Employees And The Corporation

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Professor Hector R RodriguezSchool of BusinessMount Ida College

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Course Map – Topics Covered in Course• Society

– The Corporation and Its Stakeholders– People for the Ethical Treatment of Animals– Corporate Citizenship– The Social Responsibility of Business– The Shareholder Primacy Norm– CSR, Citizenship and Sustainability

Reporting– Responsible Investing– The Community and the Corporation– Taxation and Corporate Citizenship– Corporate Philanthropy Programs– Employees and the Corporation– Managing a Diverse Workforce

• Environment– A Balanced Look at Climate Change– Non-anthropogenic Causes of Climate

Change– Sulfates, Urban Warming and Permafrost– Conventional Energy– The Kyoto Protocol– Green Building– Green Information Technology– Transportation, Electric Vehicles and the

Environment– Geo-Engineering– Carbon Capture and Storage– Renewable Energy– Solid, Toxic and Hazardous Waste– Forests, Paper and Carbon Sinks– Life Cycle Analysis– Water Use and Management– Water Pollution

• Consider obligations to employees, one of businesses’ stakeholders:– 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– Appraising 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 tests

– Debating if employees have a duty to blow the whistle on corporate misconduct, or if employees should always be loyal to their employer

– Assessing the obligations of transnational corporations to their employees around the world

Key Learning Objectives

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• Employees are an important market stakeholder group • Employees are responsible for carrying out the work of the

company• Nature of the employment relationship conveys rights and duties

on both sides

• Discussed in detail in the next few slides

The Employment Relationship

Rights and Duties of Employees and Employers

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• In the U.S. and many other countries, employees have a 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

Right to Organize and Bargain Collectively

• 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 can’t be reached, a strike might occur

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• Influence of labor unions has varied during periods in U.S. history:– New Deal period, in the 1930s, were very popular– Since 1950s has been decline in union

membership– In 2005, only 13% of U.S. workers are members

of a union– Percentage of government workers is higher, 37%

• Some unions have departed from adversarial approach to working cooperatively with management– Examples include unions at Saturn, AT&T, Kaiser

Permanente

Right to Organize and Bargain Collectively

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• U.S. Department of Labor estimates annually over 4 million workers in private industry are injured or become ill on the job

• Manufacturing jobs are more risky than service jobs• 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”

Right to a Safe and Healthy Workplace

– Law is administered by OSHA – Occupational Health and Safety Administration

– Agency has helped reduce employee deaths and injuries, since 1970 death rate has been cut in half

• Are we outsourcing risk?

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• Working conditions remain very dangerous in many developing countries:– In Bangladesh’s fast-growing garment and textile industry, fires and building

collapses have killed or seriously injured more than 2,800 Bangladeshi workers since 1990

– Efforts by governments, businesses, and unions to improve conditions of workers in international factories is discussed later

Right to a Safe and Healthy Workplace

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• In U.S. employment-at-will has been legal standard since 1800’s– Employees are hired and fired at discretion of the employer

• But, some restrictions on employment-at-will; employer cannot fire a worker:– Because of race, gender, religion, national origin, age, or disability– If would constitute a violation of public policy, as determined by the courts– If, in doing so, it would violate the Worker Adjustment Retraining

Notification Act– If worker is involved in union organizing or other activity– If would violate an implied contract, such as a verbal promise, or basic

rules of “fair dealing”

The Right to a Secure Job

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• In work context, privacy rights refers to protecting an individual’s personal life from unwarranted intrusions by the employer

• 4 areas where this might present a dilemma1. Electronic monitoring - Companies can gather, store, and monitor

information about employees’ activities. This may be at odds with an employee’s right to privacy.

2. Romance in the workplace - If office romance goes sour, one of the people may sue, charging sexual harassment. When one person in a relationship is in a position of authority, s/he may be biased in an evaluation of the other’s work.

3. Employee drug use and testing - Three-fifths of companies test employees or job applicants for Illegal substances. Arguments in debate over drug testing are shown on next slide.

4. Alcohol abuse at work - U.S. businesses lose an estimated $70 billion per year in reduced productivity directly related to alcohol abuse. Many employers now offer EAP’s (employee assistance programs) to help employees with alcohol and drug abuse issues.

Privacy in the Workplace

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• 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”

Whistle-Blowing and Free Speech

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• Whistle-blowing: when an employee believes his or her employer has done something this is wrong or harmful to the public, and he or she reports the alleged misconduct to the media, government or high company officials

• Four conditions must be satisfied to justify whistle-blowing1. Organization is doing something that seriously harms others2. Employee has tried and failed to resolve the problem internally3. Reporting the problem publicly will probably stop or prevent the

harm4. The harm is serious enough to justify the probable costs of

disclosure to the whistle-blower

Whistle-Blowing and Free Speech

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• 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 – Nike, Wal-Mart, Disney, McDonald’s

Working Conditions Around the World

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• The Richest and Deadliest Mine in the World – For most of the 16th and 17th

centuries, Potosí was the richest and largest metropolis in the Americas.

– The city had more inhabitants than Madrid, Rome, or Paris. The source of Potosí’s growth was silver.

– Nestled at 12,000 above sea level, the city was dwarfed by the massive “Cerro Rico” (“rich hill”), containing one of the largest silver reserves in the world.

http://www.linesofflight.net/isittravel/archive/2005_02_01_isittravel_archive.html

Case Study – The Potosí Mines

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• The miners’ work remains dominated by manual labor, however, and they use much of the same equipment as in centuries past.


– The mine passageways are dark, narrow, and often filled with mud.

– Much of the air is noticeably contaminated with arsenic and other fumes.

– The workers generally work 6 days a week, 10-12 hours per day.

– They do not eat during the work shifts, subsisting on breakfast and a late dinner.

– Child labor is common, and some miners are only 12 years old.


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• Although many of the miners are illiterate and speak only their indigenous language, at least some of them seemed conscious of their continued oppression.

• The miners remain frustrated with both the lack of government investment and support, and the ease with which foreign companies extract profits from the mine.

• After over 400 years, it seems that Potosí is still being used to support foreign companies at the expense of Bolivian lives.– Why have the conditions at the Potosí mines changed so little? – What could be done to improve them? – What other situations are comparable to the mines of Potosí?



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• Labor standards means the conditions under which a company’s employees, or the employees of its subcontractors, work

• Universal rules or standards related to these are called fair labor standards

• How establish fair labor standards for multinational corporations is debated, approaches include:– Voluntary corporate codes of conduct– Non-governmental organizations labor codes

• Social Accountability (SA) 8000 establishes criteria for “good working conditions” certification

– Industry-wide labor codes• Businesses work with other sectors to define standards• Example of Electronic Industry Code of Conduct (EICC) developed by HP, IBM,

and Dell, later endorsed by Cisco and Microsoft; applies uniform standards to their global supply chains

Fair Labor Standards

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• Common questions emerge1. 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?2. 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 indirect3. How should fair labor standards be enforced?

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

• The pharmaceutical industry has set a good example for this – shown on next slides

Issues Designing Fair Labor Standards

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Pharmaceutical Supply Chain Initiative

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• Employees are a key stakeholder• There are rights and duties on both sides of the

equation; important concepts include:– Right to organize– Right to a safe and healthy workplace– Right to privacy– Whistle blowing

• Employers also need to be aware of working conditions around the world. Entire supply chain must be considered. Concept of Fair Labor Standards is important.

Conclusion

Employees And The Corporation

Health & Medicine

Transcript of Employees And The Corporation