Unit 7 Assess
Ethics, Public Policy, and Employee Rights
Societies don’t rely on employers’ ethics or sense of fairness or morality to ensure that they do what’s right. Societies also institute laws. These lay out what employers can and cannot do; for instance, in terms of their hiring. In so doing, these laws also carve out explicit rights for employees. For example, Title VII of The Civil Rights Act gives an employee the right to bring legal charges against an employer if he or she believes it discriminated against him or her due to race. Figure 14-1 lists some legal areas under which workers have rights.
Unalienable Rights
However, not all rights derive from laws. Many rights flow from broader unwritten “human” or “unalienable rights,” broad, unwritten beliefs that people hold.8 For example, the U.S. Declaration of Independence famously states, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Public Policy
Although many laws, such as Title VII, aim to guarantee rights that some people view as unalienable, reasonable people may differ over what the exact laws should be.
FIGURE 14-1 Partial List of Legal Areas under Which Workers Have Legal Rights
Most laws therefore also reflect public policy. In other words, governments enact laws so as to further their public policy aims. Thus, if New York City decides that it’s in its’ citizens’ best interests to require all its businesses to provide employee sick leaves, it may pass a law to do that. Public policy “consists of political decisions for implementing programs to achieve societal goals.”9 As with sick leave laws, governments express their chosen public policies in the laws and regulations they set.
So, for example, the National Labor Relations Act established the right of employees to engage in collective bargaining. The Landrum Griffin Act contained a “Bill of Rights” for union members, protecting them from mistreatment from their unions. The Fair Labor Standards Act gave employees the right to a minimum wage and overtime pay. The Occupational Safety and Health Act gave employees the right to refuse to work under unsafe conditions. The bottom line is that although ethics, fairness, and morality do help govern how employers treat their employees, the enforceable rights embedded in employment and other laws also govern what employers do.
Workplace Unfairness
One way a company’s ethics manifest themselves is in how fairly it treats its employees. Anyone who’s suffered unfair treatment at work knows it is demoralizing. Unfair treatment reduces morale, increases stress, and has negative effects on performance.10 Employees of abusive supervisors are more likely to quit, and to report lower job and life satisfaction and higher stress.11 The effects on employees of such abusiveness are particularly pronounced where the abusive supervisors seem to have support from higher-ups.12
Sometimes workplace unfairness is subtle. For example, unstated policies requiring CPA associates to work and travel 7 days per week may unfairly eliminate working mothers from partner tracks. Other unfairness is more blatant. For example, one survey of 1,000 U.S. employees concluded that about 45% said they had worked for abusive bosses.13 At work, fair treatment reflects concrete actions such as “employees are treated with respect,” and “employees are treated fairly” (see Figure 14-2).14
Why Treat Employees Fairly?
There are many reasons why managers should be fair. The golden rule is one obvious reason. What may not be so obvious is that supervisory unfairness can backfire on the company. For example, victims of unfairness exhibit more workplace deviance, such as theft and sabotage.15 Perceptions of fairness relate to enhanced employee commitment; enhanced satisfaction with the organization, jobs, and leaders; and enhanced organizational citizenship behaviors.16 People who view themselves as victims of unfairness also suffer a range of ill effects including poor health, strain, and psychological conditions.17 Unfairness leads to increased tensions between the employee and his or her family or partner.18 Aggressive supervisors undermine their subordinates’ effectiveness and may prompt them to act destructively.19
Example
A study illustrates how unfairness works. College instructors first completed surveys concerning the extent to which they saw their colleges as treating them with procedural and distributive justice. (Procedural justice refers to fair processes; distributive justice refers to fair outcomes.) Procedural justice items included, for example, “In general, the department/college’s procedures allow for requests for clarification or for additional information about a decision.” Distributive justice items included, “I am fairly rewarded considering the responsibilities I have.” Then the instructors completed organizational commitment questionnaires, with items such as “I am proud to tell others that I am part of this department/college.” Their students then completed surveys, with items such as “The instructor was sympathetic to my needs,” and “The instructor treated me fairly.”
procedural justice
The fairness of the process.
distributive justice
The fairness and justice of a decision’s result.
FIGURE 14-2 Perceptions of Fair Interpersonal Treatment Scale
Source: “The Perceptions of Their Interpersonal Treatment Scale: Development and Validation of a Measure of Interpersonal Treatment in the Workplace” by Michelle A. Donovan, from Journal of Applied Psychology, 1998, Volume 83(5).
The results were impressive. Instructors who perceived high distributive and procedural justice were more committed. Furthermore, these instructors’ students reported higher levels of instructor effort, prosocial behaviors, and fairness, and had more positive reactions to their instructors.20 The accompanying HR Practices around the Globe feature shows how one employer in China improved its treatment of employees.
IMPROVING PERFORMANCE: HR Practices Around the Globe The Foxconn Plant in Shenzhen, China
The phrase social responsibility tends to trigger images of charitable contributions and helping the homeless, but it actually refers to much more. For example, it refers to the honesty of the company’s ads, to the quality of the parts it builds into its products; and to the honesty, ethics, fairness, and “rightness” of its dealings with customers, suppliers, and, of course, employees. The basic question is always whether the company is serving all its constituencies (or “stakeholders”) fairly and honestly. Corporate social responsibility thus refers to the extent to which companies should and do channel resources toward improving one or more segments of society other than the firm’s owners or stockholders.21
social responsibility
The extent to which companies should and do channel resources toward improving one or more segments of society other than the firm’s owners or stockholders.
The worker uprising at Apple’s Foxconn iPhone assembly plant in Shenzhen, China, shows that workers around the globe want their employers to treat them in a fair and socially responsible manner.
After the walkouts, Apple Inc. asked the Fair Labor Association (FLA) to survey the plant’s workers. The FLA found “tons of issues.”22 For example, employees faced “overly strict” product-quality demands without adequate training: “Every job is tagged to time, there are targets on how many things must be completed within an hour,” said Xie Xiaogang, 22, who worked at Foxconn’s Shenzhen plant. “. . . In this environment, many people cannot take it.”23 Heavy overtime work requirements and having to work through a holiday week were other examples.
2 Discuss important factors that shape ethical behavior at work.
Hon Hai, the Foxconn plant’s owner, soon changed its plant human resource practices, for instance, raising salaries and cutting mandatory overtime. Those changes were among 284 made by Foxconn after the audits uncovered violations of Chinese regulations.24 The changes show that fair treatment is a global obligation.
Discussion Question 14-1:
How would you explain the fact that workers in such diverse cultures as America and China seem to covet fair treatment?
Bullying and Victimization
Some unfairness is blatant. Bullying—singling out someone to harass and mistreat—is an increasingly serious problem. The U.S. government (www.stopbullying.gov/#) points out that while definitions of bullying vary, most would agree that bullying involves three things:
Imbalance of power. People who bully use their power to control or harm, and the people being bullied may have a hard time defending themselves.
Intent to cause harm. Actions done by accident are not bullying; the person bullying has a goal to cause harm.
Repetition. Incidents of bullying happen to the same person over and over by the same person or group, and that bullying can take many forms, such as:
Verbal: name-calling, teasing
Social: spreading rumors, leaving people out on purpose, breaking up friendships
Physical: hitting, punching, shoving
Cyberbullying: using the Internet, mobile phones, or other digital technologies to harm others
Employers must have systems in place (such as grievance procedures and policies to monitor employees’ harassing use of social media websites) to ensure that the company can and does deal with such unfair treatment.25
Undoubtedly, the perpetrator is to blame for bullying. However, how some people behave and their personalities do make them more likely victims.26 Those “more likely” include submissive victims (who seem more anxious, cautious, quiet, and sensitive), provocative victims (who show more aggressive behavior), and victims low in self-determination (who seem to leave it to others to make decisions for them).
Research Insight
A study illustrates the interpersonal dynamics involved. Research suggests that people with higher intellectual capability often suffer bullying at school—for instance, derogatory names such as geek and nerd. In this study, 217 employees of a health-care organization completed a survey that measured cognitive ability, victimization, and how the person behaved at work.27 The researchers found that it wasn’t just whether the person was smart that determined if he or she was victimized. Instead, people with high cognitive ability who also behaved more independently were more likely to be bullied. Smart team players were less likely to be victimized. In any case, punishing those who engage in workplace aggression is essential.28
What Shapes Ethical Behavior at Work?
Why do people do bad things? It’s complicated. However one review of over 30 years of ethics research concluded that three factors combine to determine the ethical choices we make.29 The authors titled their paper “Bad Apples, Bad Cases, and Bad Barrels.” This title highlighted their conclusion that when
“Bad apples” (people who are inclined to make unethical choices), must deal with “Bad cases” (ethical situations that are ripe for unethical choices), while working in
“Bad barrels” (company environments that foster or condone unethical choices), . . . then this brew combines to determine whether or not someone acts ethically.
Here’s a closer look at what they found.
The Person (What Makes Bad Apples?)
Because people bring to their jobs their own ideas of what is morally right and wrong, each person must shoulder much of the credit (or blame) for his or her ethical choices.
Some people are just more principled. For example, researchers surveyed CEOs to study the CEOs’ intentions to engage in two questionable practices: soliciting a competitor’s technological secrets, and making illegal payments to foreign officials. The researchers concluded that the CEOs’ personal predispositions more strongly affected their decisions than did outside pressures or characteristics of their firms.30 Most importantly, people differ in their level of “cognitive moral development.” The most principled people, with the highest level of cognitive moral development, think through the implications of their decisions and apply ethical principles.
Traits
We can also draw several conclusions about the traits of ethical or unethical people. “Moral disengagement” is a big factor.31 People who are “morally disengaged” (more likely to do unethical things without feeling distressed—they might say, for instance that “people who get mistreated have usually done something to bring it on themselves”) are much more likely to engage in unethical behavior.
Age may be a factor, too. One study surveyed 421 employees to measure the degree to which various traits correlated with ethical decisions. (Decisions included “doing personal business on company time” and “calling in sick to take a day off for personal use.”) Older workers generally had stricter interpretations of ethical standards and made more ethical decisions than did younger ones.
Honesty testing (as we discussed in Chapter 6) also shows that some people are more inclined to make the wrong ethical choice. How would you rate your own ethics? Figure 14-3 presents a short self-assessment survey (you’ll find other survey takers’ answers on page 452 ).
Which Ethical Situations Make for Bad (Ethically Dangerous) Situations?
But, it’s not just the person but the type of ethical decision that he or she confronts. Perhaps surprisingly, “smaller” ethical dilemmas prompt more bad choices. What determines “small”? Basically, how much harm can befall victims of the choice, or the number of people potentially affected by the choice. So in “less serious” situations it’s more likely someone will say, in effect, “It’s okay to do this, even though it’s wrong.”
What Are the “Bad Barrels”?—The Outside Factors That Mold Ethical Choices
Finally, the study concluded that some companies produce more poisonous social environments (“barrels”) than do others; these environments in turn influence each employee’s ethical choices.32
For example, companies that promote an “everyone for him- or herself” culture were more likely to suffer from unethical choices. Those that encouraged employees to consider the well-being of everyone had more ethical choices. Furthermore, a company whose managers put in place “a strong ethical culture that clearly communicates the range of acceptable and unacceptable behavior is associated with fewer unethical decisions in the workplace.”33 What follows are specific steps managers take to create a more ethical environment.
Job-Related Pressures
If people did unethical things at work solely for personal gain, it perhaps would be understandable (though inexcusable). The scary thing is that it’s often not personal interests but the pressures of the job. As one former executive said at his trial, “I took these actions, knowing they were wrong, in a misguided attempt to preserve the company to allow it to withstand what I believed were temporary financial difficulties.”34
One study illustrates this. It asked employees to list their reasons for taking unethical actions at work.35 For most of these employees, “meeting schedule pressures,” “meeting overly aggressive financial or business objectives,” and “helping the company survive” were the three top causes. “Advancing my own career or financial interests” ranked about last.36 In any case, reducing such “outside” pressures is crucial for heading off ethical lapses.
Pressure from the Boss
It’s hard to resist even subtle pressure from one’s boss. According to one report, for instance, “the level of misconduct at work dropped dramatically when employees said their supervisors exhibited ethical behavior.”37 Yet, in another poll, only about 27% of employees strongly agreed that their organizations’ leadership is ethical.38
FIGURE 14-3 The Wall Street Journal Workplace Ethics Quiz
Source: Ethics and Compliance Office Association, Waltham, MA and The Ethical Leadership Group, Global Compliance’s Expert Advisors, Wilmette, IL. (printed in The Wall Street Journal, October 21, 1999: B1–B4). © 1999 by Ethics and Compliance Office Association. Reprinted by permission. All rights reserved.
Examples of how supervisors lead subordinates astray ethically include:
Tell staffers to do whatever is necessary to achieve results.
Overload top performers to ensure that work gets done.
Look the other way when wrongdoing occurs.
Take credit for others’ work or shift blame.39
Ethics Policies and Codes
An ethics policy and code is another “outside force” that employers can use to signal that their companies are serious about ethics. For example, IBM’s code of ethics says, in part:
Neither you nor any member of your family may, directly or through others, solicit or accept from anyone money, a gift, or any amenity that could influence or could reasonably give the appearance of influencing IBM’s business relationship with that person or organization. If you or your family members receive a gift (including money), even if the gift was unsolicited, you must notify your manager and take appropriate measures, which may include returning or disposing of what you received.40
Some firms also urge employees to apply a quick “ethics test” to evaluate whether what they’re about to do fits the company’s code of conduct. For example, Raytheon Co. asks employees who face ethical dilemmas to ask:
Is the action legal?
Is it right?
Who will be affected?
Does it fit Raytheon’s values?
How will it “feel” afterward?
How will it look in the newspaper?
Will it reflect poorly on the company?41
Enforcement
Codifying the rules without enforcing them is futile. As one study of ethics concludes, “strong statements by managers may reduce the risk of legal and ethical violations by their work forces, but enforcement of standards has the greatest impact.”42 More firms, such as Lockheed Martin Corp., therefore appoint chief ethics officers.43 Ethics audits typically address topics like conflicts of interest, giving and receiving gifts, employee discrimination, and access to company information.44
Whistleblowers
Some companies encourage employees to use hotlines and other means to “blow the whistle” on the company when they discover fraud. In complying with the Dodd-Frank Act, the SEC recently established a whistleblower reward for people who report unethical corporate behavior to it.45 It is also tracking possible incidents of retaliation against whistleblowers.46
The Organization’s Culture
Employees get their signals about what’s acceptable not just from what managers say, but from what they do.47 For instance, a CEO who posts an ethics code and then ignores it in what he or she actually does sends the wrong signal to employees. Those signals then mold the company’s organizational culture . Culture is the “characteristic values, traditions, and behaviors a company’s employees share.” A value is a basic belief about what is right or wrong, or about what you should or shouldn’t do. (“Honesty is the best policy” would be a value.) Values are important because they guide behavior. Managing people and shaping their behavior therefore depends on shaping the values they use as behavioral guides. For example, if management really believes “honesty is the best policy,” the actions it takes should reflect this value. Managers therefore have to think through how to send the right signals to their employees—in other words, create the right culture. Doing so includes:
organizational culture
The characteristic values, traditions, and behaviors a company’s employees share.
Clarifying expectations. First, managers should make clear what values they want subordinates to follow. For example, the IBM ethics statement makes it clear the company takes ethics seriously.
Using signs and symbols. Symbolism—what the manager actually does and thus the signals he or she sends—ultimately does the most to create and sustain the company’s culture. Managers need to “walk the talk.” They can’t say “don’t fudge the financials” and then do so themselves.
Providing physical support. The physical manifestations of the manager’s values—the firm’s incentive plan, appraisal system, and disciplinary procedures, for instance—send strong signals regarding what employees should and should not do. Does the firm reward ethical behavior or penalize it?48
Fraud Controls
Fraud controls reduce occupational fraud. For example, the Association of Certified Fraud Examiners found that fraud controls such as hotlines, surprise audits, fraud training for employees, and mandatory vacations can each reduce internal theft by around 50%.49