Business ethics

2. Internal stakeholders: the case of employees

Perhaps the leading ‘internal’ stakeholders of a firm are its employees, whose fortunes depend on those of the firm in the most direct way. The firm may be the only source of income for each of its employees, and the income may be used to support many others. Employees may depend on their job for a considerable proportion of their social life and their most rewarding activity. Having a particular job, or having a job at all, may be an important source of self-esteem (see Work, philosophy of). With so many connections to the good things in life, the role of employee cannot fail to matter morally. Equal opportunity and employment protection legislation reflect the importance of having and keeping a job. In many industrialized countries discrimination in recruitment on the grounds of race or sex or religion is against the law. In western Europe dismissal from a full-time job can be legally challenged, and redundancy can be accompanied by significant financial compensation. Different types of employee have different sorts of stake in different businesses, and businesses have different stakes in different employees. A worker on the factory floor and the manager above him are both employees, but their roles in the firm are likely to make different moral demands on them and their employers. It may fall to the manager to sack factory workers for some offence or to make them redundant during a recession. It may fall to a worker to make known a costly production defect or to complain of harassment by someone higher up in the organization. The manager may strongly disagree with the decision to sack the workers, and yet be responsible for carrying it out. The worker may wonder whether making known the defect will indirectly cost them their job: putting right the defect may be expensive, and redundancies may be the firm’s way of covering its losses. On the other hand, if the defect is not made known, perhaps the safety of a very large number of consumers will be threatened. Serious consequences may also attend the report of harassment. The complainant risks not being believed, and probably the embarrassing details will be made the subject of gossip. Perhaps the person complained about will retaliate in some way. And the firm may be forced to decide between two employees, neither of whose talents it can afford to lose.

Not every moral theory is suited to weighing what is at stake in such cases, and several different theories may be required to do justice to all stakeholders in business ethics. Utilitarianism and Aristotelianism have resources for capturing the value of employment in general, since each works with a concept of wellbeing or welfare which embraces many different goods, including those associated with having a job (see Utilitarianism; Aristotle §21). Kantianism is able to give weight to the way in which consumers are put at risk by not publicizing the production defect, and the way in which the wellbeing of employees can be sacrificed for a short-term reduction in the costs of a business (see Kantian ethics). Kantianism is also able to make sense of the wrong of harassment, and therefore to justify a decision to press a complaint against harassment. In all of these cases, albeit in different ways, persons are treated as means, and Kantianism highlights such treatment as a kind of immorality. Aristotelianism is sometimes thought to be able to coordinate the moral demands that fall on people in their role as manager or worker with the moral demands that fall upon them in the rest of their lives. The manager who is uncomfortable with sacking people may be someone who tries to pursue a policy of benevolence or charity whenever possible. The worker who balks at overlooking the production defect in the factory may be in the habit of being honest and open away from work.

Aristotelianism prescribes the cultivation of patterns of behaviour that serve one in one’s private as well as in one’s public life, and that cannot be abandoned without a morally significant loss to the agent. Utilitarianism and Kantianism, on the other hand, sometimes diagnose the reluctance to depart from characteristic patterns of behaviour as a kind of squeamishness or self-indulgence. Sacking the workers may be unpleasant, according to these theories, but it may be best on balance for everyone, or necessary if one is to honour promises to shareholders or creditors.