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11/01/08 Picture refrences from; www.yahoo.com, www.google.com 1

Management And Employees

The Ethics of HRM and IR

Chapter 6

Group MatesMuhammad Faizan Talpur, Jameel Ahmed Jamali, Darshan Kumar, Saqib Mehar,Muhammad Owais Dhedi, Sajan Khwaaja

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History of Capitalism;Different Forms of Capitalist

ProductionBut why go into history in the first

place?

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Keeping the past and the futurealive is one and the same thing (Henry Fonda)

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Putter Out System

Aim, shoot and let the ball movefreely toward the flag-hole..

Work Contractors assignedProduction to the Individualsbased in cottages and paidthem on a piece rate basis(page 142)

In Pakistan, Clothing and Toymanufacturing are goodexamples of Putter out System

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A Picture is a Thousand Word

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Collective bargaining is an un ending process, whichlegitimates trade union participation in the regulationof capitalist market (page 145)

Union can take strike for the protection of labor rightbut the right is limited to the dominance of Capitalistways.

Industrial Relations Or TheCollective Bargaining

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Why there is need of union protection ?? Weak individual. Wage conflict.

FunctionsProtection of material rights

Security Status Dignity

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But is it the Interest of the Capitalist and GovernmentsTo recognize these collective rights of labour? (page145)

IR emerged because The means to achieveaccumulation was different for different people For Property Owners, Lowering Costs

For working Class, Increasing wages

Thus IR is de-legitimized in post-Fordist Capitalism

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Business ethics teaches to follow a leanproduction system.

To empower individual worker to get best results.

Capitalist employees (maximization-seeking)should be empowered as they will disciplinethemselves and lead to enhanced quality of business !

Ethics of HRM

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Ethics of HRM Individual employees firms most important assets.

Japanese HRM head is second to the CEO.

Principles:

Expect every individual to do a good job. Provide an environment in which individuals can work well

and creatively. Recognize personal achievements Treat Every Individual with Concern and respect

This is pure Kantianism (Categorical imperative).

Managers and employees must choose the Same end of accumulation

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IR to HRM, Or Fordist to Post-FordistWhy this Change?

Unionism Can be replaced by active participation of individual employees in the management process inother words HRM

The Change can also be tracked to; Cultural Values Technology

Market Imperatives The Choice of Organization itself..

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Ethical Responsibilities of

LeadershipEthics and Capitalism?

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Choose Your Path..

For everyone who knew Anita, it was about much more thanthat: you couldn't help but be inspired by her love of life, her vision of the world and her passion for changing it

(Adrian Bellamy) Chairman, The Body Shop

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Managers Rule No Private Property in Capitalism remember?

Why was that? Capitalist systems of production transfer control

from workers to managers.

In Pre-capitalism, it was the self-employedworker who decided how long they should workand what they should produce.

In capitalism (Fordist and Post-Fordist) manager takes crucial decisions aiming toward profitmaximization.

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How to Control?

Etizoni (1961) Claims 3 ways of leadership control

Coercive (use of Force and Punishment)

Remunerative (Pay and Incentives) Normative and ethical (Social rewards and

Deprivations)

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The Taylorist System Disciplining workers to ensure production on the basis of

time schedules.

Standardized work system.

No scope for recognizing worker as individual.

Reasons: Lessens managements dependence on individuals.

To make workers as easily replaceable as parts of machines .

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Bureaucratic System (Rigid) Vertical strong hierarchic structures.

Job descriptions are usually fixed (No re-definition required).

Individuals have to perform special tasks according to pre-

designed steps (creativity, initiative, multiple-roles are notencouraged).

If standardized technologies are in use and marketuncertainties are unimportant, utilitarian/Kantian argumentscan justify this bureaucratic structuring of management.

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Post-Fordism ideas Business ethics discourse presumes the existence of post-Fordistorganization.

Employer-Employee relations seen as b/w individuals not groups.

Acceptance of the atomization and disorganization is considered asnatural, irreversible and inevitable.

Leadership is expected to stress individual initiatives and enterprise.

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Organic System (Flexible) Needs to be adopted when Problems/Requirements cannot be

broken down along the perfect hierarchy. Individuals have to perform their special task in the light of their

knowledge of the tasks of the firm as a whole. Jobs have to be continually redefined (through interaction with

others). Interactions run laterally as much as vertically. Communication b/w ranks resembles lateral consultation rather

than vertical command.

Business ethics discourses justifies such organicmanagement formal and informal organizational structures

(page 155)

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Changing from mechanistic to organic system has its

costs: Disturbs intra-organizational power and resource, distributional

systems and status structures. Such changes will be resisted. Top management will need to force/persuade employees to

shift. Threatens the power and status of top management (including

CEO).

THE SHIFT

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There is no unique, OptimalBusiness Ethics system as there

is no optimal managementsystem (page 157)

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Whats happening in Pakistan?

Creating a post-Fordist structure is costly and impractical.

Business families retain a strong grip on major national

firms.

They have commitments to other values religion,

tribal, families, etc.

If Pakistani workers do not accept capital accumulation as

an end; They have no claim to any rights with capitalistorder!

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Employee Desire/Wants

Employees have a standard and stablehierarchy of needs. Material need

Higher need

According to goldthorpe hierarchy of need of employee is not fixed and isdetermined by workers orientation towork .

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Who to admit??

Correctly oriented workers Civil society. Competitiveness,ambition,individual

achievement .

Incorrectly oriented workers Religious society

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Beliefs

1. Main purpose of life is rising standards of living.

2. Participate in capitalist production .

3. There is no alternative.

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Work Participation

Work participation differs from collective bargaining

Workers participation on the other hand is theparticipation of the worker in management

Justification- Overcome conflict.- Overcome alienation at work place.- Increase productivity.

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No and Never!!

Work participation is apposed by Utilitarian. Reduce efficiency.

Slow decision making. Reduces power of union. Un necessary and superfluous.

Post Fordist dismiss union objection toworkers participation.

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Who to trust?

Management believes on their trust worthy workers.

Integrity. Competency. Benevolence.

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Fordist Rights

It recognized the collective rights of workers.

Trade unions were accepted as representatives of workers interest.

Unions had rights to collective bargaining and for demanding management participation.

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Post-Fordism(Fordist rights over-rided)

Collective agency is delegitimized. Every rational employee is to be a utility maximiser for

himself.

It frees the economy from influence of associations /groups which obstruct the operation of competitivemarkets.

P-F asserts the right to free association and the rights to

voluntarily withdraw ones labor.

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Employee Rights / Duties Individuality; Privacy; Freedom of conscience; Right to report

wrong.

Individuals Join and leave the firm through contracts.

Every employee is an agent of the firm.

He/She is to accept the purpose and structure of the firm in returnfor a wage.

Employees primary moral obligation is to obey the employer.

Right to participate in management and to organize. The employee must work for the achievement of the goals of the

organization and not for his personal interest.

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An employee is to remain impartial (benefit thecorporation) if a conflict of interest arises.

The individual employee must expect to be treated with

concern and respect.

He/She should be paid a fair wage.

That wage should be freely accepted by the employee,and not forced upon him.

Job design should aim at increasing meaningfulness,responsibility and consequential awareness of employees.

Employee Rights / Duties

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Employer Rights / Duties

The employer is to provide remuneration for the services of the employee.

An Employer cannot pay a wage below the minimum leveldetermined (not by state but) by state support payments tothe unemployed.

Legislation has been institutionalized in most capitalistcountries that requires the employers to have a minimumhealth and safety standards (at the work place).

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The Employer should not force the employee intoaccepting a wage.

The employer should adequately compensate theemployee for the risk taken.

The employee doesnt elect the manager (employer) andtherefore has no rights to limit his authority.

Employer Rights / Duties

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Informal Rights & Obligations

Capitalist Organization are dedicated to profit\wellbeingmaximization.

There are conflicts between Individuals and groupswithin the capitalist organization, Individuals are pursuing their own interest. Different views regarding profit maximization. Different views about the strategy of the firm so the

firm synchronies with the national strategy.

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Cont

Individual seeking for prestige and power doesn'tperceive the best interest of the organization.

Typical self-promotional tactics are: Blaming others for failures. Denying information to others. Promotion of ones ideas and interests. Image building of himself.

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Cont

Ingratiation and flatiery. Creating networks of mutual obligations. Acquiring control over scarce resources.

Sometimes the individuals perception is that thesetactics wont interfere in profit maximization, but they

will in most cases hurt others.

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Cont

Using political tactics is justified in utilitarian point of viewif it contributes to increasing efficiency and wellbeing.

It is unethical on utilitarian grounds if it has beenpracticed for achieving personal goals and it damagesthe organization.

An employee has a utilitarian duty not to participate insuch practices.

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Cont

Political tactics which exploit others emotions areunethical on Kantian grounds, unless it has beenvoluntarily accepted by all members.

The use of these tactics are unethical if,

The person doesnt accept participation. If he doesnt has any other option except leaving the

firm. He cant use the same tactics against you.

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Cont

Political tactics providing privileged tosome individuals, violate the principle of distributive equity.

For e.g. The trader who is also the son of thechairman of the board.

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Cont

According to ethics of care, Firms may be seen as networks of

relationships b\w individuals therefore a

caring organization should focus on thenurturing of personal relationships.

Authors of business ethics argue that caringfirms also have high level of efficiency.

But there should be a balance.

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Downsizing And The EmploymentContract

Employees are loosing their jobs due to privatization anddownsizing in Pakistan.

Business ethics recognizes that employees are not freeto choose.

If the workers are loyal to organization they have a rightto expect fair treatment.

Due process gives right to employee to present his pointof view.

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Cont

Business ethics recognizes the moral rights of employees which should be taken into account whendownsizing: Workers should be informed of decisions. Representative of workers should be allowed to

participate in the above decisions. The cost should in principle be borne by the owners.

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Cont

The contractual rights of employees should befully respected.

Workers should also be financially

compensated. Workers right to participate in the above

decision should also be recognized.

Whistle blowing ( ti g

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Whistle blowing (reportingMalpractices)

The Capitalist law states thatemployees should keep the firmsmatters secret

Justified on both Kantian andUtilitarian grounds

External whistle blowing is allowedonly when internal whistle blowingis not possible

Whi tl bl i g ( l f h

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Whistle blowing (rules for theemployees)

Obtain accurate information about themalpractice

Determine personal involvement

Alternative to public exposure

Avoid bad faith

Whistle blowing (steps by the

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Whistle blowing (steps by theorganization)

Avoid persecution or isolation

Set up an effective multi-channel grievance andreporting system

Ethical training

Di i i i d Q

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Discrimination and Quotas

Discriminatory Practices: Recruitment advertisement specifying race,

religion, gender etc

Requiring qualification, not necessary for the job Promoting people of a particular social group Different remuneration for the same job

Positive discriminationQuotas

Islamic Evaluation of Capitalist

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pemployment

Orthodox View

Employment intended to accumulate wealthis condemned by the shariah

Both haram and mushtaba (doubtful) contracts are to beavoided (Imam Ghazali)

Islamic trade union organizations, under the leadershipof Ulemas should be established to overthrow thecapitalist order (Hussaini, Banma)

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Revisionist View

General Interest.

Shariah caters to welfareof people.

A just wage (Siddiqui)

Sufficient to satisfy needs(Chapra)

This view after the 70shas shaped to justify HRMrather than trade unions

Employer-Employee

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Employer-EmployeeRelationship

Traditionally: Master : Slave

Two Laws making andgoverning bodies. Provisional Federal

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July 2004 ILO Conventions

Abolition Of Forced Labor Minimum Age for workers Freedom of Association Weekly Rest for workers Equality of treatment Abolition of worst forms of child labor

Employer-Employee

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Employer EmployeeRelationship

Labor Laws inherited from India at the time of creation

Labor laws marked as concurrent subject

Pakistanis Labor force counts upto 37.15Million

Core Provision of IRO (industrial relations

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Core Provision of IRO (industrial relationsordinance) 2002

Workers representation as an enterprise A joint work council set up in case of 50+ employees 30% or more should be of labor force.

Also taking functions of previous work council. Settlement of issues through negotiations Facilitate good and harmonious working conditions

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Procedure for Appeals Appeals first in labor courts

If party is aggrieved by decision of labor court can submit an appeal in high court

B i i d U i R l

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Bargaining and Union Role

Bhuttos Regime

Played a vital role in union movement.

Roti Kapra Aur Makaan Financial sectors nationalized. Unions were made making these nationalized

organisation a symbol of corruption Politicians became union heads Workers remained where they were. Unions became stronger and productivity fell.

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Result of Strong Union Crisis

Get rid of undesiredworkers.

Employees resistedRetrenchment

Lockouts

Well performing firmsclosed down

Unemployment

G d ll W k R li d

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Gradually Workers Realized

Workers realized the problem Unions no longer play important role Emergence of HRM system HRM champion of all workers Due to HRM unions role is now insignificant

Human Resource Management

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Human Resource ManagementSystem

Flaws which led to HRM development Personnel department did not have a good

Reputation except Defense

Political influence. HRM Systematic Approach towards management Rely on system rather than individuals

Succession Planning.

HRM i P ki t

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HRM in Pakistan.

The initiative goes to multi national firms Introduces new concepts of HRM

Competition led HRM Into local market Established Employer-Employee trust

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Compensation Management

Strategy developed keeping four factors inmind. Organizational goals Identifying potential sources Object of attracting qualified people competitiveness

Compensation Strategies

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Compensation Strategies(govt.)

Cash Payments Fringe Benefits

Housing Subsidizing

Long term benefits Pension

Medical benefits

Compensation Strategies

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Pay for performance Prefer short term benefits over long term Allowances Bonuses

Compensation Strategies(pvt.)

E hi l P bl

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Ethical Problems

Minimum wage set is Rps 4600 Increase in salaries to get employee.

Inflated compensational packages Serious concern on long term compatibility

Do nsi ing

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Downsizing

Firing unnecessary employees toreduce costs.

Unorganized workers over organizedones.

Massive dismissal of employees

Golden handshakes

Z.As efforts to promote associatednorms collapsed

C l i

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Conclusion

Organizations in Pakistanhave to play a key role inimproving employee -employer relationship, thus

maximizing utility andpursuing their ultimategoal.

Chapter 626

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Transcript of Chapter 626