Lecture Business and society: Stakeholders, ethics, public policy (14/e): Chapter 16 - Anne Lawrence, James Weber

Chapter 16 - Employees and the corporation. Learning objectives of this chapter: Understanding workers’ rights to organize unions and bargain collectively, knowing how government regulations assure occupational safety and health and what business must do to protect workers, evaluating the limits of employers’ duty to provide job security to their workers,…

Employees and the

Corporation

Copyright © 2014 by The McGraw­Hill Companies, Inc. All rights reserved McGraw­Hill/Irwin

Ch 16: Key Learning Objectives

bargain collectively

safety and health and what business must do to protect

workers

security to their workers

businesses monitor employee communications, police

romance in the office, test for drugs or alcohol, or subject

employees to honesty tests

corporate misconduct, or if employees should always be

loyal to their employer

The Employment Relationship

 Employees are an important market stakeholder

group

 Employees are responsible for carrying out the work

of the company

 At the same time, employees are dependent on the

company for their livelihood

 Nature of the employment relationship conveys rights

and duties on both sides

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Figure 16.1 Rights and Duties of

Employees and Employers

Workplace Rights

 Employees in the United States enjoy important

legal guarantees They have the right to:

 organize and bargain collectively

 have a safe and healthy workplace, and

 to some degree, job security

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Right to Organize and Bargain

Collectively

 In the United States, and in most other nations,

employees have a fundamental legal right to organize

labor unions and to bargain collectively with employers

 Workers have a right to hold an election to decide which union will represent them

 Labor unions have the right to negotiate wages, working

conditions, and other terms of employment

 Employers are required to bargain with unions in good faith

 If agreement cannot be reached, a strike might occur

Right to Organize and Bargain

Collectively

 Influence of labor unions has varied during periods in U.S

history:

 During the 1930s New Deal period unions were very popular

 Since the mid-1950s, there has been a decline in union

membership

 In 2011, only about 12% of all U.S workers were members of a

union

 The percentage was higher, 37%, in government employment

 In the wake of the Great Recession, elected officials in several

states sought to weaken unions by limiting the rights of public sector workers

 Some unions have departed from adversarial approach to

work cooperatively with management (e.g Kaiser

Right to Safe and Healthy Workplace

 Annually, more than 3 million workers in private industry are injured or become ill while on the job, according to the U.S Department of Labor

 Occupational Safety and Health Act, passed in 1970, gives workers the right to a job “free from recognized hazards that are causing or likely to cause death or serious physical

harm”

 This law is administered by the Occupational Health and Safety

Administration (OSHA)

 Since the agency’s creation in 1970 the overall workplace death

rate has been halved

Right to Safe and Healthy Workplace

 Working conditions remain very dangerous in many

developing countries For example:

 In 2010, an electrical fire at a sportswear factory in Dhaka,

Bangladesh killed 29 workers and injured more than 100 more, many of whom had jumped from upper-story windows

to escape the flames

 Managers had intentionally locked exits to prevent theft and

had not conducted fire safety drills

 In 2012, PVH Corporation—the parent of such brands as

Tommy Hilfiger, Calvin Klein, and DKNY—partnered with a group of NGOs and trade unions to provide worker training and push for stronger government enforcement of safety laws

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The Right to a Secure Job

 In the United States, since the late 1800s, the legal

basis for the employment relationship has been

employment-at-will

 Employment at will is a legal doctrine that means

employees are hired and retain their jobs “at the will of”

(i.e at the sole discretion of) the employer

 The equal employment and other laws prevent

discriminatory terminations as well as those that would

constitute a violation of public policy

The Right to a Secure Job

 The commitments that employers and employees

make to each other go beyond mere legal obligations

Cultural values, traditions, and norms of behavior

also play important roles

 The term social contract refers to the implied

understanding between an organization and its

stakeholders This is not a legal contract, but rather a

set of shared expectations

 Should companies have strong or weak bonds with

their employees?

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Privacy in the Workplace

 An important right in the workplace as elsewhere, is

privacy

 In the business context, privacy rights refer to primarily

protecting an individual's personal life from an

unwarranted intrusion by the employer

 Key workplace issues where privacy dilemmas often

emerge include electronic monitoring, office romance,

drug and alcohol abuse, and honesty testing

Privacy in the Workplace

 New technologies enable companies to gather, store, and

monitor information about employees’ activities A company’s need for information, particularly about its workers, may be at odds with an employee’s right to privacy

 Management justifies the increase in employee monitoring

for a number of reasons:

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Privacy in the Workplace

 Office romance – requires careful balancing between

legitimate employer concerns and employee privacy

 A 2011 survey showed that 38 percent of workers said they had dated a co-worker at least once during their careers, and of

these relationships almost a third had led to marriage

 Today most companies try to manage office

relationships rather than ban them outright

 Sometimes consensual relationship agreements are required to protect against possible harassment lawsuits if the people

involved later break up

Privacy in the Workplace

 Drug and alcohol testing

 Drug abuse costs U.S industry and tax payers an estimated $181 billion a year

 Drug-Free Workplace Act (1988) – required federal contractors to establish and maintain a workplace free of drugs

 About two-thirds of companies test employees or job applicants

for illegal substances, according to a 2011 study

 Drug testing is typically used on three different occasions:

 Pre-employment screening

 Random testing of employees

 Testing for cause

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Pros and Cons of Employee Drug Testing

Figure 16.2

Privacy in the Workplace

 Alcohol use and addiction causes twice the problems of

all illegal drugs combined

 About 9 percent of full-time employees are heavy drinkers

 Up to 40 percent of all industrial fatalities and 47 percent of

industrial injuries are linked to alcohol

 U.S businesses lose an estimated $88 billion per year in

reduced productivity directly related to alcohol abuse

 Employee Assistance Programs (EAPs) – offer

counseling, rehabilitation programs, and follow-up

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Privacy in the Workplace

 Employee Theft and Honesty testing

 Employee theft has emerged as a significant economic,

social, and ethical problem in the workplace

 Employee Polygraph Protection Act (1988) – severely

limited polygraph testing for employers and prohibited approximately 85 percent of all such test previously administered in the U.S

 Although controversial, many companies have switched to

written psychological tests

Whistle-blowing and Free Speech

in the Workplace

 Free speech in the workplace

 Another area where employer and employee rights and duties

sometimes conflict

 U.S Constitution protects free speech; however, does not

specifically protect freedom of expression in the workplace

 Employees are not generally allowed to speak out against their

employers, due to legitimate interests of the business

 When society’s interests override those of the individual

business, employee may feel the need to speak out or “blow the whistle”

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Whistle-blowing and Free Speech

in the Workplace

employer has done something that is wrong or harmful to

the public, and he/she reports the alleged misconduct to

the media, government, or high-level company officials

 Organization is doing (or will do) something that seriously

 The harm is serious enough to justify the probable costs of

disclosure to the whistle-blower

Working Conditions around the World

 Laws and practices that establish fair wages,

acceptable working conditions, and employee rights

vary greatly around the world

 One very public issue is sweatshops

 Factories where employees, sometimes including children, are

forced to work long hours at low wages, often under unsafe working conditions

 Number of well-known companies have been criticized for poor

working conditions in overseas factories (e.g Nike, Walmart, Disney, McDonald’s)

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Fair Labor Standards

 Labor standards refers to the conditions under which

a company’s employees, or the employees of its

suppliers, subcontractors, or others in its commercial

chain, work

 Universal rules or standards related to these are

called fair labor standards

Fair Labor Standards

 In the face of growing concerns over working

conditions overseas, a debate has developed over how to best establish fair labor standards for

multinational corporations:

 Voluntary corporate codes of conduct

 Nongovernmental organizations labor codes

 Industry-wide labor codes

 Whatever the approach, certain common questions

emerge in any attempt to define and enforce fair labor standards

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Common Questions Regarding

Fair Labor Standards

 What wage level is fair?

 Should market set the standards?

 Do multinationals have a responsibility to provide a wage that supports decent standard of living?

 Should standards apply to just the firm’s own

employees or all workers having a hand in making

the product?

 Responsibility of firm to its own employees is clear, responsibility to subcontractors employees is indirect

 How should fair labor standards be enforced?

 Who should be responsible for monitoring? The company or an independent body?