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
Ethical issues in the firm-employee
relation
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
individual’
Undermining the trade union and
collective bargaining
‘Teamworking’
Reducing the individual’s discretion
Based on Legge (1998)
Rights of employees as
stakeholders of the firm
Employee rights
Right to freedom from
discrimination
Right to privacy
Right to due process
Right to participation
and association
Right to healthy and
safe working conditions
Right to fair wages
Right to freedom of
conscience and speech
Right to work
Issues involved
Equal opportunities, Affirmative action, Reverse
discrimination, Sexual and racial harassment
Health and drug testing, Work-life balance,
Presenteeism, Electronic privacy and data protection
Promotion, Firing, Disciplinary proceedings
Organization of workers in works councils and trade
unions, Participation in the company’s decisions
Working conditions, Occupational health and safety
Pay, Industrial action, New forms of work
Whistleblowing
Fair treatment in the interview, Non-discriminatory
rules for recruitment
Duties of employees as
stakeholders of the firm
Employee duties
Issues involved
Duty to comply with labour
contract
Acceptable level of performance
Work quality
Loyalty to the firm
Duty to comply with the law
Bribery
Duty to respect the employer’s
property
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
[race,age,gender,religion,disability,nationality]
• Managing diversity prominent feature of
contemporary business
• 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
(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
Source: Singh, V. & S. Vinnicombe. 2007 & 2008
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
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 underrepresented 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
– 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
Employee privacy
• Four different types of privacy we may want
to protect
–
–
–
–
Physical privacy
Social privacy
Informational privacy
Psychological privacy
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
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
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
Based on Visser, 2006: 45
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
Employing people worldwide
The ethical challenges of globalization
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
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)
Towards sustainable employment
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’? (Rifkin 1995)
• 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
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