Chapter6

Ethical Decision-Making: Employer

Responsibilities and Employee Rights

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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.

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Chapter Objectives

After exploring this chapter, you will be able to:

1.
2.
3.
4.
5.
6.
7.
8.

Discuss the two distinct perspectives on the ethics of workplace

relationships.
Explain the concept of due process in the workplace.
Define employment at will and its ethical rationale.
Describe the costs of an EAW environment.
Explain how due process relates to performance appraisals.
Discuss whether it is possible to downsize in an ethical manner
Explain the difference between intrinsic and instrumental value
in terms of health and safety
Describe the acceptable risk approach to health and safety in
the workplace

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Chapter Objectives

After exploring this chapter, you will be able to:

9.

10.
11.
12.
13.
14.
15.

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
Explain the basic arguments for and against regulation of the
global labor environment
Describe the argument for a market-based resolution to
workplace discrimination.
Define diversity as it applies to the workplace.
Explain the benefits and challenges of diversity for the
workplace.
Define affirmative action and explain the three ways in which
affirmative action may be legally permissible.
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Articulate the basic guidelines for affirmative actions programs
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Decision-Making @ Work

We all have decisions to make about how we will treat others

in the workplace and how we will ask to be treated.
Ethics at work and in human resource management is about
our relationships with others and with our organizations.

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Decision-Making @ Work
(insert obj. 1)

There are two very distinct, and sometimes competing,

perspectives on the ethics of workplace relationships.
On one hand, employers might decide to treat employees well
as a means to produce greater workplace harmony and
productivity.

When employees see that a firm values their emotions, as well as

exhibits values such as honesty, respect and trust, they feel less
pressure, more valued as employees and are also more satisfied
with their organizations.

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Decision-Making @ Work

On the other hand, of course, employers might treat

employees well out of a Kantian sense of duty and rights,
regardless of the either utilitarian or self-interested
productivity consequences.

This deontological approach emphasizes the rights and duties of all

employees, and the interest in treating employees well simply because
it is the right thing to do.
This sense of duty might stem from the law, professional codes of
conduct, corporate codes of conduct, or such moral principles as
fairness, justice, or human rights on the part of the organizations
leadership.

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Defining the Parameters of

the Employment Relationship:
Due Process (insert obj. 2)
Philosophically, the right of due process is the right to be
protected against the arbitrary use of authority.

In legal contexts, due process refers to the procedures that police and
courts must follow in exercising their authority over citizens.
Few dispute that the state, through its police and courts, has the
authority to punish citizens.
This authority creates a safe and orderly society in which we all can
live, work and do business.
But that authority is not unlimited; it can be exercised only in certain
ways and under certain conditions.
Due process rights specify these conditions.
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Due Process . . . at Work

Similarly, due process in the workplace acknowledges an

employers authority over employees.
Employers can tell employees what to do and when and how
to do it.
They can exercise such control because they retain the ability
to discipline or fire an employee who does not comply with
their authority. Because of the immense value that work
holds for most people, the threat of losing ones job is a
powerful motivation to comply.
However, basic fairnessimplemented through due process
demands that this power be used justly.
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Employment at Will (insert obj. 3)

Ironically, the law has not always clearly supported this

mandate of justice.
Much employment law within the United States instead
evolved in a context of a legal doctrine 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.
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Employment at Will

This means that, unless an agreement specifies otherwise,

employers are free to fire an employee at any time and for
any reason.
In the words of an early court decision, all may dismiss their
employee at will, be they many or few, 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.
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Reasons to Limit EAW (insert obj. 4)

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: Though the freedom to terminate the
relationship is theoretically mutual, 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.
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Due Process:
Other Employment Contexts

Employees are under constant supervision and evaluation in

the workplace, and such benefits as salary, work conditions,
and promotions can also be used to 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 of the workplace.
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Downsizing (insert obj. 6)

Terminating workers whether one or one hundred is not

necessarily an unethical decision.
However, the decision itself raises ethical quandaries since there
may be alternatives available to an organization in financial
difficulty.
Once the decision has been made, are there ways in which an
organization can act more ethically in the process of
downsizing?
How might our earlier discussion on due process and fairness
offer some guidance and/or define limitations in a downsizing
environment?
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Downsizing:
The Legal Perspective

The decision about whom to include in a downsizing effort

must be carefully planned.
If the firms decision is based on some criterion that seems to
be neutral on its face, such as seniority, but the plan results in
a different impact on one group than another, the decision
may be suspect.
To avoid this result, firms should review both the fairness of
their decision-making process as well as the consequence of
that process on those terminated and the resulting
composition of the workforce.
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Downsizing:
The Legal Perspective

One of the most effective philosophical theories to employ

with regard to downsizing decisions 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 in the
decision.

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Health & Safety (insert obj. 7)

Within the United States and throughout many other countries with
developed economies, there is a wide consensus that employees
have a fundamental right to a safe and healthy workplace.
In some other regions, employees lack even the most basic health
and safety protections, such as in working environments that are
often termed sweatshops.
Even within the United States, this issue becomes quite
complicated upon closer examination.
Not only is the very extent of an employers responsibility for
workplace health and safety in dispute; there is also significant
disagreement concerning the best policies to protect worker health
and safety.
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Health & Safety

as Acceptable Risk (insert obj. 8)

Employers cannot be responsible for providing an ideally safe

and healthy workplace.
Instead, discussions in ethics about employee health and
safety will tend to focus on the relative risks faced by workers
and the level of acceptable workplace risk.
In this discussion, risks can be defined as the probability of
harm, and we determine relative risks by comparing the
probabilities of harm involved in various activities.
Therefore, both risks and relative risks are things that can be
determined by scientists who compile and measure data.
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Health & Safety

as Acceptable Risk

It is an easy step from these 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.
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Challenges with
Acceptable Risk Approach

This approach treats employees disrespectfully by ignoring

their input as stakeholders. Such paternalistic decisionmaking effectively treats employees like children and makes
crucial decisions for them, ignoring their role in the decisionmaking process.
In making this decision, we assume that health and safety are
mere preferences that can be traded-off against competing
values, ignoring the fundamental deontological right an
employee might have to a safe and healthy working
environment.
(continued)

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Challenges with
Acceptable Risk Approach

It assumes an equivalency between workplace risks and other

types of risks when there are significant differences between them.
Unlike many 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 concern for the consequences of an
unsafe working environment on the social fabric, the resulting
product or service created, the morale of the workforce, the
community and other large-scale results of an unhealthy
workplace.
Unlike some daily risks freely undertaken by each of us, the risks
faced at work could be controlled by others and particularly by
others who might stand to benefit by not reducing the risks.
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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.
On this account, 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 and decide how much risk they are willing to take
for various wages.
Those who demand higher safety and healthier conditions presumably
would have to settle for lower wages; those willing to take higher
risks presumably would demand higher wages.
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Health & Safety as

Market-Controlled?

In a competitive and free labor market, such individual

bargaining would result in the optimal distribution of safety
and income.
The market approach can also support compensation to
injured workers when it can be shown that employers were
responsible for causing the harms.
The threat of compensation also acts as an incentive for
employers to maintain a reasonably safe and healthy
workplace.
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Challenges to Market
Control of H&S (insert obj. 9)

Labor markets are not perfectly competitive and free.

Employees do not have the kinds of free choices that the free
market theory would require in order to attain optimal
satisfactions.
Second, employees seldom, if ever, possess the kind of
complete information required by efficient markets. If
employees do not know the risks involved in a job, they will
not be in a position to freely bargain for appropriate wages
and therefore are not in a position to effectively protect their
rights or ensure the most ethical consequences.

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The Dialogue about

Those Challenges

Markets will, over time, compensate for such failures.

Over time, employers will find it difficult to attract workers to
dangerous jobs and, over time, employees will learn about the
risks of every workplace.
But this raises what we have previously described as the first
generation problem. The means by which the market
gathers information is by observing the harms done to the
first generation exposed to imperfect market transactions.
In effect, markets sacrifice the first generation in order to
gain information about safety and health risks.

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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.

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 market failures that result from
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.

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Government-Regulated
Ethics

In 1970, the U.S. Congress established the Occupational

Safety and Health Administration (OSHA) and charged it
with establishing workplace health and safety standards.
Since that time, the dominant question has concerned the
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 industries are required to meet the highest
standards attainable within technological and economic
reason.

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Government-Regulated
Ethics

Some critics charge that this approach does not go far enough and
unjustly sacrifices employee health and safety. But the more
influential business criticism has argued that these standards go too
far.
Critics in both industry and government have argued that OSHA
should be required to use cost-benefit analysis in establishing such
standards.
From this perspective, even if a standard is technologically and
economically feasible, it would still be unreasonable and unfair if
the benefits did not outweigh the costs.
These critics argue that OSHA should aim to achieve the optimal,
rather than highest feasible, level of safety.
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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.

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The Global Workforce

(insert obj. 10)

The laws were have discussed so far apply to workers who

are employed in the United States.
Workers outside of the United States may be subject to some
US laws if they work for an American-based organization,
though enforcement is scattered.
In some cases, workers in other countries are often protected
by even more stringent laws than those in the US.
But in many other cases, especially in certain developing
countries, workers find themselves subject to conditions that
US-based workers would find appalling.
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What to do??
The answer is not a simple one.

Though few people, if any, would argue for the continuation of the
circumstances described above, economists and others do not agree
about a solution.
Some contend that the exploitation of cheap labor supplies allows
developing countries to expand export activities and to improve
their economies. This economic growth brings more jobs, which
will cause the labor market to tighten, which in turn will force
companies to improve conditions in order to attract workers (see
next slide).
In fact, several commentators argue that encouraging greater global
production will create additional opportunities for expansion
domestically, providing a positive impact on more stakeholders.
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Though an unpopular sentiment

with the general consuming
public, many economists argue
that the maintenance of
sweatshops is therefore
supported by economic theory.

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But, says the other side . . .

Opponents to this perspective argue that allowing this process

to take its course will not necessarily lead to the articulated
result, just as voluntarily improving legal compliance, wages,
and working conditions will not inevitably lead to the
negative consequences the free market advocates threaten.
Certainly it is arguable that some minimum standards might
apply and multinationals may have some core ethical
obligations to employees.
But how do we decide what those should be?
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The Case of Child Labor

As we begin to understand the circumstances facing children

worldwide, we can see that a simple prohibition might not
offer us the best possible solution. (For stats, see notes.)
But what options exist?

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The Case of Child Labor

Of course, many economically developed countries currently employ

child and juvenile labor, albeit with restrictions, and so one should
carefully review the social and economic structure within which the labor
exists.
While the easy answer may be to rid all factories of all workers under 18
years of age, that is often not the best answer for the children or the
families involved.
In developing countries, children begin work at ages as young as three
years. Though children may work in unhealthy conditions, , they also
live in unhealthy conditions.
The labor opportunities that exist almost always preclude children from
obtaining an education as children often work on a full time basis.
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The Case of Child Labor

However, if children are not working, their options are not as

optimistic as those for children in developed economies.
There are not always sophisticated education systems or
public schools.
Often children who do not work in the manufacturing
industry are forced to work in less hospitable underground
professions such as drug dealing or prostitution simply in
order to provide for their own food each day.

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The Case of Child Labor

Moreover, notwithstanding the possible educational

alternatives in some environments, recommending removal of
the child from the workplace completely ignores the financial
impacts of terminating the employment of a youth worker.
The income generated by the youth worker may, at the very
least, assist in supporting that particular youths fundamental
needs (food, clothing and shelter); and, at the very most, it
may be critical in supporting the entire family.

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Rights and Responsibilities in Conflict:

Discrimination, Diversity and Affirmative
Action

With regard to the above issues, we are discussing several

matters that remain open to debate by scholars, jurists and
corporate leaders.
The focus is on those subtle areas where perhaps the law has not
yet become so settled, where it remains open to diverse cultural
interpretations, strong minority opinions, and value judgments.
Though the courts are often forced to render judgment, their
decisions might result from a non-unanimous vote or through
the reversal of a strong lower court opinion representing a
contrary perspective.
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Philosophical Application

From a Kantian, deontological perspective, there is not yet

universal agreement on the fundamental rights that are
implicated by these issues, nor on their appropriate
prioritization.
From a utilitarian viewpoint, neither do these reasonable
minds always agree on which resolution might lead toward
the greatest common good, or even what that good should be
ultimately.
Distributive justice does not provide a clear cut solution as
there is often an argument for fairness from each camp and
other theories provide similar quandaries.
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Discrimination

The courts have carefully construed legal precedent in the

decades since Title VII of the United States Civil Rights Act
was passed in 1964 and created the prohibited classes of
discrimination.
Though several specific areas of delicate and subtle
quandaries remain, many of the original legal and ethical
debates have been fought, offering business decision-makers
arguably clear guidance on appropriate behavior in the
workplace (i.e. sexual harassment).

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Black Letter Law

in the U.S.

Employers are permitted to make decisions on any basis

other than those prohibited by the Constitution, precedent
and several statutes (such as age, religion, race, disability,
gender, national origin, color).
Some commentators would contend that this broad mandate
allows employers enormous autonomy in their employment
decisions while many employers still bemoan any regulation
of their workplaces.

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Lack of Global Agreement

There remains widespread disagreement on a global basis as to the

rights of employees with regard to discrimination, the extent of
protected classes and the more specific sub-topics such as diversity
and affirmative action.
Even in the United States, the concept of discrimination is one that
remains one of the most intensely debated issues today.
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.

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Discrimination Persists . . .

Discrimination persists in the United States with regard to

race (see notes), as well as gender.
Women often face challenges that are distinct from those
faced by men.
For instance, women and men are both subject to gender
stereotyping, but suffer from different expectations in that
regard.

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.
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Diversity (insert obj. 12)

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

Statistics

Ninety percent of employees in U.S. businesses believe they

have a diverse workforce where they work.
It is estimated that, by 2010, only 20% of the workforce will
be white, non-disabled men under 45.
As one might expect, the management composition at firms
with diversity programs is significantly more diverse than
those at firms that do not have such programs and 79% of
senior managers at those firms say that cultivating a more
diverse workforce is part of the organizations overall
business strategy.
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Diversity = $$?
(Reality Check)

The positive impact on the overall strategy is not insignificant

A study by Catalyst (2004) evidenced a strong link between gender
diversity in top management teams and corporate financial
performance.
The studys authors contend that the link is based on the fact that
employers who pay attention to diversity have a larger and more
capable 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.
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Benefits and Challenges of Diversity

for the Workplace (insert obj. 13)

When a firm brings together individuals with these (or other)

differences often exposing these individuals to these differences for
the first time there are likely to be areas of tension and anxiety.
In addition, the organization is likely to ask that they work together
toward common goals, on teams, in supervisory or subordinate roles,
in power relationships, all requests that might lead to conflicts or
tension even without additional stressors such as cultural challenges.
There are several areas of potentially increased values tension with
regard to diversity. Where differences are new or strong, and where
negative stereotypes previously ruled interactions between particular
groups, sensitivity to the potential for conflict is necessary.
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Benefits and Challenges,

continued

Another concern involves integrating diverse viewpoints with a

pre-existing corporate culture.
There seems nothing inappropriate about seeking to ensure that
workers will support the particular values of a firm, but it might be
difficult to do this while also encouraging diversity.
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.
Some scholars suggest that job applicants be screened with regard
to their values but how does one do this?
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Affirmative Action
(insert obj. 14)

Does one person deserve a position more than another

person?
For instance, efforts to encourage greater diversity may also
be seen as a form of reverse discrimination - in other
words, discrimination against those individuals who are
traditionally considered to be in power or the majority, such
as white men.
A business that intentionally seeks to hire a candidate from an
underrepresented group might be seen as discriminating
against white males, for example.
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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.

Affirmative Action

The use of Affirmative Action policies in both business and

universities has been controversial for decades.
In its first discussion of affirmative action in employment, the
U.S. Supreme Court found that employers could intentionally
include minorities (and thereby exclude others) in order to
redress past wrongs.
However, the holding was not without great restrictions, of
course, thereby leaving most employers with a great deal of
confusion.
Even today, the law does not provide extraordinary clarity
and we are thus left with values systems to instead provide
direction, which we will discuss shortly.
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How Affirmative Action

Arises in the Workplace.
1.

2.

3.

Much of the law relating to affirmative action applies only to

about 20% of the workforce those employees of federal
contractors with 50 or more employees who are subject to
Executive Order 11246, which requires affirmative action
efforts to ensure equal opportunity.
Where Executive Order 11246 does not apply, courts may
also impose require efforts through what is termed judicial
affirmative action in order to remedy a finding of past
discrimination.
(continued next slide)
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How Affirmative Action

Arises in the Workplace.
3.

A third form of affirmative action involves voluntary

affirmative action plans that are undertaken by employers in
order to overcome barriers to equal opportunity.

In order to justify affirmative action efforts under either of

these latter two options, there must be a demonstrated underrepresentation or finding of past discrimination.

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Guidelines for Affirmative

Action Programs (insert obj. 15)

Consider how the following legal constraints to an affirmative action

program are in line with deontological and teleological frameworks that
support ethical decision-making, as well:
The affirmative action efforts or policy may not unnecessarily infringe
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 and may not be construed as quotas to be met.
It should unsettle no legitimate, firmly rooted 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 into the legitimate, settled
expectations of other employees.

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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
and therefore are inappropriately placed since those who pay for the
wrongs are unfairly burdened and 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.
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