Employees and Business Ethics

Prepared for class discussion

By
Prof.S.Suryanarayanan
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
• TED talk on CSR, employee welfare and responsible investment
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’
 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 the trade union and

individual’ collective bargaining
‘Teamworking’ Reducing the individual’s discretion
 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
Duties of employees as stakeholders of the firm
Employee duties
Duty to comply with labour
contract
Duty to comply with the law
Duty to respect the employer’s
property
Issues involved
Acceptable level of performance
Work quality
Loyalty to the firm
Bribery
Working time
Unauthorized use of company
resources for private purposes
Fraud, theft, embezzlement
 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
• Managing diversity prominent feature of contemporary
business
• Extensive legislation
• Institutional discrimination: discrimination deeply
embedded in business
Women in top management positions
Female Directors in FTSE 100 Companies 2000-2008
2000 2004 2008

Female held directorships 69 110 131

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

Female 11 17 17
executive directors

Female 60 93 114
non-executive directors

Companies with 2 women 14 19 39

directors

Companies with no women 42 31 22

director
 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

• Example: Phanesh Murthy

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
 Reverse discrimination
• In some cases, people suffer reverse discrimination
because AA policies prefer certain minorities
• 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
• Stronger forms of reverse discrimination tend to be illegal
in many European countries
 Employee privacy
• Four different types of privacy we may want to protect (Simms 1994)
• Physical privacy
• Social privacy
• Informational privacy
• Psychological privacy
 Health and drug testing
• Highly contested issue
• Three main issues
• Potential to do harm
• Causes of employee’s performance
• Level of performance
• Despite these criticisms, such tests have increasingly come common
in the US
 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 is saved and processed
electronically
• Data protection
 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
 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
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
 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
 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
 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
 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
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
 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
 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
 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
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)
 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
• Protect (states’ duty to prevent abuses)
• Respect (firms’ duty to respect human rights)
• Remedy (general duty to create systems to remedy abuses)
 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
 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’?
• From sustainability perspective: ensure that what work exists is shared out more
equitably
 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
• Discussion on child labour, outsourcing to developing countries
 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