Chapter

Ethical Decision-Making: Employer Responsibilities and Employee Rights

McGraw-Hill/Irwin Business Ethics: Decision-Making for Personal Integrity & Social Responsibility

Copyright 2008

6-2 1-2 The McGraw-Hill Companies, Inc. All rights reserved.

Ethics is tougher than you think . . .

"We can invest all the money on Wall Street in new technologies, but we can't realize the benefits of improved productivity until companies rediscover the value of human loyalty." - Frederick Reichheld, Director, Bain & Co.

6-3 1-3

Chapter Objectives

After exploring this chapter, you will be able to:

1. Discuss the two distinct perspectives on the ethics of workplace relationships. 2. Explain the concept of due process in the workplace. 3. Define employment at will and its ethical rationale. 4. Describe the costs of an EAW environment. 5. Explain how due process relates to performance appraisals. 6. Discuss whether it is possible to downsize in an ethical manner 7. Explain the difference between intrinsic and instrumental value in terms of health and safety 8. Describe the acceptable risk approach to health and safety in the workplace
6-4 1-4

Chapter Objectives

After exploring this chapter, you will be able to:

9. Describe the nature of an employers responsibility with regard to employee health and safety and why the market is not the most effective arbiter of this responsibility 10. Explain the basic arguments for and against regulation of the global labor environment 11. Describe the argument for a market-based resolution to workplace discrimination. 12. Define diversity as it applies to the workplace. 13. Explain the benefits and challenges of diversity for the workplace. 14. Define affirmative action and explain the three ways in which affirmative action may be legally permissible. 15. Articulate the basic guidelines for affirmative actions programs 6-5

1-5

Opening Decision Point: Abercrombie & Fitch

Do you see a connection between the subject of the lawsuit discussed above and the choices made surrounding the t-shirt line? Do you that Abercrombie & Fitch did anything wrong in its choice to sell these t-shirts that would justify the protests and negative attention? What are the key facts relevant to your determination? What are the ethical issues involved in your decision? Who are the stakeholders involved this scenario? Are the stakeholders rights abridged? In what way?
6-6 1-6

Opening Decision Point: Abercrombie & Fitch

Even if you answer no to the first question, above, evidently certain stakeholders believed that Abercrombie & Fitch acted inappropriately. Other than not selling the shirts at all, is there any other way to have prevented this from happening in the first place? What alternatives were available to it originally? How would each of these new alternatives have affected each of the stakeholders you have identified? Moving forward from this point, what alternatives now exist for Abercrombie & Fitch to heal relationships with its stakeholders? What recommendations would you offer to Abercrombie & Fitch?
6-7 1-7

Decision-Making @ Work

decisions to make about how we will treat and be treated in the workplace . Ethics at work and in human resource management is about our relationships with others and with our organizations. Companies that place employees at their strategies produce more

6-8 1-8

Decision-Making @ Work
There are two very distinct on the ethics of workplace relationships. 1- Treat employees well as a means to produce greater workplace harmony and productivity. (utilitarianism)

When firm values employees s emotions, respect and trust, and are also more satisfied with their organizations.

6-9 1-9

Decision-Making @ Work

2- employers might treat employees well out of sense of duty and rights

This deontological approach emphasizes it is the right thing to do. This stem from the law, professional codes of conduct, corporate codes of conduct, or such moral principles as fairness, justice, or human rights .

6-10 1-10

Defining the Parameters of the Employment Relationship: Due Process

Philosophically, the right of due process is the right to be protected against the arbitrary use of authority.

Due process refers to the procedures that police and courts must follow in exercising their authority over citizens. Example . police and courts, has the authority to punish citizens. This authority creates a safe society. But that authority is not unlimited; it can be exercised only in certain ways and under certain conditions. Due process rights specify these conditions.

6-11 1-11

Due Process . . . at Work

Similarly, due process in the workplace acknowledges an employers authority over employees. Employers can tell employees what , when and how to do work. They can fire an employee who does not comply with their authority. the threat of losing ones job is a powerful motivation to comply. implemented through due processdemands that this power be used justly. unfair treatment will result absenteeism (1/3- 2/3 suffered employees from work place bulling )
6-12 1-12

Employment at Will

the law has not always clearly supported this justice. Much employment law known as Employment at Will.
Employment at Will (EAW) holds that, absent a particular contractual or other legal obligation that specifies the length or conditions of employment, all employees are employed at will.

6-13 1-13

Employment at Will

This means that unless there is agreement , employers are free to fire an employee at any time and for any reason. court decision, all may dismiss their employee at will, for good cause, for no cause, or even for cause morally wrong.
In the same manner, an EAW worker may opt to leave a job at any time for any reason, without offering any notice at all; so the freedom is theoretically mutual.
6-14 1-14

Reasons to Limit EAW

Justice Argument: Even if EAW proved to be an effective management tool, justice demands that such tools not be used to harm other people. Property Argument: Even if private property rights grant managers authority over employees, the right of private property itself is limited by other rights and duties. Also Lack of Mutuality: the employer is often responsible for the employees livelihood, while the opposite is unlikely to be true; so the differential creates an unbalanced power relationship between the two parties.

6-15 1-15

Due Process: Other Employment Contexts

Employees are under constant supervision and evaluation , salary, work conditions, and promotions can motivate or sanction employees. Thus, being treated fairly in the workplace also involves fairness in such things as promotions, salary, benefits, and so forth. Because such decisions are typically made on the basis of performance appraisals, due process rights should also extend to this aspect
6-16 1-16

Appraisals procedures should be

Standardized and uniforms for all employees Formally communicated to employees Access for employees to be reviewed Opportunities s to correct deficiencies Use multiple and unbiased raters Provide written instructions and training for raters Establish a system to detect bias or abuses

6-17 1-17

Downsizing

Terminating workers whether one or one hundred is not necessarily an unethical decision. there may be alternatives available to an organization in financial difficulty. Once the decision has been made, can organization act more ethically in the process of downsizing? How due process and fairness define limitations in a downsizing environment?

6-18 1-18

Downsizing: The Legal Perspective

whom to include (who will go and who stay)effort must be carefully planned. If the firms decision is based seniority (neutral), but results impact on one group than another, the decision may be suspect. firms review both the fairness of decision-making process as well as the consequence of that process on those terminated and the resulting composition of the workforce.

6-19 1-19

How to make fair decisions

Decision should be made by representative group Fact should be collected and issues should be raised Identify stakeholders Decision should not be surprised (debatable) to avoid rumors Early notice to employees (not to remain in his position for long time after being notified) to account for their loss of job Managers should be reachable and transparent understanding fear of other employees staying

6-20 1-20

Downsizing: John Rawls The Legal Perspective

One of the most effective theories to employ with regard to downsizing would be John Rawls theory of justice.
Under his formulation, you would consider what decision you would make whether to downsize or how to downsize if you did not know what role you would be playing .

6-21 1-21

Health & Safety

employees have a fundamental right to a safe and healthy workplace. employees lack even the most basic health and safety protections, such as sweatshops. Health and safety have intrinsic value in addition to instrumental value A significant disagreement concerning the best policies to protect worker health and safety.

6-22 1-22

Health & Safety as Acceptable Risk

If safe means free of risk ;no work place is certainly safe ethics will focus on the relative risks faced by workers and the level of acceptable workplace risk. risks is defined as : probability of harm, relative risks is defined as: comparing the probabilities of harm Therefore, both risks and relative risks are things that can be determined by scientists who compile and measure data.

6-23 1-23

Health & Safety as Acceptable Risk

calculations to certain conclusions about acceptable risks. If it can be determined that the probability of harm involved in a specific work activity is equal to or less than the probability of harm of some more common activity, then we can conclude that this activity faces an acceptable level of risk.

From this perspective, a workplace is safe if the risks are acceptable.

6-24 1-24

Challenges with Acceptable Risk Approach

This approach treats employees disrespectfully by ignoring their input as stakeholders treats employees like children .
health and safety are mere preferences that can be traded-off against competing values, ignoring the fundamental deontological right an employee

6-25 1-25

Challenges with Acceptable Risk Approach

it assumes an equivalency between workplace risks and daily risks, the risks faced in the workplace may not be freely chosen, nor are the risks faced in the workplace within the control of workers. It disregards the utilitarian consequences of an unsafe , the resulting product or service created, the morale of the workforce, the community and other large-scale results of an unhealthy workplace. the work risks could be controlled by others and particularly by others who might stand to benefit by not reducing the risks. example smoking ( ones will) vs. inhaling dust from factory
6-26 1-26

employees would be free

Can we leave H&S standards to the market?

Individual bargaining between employers and employees would be the approach to workplace health and safety favored by defenders of the free market and the classical model of corporate social responsibility. employees would be free to choose the risks that they are willing to face by bargaining with employers. Employees would balance their preferences for risk against their demand for wages. Those who demand higher safety and healthier conditions presumably would have to settle for lower wages and vice versa.
6-27 1-27

Health & Safety as Market-Controlled?

The market approach can compensation to injured workers when employers were responsible for causing the harms. The threat of compensation also make employers to maintain safe and healthy workplace.

6-28 1-28

Challenges to Market Control of H&S

1-Labor markets are not perfectly competitive and free. Example: employees accept jobs because they have no choices satisfactions.

2- employees dont have complete information about risks , to bargain for wage Example they might know heavy machine but dont know toxic .

6-29 1-29

The Dialogue about Those Challenges

Over time employees will learn about the risks of every workplace. first generation problem and markets sacrifice the first generation .

6-30 1-30

These questions of public policy, questions that after all will affect human lives, would never even be asked by an individual facing the choice of working at a risky job or no job at all. To the degree that these are important questions that ought to be asked, individual bargaining may fail as an ethical public policy approach to worker health and safety.

6-29

Is government regulation more appropriate from an ethical perspective?

Mandatory government standards address most of the problems raised against market strategies.

Standards can be set according to the best available scientific knowledge and thus overcome insufficient information. Standards prevent employees from having to face the fundamentally coercive choice between job and safety. Standards also address the first generation problem by focusing on prevention rather than compensation after the fact. Finally, standards are fundamentally a social approach that can address public policy questions ignored by markets.
6-32 1-32

Government-Regulated Ethics

In 1970, the U.S. Congress established the Occupational Safety and Health Administration (OSHA) appropriateness of using cost-benefit analysis to set health and safety standards. Regulations are aimed at achieving the safest feasible standards, allowing a balancing approach between health and economics .

6-33 1-33

Challenges in the Cost-Benefit Approach to Government-Regulated H&S

The use of cost-benefit analysis in setting workplace health and safety standards commits us to treating worker health and safety as just another commodity, another individual preference, to be traded-off against competing commodities. It treats health and safety merely as an instrumental value and denies its intrinsic value. Cost-benefit requires that an economic value be placed on ones life and bodily integrity.

6-34 1-34

6-35 1-35

Rights and Responsibilities in Conflict: Discrimination, Diversity and Affirmative Action

matters that remain open to debate by corporate leaders.

areas where perhaps the law has not yet become so settled

6-36 1-36

Discrimination

The courts of the United States Civil Rights Act was passed in 1964 and created the prohibited classes of discrimination.
offering business decision-makers guidance on appropriate behavior in the workplace . EEO provide legal directions for both employees and employer Example : in recruitment, interviews

6-37 1-37

 Law in the U.S.

Employers are permitted to make decisions on any basis other than ( age, religion, race, disability, gender, national origin, color). Some commentators contend that this allows employers enormous autonomy in their employment. Still in the U.S.A discrimination on the bases of ones name

6-38 1-38

Lack of Global Agreement

There remains widespread disagreement on a global basis as to the rights of employees with regard to discrimination. Employers continue to advocate for their rights to manage the workplaces and to be permitted to hire, retain and terminate without external influence or control. Employees fear unfair treatment and a loss of power based on reasons completely outside their control.

** See notes for Objective 11.

6-39 1-39

Discrimination Persists . . .

Discrimination persists with regard to race , as well as gender. Women often face challenges that are distinct from those faced by men. women are Subject to stereotyping .

A woman who is aggressive in the workplace is often considered to be a bully, while a man is deemed to be doing what he needs to do to get ahead. Glass ceiling

6-40 1-40

Diversity
Diversity refers to the presence of differing cultures, languages, ethnicities, races, genders, religious , abilities, social classes, ages and national origins of the individuals in a firm.
6-49

Statistics

Ninety percent of employees in U.S. businesses believe they have a diverse workforce where they work. by 2010, only 20% of the workforce will be white men under 45. 79% of senior managers at those firms say that cultivating a more diverse workforce is part of the organizations overall business strategy.

6-42 1-42

Diversity = $$? (Reality Check)

Advantages of diversity link between gender diversity in top management teams and corporate financial performance. diversity have a larger and more applicant pool from whom to choose the best workers. These organizations are also better positioned to respond more effectively to a diverse consumer population. In addition, these firms evidence better decision-making, production and other critical success factors.

6-43 1-43

Benefits and Challenges of Diversity for the Workplace

Challenges of diversity; Working together individuals with these differences there are likely to be areas of tension and anxiety. working together toward common goals, on teams, might lead to conflicts or tension even without additional stressors such as cultural challenges. Tensions increased When: differences are new or strong,(surface and deep diversity ) negative stereotypes between particular groups

6-44 1-44

Benefits and Challenges, continued

.

difficult to comply with values of a firm. The diversity that might be the source of positive gains for the organization might also be the source of challenging fundamental differences and these differences must be balanced. job applicants be screened with regard to their values ?

Example second interview

6-45 1-45

Affirmative Action
A policy or a program that tries to respond to instances where there has been some past discrimination by implementing proactive measures in order to ensure equal opportunity today.
It may take the form of intentional inclusion of previously excluded groups in employment, education or other environments.
6-55 6-55

Affirmative Action

the U.S. Supreme Court found that employers could intentionally include minorities in order to redress past wrongs. however it was not without great restrictions. the law is not clear clarity and we must turn to value systems

6-47 1-47

Guidelines for Affirmative Action Programs

Consider how the following legal constraints to an affirmative action program are in line with deontological framework that support ethical decision-making, as well: The affirmative action efforts or policy may not be against upon the majority employees rights or create an absolute bar to their advancement. The affirmative action effort or policy may not set aside any positions for women or minorities may not be construed as quotas to be met. It should not be against legitimate, expectation of employees. It should be only temporary in that it is for the purpose of attaining, not maintaining, a balanced workforce. It should represent a minimal intrusion interference into the legitimate, 6-48 1-48 settled expectations of other employees.

Opposition to Affirmative Action Programs

Opponents claim that the efforts do more harm than good, that they create ill will and poor morale among work forces. They argue that they translate into current punishment of past wrongs since those who pay for the wrongs should not bear the responsibility for the acts of others. It is not merely the white males who articulate this claim. Ward Connerly, an African-American Regent of the University of California discussed affirmative action during a 60 Minutes interview and stated, Black Americans are not hobbled by chains any longer. Were free to compete. Were capable of competing. It is an absolute insult to suggest that we cant.

6-49 1-49

Discussion of Opening Decision Point: Abercrombie & Fitch

With regard to the postscript for the 2003 class action lawsuit against A&F, a settlement agreement was reached between A&F and more than 10,000 claimants who were Latino, African American, Asian American and female applicants and employees of the company. Under the settlement, A&F agreed to pay claims ranging from several hundred dollars to thousands of dollars, depending on the claimants particular damages and the extent to which they contributed to the prosecution of the case totaling $50 million, including attorneys fees. In addition, under the agreement, A&F also is required to institute policies and programs to promote diversity among its workforce and to prevent discrimination based on race or gender. 6-50

1-50

Discussion of Opening Decision Point: Abercrombie & Fitch

It is important to consider the additional elements included in of the settlement agreement because they were included in order to promote diversity in A&Fs workforce. (Included in the text and notes) Consider whether any of these elements might have helped A&F to have avoided the challenging circumstances in which it found itself at the beginning of this chapter. If it had instituted some of these prior to the t-shirt situation, maybe it would not have found itself in that hot water.
6-51 1-51

Discussion of Opening Decision Point: Abercrombie & Fitch

When one explores the impact of the t-shirt controversy, it is interesting to consider both sides of the stakeholder opinions. Though emotional pain and the perpetuation of historic discrimination was expressed from one perspective, others felt that people had become too thin-skinned and that, as a society, we had moved beyond these issues to a point where poking fun at stereotypes was acceptable, hence A&Fs response. One of the values, though, in a diverse workforce, is the ability to weigh the varying perspectives of myriad stakeholders. While one group might consider a marketing campaign to be poking fun, another might be brutally pained by the mockery. A greater diversity among decision-makers certainly does not guarantee that all perspectives are represented by does ensure more broad opinions might be considered.
6-52 1-52

Discussion of Opening Decision Point: Abercrombie & Fitch

A&F might benefit from a more broad opinion on a variety of matters. In recent years, it has drawn criticism from Mothers Against Drunk Driving for its Dinking 101 directions for creative drinking in its catalogs aimed at college students and from several family-oriented organizations for its childrens thong underwear with the words eye candy and wink wink printed on the front. With headlines such as Abercrombie Criticized for Sexy Undies, perhaps A&F again misjudged its audience. A&F responded, saying that the underwear for young girls was created with the intent to be lighthearted and cute, and placing any misunderstanding purely in the eye of the beholder.
6-53 1-53

Chapter Six Vocabulary Terms

After examining this Chapter, you should have a clear understanding of the following Key Terms and you will find them defined in the Glossary:

Affirmative Action Child Labor Discrimination Diversity Downsize Due Process Employment at Will (EAW) Just Cause Multiculturalism OSHA Reverse discrimination Sweatshops
6-54 1-54