BUSINESS ETHICS

(BBB 2154)

LECTURE 9
Employee stakeholders and the corporation
 TOPIC OUTLINE
❑ EMPLOYEE STAKEHOLDERS IN THE CHANGING WORKFORCE
❑ THE CHANGING SOCIAL CONTRACT BETWEEN CORPORATION
AND EMPLOYEES
❑ EMPLOYEE AND EMPLOYER RIGHTS AND RESPONSIBILITIES
❑ DISCRIMINATION, EQUAL EMPLOYMENT OPPORTUNITY AND
AFFIRMATIVE ACTION
❑ SEXUAL HARASSMENT IN THE WORKPLACE
❑ WHISTLE-BLOWING VERSUS ORGANIZATIONAL LOYALTY
 EMPLOYEE STAKEHOLDERS IN THE
CHANGING WORKFORCE
• Change in the workforce and workplace presents ethical tensions and issues
• Concept of “a job and career for life” is dead or dying
• An employee holds nine jobs by the age of 30
• Professionals are changing careers five to eight times on average during
their working lives
• Aging workforce and with declining birth rates in some countries will result
in a shrinking talent pool
• Requires organizations to review and modify their human resource policies
to adjust to the changing environment
• Generational differences offer challenges to coworkers and managers
• Five different American generations dominant value orientations
1. GI Generation (born 1901– 1925)

• Survived the Great Depression and served in World War II

• Believe in upward mobility, civic virtue, and the American Dream

2. Silent Generation (born 1926– 1945)

• Too young to fight in World War II

• Influenced by the patriotism and self- sacrifice of the GI generation

• Dominant principles are allegiance to law and order, patriotism, and

faith

• Likes memorabilia such as plaques, trophies, and pictures of

themselves with important people

• Characterized by “giving back and contributing to the collective good”

3. Baby Boomers (born 1945– 1964)
• Currently the most powerful demographic generation, with approximately 77 million
members and represented 44% of the working population in 2012
• Led and set trends in society
• Their “buy now, pay later” belief characterizes their instant satisfaction practices
• Moralistic, but they question authority and the moral and ethical principles of institutions
• Do not “join” or sacrifice personal pleasure for the good of the group or collective
• Respond to managers who make an extra effort to show that they care
• As employees, they are “process- oriented and relationship- focused”
4. Generation X (born 1965– 1981)
• Known as the “Baby Busters,” this generation has 41 million members
• Came from a time of high national debt and depressing job markets, and were labeled as
the “McJob” generation
• Referring to holders of low- and entry- level jobs
• Believes that they will get less materially than the boomers
• Value close friends and virtual families more than material success but insecure
5. Generation Y (born 1982– 2003)
• Millennial generation (or “Echo Boomers”) numbers about 80 million members
• Spend $170 billion a year of their parents’ and their own money
• Grown up with television, computers, instant messaging and new technologies
• Don’t want to be associated with X-ers
• Believe X’ers are selfish and complaining and the least heroic generation— a bunch of
“slackers.”
• Y-ers started growing up with a strong job market
• They are ambitious, motivated, extremely impatient and demanding, and have a sense
• of entitlement
• Extremely practical and welcome clear rules and guidelines, display high levels of trust and
optimism
• Define success in terms of team rather than individual achievement
• Generation Y is more positive than other employee groups and is more likely to agree that
“senior management communicates a clear vision of the future direction of my organization.”
• Positive about growth and development opportunities
• From a manager’s perspective, Generation Y employees require “super high maintenance,”
since they are “on fast- forward with self- esteem.”
• Generational differences may be only one among several issues that cause
conflict and ethical dilemmas in the workplace
• Using communication skills
• Emotional intelligence
• Managing self, others, and relationships with awareness and sensitivity are
important
• Taking this perspective steps could help managers to see the larger picture
outside of a particular generational lens:
• Identify the Problem Areas
• Get To Know the Individuals Inside Their Roles and Positions
• Understand and Anticipate Expectations of Different Generations
• Develop a Personal Growth and Development Plan for Each Employee
• Engage and Communicate
• Be a Leader, Not a Friend
 THE CHANGING SOCIAL CONTRACT
BETWEEN CORPORATION AND EMPLOYEES
• Employment At Will (EAW) doctrine has been in effect since 1884
• Employee– employer relationship is known as the “employment- at- will (EAW)
doctrine
• Holds that the employer can dismiss an employee at any time for any reason
• As long as federal and state laws and union contracts are not violated
• Employees are also free to terminate their employment with a company
whenever they choose and for what ever reason
• Remains the dominant view of the employment relationship in the United
States
• Although parts of the doctrine have eroded since its inception
• If employees are unprotected by unions or other written contracts, they can
be fired, according to this doctrine
• Federal legislation since the 1960s has been enacted to protect employees against racial discrimination
• Provide rights to a minimum wage, to equal hiring and employment opportunities, and to participation in
labor unions
• Over time, the following example to the EAW doctrine have evolved:

1) The Good Faith Principle

• Based on the premise that employers should practice fairness and reasonableness in their actions with
employees

• For example, an employer should demonstrate that opportunities were offered for a terminated employee
to improve his/her performance before the employee was fired
2) The Public Policy Principle

• 1970s, state court decisions have limited the EAW doctrine

• Specifically, state courts have upheld employees’ rights to use legal action against their employers

• If an employee termination violated “public policy” principles

Examples include:

• If employees were pressured to commit perjury

• If employees were terminated because they refused to support a merger

• If employees reported alleged employer violations of statutory policy (whistle- blowing)

3) Implied Contracts Exception

• In a non contractual employment arrangement, an implied promise from the

employer existed

• The employer could not act randomly with its employees regarding termination

decisions when considering the following factors:

(1) duration of employment

(2) recommendations and promotions received

(3) assurances given; and

(4) the employer’s acknowledged policies

• Other implied contract exceptions include statements in employee and personnel

handbooks, manuals, guidelines, letters offering employment, and verbal

statements made to employees regarding job security and promises of continuing

employment
• Though legal requirements might serve to protect some
interests, they can only go so far
• Employment security—getting and keeping a job—is perhaps
the most significant aspect of work from the employee’s
ethical perspective
• Employers can tell employees what to do, and when, and
how to do it
• 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 one’s job is a powerful
motivation to comply
• Unfortunately,acknowledged authority of employers over
employees, is not always exercised in a just or fair manner
• Leads to bullying
 EMPLOYEE AND EMPLOYER RIGHTS AND
RESPONSIBILITIES
• Have rights and responsibilities each should honor with respect to the other
• Employers must protect their property and assets against illegal and unethical
practices of certain employees
• Employees seek to increase their wages and benefits, to improve working
conditions, to enhance mobility, and to ensure job security while demonstrating
mutual respect for the value of their labor
• Ideal relationship between employer and employees is one based on mutual
respect and trust
• A right can be understood as a “moral claim”
• A right is moral when it is not necessarily part of any conventional system, as are
legal rights
• Corresponds with a duty on the part of the person against whom the right is held
• For example, I claim that I have a right to be safe in my workplace.
I hold this claim against my employer, because the employer has
the duty to provide me with this safety.
• Under particular circumstances, my moral claim can be argued
and disputed. It may not be an absolute claim.
• Moral foundation for employee rights is based on the fact that
employees are persons
• A values- based stakeholder management perspective views the
employee– employer relationship from a win– win foundation
• The evolving social contract between employers and employees
still recognizes employers’ power over their physical and material
property, but the contractual relationship between employer and
employee aims in principle at balance, mutual respect, integrity,
and fairness
• Employee rights are based on principles determined by law
• For example, rights related to the minimum wage; sexual harassment;
discrimination based on race, creed, age, national origin, gender, or
disability; and the right to assemble
Employee rights in the workplace:
•The right not to be terminated without just cause
• The right to due process (The right to have an impartial and fair hearing
regarding employers’ decisions, procedures, and rules that affect employees)
• The right to privacy (Technology and Employee Privacy)
• The right to know
• The right to workplace health and safety
• The right to organize, strike and form union
• Rights regarding plant closings
Employee responsibilities:
• Fulfilling their contracted obligations to the corporation
• Following the goals, procedural rules, and work plans of the organization
• Offering ability equal with the work and job assignments
• Performing productively according to the required tasks
• Other responsibilities include timeliness
• Avoiding absenteeism
• Acting legally and morally in the workplace and while on job assignments
• Respecting the intellectual and private property rights of the employer
• Employee responsibilities to employers become complicated when conflicts
of interest appear
• When an employee’s private interests compete or are not aligned with the
company’s interests
Employers responsibilities:
• Obliged to provide workers with a safe working environment and safe working
conditions
• Pay competitive wages commensurate with the occupational risks associated
with a profession, job, or work setting
• Employers also are expected to provide full information on the risks and health
hazards related to the work, products, and working environments to all
employees exposed to those risks
• Provide safety training in a language and vocabulary workers can understand
• Making sure company free from discrimination, sexual harassment and bullying
• To address workplace hazards such as bullying, stress and fatigue
• Provide training for employee to enrich thier personal development
• Monitor the health of the employee
• To give promotion and increase salary for employee
• Obliged to pay employees fair wages for work
performed and to provide safe working conditions
• Fair wages are determined by factors such as what the
public and society support and expect such as:
• Conditions of the labor market
• Competitive industry wages in the specific location
• The firm’s profitability
• The nature of the job and work
• Laws governing minimum wages
• Comparable salaries
• The fairness of the salary or wage negotiations
 DISCRIMINATION, EQUAL EMPLOYMENT
OPPORTUNITY AND AFFIRMATIVE ACTION
• Discriminatory practices in employer– employee relationships
include unequal or disparate treatment of individuals and groups
• Systematic and systemic discrimination is based on historical and
institutionally rooted from unequal and disparate treatment
against minorities, the disadvantaged, and women
• For example: Terminating employees on the basis of sex, age, race,
or national origin is discriminatory
• Title VII of the Civil Rights Act of 1964 makes discrimination on the
basis of gender, race, color, religion, or national origin in any term,
condition, or privilege of employment illegal
• The Civil Rights Act also created the Equal Employment
Opportunity Commission (EEOC) as the administrative and
implementation agency to investigate complaints that individuals
submit
• The Age Discrimination in Employment Act (ADEA) of 1967,
revised in 1978, prohibits employers from discriminating against
individuals based on their age (between ages 40 and 70) in
hiring, promotions, terminations, and other employment
practices
• The Equal Pay Act of 1963, amended in 1972, prohibits
discriminatory payment of wages and overtime pay based on
gender
 AFFIRMATIVE ACTION
• Affirmative action programs attempt to make employment practices blind to color, gender, national

origin, disability, and age

• Affirmative action implied a set of specific result- oriented procedures designed to achieve equal

employment opportunity at a pace beyond that which would occur normally

• Designed to set goals, quotas, and time frames for companies to hire and promote women and

minorities in proportion to their numbers in the labor force and in the same or similar occupational

categories within the company

• Courts have both supported and eroded affirmative action approaches in the Civil Rights Act
• Arguments that have been offered to explain and summarize affirmative action as it applies to hiring,
promotions, and terminations are:
1. Affirmative action does not justify hiring unqualified minority group members over qualified
white males. All individuals must be qualified for the positions in question
2. Qualified women and minority members can be given preference morally, on the basis of
gender or race, over equally qualified white males to achieve affirmative action goals
3. Companies must make adequate progress toward achieving affirmative action
goals, even though preferential hiring is not mandatory
• The ethical principles behind affirmative action are often debated
• Affirmative action as a doctrine is derived from several ethical principles that
serve as bases for laws
 SEXUAL HARASSMENT IN THE
WORKPLACE
• Sexual harassment was not a specific violation of federal law before 1981
• Although sexual harassment can be and is committed by both men and women,
it is more often women who are the victims
• Victims experienced posttraumatic stress disorder, loss of work, decreased
organizational commitment, poor job satisfaction, and problems with physical
and mental health
• The Supreme Court ruled in 1986 that sexual harassment is illegal under Title VII
of the 1964 Civil Rights Act and that when a “hostile environment” is created
through sexual harassment in the workplace, thereby interfering with an
employee’s performance, the law is violated, regardless of whether economic
harm is done or whether demands for sexual favors in exchange for raises,
promotions, bonuses, and other employment- related opportunities are granted
• The EEOC guidelines place absolute liability on employers for
actions and violations of the law by their managers and
supervisors, whether or not the conduct was known,
authorized, or forbidden by the employer
• Employers are responsible for establishing programs (and
standards) that develop, train, and inform employees about
sanctions and procedures for dealing with sexual harassment
complaints
Forms of sexual harassment include the following:
• Unwelcome sexual advances
• Coercion
• Favoritism
• Indirect harassment
• For example, courts have ruled that sexual harassment was committed when
graffiti was written on men’s bathroom walls about a female employee and when
pornographic pictures were displayed in the workplace
• Sexual harassment continues to be reported across industries, including
outstanding companies such as Wal- Mart
• Moreover, men’s sexual harassment charges increased to 16.4% of all sexual
harassment charges filed to the EEOC in 2010, compared to only 11.6% in 1997
• Another case: Anita Hill
• Exercise reasonable care to prevent and correct for any harassment
• There should be an anti-harassment policy and a complaint procedure present,
made known to every employee, readily available, and used in training
• The EEOC enforcement guidelines provide an excellent source of training
materials
• Quickly and effectively address all harassment complaints
 WHISTLE-BLOWING VERSUS ORGANIZATIONAL
LOYALTY
• Whistle- blowing is “the attempt of an employee or former employee of an
organization to disclose what he or she believes to be wrongdoing in or by the
organization
• Whistleblowing goes against strong U.S. cultural norms of showing loyalty toward an
employer and colleagues and avoiding the “snitch” label
• A moral dilemma can occur when a loyal employee observes their employer
committing or assisting in an illegal or immoral act and must decide what to do
• The risks to whistle- blowers can range from outright termination
• May also experience negative and damaging repercussions in his or her profession,
marriage, and family life
• The Whistleblower Program proposed under the Dodd- Frank Wall Street Reform
and Consumer Protection Act took effect on August 12, 2011
Whistle- blowing morally justified:
1. When the firm, through a product or policy, will commit serious and considerable
harm to the public (as consumers or bystanders), the employee should report the firm
2. When the employee identifies a serious threat of harm, he or she should report it
and state his or her moral concern
3. When the employee’s immediate supervisor does not act, the employee should
exhaust the internal procedures and chain of command to the board of directors
4. The employee must have documented evidence that is convincing to a reasonable,
impartial observer that his or her view of the situation is accurate and evidence that
the firm’s practice, product, or policy seriously threatens and puts in danger the
public or product user
5. The employee must have valid reasons to believe that revealing the wrongdoing to
the public will result in the changes necessary to remedy the situation. The chance of
succeeding must be equal to the risk and danger the employee takes to blow the
whistle
When Whistle- Blowers Should Not Be Protected:
• The most obvious condition under which whistle- blowers should not be protected is
when their accusations are false and their motivation is not justifiable or accurate
• When divulging information about legal and ethical plans, practices, operations,
inventions, and other matters that should remain confidential and that are necessary for
the organization to perform its work efficiently
• When an employee’s personal accusations or slurs are irrelevant to questions about
policies and practices that appear illegal or irresponsible
• When an employee’s accusations do not show a conviction that a wrongdoing is being
committed and when such accusations disrupt or damage the organization’s morale
• When employees complain against a manager’s competence to make daily work
decisions that are irrelevant to the legality, morality, or responsibility of management
actions
• When employees object to their discharge, transfer, or demotion if management can
show that unsatisfactory performance or violation of a code of conduct was the reason
for the decision
• Managers have a responsibility to listen to and respond to their
employees, especially regarding the observations of and reporting
of illegal and immoral acts
• Preventing, reporting, and effectively and fairly correcting illegal
and immoral actions, policies, and procedures are the
responsibilities of employers and employees
• Management cannot expect employees to be loyal to a company
that promotes or allows wrongdoing to its stakeholders
• Whistle- blowing should be a last resort
• A more active goal is to hire, train, and promote morally and legally
sensitive and responsive managers who communicate with and
work for the welfare of all stakeholders
 EXERCISES
1. Justify if you believe whistle-blowing is justifiable in
corporations.
2. Explain the concept of affirmative action.
3. Evaluate under what circumstances would you be
compelled to blow the whistle as an employee in an
organization?
4. Analyze why discrimination is a symptom of an
unethical company?
5. Elaborate the importance of identifying different
generations in a workforce.
6. Discuss the employee rights in a workplace.