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Employee Stakeholders and Workplace Issues

Professor Craig DiamondBA 385

December 2, 2009

Chapter 17

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Internal Stakeholders

Chapters 11-16 address external stakeholders• Government• Customers• Natural environment• Community

Chapters 17-19 address internal stakeholders• Employees

This course covers chapters 17 and 19

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Outline of Topics

The New Social Contract

Overview of Employee Rights

The Right Not to Be Fired Without Cause

The Right to Due Process and Fair Treatment

The Right to Freedom of Speech in the Workplace

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The New Social Contract

Global competition and globalization are causing businesses and employees to be more competitive

Employees and employers view each other as much more disposable (“using each other” to get ahead)

The typical worker today has 9 jobs by the time he/she turns 30.• Very different from past generations

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The Changing Social Contract

Old Social Contract New Social Contract

Job security Tenuous job security

Life careers with one employer Few life careers; changes common

Stable positions / job assignments Temporary project assignments

Loyalty to employer Loyalty to self

Paternalism Relationships far less familial

Employee sense of entitlement Personal responsibility for one’s job future

Stable, rising income Pay for “value added”

Job-related skill training Employees in charge of own education

Focus on individual accomplishments Focus on team building and projects

Figure 17-1 6

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Employee Rights

Public vs. private sector employees• Public sector employees protected by constitutional

control on employer power• Private sector employees viewed through the principal

of private property under the law• This being challenged more and more

Employee rights provide workers with:• Desired outcomes and• Protection from unwanted outcomes

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Sources of Employee Rights

Employee Rights

1. Statutory rights – provided by laws/regulations

2. Collective bargaining rights – provided by union contracts

3. Enterprise rights – provided by employer promises

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Models of Management Morality

MoralManagement

MoralManagement

Employees must be treated with dignity and respect.

Employees must be treated with dignity and respect.

AmoralManagement

AmoralManagement

Employees are treated only as the law requires.Employees are treated only as the law requires.

ImmoralManagement

ImmoralManagement

Employees are viewed as factors ofproduction to be used, exploited, and manipulated.

Employees are viewed as factors ofproduction to be used, exploited, and manipulated.

Figure 17-2

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Key Job-Related Rights

The right not to be fired without just cause

The right to due process and fair treatment in the workplace

The right to freedom of expression in the workplace

The rights to privacy, safety and health in the workplace (Chapter 18)

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Right not to be fired without just cause

Good Cause Norm – belief/right that employees should be discharged only for good reason

Employment-at-Will Doctrine – asserted legal right of companies to terminate any employee for any reason at any time• unless it is discriminatory or violates a union contract

These ideas are in direct conflict

Many employees incorrectly assume that good cause norm prevails• Over time, good cause norm is gaining legal traction

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Right Not to be Fired Without Just Cause

Public Policy Exceptions

Public Policy Exceptions

ContractualActions

ContractualActions

Breach of GoodFaith Principle

Breach of GoodFaith Principle

ExceptionsExceptions to Employment-at-Will Doctrine to Employment-at-Will DoctrineExceptionsExceptions to Employment-at-Will Doctrine to Employment-at-Will Doctrine

Protects employees from being fired forrefusal to commit crimes (43 states)

Protects employees from being fired forrefusal to commit crimes (43 states)

Protects employees who they believe have contracts or implied contracts (38 states)

Protects employees who they believe have contracts or implied contracts (38 states)

Employers are expected to hold to a standard of fairness and good faith (11 states)

Employers are expected to hold to a standard of fairness and good faith (11 states)

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Employment-at-Will

1. Employees deserve respectful treatment.

2. Employees do not have the option of being arbitrary or capricious with employers. Employers should bear the same responsibility.

3. Employees are expected to be trustworthy, loyal and respectful with employers. Employers should show employees the same consideration.

Objections to Employment-at-WillObjections to Employment-at-WillObjections to Employment-at-WillObjections to Employment-at-Will

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Terminating an Employee

1. Fire employees in a private space.

2. Be mindful of employees’ logistics.

3. Preserve the employee’s dignity.

4. Choreograph the notification in advance.

5. Use transparent criteria for layoffs.

It is important to terminate employees fairly and respectfully, for both ethical and legal reasons. It also

protects the morale of existing employees who see fairness in the process.

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What Not to do WhenTerminating an Employee

1. Don’t fire on a Friday.

2. Don’t say that downsizing is finished.

3. Don’t terminate an employee via e-mail.

4. Stick to the topic and avoid platitudes.

5. Don’t rush through the meeting.

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The Right to Due Process

DueProcess

The right of employees to havedecisions that adversely affect themto be reviewed by objective, impartialthird parties.

To achieve fairness, need to balance the

interests of the employer with the interests

of the employee.

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The Requirements of a Due Process System

• It must be a procedure and must follow rules.

• It must be visible so that potential violators are aware of it.

• It must be predictably effective.

• It must be institutionalized.

• It must be perceived as equitable.

• It must be easy to use.

• It must apply to all employees.

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Alternative Dispute Resolution

Open-Door PolicyOpen-Door Policy

Hearing ProcedureHearing Procedure

The OmbudsmanThe Ombudsman

The Peer Review PanelThe Peer Review Panel

One senior employee reviews the case

Employee can be represented by an attorney or other person

Formally and officially neutral person reviews case

Selected and trained group of employees review case

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Freedom of Speech in the Workplace

Whistle-Blower

An employee who discloses illegal, immoral, orillegitimate practices to personsor organizations that may be able toeffect action.

Becoming a more frequent practice as loyalty

and obedience become less prevalent

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Changing View of Employees’ Responsibility in Whistle-Blowing

Corporate

Employer

Corporate

EmployerLoyalty

ObedienceConfidentiality

EmployeEmployeee

EmployeEmployeee

TraditionalTraditional

(Has certain rights)

PublicPublicEmployeEmployeee

EmployeEmployeee

Corporate

Employer

Corporate

Employer

Whistle blowingWhistle blowing

Responsibility Responsibility

(Has certain rights)

(Has certain rights)

EmergingEmerging

Figure 17-3

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Whistle-Blowing

A Few Well-Known Whistle-Blowers

Sherron Watkins, Enron

Jeffrey Wigand, Brown & Williamson tobacco co.

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Consequences of Whistle-Blowing

Firing More stringent criticism of work Less desirable work assignments Pressure to drop charges against the company Heavier workloads Loss of perquisites Exclusion from meetings previously attended

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Whistle-Blowing

Civil Service Reform Act (1978) Michigan Whistle-Blowers Protection Act (1981) False Claims Act (1986) Whistle-Blower Protection Act (1989) Sarbanes-Oxley (2002)

Examples of Government Protection

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Management’s Responsiveness to Whistle-Blowing

Employees should be encouraged to speak out and make suggestions, and those need to be acknowledged and rewarded.

The idea is to avoid the need for whistle-blowing in the first place.