Chapter 626

Chapter

6

Management And Employees The Ethics of HRM and IR Group Mates Muhammad Faizan Talpur, Jameel Ahmed Jamali, Darshan Kumar, Saqib Mehar, Muhammad Owais Dhedi, Sajan Khwaaja 11/01/08

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History of Capitalism; Different Forms of Capitalist Production But why go into history in the first place?

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“Keeping the past and the future alive is one and the same thing” (Henry Fonda)

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Putter Out System • Aim, shoot and let the ball move freely toward the flag-hole.. • “Work Contractors assigned Production to the Individuals based in cottages and paid them on a piece rate basis” (page 142) • In Pakistan, Clothing and Toy manufacturing are good examples of Putter out System 11/01/08

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A Picture is a Thousand Word

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Industrial Relations Or The Collective Bargaining • “Collective bargaining is an un ending process, which legitimates trade union participation in the regulation of capitalist market” (page 145) • Union can take strike for the protection of labor right but the right is limited to the dominance of Capitalist ways.

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Industrial Relations Or The Collective Bargaining • Why there is need of union protection ?? – Weak individual. – Wage conflict. • Functions Protection of – material rights – Security – Status – Dignity 11/01/08

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Industrial Relations Or The Collective Bargaining • “But is it the Interest of the Capitalist and Governments To recognize these collective rights of labour?” (page 145) • IR emerged because The means to achieve accumulation was different for different people… – For Property Owners, Lowering Costs – For working Class, Increasing wages

Thus IR is de-legitimized in post-Fordist Capitalism 11/01/08

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Ethics of HRM • Business ethics teaches to follow a “lean production” system. • To empower individual worker to get best results. • Capitalist employees (maximization-seeking) should be empowered as they will discipline themselves and lead to enhanced quality of business !

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Ethics of HRM • Individual employees firm’s 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 11/01/08

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IR to HRM, Or Fordist to PostFordist…Why this Change? • Unionism Can be replaced by “active participation” of individual employees in the management process in other 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 Leadership Ethics and Capitalism?

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Choose Your Path.. •

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“For everyone who knew Anita, it was about much more than that: 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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Manager’s 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-employed worker who decided how long they should work and what they should produce. • In capitalism (Fordist and Post-Fordist) manager takes crucial decisions aiming toward profit maximization. 11/01/08

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How to Control? •

Etizoni (1961) Claims 3 ways of leadership control • • •

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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 management’s 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 predesigned steps (creativity, initiative, multiple-roles are not encouraged). • If standardized technologies are in use and market uncertainties are unimportant, utilitarian/Kantian arguments can justify this bureaucratic structuring of management.

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Post-Fordism ideas •

Business ethics discourse presumes the existence of post-Fordist organization.

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

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

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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 “organic management” formal and informal organizational structures (page 155) 11/01/08

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THE SHIFT

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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).

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There is no unique, Optimal Business Ethics system as there is no optimal management system (page 157)

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What’s 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 capitalist order!

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Employee Desire/Wants • Employees have a standard and stable hierarchy of needs. – Material need – Higher need • According to goldthorpe hierarchy of need of employee is not fixed and is determined by workers “orientation to work” . 11/01/08

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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 • Worker’s participation on the other hand is the participation 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 to worker’s participation. 11/01/08

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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 competitive markets. • P-F asserts the right to free association and the rights to voluntarily withdraw one’s 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 return for a wage. • Employee’s 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. 11/01/08

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Employee Rights / Duties • An employee is to remain impartial (benefit the corporation) 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. 11/01/08

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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 level’ determined (not by state but) by state support payments to the unemployed. • Legislation has been institutionalized in most capitalist countries that requires the employers to have a minimum health and safety standards (at the work place).

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Employer Rights / Duties • The Employer should not force the employee into accepting a wage. • The employer should adequately compensate the employee for the risk taken. • The employee doesn’t elect the manager (employer) and therefore has no rights to limit his authority.

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Informal Rights & Obligations • Capitalist Organization are dedicated to profit\wellbeing maximization. • There are conflicts between Individuals and groups within 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't perceive the best interest of the organization. • Typical self-promotional tactics are: – Blaming others for failures. – Denying information to others. – Promotion of one’s 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 individual’s perception is that these tactics won’t 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 view if it contributes to increasing efficiency and wellbeing. • It is unethical on utilitarian grounds if it has been practiced for achieving personal goals and it damages the organization. • An employee has a utilitarian duty not to participate in such practices.

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Cont… • Political tactics which exploit others emotions are unethical on Kantian grounds, unless it has been voluntarily accepted by all members. • The use of these tactics are unethical if, – The person doesn’t accept participation. – If he doesn’t has any other option except leaving the firm. – He can’t use the same tactics against you.

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Cont… • Political tactics providing privileged to some individuals, violate the principle of distributive equity. – For e.g. The trader who is also the son of the chairman 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 the nurturing of personal relationships. – Authors of business ethics argue that caring firms also have high level of efficiency. – But there should be a balance.

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Downsizing And The Employment Contract • Employees are loosing their jobs due to privatization and downsizing in Pakistan. • Business ethics recognizes that employees are not free to choose. • If the workers are loyal to organization they have a right to expect fair treatment. • Due process gives right to employee to present his point of view.

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Cont… • Business ethics recognizes the moral rights of employees which should be taken into account when downsizing: – 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 be fully respected. – Workers should also be financially compensated. – Workers’ right to participate in the above decision should also be recognized.

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Whistle blowing (reporting Malpractices) • The Capitalist law states that employees should keep the firms matters secret • Justified on both Kantian and Utilitarian grounds • External whistle blowing is allowed only when internal whistle blowing is not possible 11/01/08

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Whistle blowing (rules for the employees)

• Obtain accurate information about the malpractice • Determine personal involvement • Alternative to public exposure • Avoid bad faith

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Whistle blowing (steps by the organization)

• Avoid persecution or isolation • Set up an effective multi-channel grievance and reporting system • Ethical training

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Discrimination and Quotas •

Discriminatory Practices: • Recruitment advertisement specifying race, religion, gender etc • • •

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

Positive discrimination  Quotas

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Islamic Evaluation of Capitalist employment Orthodox View • Employment intended to accumulate wealth is condemned by the shariah • Both haram and mushtaba (doubtful) contracts are to be avoided (Imam Ghazali) • Islamic trade union organizations, under the leadership of Ulemas should be established to overthrow the capitalist order (Hussaini, Banma)

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Revisionist View • General Interest. • Shariah caters to welfare of people. • “A just wage” (Siddiqui) • Sufficient to satisfy needs (Chapra) • This view after the 70’s has shaped to justify HRM rather than trade unions 11/01/08

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Employer-Employee Relationship • Traditionally: Master : Slave

• Two Laws making and governing 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

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Employer-Employee Relationship • Labor Laws inherited from India at the time of creation • Labor laws marked as “concurrent subject” • Pakistanis Labor force counts upto 37.15 Million

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Core Provision of IRO (industrial relations ordinance) 2002 • Worker’s 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

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Bargaining and Union Role • Bhutto’s 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. 11/01/08

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Result of Strong Union Crisis • Get rid of undesired workers. • Employees resisted Retrenchment Lockouts

• Well performing firms closed down • Unemployment

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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 union’s role is now insignificant

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Human Resource Management System • 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.

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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 in mind. – Organizational goals – Identifying potential sources – Object of attracting qualified people – competitiveness

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Compensation Strategies (govt.) • Cash Payments • Fringe Benefits • Housing • Subsidizing

• Long term benefits • Pension • Medical benefits

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Compensation Strategies (pvt.) • • • •

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

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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

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Downsizing •

Firing unnecessary employees to reduce costs.

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Unorganized workers over organized ones.

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Massive dismissal of employees

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Golden handshakes

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Z.A’s efforts to promote associated norms collapsed

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Conclusion • Organizations in Pakistan have to play a key role in improving employee employer relationship, thus maximizing utility and pursuing their ultimate goal.

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