Ethics and the employee

Sub topics

 Rational organization
 Political organization
 Caring organization
The rational
organization
8.1
The rational organization sub topics

 The employee obligation to the employer

 Conflict of interest
 Commercial Bribes
 Gifts
 Theft
 Insider Trading
 The employer obligation to the employee
 Wages
 Working Condition
Introduction of rational organization

 The traditional rational model of a business organization defines the

organization as a structure of formal (explicitly defined and openly employed)
relationships designed to achieve a goal with maximum efficiency.
 An organization is the planned coordination of the activities of a number of
people for the achievement of some common, explicit purpose or goal,
through division of labor and function, and through a hierarchy of authority
and responsibility.
 If an organization is looked at in this way, then the most fundamental
elements of the organization are the formal hierarchies of authority. Figure
8.1 provides a simplified exam
The Employee’s Obligations to the Employer

 CONFLICTS OF INTEREST
 Conflicts of interest in business arise when an employee or officer of a
company 1. Is engaged in carrying out a certain task (or using personal
judgment) for the employer; 2. Has an interest that provides him or her with
an incentive or motive to do the task (or use personal judgment) in a way that
serves that interest; and 3. Has an obligation to do the task (or use personal
judgment) in a way that serves the interests of the employer, free of any
incentive to serve another interest
 OBJECTIVE AND SUBJECTIVE, ACTUAL AND POTENTIAL CONFILICT OF INTEREST
 A conflict of interest that is based on financial relationships is sometimes called an
objective conflict of interest,
 While a conflict of interest that is based on emotional ties or other kinds of
relationships is sometimes called a subjective conflict of interest.
 .A potential conflict of interest occurs when an employee has an interest that
could influence what she does for her company if the employee were performing a
certain task for her company but she has not yet been given that task to perform.
 An actual conflict of interest occurs when an employee has an interest that could
influence what he does for his employer when the employee performs a certain
task for that employer and he actually has been given that task to perform
 An apparent conflict of interest exists when an employee has no actual
conflict of interest, but other people looking at the employee’s situation may
come to believe (wrongly) that he or she has an actual conflict of interest
 Commercial Bribe
Ethics of accepting gifts depend on

 The value of the gift

 The purpose of the gift
 The circumstances of the gift
 The job of recipient
 Accepted and public local practices
 Company policy on gift
 Legal prohibition on gifts
 TRADE SECRETS, OR PROPRIETARY INFORMATION Some information is referred to as
a trade secret.
 A trade secret (sometimes called proprietary information) consists of nonpublic
information that
 • concerns a company’s own activities, technologies, future plans, policies, or
records and that if known by competitors would materially affect the company’s
ability to compete commercially against those competitors
 • is owned by the company (although it might not be patented or copyrighted)
because it was developed by the company for its private use from resources it owns
or it was legitimately purchased for its own use from others
 • the company indicates through explicit directives, security measures, or
contractual agreements with employees that it does not want anyone outside the
company to have
Case Study
Ethical Application
Moving to a competitor
INSIDER TRADING

 Inside or insider information about a company is proprietary information

about a company that is not available to the general public outside the
company, but whose availability to the general public would have a material
or significant impact on the price of the company’s stock
The Employer’s Obligations to the
Employee The basic moral obligation
 Two main ethical issues are related to this obligation:
 • the fairness of wages, a special problem in developing nations
 • the fairness of employee working condition
Fair wages depends on

 Wages in industry and local area

 The firm ability to pay
 The risk, skill and demand of the job
 Minimum wages law
 Fairness in comparison in other salaries in the firm
 Fairness of wages negotiation
 Local living cost
Occupational Safety and Health
Administration (OSHA)
In 1970, the U.S. Congress passed the Occupational Safety and Health Act and
created the Occupational Safety and Health Administration (OSHA) “to assure as
far as possible every working man and woman in the nation safe and healthful
working conditions.
Working Conditions: Health and Safety

 Job Risks . . .
 • Are not justified when labor markets are uncompetitive and risks are
unknown and uncompensated
 • Are not justified when companies fail to collect information on risks and
fail to inform workers of risk
 • May not be justified when less risky jobs are unavailable, or when workers
lack information about less risky alternatives.
Establishing Fair Working Conditions
Requires .
 . Eliminating risks when cost is reasonable, studying potential risks of a job,
informing workers of known risks, compensating workers for injuries •
 Providing compensation for job risks similar to risk premiums paid in other
jobs •
 Providing adequate medical and disability benefits •
 Working singly or with other firms to collect information about job risks and
then make that information available to workers
sweatshop

 The term sweatshop is sometimes used to describe a workplace that has

numerous health and safety hazards and poor working conditions, as well as
low wages.
The Political
Organization
Unit 2
Sub topic of political organization

 Employee rights
 The rights of privacy
 Right to freedom of conscience
 Whistleblowing
 Worker right to participate in decision making
 The right to due process versus employment at will
 Right to work
 Right to organize
The Political Organization OBJECTIVE:

 Analyze the political model of the organization in terms of power and rights
and justice
Similarity Argument

 • Similarities between the power of management and government imply that

employees should have rights similar to citizens’ rights.
 • A company’s management is a centralized decision making body that exercises
power, like a government’s centralized decision-making body of officials.
 • Managements wield power and authority over employees, like governments
wield power over citizens.
 Management has the power to distribute income, status, and freedom among the
corporation’s constituencies, like government does with respect to citizens. •
 Management shares in the monopoly on power that government possesses.
 • Since management’s power over employees is so similar to government’s power
over citizens, employees should have rights that protect them from managers’
power, just as citizens’ rights protect them from government power.
Replies and Counter-Replies to the Similarity Argument

 The power of government is based on consent and so is unlike the power of

managers, which is based on ownership of the company; supporters of the
similarity argument respond that today the power of managers does not come
from owners.
 • Unlike government, the power of management is limited by unions;
supporters of the similarity argument respond that most workers today are
not unionized.
 • While it is hard for citizens to escape the power of a government, it is easy
for employees to escape the power of managers by changing jobs; supporters
of the similarity argument respond that changing jobs is not always so easy
a) Rights to Privacy

 Employee Right to Privacy .

 Is threatened by today’s technologies •
 Is justified because of the interest we have in the protective and enabling
functions of privacy •
 Requires that managers consider relevance, consent, and methods when
collecting information about employees
 PSYCHOLOGICAL PRIVACY AND PHYSICAL PRIVACY
 There are two types of privacy:
 psychological privacy, which is privacy regarding one’s inner thoughts, plans,
beliefs, values, feelings, and wants; and
 physical privacy, which is privacy with respect to one’s physical activities,
particularly those that reveal one’s inner life and those that involve physical
or personal functions that are culturally recognized as private
 THREE ELEMENTS OF PRIVACY
 Three elements must be considered when collecting information that may
threaten the employee’s right to privacy: relevance, consent, and method.
b) Employees’ Right to Freedom of Conscience

 Employees’ Right to Freedom of Conscience

 Employees sometimes discover that the corporation they work for is doing
something that they believe is seriously and morally wrong. Indeed,
individuals inside a corporation are usually the first to learn that the
corporation is marketing unsafe products, polluting the environment,
suppressing health information, or violating the law
c) WHISTLEBLOWING

 Whistleblowing is an attempt by a member or former member of an

organization to disclose wrongdoing in or by the organization including
violations of the law, fraud, health or safety violations, bribery, or a potential
or actual injury to the public.
The Right to Whistle blow

 • It is justified by the interest we have in remaining true to our religious and

moral convictions. •
 It must be balanced against the legitimate rights of the firm, its
stockholders, and fellow employees.
d) Employees’ Right to Participate

• It is based on the right to freely decide how I will lead my life and to
participate in decisions that affect my life.
• It can mean open discussion, consultation, or full participation in policy
decisions.
• It supports the kind of participative management advocated by McGregor’s
Theory Y model, Miles’s human resource model, and Likert’s System 3
consultative and System 4 participative systems of organization.
• McGregor, Miles, and Likert supported their views with the utilitarian argument
that adopting their theories made organizations more productive
 Arguments Supporting Employment at Will
 • The employer owns the company, and ownership gives him or her the right
to decide whether and how long an employee will work in his or her company.
 • Everyone has the right to do what he or she chooses (provided that the
rights of others are not violated), and so has the right to make whatever
agreements he or she chooses (including an agreement with employees to hire
and fire them at will).
 • Businesses will operate most efficiently if employers have the freedom to
hire or fire employees as they see fit
e) The right to due process

 In employment, the right to due process refers to the right to a fair process of
decision-making when decision makers impose sanctions on employees
 The Right to Due Process . . .
 • Is justified because without it all other employee rights are at risk
 • Requires that individuals be notified of the rules they must follow, that
they be given a fair and impartial hearing when accused of violating the rules,
that rules be applied consistently, that processes through which sanctions are
decided be designed to determine the truth objectively, and that people not
be held responsible for what they could not avoid
 • Is institutionalized through fair grievance procedures
f) The Right to Work

 • It is justified because of the interest we have in the instrumental and

intrinsic value of work.
 • Work has a critical instrumental value because it is a means to our survival.
 • Work has an intrinsic value because (1) it is our basic economic contribution
to society and helps us feel worthwhile and useful, (2) it lets us develop our
potential and identity as a particular human being, (3) it lets us
Protecting the Right to Work

 • The United States and other countries (e.g., Canada, Great Britain,
Australia, and Denmark) protect the right to work with “palliative” policies
that help workers find new jobs after they have lost their jobs; other
countries (e.g., the Netherlands, Japan, France, Germany, and Belgium) also
use “preventive” policies that try to ensure workers do not lose their jobs to
begin with.
 • Companies that have to lay off workers can respect their employees’ right
to work by providing advance notice, severance pay, health benefits, early
retirement, job transfers, job retraining, and the possibility of employee
purchase of the plant. They can also reduce the harmful effects of layoffs by
phasing out their local tax contributions instead of reducing them suddenly.
g) Right to Organize

 • This right derives from the same right owners have to join together to form
a company (i.e., from the right to freely associate with others to establish
and run an organization as well as the right to be treated as an equal in
negotiations with organizations).
 • Unions have a right to strike that derives from every worker’s right to quit
working as long as doing so does not violate others’ rights. •
 Union membership declined from 35 percent of workers in 1947 to 12 percent
in 2010. •
 Many developing countries do not protect the right to organize, but U.S.
companies can often allow their workers there to unionize anyway.
 Approaches to the Ethics of Political Tactics
 • Utilitarian: Are the goals one intends to achieve by using the tactics
socially beneficial or socially harmful?
 • Rights: Do the tactics employed treat others in a way that is consistent with
their moral rights?
 • Justice: Will the tactics lead to an equitable distribution of benefits and
burdens?
 • Caring: What impact will the tactics have on the web of relationships
within the organization?
Caring Model
The Caring Model of the Organization
Characteristics
 • Caring is focused entirely on persons, not on “profit” or “quality.”
 • Caring is undertaken as an end in itself, not as a means to productivity.
 • Caring is essentially personal.
 • Caring is growth enhancing for those who receive care
 Problems of the Caring Organization
 • Caring too much for others can lead to “burnout” when the needs of others
are given too much weight compared with the needs of the self.
 • Not caring enough for others may be due to fatigue, self-interest, or
disinterest that leads us to ignore others’ needs. At the organizational level,
the organization may systematically drive out caring with layoffs,
bureaucracy, managerial styles that see employees as disposable, or rewards
that encourage competitiveness and discourage caring.