Chapter 16: Employees and the Corporation

Chapter 16 Employees and the CorporationCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinCh. 16: Key Learning ObjectivesUnderstanding workers’ rights to organize unions and bargain collectivelyKnowing how government regulations assure occupational safety and health and what business must do to protect workersEvaluating the limits of employers’ duty to provide job security to their workersAppraising the extent of employees’ right to privacy, when businesses monitor employee communications, police romance in the office, test for drugs or alcohol, or subject employees to honesty testsDebating if employees have a duty to blow the whistle on corporate misconduct, or if employees should always be loyal to their employerAssessing the obligations of transnational corporations to their employees around the world16-*The Employment RelationshipEmployees are an important market stakeholder group Employees are responsible for carrying out the work of the companyAt the same time, employees are dependent on the company for their livelihoodNature of the employment relationship conveys rights and duties on both sides 16-*Figure 16.1Rights and Duties of Employees and Employers 16-*Workplace RightsEmployees in the United States enjoy important legal guarantees. They have the right to:organize and bargain collectivelyhave a safe and healthy workplace, andto some degree, job security16-*Right to Organize and Bargain CollectivelyIn the United States, and in most other nations, employees have a fundamental legal right to organize labor unions and to bargain collectively with employersWorkers have a right to hold an election to decide which union will represent themLabor unions have the right to negotiate wages, working conditions, and other terms of employmentEmployers are required to bargain with unions in good faithIf agreement cannot be reached, a strike might occur16-*Right to Organize and Bargain CollectivelyInfluence of labor unions has varied during periods in U.S. history:During the 1930s New Deal period unions were very popularSince the mid-1950s, there has been a decline in union membershipIn 2011, only about 12% of all U.S. workers were members of a unionThe percentage was higher, 37%, in government employmentIn the wake of the Great Recession, elected officials in several states sought to weaken unions by limiting the rights of public sector workersSome unions have departed from adversarial approach to work cooperatively with management (e.g. Kaiser Permanente)16-*Right to Safe and Healthy WorkplaceAnnually, more than 3 million workers in private industry are injured or become ill while on the job, according to the U.S. Department of LaborOccupational 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 halved16-*Right to Safe and Healthy WorkplaceWorking 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 flamesManagers 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 16-*The Right to a Secure JobIn the United States, since the late 1800s, the legal basis for the employment relationship has been employment-at-willEmployment 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 employerThe equal employment and other laws prevent discriminatory terminations as well as those that would constitute a violation of public policy16-*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 expectationsShould companies have strong or weak bonds with their employees?16-*Privacy in the WorkplaceAn important right in the workplace as elsewhere, is privacyIn the business context, privacy rights refer to primarily protecting an individual's personal life from an unwarranted intrusion by the employerKey workplace issues where privacy dilemmas often emerge include electronic monitoring, office romance, drug and alcohol abuse, and honesty testing16-*Privacy in the WorkplaceElectronic monitoringNew 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 privacyManagement justifies the increase in employee monitoring for a number of reasons:Employee efficiencyFear of lawsuits if employees act inappropriately16-*Privacy in the WorkplaceOffice romance – requires careful balancing between legitimate employer concerns and employee privacyA 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 outrightSometimes consensual relationship agreements are required to protect against possible harassment lawsuits if the people involved later break up16-*Privacy in the WorkplaceDrug and alcohol testingDrug abuse costs U.S. industry and tax payers an estimated $181 billion a yearDrug-Free Workplace Act (1988) – required federal contractors to establish and maintain a workplace free of drugsAbout 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 screeningRandom testing of employeesTesting for cause16-*Pros and Cons of Employee Drug TestingFigure 16.216-*Privacy in the WorkplaceAlcohol use and addiction causes twice the problems of all illegal drugs combinedAbout 9 percent of full-time employees are heavy drinkersUp to 40 percent of all industrial fatalities and 47 percent of industrial injuries are linked to alcoholU.S. businesses lose an estimated $88 billion per year in reduced productivity directly related to alcohol abuseEmployee Assistance Programs (EAPs) – offer counseling, rehabilitation programs, and follow-up 16-*Privacy in the WorkplaceEmployee Theft and Honesty testingEmployee theft has emerged as a significant economic, social, and ethical problem in the workplaceEmployee 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 tests16-*Whistle-blowing and Free Speech in the WorkplaceFree speech in the workplaceAnother area where employer and employee rights and duties sometimes conflictU.S. Constitution protects free speech; however, does not specifically protect freedom of expression in the workplaceEmployees are not generally allowed to speak out against their employers, due to legitimate interests of the businessWhen society’s interests override those of the individual business, employee may feel the need to speak out or “blow the whistle”16-*Whistle-blowing and Free Speech in the WorkplaceWhistle-blowing – when an employee believes his/her 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 officials4 conditions must be satisfied to justify whistle-blowingOrganization is doing (or will do) something that seriously harms othersEmployee has tried and failed to resolve the problem internallyReporting the problem publicly will probably stop or prevent the harmThe harm is serious enough to justify the probable costs of disclosure to the whistle-blower16-*Working Conditions around the WorldLaws and practices that establish fair wages, acceptable working conditions, and employee rights vary greatly around the worldOne very public issue is sweatshops Factories where employees, sometimes including children, are forced to work long hours at low wages, often under unsafe working conditionsNumber of well-known companies have been criticized for poor working conditions in overseas factories (e.g. Nike, Walmart, Disney, McDonald’s)16-*Fair Labor StandardsLabor standards refers to the conditions under which a company’s employees, or the employees of its suppliers, subcontractors, or others in its commercial chain, workUniversal rules or standards related to these are called fair labor standards 16-*Fair Labor StandardsIn 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 conductNongovernmental organizations labor codesIndustry-wide labor codesWhatever the approach, certain common questions emerge in any attempt to define and enforce fair labor standards16-*Common Questions Regarding Fair Labor StandardsWhat 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 indirectHow should fair labor standards be enforced?Who should be responsible for monitoring? The company or an independent body?16-*