Employees as stakeholders

Learning points
• Ethical issues in the firm – role of employee as
stakeholders
• Ethical problems between rights and duties,
discrimination, employee privacy, due process and
layoffs, associations, working conditions, fair wages,
right to work
• Employing people worldwide - the ethical challenges of
globalization – National culture and moral values,
Some yardsticks for ethical decision making
• Towards sustainable employment-Re-humanized work
places, work-life balance
 Role of employee as stakeholders
• They are one of the most important factors of
production (resource)
• Consequently, employees are subject to a
strict managerial rationale of minimising costs
and maximising the efficiency of the ‘resource’
• They represent the company towards most
other stakeholders
• They benefit and get benefitted by the growth
of the corporation
 Management of human ‘resources’:
an ethical problem between rights and duties

• Legally there exists a contract that stipulates

their rights and duties- sometimes subject
labor rules and government regulations
• Ethical issues arise
 When they are viewed as only ‘means of
production’ or commodity
 Not treated with dignity
 When there lies a gap with Rhetoric and
Reality
 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
‘Team working’ Reducing the individual’s discretion
 Rights of employees as
stakeholders of the firm
 Duties of employees as
stakeholders of the firm
Employee duties Issues involved
Duty to obeywith labour Acceptable level of performance
contract Work quality
Loyalty to the firm
Duty to comply with the law Bribery

Duty to respect the employer’s Working time

property Unauthorized use of company
resources for private purposes
Fraud, theft, embezzlement
 Ethical issues out of relations
between employees and the firm
1. 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, example- race, gender,
nationality, marital status, appearance etc
• Managing diversity prominent feature of
contemporary business
 Ethical issues out of relations between
employees and the firm-cont

2. 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 (Crain and Heischmidt 1995)
 Ethical issues out of relations between
employees and the firm-cont
3. 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- may be racial minorities, disabled
persons etc through:
• Recruitment policies, example, job ads in media seen by under-represented groups
• Fair job criteria- flexible work hours for disabled
• Training programmes for discriminated minorities
• Promotion to senior positions
 Ethical issues out of relations between
employees and the firm-cont
4. Reverse discrimination is term referring to discrimination
against members of a dominant or majority group, including
the city or state, or in favor of members of a minority or
historically disadvantaged group.
• Groups may be defined in terms of race, gender or other
factors. This discrimination may seek to redress social
inequalities where minority groups have been denied access
to the same privileges of the majority group.
• It is intended to remove discrimination that minority groups
may already face. Reverse discrimination may also be used to
highlight the discrimination inherent in affirmative programs
 Ethical issues out of relations between
employees and the firm-cont
Reverse discrimination- cont
• 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 (Beauchamp 1997)
• Stronger forms of reverse discrimination tend to be illegal in
many European countries
 Ethical issues out of relations between
employees and the firm-cont
5. Employee privacy:
• Four different types of privacy we may want to protect
(Simms 1994)
– Physical privacy- monitoring employee private activities
– Social privacy- employees not allowed to bring disrepute by indulging
in immoral things outside office
– Informational privacy- employers hiring private security firms to make
investigations against employees without reason
– Psychological privacy- controlling emotional and cognitive inputs and
outputs, example, compelling employees to smile and appear happy
before the customers.
 Employee privacy- cont
Employee privacy is affected by:
1. Health and drug testing
Two main ethical issues of drug testing
– Potential to do harm- particularly when drug test
does not require for job specification
– Causes of employee’s performance- when employers
seek details of causes of under performance
• Despite these criticisms, such tests have
increasingly come common in the US
 Employee privacy- cont
2. 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
 Employee privacy- cont
3. 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- packages employees
receive when they are laid off, early retirement
options etc
 Ethical issues out of relations between
employees and the firm-cont
6.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- for job enlargement or job enrichment
– Information – about performance of the corporation
– Consultation- allows to express views on decisions taken by employer
– Co-determination- common approach for decision making
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
 Ethical issues out of relations between
employees and the firm-cont
7. Right to healthy and safe working conditions- one of the very
first ethical concerns for employees
• Dense network of health, safety and environmental (HSE)
regulations implemented by many countries. Main issue is
enforcement and implementation which is not proper
• Newly emergent HSE issues relate to changing patterns of
work. Ethical issues in the context are:
– Excessive working hours and presenteeism
– Flexible working patterns
– Work-life balance distortion
 Ethical issues out of relations between
employees and the firm-cont
8. Excessive work hours
• Thought to impact the employee’s overall
state of physical and mental health
9. ‘Presenteeism’
• phenomenon of being at work when you
should be at home due to illness or even just
for rest and recreation (Cooper 1996)
 Ethical issues out of relations between
employees and the firm-cont
10.Fair wages- ethical issues
• 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
Ethical issues out of relations between employees and
the firm-cont
11.Freedom of conscience and freedom of speech in the
workplace- ethical issues
• Normally guaranteed by governments
• Situations in business where freedom of speech might face
certain restrictions such as
 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, example is when the employer asks the employee
to do ‘creative accounting’. The employee cannot seek outside help nor
can violate the rules of the firm.
• Whistleblowing – can involve considerable risk
 Employing people worldwide-
The ethical challenges of globalization

• 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 should 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
– Ethical argument is that MNCs have a duty to promote minimally just
social & political institutions where they operate if these do not exist,
because of duty to avoid harm (Nien-hê Hsieh, 2009)
 Migrant labour and illegal
immigration- ethical issues
• Growing mobility of workers is a recent phenomenon of
globalization
– 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, prostitution, pressure on social infrastructure)
– Migrants are often from poor countries; willing to accept pay &
working conditions normally unacceptable in host country
– Migrant workers are often enter in a country illegally and employing
them is against law (but a record of employment may later be the
basis for legal residency)
Towards sustainable employment-
Re-humanized workplaces
• Sustainable employment is possible if
 The employees are gainfully employed
 Feel respected as human beings
 Feel that their voice is heard for long-term
sustainability of the organization
 Companies support employees to maintain
meaningful social relationships with their
families, neighbors and friends
 Re-humanized workplaces- cont
• ‘Alienation’ of the individual work in the era of industrialised
mass production due to technology and division of labor
• Brought tremendous efficiencies and material wealth, but
have also created the prospect of a dehumanised and
deskilled workplace
• Attempts to re-humanize the workplace through
– ‘empowering’ the employees through
– ‘job enlargement’- giving wide range of tasks
– ‘job enrichment’- giving employees a large scope for deciding how to
organize the work
– Human-centred technology as far as possible
Towards sustainable employment-
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,
 Reduce working time for individual worker by employing
more workers
 Towards sustainable employment
- Green jobs
• ‘Green jobs’ are those that are available in
– industries making environmentally-friendly products (example, cars on
solar panels)
– workplaces & organizations where the job itself can be organized
environmental friendly like
1. Car-pooling
2. Paperless office
3. Video-conferencing rather than business travel
4. Home-based tele working
• Potential benefits are social, economic and ecologic
• Gained attention in late 2000s; part of broader debate on
restructuring economies to be more sustainable
Thank You

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