duties Issues involved

Duty to comply with labour Acceptable level of performance
contract Work quality
Loyalty to the firm
Duty to comply with the law Bribery

Duty to respect the employer’s Working time

property Unauthorized use of company
resources for private purposes
Fraud, theft, embezzlement

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 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 such as race, gender, age, religion,
nationality, disability
• Managing diversity prominent feature of contemporary business
since majority of employees are coming from different nationality
or cultural groups
• Extensive legislation
• Institutional discrimination: discrimination deeply embedded in
business

Crane & Matten: Business Ethics, 4th edition

 Women in top management positions
Female Directors in FTSE 100 Companies 2000-2014

2000 2004 2008 2016

Female held directorships 69 110 131 231

(in % of total directorships) (5.8 %) (9.7 %) (11.7 %) (20.7%)

Female 11 17 17 20
executive directors

Female 60 93 114 211

non-executive directors

Companies with 2 women 14 19 39 79

directors

Companies with no women 42 31 22 2

director

See Figure 7.3 for more detail and sources.

Women receive lower wage for the same jobs as their male
Crane & Matten:equivalents, on4thaverage.
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 Sexual and racial harassment

• Issues of diversity might be exploited to inflict(to force

someone to experience something very unpleasant)
physical, verbal, or emotional harassment
• Sexual favors are requested for promotion or other
rewards that would normally be a result of succesful
work
• 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 (Crain and Heischmidt 1995)

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 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(anonymous CV)
• Fair job criteria(BU graduates)
• Training programmes for discriminated minorities
• Promotion to senior positions(ethnic and racial minorities
make up only 10% of corp. directors but 35% of population
in the U.S. )

Crane & Matten: Business Ethics, 4th edition

 Reverse discrimination

• In some cases, people suffer reverse discrimination

because AA policies prefer certain minorities
• At some point AA can itself be deemed discriminatory
because it disadvantages those thought to already be
in an «advantaged» position.
• Justification for reverse discrimination
– Retributive justice: past injustices have to be ‘paid for’
– Distributive justice: rewards such as job and pay should be
allocated fairly among all groups (Beauchamp 1997)
• Stronger forms of reverse discrimination tend to be
illegal in many European countries

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 Managing Diversity

• Addressing discrimination in all its forms has become an area of

management, which is called managing diversity

• Managing Diversity: The notion of diversity is driven by the

ethical values of fairness and justice and focused on embracing
difference as a potential strength. (Barak, 2013; Kirton and
Greene, 2010)

• Enlightened Self-Interest
– Richer pool of experiences and talent for diverse and open
firms.
– Can make firms more attractive to customers.

Crane & Matten: Business Ethics, 4th edition

 Employee privacy

• Four different types of privacy we may want

to protect (Simms 1994)
– Physical privacy, surveillance cameras in
employee’s private rest areas might be said to
compromise physical privacy
– Social privacy, freedom to behave in our private
life in whichever way we choose
– Informational privacy, employees’ social media
use outside the workplace is monitored by
employers
– Psychological privacy, employers must smile and
be happy in front of customers
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 Health and drug testing

• Highly contested issue

• Three main issues
– Potential to do harm, AIDS test might make sense
for a nurse but not for a software specialist
– Causes of employee’s performance, excessive
workload may affect performance more than the
drug and alcohol use
– Level of performance, pilot eye test, fire man test
• Despite these criticisms, such tests have
increasingly come common in the US

Crane & Matten: Business Ethics, 4th edition

 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 can be monitored very
easily
– Usage of employee time for private reasons
• E-mail and internet
• Issue of privacy in situations where data is
saved and processed electronically
– Data protection, eg: employee and company’s
doctor relationship
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 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

– Watch <up in the air> by George Clooney

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 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, on performance of corp.,pension
– Consultation, employee expresses views on decisons of
employer
– Codetermination, employees have a full codified right to
determine major decisions in the company. This is the
strongest form of participation, such as mergers and
diversification in new markets
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 Evolution of trade union density
(membership as % of workforce)
1980 2010 Absolute change in %

Australia 49 19 -30

Canada 34 30 -4

Finland 69 70 +1

Germany 35 19 -16

Japan 31 19 -13

New Zealand 69 21 -48

United Kingdom 51 28 -23

United States 22 11 -11

Based on Snabel, 2013

Crane & Matten: Business Ethics, 4th edition

 Working conditions

• Right to healthy and safe working conditions one of

the very first ethical concerns for employees, eg: in
mines
• 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

Crane & Matten: Business Ethics, 4th edition

 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 (Cooper 1996)

Crane & Matten: Business Ethics, 4th edition

 Flexible working patterns

• Another way of saying that management can do what

it wants? (Legge, 1998)
• ‘Non-standard’ work relationships
– Part-time work, temporary work, self-employment and
teleworking (Stanworth 2000)
– Less secure legal status for periphery(çevre) workers.
– “precarious(istikrarsız) work”
– Potential for:
• Poorer working conditions
• Increased insecurity
• Lower pay
• Exclusion from training and other employment benefits

Crane & Matten: Business Ethics, 4th edition

 Fair wages

• The basis for determining fair wages is commonly the

expectations placed on the employee and their
performance towards goals
• Comparison of wage levels at the top and bottom
– 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

Crane & Matten: Business Ethics, 4th edition

 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(creative accounting)
• Whistleblowing – A whistleblower is usually an employee, who
exposes information or activity within a private, public, or
government organization that is deemed illegal, immoral, illicit,
unsafe, fraud, or abuse of taxpayer funds.
• Whistleblowing can involve considerable risk

Crane & Matten: Business Ethics, 4th edition

 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

• Employing and paying people a salary is only

possible if the company is able to sell a reasonable
amount of goods and services

• The right to work should result in every individual

facing the same equal conditions in exerting this right
Crane & Matten: Business Ethics, 4th edition
 Employing people worldwide

• The ethical challenges of

globalization

Crane & Matten: Business Ethics, 4th edition

 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

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 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 (Nien-hê Hsieh, 2009)

Crane & Matten: Business Ethics, 4th edition

 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)

Crane & Matten: Business Ethics, 4th edition

 The corporate citizen and employee
relations

Crane & Matten: Business Ethics, 4th edition

 The corporate citizen and employee
relations in a global context
• Corporations govern a great deal of social and civil rights of
citizens via the work place=corporate citezenship
• 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’, shareholder and employees have equal
say in governing the company-Germany metal industry
supervisory board(1/2 board of members are employees)
• 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
– Protect (states’ duty to prevent abuses)
– Respect (firms’th
duty to respect human rights)
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 Towards sustainable employment

Crane & Matten: Business Ethics, 4th edition

 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(division of labor,repeating same
action over and over again)
• Attempts to re-humanize the workplace
– ‘empowering’ the employee
– ‘job enlargement’, giving employees a wider range of task to do
– ‘job enrichment’, giving employees a larger scope for deciding
how to organize their work
• Success of such schemes contested
• Suggested that ‘humanized’ approach might be more
appropriate and effective in some cultures (e.g.
Scandinavia) than others
Crane & Matten: Business Ethics, 4th edition
 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(haberci) the ‘end of work’? (Rifkin
1995)
• From sustainability perspective: ensure that what work exists is
shared out more equitably
• 21 hour work in a week, uk
• Utah four-day week
• Belgium four-day week
• Productivity and job satisfaction increase, but gasoline
consumption and greenhouse gas release decrease

Crane & Matten: Business Ethics, 4th edition

 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

Crane & Matten: Business Ethics, 4th edition

 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

Crane & Matten: Business Ethics, 4th edition

Crane & Matten: Business Ethics, 4th edition