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Ethical and unethical practices
"It pays to be good"

This tutorial was
written by
Cassy Norris
Head Teacher, Social Science
Randwick Boys High School

Introduction
Outcomes
Overview
Case studies
Revision
More

Introduction

In an ethical and socially responsible workplace, managers must consider the impact of the firm’s employment relations practices upon the welfare of staff and the community. Managers must also act in good faith and behave in a fair and morally correct manner in their employment relations policies and practices. Firms with a reputation for ethical and socially responsible behaviour benefit from positive publicity, and committed staff, and save on costly fines and claims.

Students must be prepared for HSC examination questions that integrate a number of topics, particularly in relation to ethical aspects of business. This tutorial links ethical practices in employment relations in global and domestic business.

HSC Topic 4: Employment Relations is covered in the Board of Studies NSW Syllabus (June 1999) pages 32–35. The specific outcomes for this tutorial are:

Outcomes

The student:

H2.1	describes and analyses business functions and operations and their impact on business success
H2.2	evaluates processes and operations in global business
H3.2	evaluates the effectiveness of management in the organisation and operations of the business and its responsiveness to change
H3.3	analyses the impact of management decision making on stakeholders
H4.1	critically analyses the social and ethical responsibilities of management
H5.1	selects, organises and evaluates information and sources for usefulness and reliability
H5.3	communicates business information, ideas and issues, using relevant business terminology and concepts in appropriate forms.

Overview

What are unethical employment relations practices?

There are a range of unethical employment relations practices. Workplace bullying, harassment and discrimination; poor occupational health and safety practices and unfair dismissal are common examples. Global businesses which seek to exploit cheap labour risk alienating both their customers and the governments in host countries.

A wide range of employment relations issues which arise in the workplace can lead to loss of reputation and customers, poor staff morale, low productivity, high labour turnover, heavy costs (fines, damages) and industrial disputes if not handled in an ethical, legal or socially responsible manner.

Why be a socially responsible, ethical employer?

A socially responsible, ethical employer recognises that:

a need exists for a safe, pleasant working environment and working conditions, in order to motivate and retain staff
performance and motivation is maximised when staff feel appreciated, secure, confident in their work, and equally valued and rewarded for their efforts
an effective workplace is free from harassment and discrimination, and benefits from good working relationships and teamwork
the business depends upon community support, as a source of staff and as a source of business (i.e. as its customers) and resources
if managers act as role models, employees are more likely to be committed to ethical practices and the firm itself.

What strategies can employers use to promote ethical employment relations?

Some strategies a manager can implement:

Develop an ethical framework in the workplace in collaboration with major stakeholders, for example employees and a government agency or industry association. Include in the framework, a code of conduct, and a code of ethics. A code of conduct is a statement including acceptable and unacceptable behaviours in the business. A code of ethics is a statement of a firm’s values and principles.
Actively communicate and evaluate the implementation of a code of conduct and ethical practices in all areas, including recruitment and selection (the most common area of complaint in relation to discrimination). Regular reporting on affirmative action practices is required for firms with more than 100 employees.
Act to prevent and follow-up harassment and discrimination. Ensure processes, such as grievance procedures, are available to quickly, fairly and effectively deal with disputes in such matters.
Develop a family friendly workplace in consultation with staff.
Make awareness of ethical practices a condition of promotion.
Make safety a priority. Train staff to identify, minimise or eliminate risks and prevent accidents.

Benefits of ethical employment relations

For a business demonstrating best practice and affirmative action, there are significant marketing and business opportunities. Best practice employers are regularly publicised in the media, journals and on the Internet. Such firms also save on industrial disputes, fines and unfair dismissal or discrimination claims. They are also likely to experience savings from lower staff turnover rates and higher levels of productivity from motivated staff.

Firms with good safety records save on accidents, lost time through injuries, fines and workers compensation insurance premiums.

Case studies

Country Road

Country Road has chosen to improve employment flexibility, and has implemented family-friendly initiatives in order to improve rates of staff returning from maternity leave. It also hopes to reduce staff turnover rates, improve employee morale, and attract quality candidates to the company. Country Road recently analysed its workplace profile, feedback from enterprise bargaining focus groups, internal statistics on length of service, and staff turnover rates. Management concluded that specific additional strategies would improve equal employment opportunities in terms of career paths and pay equity, and also help create a flexible, family-friendly, non-discriminatory workplace.

In the area of training and development, Country Road chose to improve career development opportunities in the sales area, where 76 per cent of employees are women. The actions it took, included advertising all positions internally and on its intranet site to enable store employees equal access to company information and opportunities. A leadership development program was developed to fast track high-potential staff to retail management level.

The selection process for the program involved an information night for interested employees via an advertising program across stores. Interested candidates were then involved in a panel interview, self-evaluation and presentation. Following the program, 100 per cent of the graduates from the Leadership Development Program, of which 87 per cent were women, were promoted to management roles or head office positions.

In another employment relations area, Country Road chose to improve areas of workplace inflexibility and to focus on a more family-friendly environment. Following consultation with staff, career break and childcare leave, plus emergency and annual leave at half pay and more part-time and job-share roles were provided. Management also introduced “stay-in-touch information” about job opportunities and company news for staff on parental leave, together with quarterly afternoon teas.

The results were gratifying. There was an eight per cent drop in staff turnover following the introduction of job flexibility and employment practices. These strategies also helped to achieve 80 per cent attendance at quarterly afternoon teas for staff on parental leave. Such strategies benefit a firm as they attract and utilise the skills from a wider pool of talent for all positions, improve a firm’s image with customers and motivate and retain staff.

Nike

In global markets, some firms have been criticised for taking advantage of cheap labour, even child labour. Some discriminate against employees who seek to improve working conditions, most often through union activity.

Nike’s reputation for employment relations in its overseas manufacturing plants has been tarnished by frequent reports of labour abuses. As a result of public pressure it has made a public commitment to respect the UN Declaration of Human Rights, and to respect the right to freedom of association (such as the right for workers to form unions). Nike CEO, Phillip Knight has restated that commitment through his high profile support for the UN's Global Compact. Some argue, however, that Nike’s current record in Asian countries such as Indonesia, China, Thailand, Cambodia and Mexico has not improved.

Tim Connors, an Australian academic involved in researching these issues, reports:

Nike's operations in Indonesia take place against a backdrop of political repression. In April 2000, soldiers worked closely with factory management at the giant Nikomas Gemilang factory in Serang (where shoes are manufactured for Nike and Adidas) to threaten violence against workers involved in organising a demonstration for better pay.

Julianto, a worker at Nikomas Gemilang, described the threats made against him after, he helped organise a December 1999 protest at the factory. "I was called away from my work and taken into an office... Inside... there were two managers and a soldier from the Indonesian army there", he told human rights workers on a trip to Australia. "They shouted at me and slammed the table. They told me that we had to disband the workers committee. I told them that we did not want to. And they said ‘if you organise another demonstration we will take you to the police, or you will be visited by hired thugs.’”

Firms such as Levi Strauss have sought to improve their practices by implementing ethical guidelines or codes of practice to their contractors or subsidiaries on the treatment of employees and employment standards. Such firms now employ auditors to visit and inspect workplaces to ensure that working conditions are fair and safe.

Revision

Develop a table listing all the costs involved in unethical employment relations. Then develop a list of all the benefits firms can gain from ethical employment practices. Some of these have been provided in the article. (outcomes H2.1, H2.2, H3.2, H3.3, H4.1 and H5.1)
Imagine you are appointed the Australian manager of a new Australian (majority owned) manufacturing subsidiary in Indonesia. You have decided to employ local staff to work in the factory, but will need to have some Australian staff managing the factory.
1. Discuss the factors you will need to consider in managing a staff that includes local and foreign employees. Some of the issues you may have to consider are the different attitudes to power and authority, cultural traditions and celebrations and their impact on the workplace, and attitudes towards the employment of relatives and friends.
2. Develop a code of practice for the management to implement in the factory. (Refer to your HSC text for some ideas.) These ideas may include reference to complying with labour and safety and health laws, paying fair compensation, allowing the right to free association (to join unions), and providing fair employment conditions.
3. Discuss how your ethical employment relations strategies could be used in the promotion of your company. You may like to refer to media publicity given by government agencies, free publicity achieved through sponsorship of community groups and issues, development of your company information publications including your annual report, and the nature of your advertising for employment vacancies. (outcomes H2.1, H2.2, H3.2, H3.3, H4.1 and H5.3)

Web sites

Discrimination and ways of reducing discrimination in the workplace are discussed in these two web sites:

The behaviour of several global businesses, including Nike, are examined in:

Textbooks

Chapman S., Merritt L. and Norris C. (2001) HSC Business Studies in Action, Jacaranda Wiley, Milton, Queensland pp 447–468, 548–561.

Sykes D., Hansen V. and Codsi E. (2001) Business Studies HSC, Longman, South Melbourne.

Articles from The New Internationalist

Tim Connor: “Still Waiting For Nike To Respect the Right to Organize”, June 28, 2001.

Tim Connor is Associate Researcher at the Centre for Urban and Regional Studies at Newcastle University in Australia and coordinator of the NikeWatch campaign in Australia.