chapter
Responsibilities of employers
The Romanian workforce market: past and present
Paper contracts and living people
Respect for the individual
Ethical dilemmas and moral responsibilities of employers
Responsibilities of employees
Loyalty and morality
Whistle-blowing
Fairness between employees
Affirmative action and positive discrimination
A harassment-free workplace
Employees and quality
References
In comparison with their position in the socialist command economy, customers are much better off in the free market economy. This fact is undisputable and most of our fellow citizens agree that only the development of capitalism in our country could ensure the best conditions for the fulfilment of their needs as consumers. That is why the previous chapter began with an analysis of the relationship between businesses and customers in the developed capitalist societies and ended with a few brief considerations about the present situation in Romania. The relationship between employers and employees is somehow different. Suppliers and consumers are rela 23423i813x ted through an exchange of goods, services, and money - an impersonal relationship, from which both parties would gain something, if the exchange is fair; the 'logic' of the relationship is relatively simple and clear. Employers and employees are linked by personal bonds; they work together for the benefit of the company, and, even though it is also clear enough, the 'logic' of their relationship is not concerned only with an exchange of inanimate things - goods, services, and money - but primarily implies human beings. Thus, the moral dimensions of this kind of relationship are much deeper, much more complex and sensible.
On the other hand, in connection with employment, socialism could, and actually does claim to offer better solutions than capitalism, at least in some respects. As a matter of fact, a significant number of our fellow citizens believe that they were better off in the good old days of communist command economy and feel a strong resentment about their present uncertain position in the workforce market. Starting from these premises, the structure of this chapter will be reversed: we shall first analyse the specific problems with the Romanian economy, and after that we shall try to evaluate the most representative lines of thought in the Western societies. The main topics related to the moral dimensions of employment seems to be the following: responsibilities of employers, responsibilities of employees, and fairness between employees.
Businesses usually acknowledge responsibilities to those they employ. Indeed the relationship of employment is one of the most important in society. Those who work for a living may spend up to half their waking hours as employees, while those who do not feel deprived as a consequence. Employment is often treated as a 'right' - something to which all people of working age are morally entitled. That means, as Griffiths and Lucas point out, "that firms existed in order to provide employment, and that their duties to employees were paramount. That is a mistake. Jobs are not goodies to be given to people because they need or deserve them. There is no natural right to work in that sense. Work is essentially defined in terms independent of the worker. It is what other people want him to do, need him to do, or recognise it as worth doing; and it is well or ill done according to those standards, not according to his. Once that connexion is severed, we move towards the communist world, where people pretend to work and the State pretends to pay them."1 Whether we accept or deny the claim that employment is a 'right', the obligations of a business to its employees, and vice-versa, are often unclear, and frequently a matter of public controversy.
This is perhaps the most controversial issue in Romania, because in this area the communism left the deepest wounds, far from having been healed after thirteen years of 'original' and totally inconsistent capitalism. For a great number of Romanians, the transition from a demand economy to a free market economy never meant a better life; on the contrary, many of them have lost their jobs, and the rest live with the fear of redundancy, having little or no hope at all that the near future would bring them back at work. The world is changing, indeed, but for the time being only for worse, as long as the jobs created by the private businesses are scarce, insecure, and poorly paid. That is why so many of our fellow citizens are bitterly disappointed with the free market economy and so nostalgic about their life in the past.
Before the upheaveal of the communist regime, the State - in fact ruled by the communist party - was the one and only owner of the most important production capacities and, consequently, the one and only significant employer. This privilege entailed a sum of negative consequences for the workforce. It was very difficult for the ordinary people to choose or to change their profession, their jobs, and to move from a place to another; the wages were poor and arbitrarily imposed; the promotion depended not on competence and individual value but primarily on political criteria or personal relationships, and so on. All of these shortcomings were compensated by two great advantages: it was easy to find a job and even easier to keep it until retirement. Of course, not everybody could possibly be a party official, a manager, a superior officer in the Army or the Secret Services, an artist, a doctor or an academic, but the differences between wages were relatively small, and the party propaganda kept on fooling the ignorant people with slogans about workers and farmers as the 'ruling classes' of the socialist society. Many people were discontented with their lousy jobs but everybody was employed and, once hired, could safely wait for his or her retirement, no matter how good or bad his or her activity was.
Now things are running slowly, but inevitably towards an entirely different social and economical setting. There are four main categories of employees. The most privileged situation is that of the employees who work for the State monopolies - huge companies in the public services such as Electrica, Rompetrol, Radet, SNCFR, etc. Supported by strong trade unions, politically affiliated to the ruling parties, these employees are relatively well paid and their jobs are secure enough. In spite of their chronic economic inefficiency, the State monopolies can afford to pay substantial wages to their employees because of the total lack of competitors. These huge state-owned corporations compensate their inefficiency and their astronomical financial losses on the behalf of society at large, imposing unfair prices for their lousy services upon all of their customers. Political, as well as commercial, complicities of the central administration with managers and trade union leaders protect monopoly practices and delay the discharge of enormous debts, that have created a real financial chaos. Obviously, neither ruling politicians, nor the management or the employees of the State monopolies would like to give up their benefits; that is why no authority really wants to complete the privatization in public services, even though all the political statements mention it as a major priority. Like any other undeserved privilege, the benefits of this category of employees is morally unjustifiable and the conservation of their unfair advantages is an offense against the rest of our society.
The employees who work in the state-owned trade companies are in a much worse situation. With very few exceptions, most of these companies are relics of the impotent socialist industry, condemned to disappear sooner or later. Their inefficient activities belong to the past and no serious investor would be interested to buy them, because no one could resuscitate their agony. Having no future, these trade companies strive desperately to survive but they have to sack periodically part of their redundant personnel, keeping the rest of their employees, provided that they accept to work in wretched conditions for miserable salaries, waiting with fear and anger the next wave of discharged personnel. These people are desperate, because the unemployment compensation is extremely poor and granted for a short while; their chances to find a new job in their field of activity are extremely small, as well as their real possibilities to change or to improve substantially their professional skills. These people - especially the older ones - are not responsible for their present situation. They have been trained in obsolete professions, as a result of the wrong decisions made by narrow-minded planners, and they have been indoctrinated, as future members of the communist heaven, with the idea that the party must take care of them having all secure jobs. Morally, they are entitled to social assistance, which they need to survive while unemployed and to get training in new professions. Unfortunately, substantial compensations for the discharged personnel have been granted only to those employees who had been working for huge industrial aggregates, in steel industry, coal mining, mechanical and tools construction, armament industry, and so on. Located in monoindustrial towns, with no prospects for new jobs, these discharged workers forced the government to be 'generous', litterally fighting for their rights, not only by legal forms of social protest - strikes or demonstrations - but often they resorted to illegal methods, such as blockade of roads and railroads, occupation of the plants, sequestration of managers or violent riots. Taking advantage of their number, these employees acted unethically: first, because they used violence and illegal actions; second, because their substantial financial compensations have been granted as privileges, on the behalf of those weaker categories of employees, who had not the necessary force to fight the government for their rights.
Those who have to support the privileges of the first two categories of employees are the so-called 'budgetaries': school teachers, academics, doctors, military, policemen, lawyers, clerks, and so on. Most of them are well educated and highly qualified, and perfectly aware of the social importance and value of their activities. Excepting the military, police force and secret services - who have been privileged categories under the communist regime, for obvious reasons - the rest of the 'budgetaries' continue to be treated by the administration as they had been treated by the communists: unproductive people, who do not literally 'work', contributing directly to the economical growth, like industrial workers and farmers. Many people still think that teachers, doctors or lawyers are social parasites, because they produce nothing for the people, who has to work hard to support them. Even though the Parliament and the Government are full of doctors, academics, engineers, economists, lawyers, and other kinds of certificated people, nothing has really changed in the last decade. The official rhetoric praises the social value of their activities, but - with a few noted exceptions - the mass of employees in the budgetary sectors are poorly paid and humiliated. Because they do not have the legal right to protest (military, police force, secret services) or do not have the physical force to disturb seriously the social order or the economic stability (teachers, doctors, clerks, etc.), this category of employees is always the last to be considered by the planners of public expenses. They always have to wait for better times, when a generous budget could secure them bigger salaries. The relative advantage of this category of employees is the security of their jobs, but the poor wages and the low social status force many competent and worthy specialists to abandon their lousy jobs for independent activities or to emigrate; on the other hand, after their graduation, highly trained young people do not wish to work in the budgetary sectors. Consequently, the work force in these vital activities of any civilized society is getting older and older, whereas a considerable number of the younger people who go into service to replace the retired employees are second-rate specialists and not very enthusiastic about their profession and career. A small part of the employees in the budgetary sectors try to enhance their income by taking a second or even a third job, but this effort is detrimental to their capacities and efficiency, and, because of a merciless fiscality, they have to choose between working hard for nothing or tax dodging. On the other hand, many of those who can, do not hesitate to take bribe for doing their poorly paid duties (teachers, doctors, clerks etc.) or for not doing their duties (policemen, prosecutors, judges, and so on). Even though their frustration is entirely justified, nothing could morally justify corruption, bribery or tax fraud. On the other hand, those few teachers, doctors, lawyers, clerks, policemen, and so on who continue to do their jobs honestly and competently, in spite of their miserable and humiliating salaries, are quite remarcable people, who deserve respect for their integrity.
As a matter of fact, what happens to those three categories of employees, hired and paid by the State, is not primarily a business ethics issue, but a social policy ethics issue. Their specific difficulties are not generated by the mechanisms of a functional free market economy but are the results of a long list of controversial, if not downright incompetent or malevolent political decisions. The specific business ethics issues appear when we analyse the forth category of employees: those working for private-owned companies. A relatively small number of them have the chance to work for big companies or banks, owned by foreign investors or subdivisions of multinational corporations. They are comparatively well paid, by the standards of the local workforce market, but they have to be as good and competent as the Western employees, for much smaller wages than those earned for similar jobs in the West. These lucky employees must work hard to keep their jobs and to get a promotion; the competition among them is tough and their workplaces are not secure.
Things are running much worse for those employed by the small firms. In most cases they are mercilessly exploited by unscrupulous employers, who hire desperate people, ready to accept miserable wages for long hours, hard work, unfair treatment, humiliation, and a total insecurity of their jobs. Simple Romanians hate and fear privatization or, at least, are not enthusiastic about it, because, as a rule, the salaries earned in the private sector are even smaller than those offered by the state, whereas the work is harder and the jobs are insecure.
What the Government should do in order to accelerate the economical growth and to bring more justice in the Romanian society is not our present business. We are concerned with what business people could and should do as employers in order to succeed financially but in such a way that would satisfy and stimulate their employees. Not forgetting, even for a second, that a business must be profitable, we must investigate the best methods which a business leader can use so that to make long-term profits not on the behalf of his employees but together with them, as a result of a team effort, beneficial both to employers and employees. Let us see how things work in the developed capitalist countries.
In principle the relations between a business and an employee are governed by a legal contract of employment. However, such contracts often leave out more than they put in, and while the terms of employment of a manual worker in a unionized company are likely to be relatively clear, those of a manager or profesional employee are not. Tasks and responsibilities, hours of work, location, and travel requirements may all be unspecified. Moreover even when the terms of employment are relatively specific, there is the question whether the business and its employees have any moral responsibilities to each other beyond those of the contract. For example, the employment contract is an agreement to exchange wages or salary for work, but it is commonly held that a business has an obligation not only to pay for work done, but also to continue, if possible, to provide future work for the employee. To some extent this obligation is built into a range of legal requirements, making difficult for a business to end an employment contract and requiring redundancy payments if it does. However, there is no legal requirement for a business to behave in such a way as to minimize the chance of redundancy.
Does a business have any moral obligation in this respect? Many employees, and a good number of businesses, would argue that it does. In Japanese business there has been a well-established tradition, only recently questioned, of life-time employment. Alan Blinder, Business Week's economic columnist, observes that "finance-dominated capitalism too often forgets that a business organization is made up of people and can function no better than they do. The Japanese rarely forgets this. Indeed, Japanese managers commonly believe that the company's employees, not its machines, are its most important assets and are therefore to be valued, nurtured and - except in extremis - retained."2 Ask an American company who the most important officer is after the CEO, and the answer you will get is probably the chief financial officer, according to Lester Turow. In contrast, he notes, "The post of head of human resources management is usually a specialized, off-at-the-edge-of-the-corporation job, and the executive who holds it is never consulted on major strategic decisions and has no chance to move up to chief executive officer (CEO)." The contrast between the two corporate attitudes is even greater, due to the fact that "in Japan the head of human resources management is usually the second most important person after the CEO. To become CEO, it is a job that one must have held."3
These views are reiterated by Thomas J. Peters and Robert H. Waterman in their book In Search of Excellence in which they recount a conversation with a senior Japanese executive who said, "We are very different from the rest of the world. Our only natural resource is the hard work of our people." Such an attitude, according to Peters and Waterman, permeates the entire Japanese corporate ethos. "Treating people - not money, machines, or minds - as the natural resource may be the key to it all. Kenichi Ohmae, head of McKinsey's Tokyo office, says that in Japan organization and people (in the organization) are synonymous. Moreover, the people orientation encourages love of product and requires modest risk taking and innovation by the average worker."4 These lessons are not being lost on American and European companies that face the challenge of competing in a global economy.
For example, The Body Shop, a fast-growing cosmetics business, whose worldwide sales exceed half a billion dollars. Started in England in 1976, the company has over 260 outlets in the United States. The view of its founder, Anita Roddick, is that young people "don't want to work for a company that doesn't have a social conscience, or that is passive." The company's attitude toward everything is shaped by its ethical commitments. According to Roddick, "first and foremost are the values".5 The employees of the company regularly evaluate their bosses and are encouraged to write reviews of their organization's business practices. There is little sense of hierarchy, and employees are given time off - at company expense - to do volunteer work.
Nucor Steel, headquartered in Charlotte, North Carolina, provides production bonuses to its employees, offers worker stock plans, and for twenty years has avoided layoffs. In bad economic times, everyone, from CEO to the newest employee, takes a pay cut, and when times improve everyone shares in the profits. In addition to its Charlotte plant, the company operates other steel minimills in eight states and defies the trends in other segments of the steel industry by being a growth company whose stocks are highly valued on Wall Street.
Attitudes towards employees such as these reflect what The Body Shop's Anita Roddick calls "empowerment of employees", an outlook that sees them as important contributors to the bottom line, not just another commodity to be factored into a cost-benefit analysis of a business. "Productivity through people", is what Waterman and Peters call it. They quote Bill Hewlett, founder of Hewlett-Packard, who underscores this point from his personal experience: "I feel that in general terms it is the policies and actions that flow from the belief that men and women want to do a good job, a creative job, and if they are provided with the proper environment they will do so. It is the tradition of treating every individual with consideration and respect and recognizing personal achievements."6
The insistence on valuing persons as important in their own right - not seeing them merely as cogs in an impersonal production machine - echoes again an important insight by Immanuel Kant. When we analyse further the demands of the categorical imperative - which says that we should be able to universalize our principle of action without contradictions - this moral principle leads us quickly to the principle of treating people with respect. After all, this is the way we want to be treated - with respect - and to be valued as individuals, not as means for the self-aggrandisement of another. Universalizing the principle of respect means, according to Kant, treating others as ends in themselves, not as means only.
To understand Kant's point fully, we must first look at what is meant by saying that we treat someone as a means only. The classic example of this attitude is found in the work of the American management consultant Frederick Winslow Taylor. In his book, The Principles of Scientific Management, Taylor lays the foundations of modern, assembly-line production techniques. The noted writer on business ethics Kenneth Goodpaster observes that because Taylor "considered human individuality cumbersome, he shaped a standardized work system that made employees replaceable, like the parts of a machine." Taylor's approach, according to Goodpaster, assigned thinking to managers and acting to workers. "This eliminated work done by rule of thumb or learned through the apprenticeship system. Management selected and trained workers, and all tasks were standardized. Under Taylor's system, labour required little skills and was, therefore, cheap."7
The alternative to considering workers as just another (replaceable) variable in the manufacturing process requires that workers be looked upon as more than a mere means to production. Treating workers as part of the management team, not just as replaceable cogs in the production machine, seems to be the norm at Japanese manufacturing plants - not only at home, but all over the world. The New York Times describes the Toyota plant in Georgetown, Kentucky, as a showcase factory. In contrast to older American manufacturing approaches, where each worker has one or two repetitive tasks to perform in the assembly process, Toyota enlists workers in making decisions that in most other manufacturing plants would be made by managers.
Encouraged by management through bonus awards and being given more control over their own production work, assembly-line workers contribute to what is described as a "lean production" environment. Workers in such an environment "learn numerous jobs and shoulder broader responsibility, including maintenance, inspection and machine setup."8 Worker involvement in production decisions includes having authority to stop the production line in order to fix mistakes, being rewarded for suggestions that improve production techniques, and even introducing new manufacturing processes. According to New York Times writer Doron Levin, Toyota has discovered that when allowed to participate in the decisions that shape the workplace, "a smaller number of workers, each capable of doing several jobs, can manufacture automobiles with less inventory, less investment, and fewer mistakes."9 Such lessons are not being lost on at least some of American and European manufacturers.
We lived for a long time with a big lie: Romania is a rich country, blessed by God with all possible natural resources. Maybe, by the standards of the Middle Ages feudal autarchic production. We must learn as fast as we can that in modern economy 'man is the most valuable capital'. The communists kept on repeating this slogan, but they always treated workforce as the cheapest and the most unworthy variable in the economic process. The incapacity of our political or business leaders to understand that the workforce is the decisive factor in any competitive free market economy is really amazing. As a result, we waste the ability and the competence of our best professional workers, specialists and experts, who are miserably paid and treated with contempt by incapable, stupid, and greedy managers. In the last decade our best specialists left the country for good, in search for better jobs abroad, and an alarming number of young students - more precisely the elite of our future experts - are firmly decided to emigrate as soon as possible, having no bright future ahead in their country. On the other hand, the obvious fact that no one could get a solid financial situation on the grounds of high qualification, competence, and hard work, the young people who do not plan to leave Romania for good, lose their interest in education, so that their value in the workforce market is reduced, as well as their productivity and efficiency. Many of them prefer to do temporary unskilled labours in West European countries, because in a few months they can earn there more money than a highly trained employee gets for a year work in Romania. The private-owned companies pay more attention to their employees than the public companies but the difference is not yet very significant. Leaving aside any moral considerations, from a pragmatic and self-interested point of view, the investment in the workforce is the most profitable. The fact that most of our business leaders ignore this elementary aspect is symptomatic of how primitive and brutish Romanian society is.
The only common feature of both Japanese and Romanian economy is the well-established tradition of life-time employment. In Europe and North America a few large firms, and many family-owned firms, have also espoused policies of continued employment. Such firms usually manage their affairs for stability rather than rapid growth, attempting to provide their employees with long-term security rather than hiring them one minute and firing the next. On the face of it this seems very laudable. However, the business's obligations to its employees have to be considered alongside its obligations to other stakeholders. For example, is a policy of continued employment beneficial to the shareholders? Many business leaders would argue that, while treating their employees well and responsibly is in general in the shareholders' interests (because it leads to higher employee loyalty and productivity), an over-emphasis on job security goes against shareholder interests by restricting the options for growth and incurring unnecessary expenses in recession.
We may also need to take account of creditors. When a business goes into receivership or liquidation, the employees come right at the bottom of the pecking order of those who have a claim on its assets. This is sometimes seen as unjust. When the Anglo-Dutch lorry and truck manufacturer Leyland went into receivership in early 1993, the employees complained bitterly that they did not receive the redundancy payments to which they would have been entitled had the firm still been in business. But they were at least paid for the work they had done, whereas the creditors had supplied goods or services for which they had not yet been paid. In this situation it seems quite reasonable that the creditors should have, as they do in British law, priority over the employees. In a company that is still trading, however, paying employees for the next week or next month is usually treated as a higher priority than paying creditors for the past week or past month, even though the creditors have supplied their services and the employees have not. Even if the need of employees for future employment is greater than the need of creditors for payment, which may or may not be the case, this is difficult to justify morally. Only if the obligation to retain employees were socially accepted as an overriding one, so that it was effectively implicit in the contracts with creditors, could a reasonably strong case to be made.10
Another responsibility of business to their employees might be to their growth and well-being while in employment. In this context we might ask to what extent a business is morally obliged to provide its employees with benefits such as education and training, or to enable them to pursue their own development through, for example, day-release arrangements. And to what extent should it take account of personal needs in the allocation of tasks or duties? Because employment can be hard to come by, a business will often be able to persuade an employee to make considerable personal sacrifices - often at the expense of spouse and children - in the interests of the business. In many companies employees are expected to treat work as their primary responsibility, and to relegate families, leisure and personal development to second place. This may be good for shareholders, but from a moral standpoint it would seem to be tantamount to the exploitation of a weaker party (the employee) by a stronger one (the business), and this would make it unacceptable within most ethical philosophies.
The most contentious issues that arise between an employer and his employees concern money and conditions of service. There are cross-currents between internal arguments, based on their all being together in a joint enterprise, and external arguments ending in a bargain between parties whose interests are opposed. Money paid in wages is potential profit forgone. Prima facie, therefore, it is in the employer's interest to pay as little as he can get away with if the job is to be done. Up to a point, however, enlightened self-interest argues the other way. Well-paid and well-looked-after employees tend to identify with the firm more and work better. But only up to a point. In many factories there is not much scope for working better, and if a better-paid work-force is only as productive as an ill-paid one, competition will drive a good employer out of business. Sad but true, especially for present Romania - as Griffiths and Lucas point out - "often the choice has been between offering employees a starvation wage and not offering them employment at all. It is difficult to be happy about employing sweated labour, but if there is one thing worse than being an exploited worker, it is being an unexploited one."11
Are some of the Romanian managers and business leaders stupid and greedy? Doubtlessly, they are. But would we acknowledge that all of them are like that? This certainly does not hold true. In the previous section we assumed implicitly that all the employees are competent, industrious, honest, and devoted to their jobs. Unfortunately, the communist era has left here, too, deep scars. One of the favourite jokes of our employees before 1990 was: 'They - that is the party leaders and managers - pretend to be paying us, and we pretend to be working.' This attitude of our employees towards their duties and professional responsibilities is perhaps the most devastating damage caused to our people by the fifty years of triumphant socialist demand economy. In 1945, about 80 percent of Romania's population were small farmers and poor peasants, whose patterns of living and working have had nothing in common with a modern industrial society. A massive transfer of population from villages to industrial towns has been operated by the communists. They have 'educated' and 'trained' our workforce in this unfortunate spirit: as long as everyone gets easily a lousy job, poorly paid but secure until retirement, and as long as the lousy salaries are practically the same, no matter if you do your job well or not, and as long as the promotions depended not on competence and hard work but on political criteria and personal relationships, the employees only have to pretend to be working. And because they had the feeling to be exploited and stolen by the State - the almighty employer - and because all the productive capacities belonged to the 'entire nation' - that is, they were owned by nobody in particular - a huge number of employees thought they have the right to steal back from the State.
Many of them still think and behave this way, demanding to be paid even if they do not take seriously their professional duties, are not interested in the quality of the products they are manufacturing or the services they are rendering, and even if they still believe they are morally entitled to steal from their employers. The Romanian employers - formerly employed themselves by the socialist State - are familiar with this endemic and chronic lack of professional conscience of the employees; some of them strive to change the mentality of their personnel but most of them accept it as a 'natural' and unchangeable fact, and seek to protect their interests treating their employees as lazy thieves: low wages (they are incompetent, they are playing truant, they are stealing - what for good wages?), authoritarian treatment (they always must be told what to do and if the boss turns a blind eye they do nothing or make mistakes), and frequent lay-offs (this one is no good; I'll try another one - easy to find, because of the massive unemployment - he or she cannot be worse).
As for the foreign investors, initially they have been attracted by the cheap skilled workforce in Romania, but soon they discovered all the shortcomings of our ordinary employees. Some of them engaged a long and difficult battle against this state of affairs, trying and often succeeding to select, to train, and to educate their personnel in the true spirit of genuine free market economy; others did not even start this fight or gave up sooner or later, liquidating their businesses here.
In the developed capitalist countries, it is understood that if a business has moral responsibilities to its employees, so too do the employees have responsibilities to the businesses employing them. The extent of these responsibilities depends on the nature of the employment. Casual hands or one-off consultants may have no obligations other than to do the jobs for which they are paid. Permanent employees, on the other hand, may reasonably be expected to display some degree of loyalty to the business, especially if it is providing them with job security, a sense of belonging in a community, support and understanding in times of personal difficulties, and so on. The question is, how far should that loyalty go? Is it reasonable to expect, as some businesses do, total loyalty from employees, or are there limits beyond which the demands of loyalty are unreasonable?
What happens, in particular, when the behaviour expected in the business is at odds with what would be morally acceptable in society at large, or to the individual concerned? This might include asking one employee to invade the privacy of another, or asking an employee to tell lies or conceal the truth when the success or reputation of the business is at stake.
There seems to be no reason in principle why moral standards within a business should be any different from those outside it, or why a person should apply different moral rules to his behaviour when in work from those applied to his behaviour the rest of the time. If a business or its employees act in a way that would be morally reprehensible in any other context, the chances are that it is morally reprehensible in a business context too. The fact is, however, that people do often behave as if there was one moral code for everyday life and another, looser one, for business. On the premise that 'all is fair in love, war and business', they leave their morals behind them when they go into work. As a result, those employees who take their morals with them can be placed in a very difficult position.
Consider, for example, a case in which a company has been in breach of a law governing toxic emissions. The breach was inadvertent, a consequence of the difficulties of coordination that beset any complex organization. Once it is discovered the company takes action to rectify the situation, but this requires a plant redesign that will take 12 months to put into effect. In the meantime, to admit to the breach would mean stopping production, which, combined with the effect on its reputation, would seriously damage the company. Although the high emissions might cause very serious illness, the chance of their doing so is small, and the company instructs its employees to lie about the emission levels. One of the employees believes strongly that this course of action is morally impermissible, but when he puts this view to his superiors he gets nowhere, so in the end he talks to the press. Now we reach one of the most debated topics in business ethics: the so-called 'whistle-blowing'.
Is whistle-blowing morally permissible, morally impermissible or an unacceptable breach of loyalty and confidentiality? The line of argument most commonly used in such cases is to assess the likely damage to the public from keeping quiet and to the company from being honest. If the risks to the public were minimal and the costs to the firm high, then, it is argued, the employee's duty of confidentiality would override any other considerations. If the risk to the public were serious, however, the whistle-blowing might be permissible and, in certain cases, obligatory. Such an analysis has two weaknesses, however. First, it excludes damage that is done by acts that establish dishonesty as a legitimate practice. The immediate effects of a lie might be beneficial, but can still be outweighted by the long-term effects of an accumulation of lies - which is wrong by rule-utilitarian standards. And even if the effects appear beneficial - offering an act-utilitarian justification - it can still be wrong, as in Kantian or Aristotelian ethics, to lie. Second, it fails to address the fact that the costs and benefits cannot be objectively calculated, and that the business and the employee might genuinely differ in their judgments of the seriousness of the breach.
In practice businesses tend to place a great emphasis on both shareholder returns and employees loyalty, and their actions reflect these priorities. Even when they have a clear moral dimension, decisions are often made on commercial rather than moral grounds, and whistle-blowers are either fired or given every encouragement to leave. If asked to describe how they would respond to a hypothetical situation, however, the directors of these same companies will usually profess honesty and openess, and this suggests that they recognize that their practices fall short of society's expectations, at least.
An employee, faced with a situation of this kind, would appear to have a duty to act responsibly - not to cause damage on the basis of an unsubstantiated rumour, or without giving his employer a chance to rectify the situation. Providing this is done, however, there seems to be no sound argument to suggest he should behave any differently from a moral perspective than he would if he were not an employee. There seems to be no sound basis either on which a business can encourage or oblige its employees to behave in anything other than a morally responsible way.
Moreover, we can go further than this. Major breaches of safety standards may be relatively rare, most people have found themselves in a situation in which they knew a wrong was being commited, and felt instinctively that they should do something to stop it, but ended up turning a blind eye - either because they were scared (if witnessing a crime) or because they wished to avoid the hassle and possible risks to themselves of taking action, or because they felt pressurized by a perception that the wrongdoing was in some sense socially acceptable (cheating the tax-man, for example, or selling a second-hand car without disclosing faults). Inevitably these types of situation arise in business as well as in social life. Sexual harassement, the invasion of privacy, minor safety infringements, or cheating of customers and suppliers, are allowed to pass unnoticed. If a business has a moral obligation to prevent such things, as it surely does, then it also has an obligation to its employees to ensure that they do not feel pressurized in any way to ignore them. Fenman Training, a producer of training videos, has the following statement posted on its walls:
We believe in honest and fair methods of doing business. Our policy is 'Active Honesty'. For example, if a colleague became aware that a supplier had mistakenly undercharged us for goods or services and clearly had not noticed the error, we would expect the colleague to point this out to the supplier. Likewise, if we had overcharged a customer.
We believe in the importance of trust and mutual respect in business and we believe that a policy of Active Honesty pays for itself in the long run quite apart from the self respect that it makes possible for colleagues. This company will never penalise anyone for being honest regardless of the cost to the company [emphasis in original].12
This type of approach is unusual in business but it is surely morally desirable. By making it quite clear where everybody stands, the firm minimizes the possibilities for half-truths, evasion and cover-up. As a side benefit for the company, a lot of emotional energy that would otherwise go into agonizing and frustration is put instead into making the business successful.
Big or small, a business organization has a structure that cannot be reduced at only two key factors: employers and employees. From the CEO and his staff to the last employee, any business organization is based on the cooperation among specialized functions, whose coordination requires a chain of command. In other words, employees are bond in a complex network of horizontal and vertical relationships. Consequently, there must be a division of labour and a hierarchy of decisional authority. Different categories of personnel and even different individuals in the same category bring unequal contributions to the financial success or failure of a business. Therefore, a system of unequal retributions is perfectly just and fair, as long as the differences are related to the effective contribution of each employee to the business activity.
A functional business requires a perfect cooperation among all of its components. That is why any corporate culture emphasizes the so-called 'team spirit', cultivating the loyalty of the individual employees to their colleagues, be they inferiors, equals or superiors. But the members of a business organization have also to compete with each other - primarily in order to keep their jobs, and secondly to step up the hierarchical ladder of the firm. The competition among employees does not raise specific moral issues. It is wrong, dishonest and unfair to lie, to cheat, to manipulate, to steal, to violate someone's privacy, and so on under any circumstances, those in the workplace included. No business context could justify a morally reprehensible behaviour in the world outside the company. If, as a general rule, it is wrong to tell lies or to conceal the truth, then no one could claim his moral right to cheat in order to keep his job or to get a promotion.
Specific business ethics issues are connected with the grounds on which business leaders make and apply the rules of unequal treatment of their employees. We have so far assumed that the responsibilities of business towards one employee are the same as those towards another. In practice, however, firms do not behave as if they had the same obligations to all employees. Under the communist regime, men and women had equal economic rights for equal activities - absolutely miserable, that's true, but equal. We have got very quickly rid of this socialist heritage, and now we can be proud of staying in line with the developed capitalist countries: women often work on terms that are significantly inferior to those of men, and part-time staff are regularly excluded from protections enjoyed by full-time workers. But there is another socialist legacy that our employers - both in public and private segments - keep alive with fervency: Before 1990, the younger employees began their professional career with incredible low wages, just because they were young - no matter their competence, training, professional skills, creativity or productivity. All of them had just to wait: good or bad, industrious or lazy, competent or incapable, as time went on, all in a row got the same increase of their salaries. Things did not change too much in our slow transition from a demand economy to a free market economy. Excepting a few high tech industries, such as computer science or electronics, and a few brand new financial and managerial activities, such as stock broker, the young employees get awfully poor wages on the ground of their lack of experience. In some cases, this claim is grounded, but when everything should change as quickly as possible in our economy, the 'experience' acquired by older employees in socialist economy of inefficiency and waste is rather a handicap, not an advantage.
Our main problems are the increasing poverty of at least half of the population, which is primarily generated by the inefficiency of our economy, and the huge contrasts between the returns of the business leaders or top officials in the administration and those of the ordinary employees. These two problems are so evident and urgent that other issues may be less visible, but they became serious since Romania has began to align its legislation to the European Union. It appeared that some of the controversial issues in the Western world, which we were not familiar with until recently, already became actual in our society: discrimination against different ethnic or gender minorities and sexual harassement.
This was originally a specific American problem. Given the growing racial, ethnical, and religious diversity of the United States, as well as the deep contrasts in wealth, education or social status that separated at the half of the 20th century the white majority and the disadvantaged minorities, as well as the inequality of gender, clearly in favour of male population, America has been tormented by radical political pressure that succeeded in obtaining, step by step, legislative changes, meant to ensure special protection for the different kinds of minorities. The key terms of this process are 'affirmative action' and 'positive discrimination'. The former is frequently used, because it sounds well, but its meaning is not clearly defined; the latter is currently avoided, because it sounds less 'politically correct', but its unpleasant connotation is due precisely to the fact that it has a clear and truthful meaning.
The affirmative action was initially associated with the view that companies should not be allowed to exclude individuals from consideration for employment because of such irrelevant factors as gender, race, national origin, or a disability that would not prevent them from accomplishing the job. Affirmative action policies not only prevent employers from using such irrelevant criteria in making hiring decisions, they also work to bring into the work force individuals from groups historically underrepresented. When this good-willed and noble policy calls for advantages accorded to whole categories of people solely because they have been discriminated in the past, affirmative action becomes positive discrimination. Probably no feature of contemporary social policy is more controversial than affirmative action, because preferential hiring practices raise charges of reverse discrimination and the specter of quotas imposed either from within a company or from without.
Affirmative action can mean different things to different people, but it basically comes down to the efforts of employers not to exclude individuals from their work force because of irrelevant criteria. Often the problem is not that companies deliberately exclude certain classes of people (though sometimes they do that, too) but, rather, that individuals making the hiring decisions tend to hire the same kind of people they see around them. If the employers surround themselves only with people from a certain race or sex - white males, for example - they tend to think of only those persons as qualified for the jobs they offer. By deliberately excluding certain groups from employment, they have created an injustice against that groups, an injustice that can only be addressed by compensatory action - that is, they compensate for past wrongs by making a special effort to hire persons from the groups discriminated against.
Opponents of the compensatory justice approach argue that the individuals discriminated against are not the same individuals now being compensated for the past wrong. A further argument against the compensatory justice approach is that making a preferential decision to hire a person from a class previously discriminated against is to commit another unjust act of discrimination: if a company has a history of hiring only white males, then for it to make a commitment to hire minority females is to discriminate unjustly against white males who are also qualified for the position.
At first sight, scepticism about positive discrimination appears perfectly justified, for, as in the case of hiring, how can the colour or ethnic background of people who run a business properly qualify them for favourable treatment if it could only improperly qualify them for unfavourable treatment? One simple answer is that the colour or background, though irrelevant to one case, may perhaps be relevant to the other, though indirectly. In recruitment one is always making a judgment on people's future potential (their ability to do a job they have not yet done), not on past or present performance. Past and present performance are relevant factors in making this judgment, but so are many other factors that might have influenced that performances. In recruiting students into university courses the admission board expects a higher level of examination performance from someone who has went to a good school and came from a supportive family environment than from someone who has not had those advantages. Lower levels of examination performances does not, then, mean lower levels of ability. In giving weight to this consideration the universities are effectively applying positive discrimination in favour of the underprivileged, who are in many cases women, or coloured, or members of ethnic minorities. The same argument holds in respect of the recruitment of employees. A problem arises, however, when we move from a judgment based on individuals to one based on classes of individuals, such as women or ethnic groups, and when we move from allowing an element of judgment to requiring a practice that may at times conflict with that judgment, for not all members of these groups are underprivileged, and not all underprivileged people are members of these groups.
A counter to these objections is an appeal to something like Rawls's second principle of justice: in a fair society positions to which are attached unequal rewards should be open to all, and a pattern of hiring that excludes certain classes of people is evidence in itself that hiring practices are unfair. Or if all females in an organization receive wages 30 percent lower than males doing comparable work, this is prima facie evidence of wage discrimination on gender grounds. To redress the imbalance in hiring or in wages requires positive steps to correct the situation. The ethical principle appealed to here can be seen as a fairly straightforward Kantian one: if you were a member of the excluded class, or if you were paid less than your coworkers simply because of your gender or race, this would not be a principle with which you would agree. Therefore, a principle of action (a maxim) that tries to universalize discriminatory conduct based on irrelevant criteria would not be maximized.
Qualifications for a position are not irrelevant criteria, and it is hard to argue against the view that the best qualified person should receive the position regardless of race, gender, or national origin - and this is affirmative action in its original and justifiable sense. A more subtle form of bias can creep here, however. Requiring certain kinds of tests may disqualify those individuals from social groups unfamiliar with testing procedures. Or a company may look for only women to fill certain kinds of jobs and only men to fill others, thus failing to consider a woman seriously for a role traditionally viewed as a male position. Even educational requirements not necessary for the job can serve as a form of discriminatory hiring.
There are also utilitarian arguments for affirmative action in hiring and promoting individuals within an organization. One could argue that a society becomes unstable when sizable numbers of its people are systematically excluded from access to the most desirable jobs. We could also argue that a company severily limits its ability to compete when it draws its talent from a limited range of people and excludes over half of the work force (women and minorities). It also risks losing the competitive edge that comes from diversity of outlook. The truth is that philosophical arguments lead nowhere: the pros and cons balance indefinitely, especially when it comes to positive discrimination (no matter how 'positive' this might be, it is, after all, another form of dicrimination). The debate has been lastly decided by the interests of the big companies, which learned from experience that, in the long run, diversity pays. According to Bank One Corp. Chief Legal Officer Christine A. Edwards, "diversity is good business".13
Considering the demographic trends in America (where, like everywhere else in the world, the non-white minorities are very prolific) and taking account of the requirements of the global economy, these companies appreciate that racial, ethnic or gender diversity could be an important factor of their growth and competitiveness. In a global economy, customers are diverse, and unless the work force is also diverse, a firm may find its products appealing only to a subset of the population at large. IBM's CEO Louis V. Gerstner, Jr., remarks that "our marketplace is made up of all races, religions, and sexual orientations, and therefore it is vital to our success that our work force also be diverse."14 According to Ernest H. Drew, the CEO of Hoechst Celanses, the solutions found by heterogeneous management are broader than those of groups composed of a single race. Formerly the company thought of diversity only in terms of the number of women and minorities. Current thinking is that it need "diversity at every level of the company where decisions are made", according to Drew. A similar point of view is expressed by Robert D. Haas, CEO of Levi Strauss, whose values-driven management style includes a commitment to broadening its work force at all levels to include those historically excluded. According to Haas, "We are not doing this because it makes us feel good - although it does. ... We are doing this because we believe in the interconnection between liberating the talents of our people and business success."15
To summarize, arguments for affirmative action are the following:
1 Affirmative action can be seen as a compensatory justice to correct past wrongful discrimination.
2 Fair hiring practices require us to make sure that favoured positions are open to all, regardless of race, gender, or class.
3 Discriminatory hiring practices create instability both in a society and in a company that practices them.
4 Developing a diverse work force aids a company's creativity and competitiveness.
Broadly speaking, the first two arguments are deontological and the last two are utilitarian. This list shows again how both consequentialists and deontologists can agree about courses of action while disagreeing on the grounds for such action. In the case of hiring practices, both lines of moral reasoning point to the importance of creating a diverse work force, and it is in the confluence of these two moral demands that much of the current discussion of this issue is couched. However, perhaps the most compelling motivation for encouraging diversity in the workplace are the forces of the marketplace itself.
Lately these typical American issues became actual also in some of the West European countries, such as the United Kingdom, France, Germany, etc., as a result of a massive emigration of people from all over the world. Each of these countries has its specific problems with consistent racial, ethnic or religious minorities. Even though the American model of affirmative action as positive discrimination is not yet generally agreed upon in Europe, many of its components begin to be adopted by recent legislation of the E. U.
What might be the relevance of these issues for Romania? Do we have to deal with problems raised by discrimination? We certainly do. As I said above, in the private-owned companies, lower wages for women became a frequent practice. Besides, women are discriminated against for several grounds: many firms hire only young and attractive women - usually for reasons connected with the next section, dealing with sexual harassment; employers also avoid to hire women because they get married and have children, so that they are not always ready to put the professional activity on top of their priority list, and so on.
As for the ethnic minorities, gipsies undeniably are already a serious problem in our society. Unfortunately, the lack of financial means of the government in combination with the refusal of most gipsies to be integrated in a genuine European style of living make the situation worse and worse, and chances to see spectacular changes in the near future are quite small. Perhaps the American model of affirmative action is not adequate for present Romania, but some issues are common and we must watch carefully the Western approaches to them.
Originally sexual harassment was defined as quid pro quo, the implicit - or often explicit - offer to exchange certain job benefits (promotions, better assignments, raises) for sexual favours. The concept was broadened from this somewhat narrow definition to include hostile environment, which is defined as a workplace where unwanted comments, touching, offensive sexual references, language, and even outright sexual intimidation have the effect of transforming the office into a nightmare for the employees who are the targets of harassment.
The issue here can be understood as a variant on Kant's theme of treating persons as means only. The individual who is the target of unwelcome sexual advances is being treated as an object, as a means for the gratification of the harasser. The way the issue is frequently framed is that women (and it is most often women) are being treated as sex objects. The issue becomes one of power, the abuse of superior authority to take advantage of those subordinate in the chain of command. Certainly the harasser could not legitimately claim to be treating the harassed as an end in itself, a person worthy of respect and dignity.
It is not difficult also to formulate a utilitarian argument - certainly in the sense of rule utilitarianism - against people as objects by harassing them sexually. The success of a business organization depends on the morale of its employees. The greatest good for the greatest number of persons - shareholders (in terms of profitability of the company), customers (in terms of consumer satisfaction), and employees (in terms of high morale and productivity) - will result if the company provides a harassment-free workplace. The absence of harassment does not guarantee higher productivity, profitability, or morale, but its presence is certainly detrimental to these objectives. Of course, it is possible to argue that an occasional act of harassment would not affect these objectives and that the utilitarian standard really does not address an occasional or isolated case. It is just such counterarguments that led to rule utilitarianism: the rules against harassment are defensible on utilitarian grounds, and therefore one cannot use utilitarian arguments to defend exceptions to those rules.
It is also clear that such conduct is prohibited by deontological standards. As was encountered earlier, not only is there a Kantian appeal for the treatment of individuals with respect, it is also the case that the first formulation of the categorical imperative prohibits such action. The one doing the harassing could not make the principle of action a universal law, for the harasser would not want to be the recipient of such actions, and, likewise, the principle could not be made universal because the actions are unwelcome. Reports published by world-wide famous media, such as Business Week, Wall Street Journal or New York Times make clear that more and more businesses are discovering that one key to productivity is to treat their employees with dignity. Not only is such corporate behaviour good for business, it is also the right thing to do.
We must say that just like positive discrimination or political correctness, viewed from our cultural tradition and collective spirit, sexual harassment in its American version looks very much like a psychosis. It is not hard, but almost impossible to imagine a Romanian female employee suing her employer or her superior only because she has repeatedly been the target of his come-to-bed eyes or his sexual jokes and allusions. Fortunately we still have a more natural attitude toward sexuality than Americans, who consider that kissing one woman's hand or opening the door for her are clear invitations to intercourse. Our women still like to be courted and sex life is not a taboo in the small talks of coworkers; on the contrary. But taking advantage of a subordinate for sexual favours is a different matter. It is hard to say if it happens now more often than before 1990 - probably it does - but new is the fact that more and more female employees protest against those immoral practices and, due to the free press, more and more scandals come to the open.
Among the concerns expressed most often by contemporary managers is the quest for quality in all operations of a company, a concern commonly called quality assurance programs, continuous improvement programs, or total quality management. One of the strategies in this pursuit of quality is to rely more on the creative talents of employees and less on management techniques that, like those of Taylor, treat workers as interchangeable ingredients in the manufacturing and service processes. A Business Week report on the quality imperative noted that "empowering workers" may be the best strategy for achieving quality "because it's the employees themselves who generally find the best solution." This means getting rid of the the attitude that "harks back to the time of Henry Ford and the productivity theories of Frederick Winslow Taylor. . . . Most U.S. companies are still struggling to leave this structure behind."16
In the rhetoric about the need for "reinventing the corporation", which calls for, among other things, rethinking the way the company does business and getting back to core competencies, a familiar refrain is the importance of unleashing the creative talents of a company's employees. A discovery made by managers who focus on processes rather than on the company's internal structure is that "self-managed teams throw more challenge and meaning into employment" and "today's best managers, the theory goes, must step back to allow their workers to assume alternating roles as leaders in teams."17 None of this would have surprised Kant, for treating people as a means only is a perfect description of Taylor's management theories that treated workers as things, replaceable cogs in the industrial machine. To treat individuals as ends includes taking their own interests seriously; treating them with respect also means taking their ideas and insights seriously as well.
"In TQM [total quality management]," one writer observed, "85 percent of the problems that arise in the course of work are attributable to the organization's systems, just 15 percent to the shortcomings of individual employees. The manager's job, then, is to improve constantly the work systems of the organization, to drive out blaming and fear, to remove obstacles in the system that prevent persons or teams from doing their best work."18
We have the right to dream about tomorrow or, perhaps, the day after tomorrow and, if we are rational, we even must think of the future strategies. For the time being, however, our employers should create jobs first and should pay decent wages to their employees, who do not expect to be so much 'empowered' but would be delighted if they were treated as human beings. On the other hand, our employees should be pacient with their 'creative self-management'; every one would be happy if they did honestly and skillfully their jobs, each and every day.
1 M. R. Griffiths and J. R. Lucas, Ethical Economics, p. 82
2 Cf. David Stewart, Business Ethics, p. 151
3 Lester Turow, Head to Head: The Coming Economic Battle Among Japan, Europe and America, p. 54
4 Thomas J. Peters and Robert H. Waterman, In Search of Excellence: Lessons from America's Best-Run Companies, p. 39
5 Cf. Stewart, op. cit., p. 151
6 Peter and Waterman, op. cit., p. 244
7 Kenneth E. Goodpaster, "Note on the Corporation as a Moral Environment", in Ethics and Practice: Managing the Moral Corporation, eds. Kenneth R. Andrews and Donald K. David, Boston, Harvard Business School Press, 1989, p. 90
8 Cf. Stewart, op. cit., p. 154
9 Idem
10 Cf. Tom Sorell and John Hendry, Business Ethics, p. 86
11 M. R. Griffiths and J. R. Lucas, op. cit., p. 85
12 Ibid., p. 89
13 Roger O. Crockett, "Why Diversity Is Good Business", BusinessWeek, January 17, 2003
14 Cf. Stewart, op. cit., p. 164
15 "Managing by Values", Business Week on line, www.businessweek.com, Aug. 1, 1994
16 Cf. Stewart, op. cit., p. 161
17 "Management's New Gurus", Business Week on line, Aug. 31, 1992
18 Ted Marchese, "TQM: A Time for Ideas", Change, May/June, 1993, p. 13
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