Chapter 7 'Think Theory' answers

Employees and Business Ethics



In chapter 2 we discussed different models of the firm, notably the managerial view and the stakeholder view. The managerial view puts shareholders’ interests first while the stakeholder perspective would consider other groups’ interests as legitimate as well. Try to construct an ethical argument in favour of employees as legitimate (maybe even dominant) stakeholders of the firm.

Employees are crucial to a company’s success: for example, the saying that ‘staff are our most important asset’ is well-known. Even from an egoism perspective, which focuses on promotion of the company’s own self-interest, treating employees as a legitimate stakeholder, is likely to result in greater employee satisfaction and identity with the business. This in turn is likely to result in greater happiness and productivity, which is of direct benefit to the company.


Think about what it means to talk about employees in terms of ‘human resources’. Compare Kant’s theory with the feminist approach to business ethics in relation to human resource management. Do you think the term HRM is adequately chosen? What are the implications of this terminology from both perspectives?

Kant’s second maxim requires people to be treated with dignity, and as ends in themselves. The feminist approach is concerned with the network of interpersonal relations and prioritises empathy and good social relationships. Both would place a high value on good employee relations and working conditions. The term, ‘human resources’ is anathema to both of these ethical perspectives: it suggests precisely that people are ends to means, individual parts of a system to be deployed wherever appropriate, and then moved elsewhere as soon as they are no longer required. It suggests that provision of good working conditions is a means to generating good outcomes for the company, rather than because of any intrinsic value in the staff. The term ‘human resources management’ is therefore problematic from both ethical perspectives.


Although we have suggested that employees have a right to be free from discrimination, it is clear that it still occurs. Is this just because employers haven’t recognized that discrimination is wrong, or it possible to establish a defence of discrimination from the perspective of other ethical theories? Which theory provides the most convincing defence?

It is difficult to argue convincingly for an ethical approach to discrimination in general, and it is likely that most discrimination is not carried out with a conscious appeal to ethical thinking. However, one can argue for some degree of discrimination for a limited period of time, from an ethics of justice perspective. One example of this is Black Economic Empowerment in post-apartheid South Africa, which seeks to redress past systematic injustices and thus generate fair outcomes. Fair procedure does suffer as a result, but this is justified for a limited period of time.


Think about the employer surveillance of employee emails and internet use from a perspective of rights and justice. Which rights on both sides are involved and what would be a fair balance in addressing these issues?

Both employers and employees have certain rights that should be protected and respected, and each should be able to expect fair treatment. This suggests the following, with respect to surveillance of employee e-mails and internet use:

  • The employer should be able to expect that employees use company equipment for the purpose for which they are intended, and that they do the work they are being paid for during office hours. The employer also has a right to keep its intellectual property private.
  • The employee, on the other hand, has a right to expect both privacy and reasonable working conditions. This suggests that employees should be able to expect that their employer does not put them under constant observation or intrude on their communications.

A fair balance might be for the employer to allow a degree of internet browsing and private e-mail use during work time, subject to a fair use policy and provided the employee continues to work effectively. The understanding would be that the employer would not subject employees to surveillance but that this would be subject to review if productivity diminished. An exception could be made for employees working on highly sensitive intellectual property projects.


Think about electronic surveillance in terms of utilitarianism. What are the costs and benefits involved? Is this likely to offer a reasonable justification for incursions into employee privacy? Does this extend to other workers in the organization who don’t have an employment contract? What about other organizational stakeholders such as students at a university?

In addition to the monetary cost, electronic surveillance costs the company staff time in setting up systems and/or monitoring them. As technology matures and the role of electronic communication grows, so these costs are likely to expand. Another potential cost is the effect on the working environment, both to individual psychological welfare and to the firm if trust is eroded. The potential benefits include preventing large-scale time-wasting, saving company reputation and avoiding industrial espionage. In certain cases the benefits of such surveillance may outweigh the costs, but it is difficult to make a general case for surveillance on utilitarian grounds. These arguments are complicated in the case of workers that don’t have an employment contracts, although they may often be treated very much in the same way as those employees who do not have contracts. The arguments become even weaker and further muddied when it is extended to other organizational stakeholders, as the benefits are far less clear.


Think about outplacement strategies from the perspective of justice and fairness. See if you can set outplacement in the context of Rawls’ theory of justice.

Outplacement is about companies helping employees to find work in the wake of redundancies, and can include training and/or counselling. In his theory of Justice, Rawls puts forward two tests of fairness. The first is that each person affected by a decision has the same basic rights and freedoms. Assuming all employees being laid off are offered the service, outplacement passes this test. The second test is whether the decision is to the greatest benefit of the least advantaged; suggesting that outplacement passes if those who profit least from it are nevertheless better off with the service than they would have been without it. As long as the service follows redundancies – i.e., the introduction of an outplacement programme does not increase the number of redundancies – outplacement passes this test as well.

  • Uncertainty avoidance. In a culture with low uncertainty avoidance, employees may expect to move job often, and to be given space to use their own initiative, whereas staff in cultures with a high preference for certainty may be expected to follow the company rules closely, but also enjoy higher job security.
  • Masculinity/femininity. A culture with a high masculinity orientation could see employees valued principally for their success in generating corporate profit, whereas a high femininity orientation could suggest greater emphasis on employees’ intrinsic value.
  • Long-term/short-term orientation. A company with a long-term focus may (and reward) evaluate staff performance over several years; as opposed, perhaps, to quarterly evaluations for staff in companies with a short-term focus.
  • Indulgence. A company with less indulgence and less willingness to supress desires might be expected to hold employees to a similarly strict standard.