Employer-Employee Relationship in the 21st Century

Shawn Berman

Shawn Berman

Olsson Center Senior Fellow Shawn Berman, Professor of Business & Society at the University of New Mexico Anderson School of Management, recently gave a talk on the “employer-employee relationship in the 21st century.” Berman was speaking to the Business Ethics Society, an undergraduate club at the University of Virginia.

He discussed how frontline employees are overworked and stressed in the U.S. and how they are often seen as simply “resources.” After presenting statistics on the present-day workforce, Berman noted that corporate CEO pay is 380 times that of the average worker. He asked the students if the rising inequality in society should be of concern. Using stakeholder management, he encouraged the students to think about the employer-employee relationship and its consequences for society.

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Technology and Stakeholders

Early in her talk at the University of Virginia, Professor Jennifer Griffin elicited a telling remark from a student: technology has expanded the number of stakeholders

Griffin, Professor of Strategic Management & Public Policy at the George Washington University School of Business, said that today’s technology makes communication in the business world easier and faster than in the past. In relation to stakeholders, another student said that this also presents the opportunity for more misinformation. Griffin spoke with undergraduate students in the Business Ethics Society to convey the complexities of modern business management in a world of fast-moving technology.

GriffinShe says today’s multinational corporations must operate in an environment similar to “a 3-D chess game” because networks and technology are making the world that much more complex. No longer do companies have to deal with just individual stakeholders, but they must work with sets of stakeholders. She challenged the students to think about these stakeholders’ impacts on the firm.

She stated that we’re now in an information market or marketplace of ideas, especially with the media, internet, governments. “How does that change your world? How does that change your business?” Griffin noted that it is “not just having relationships, but it’s the information with technology that changes the game.”

Griffin urged the future business managers to ask, “What business are you in? How do you co-create value?” and finally, “Why should you tend to stakeholders?” She concluded with “If you don’t do it, someone else will for you.”

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Capitalism in Question

Recently the Academy of Management Social Issues in Management division hosted a panel discussion called, “Capitalism in Question: Towards an Economics of Justice, Sustainability, and Economic Thrivability.” Professor R. Edward Freeman participated in the discussion, where he humorously remarked that he felt like a clown attending a funeral.

R. Edward Freeman at AOMMany of the speakers discussed capitalism’s unsustainable growth, environmental neglect and unsavory scandals. However, Freeman saw a bright future of innovation and hope. He believes that we live in a time where business has the potential to solve real problems. According to Freeman, business adds real value to our lives, and capitalism is the greatest system of cooperation created.

Freeman noted that the old story of business has run its course. That’s why he is actively talking about “New Models of Business in Society” to get people thinking about what is possible.

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New TV Show Asks “Big Questions”

Olsson Center Senior Fellow Patricia H. Werhane, the Executive Director of the Institute for Business and Professional Ethics at DePaul University, has recently launched a new PBS program about ethics called “Big Questions.”

Pat WerhanePart documentary, part talk-show, each episode draws you into major issues facing the world today, and many episodes offer solutions.

The show asks what you think about some of the world’s most critical challenges. Big Questions brings you inspiring stories where just a few people have already made a big difference. The hosts bring years of experience and knowledge to help shed light on new ideas and projects that are changing the way the world works, and then look to you for insights on how that change can continue.

Stirring and motivating stories can be found in all kinds of places, from our backyard to faraway places around the globe. The first half of season takes the viewer to rural villages in Bangladesh, an international corporation’s health care initiative in Tanzania, wage theft protests and food deserts in Chicago, and even includes a rehabilitation program in a small town Michigan correctional facility. The second half brings the viewer to a school in Haiti, a pineapple plantation in Ghana, homeless shelters in the U.S., Hong Kong’s cage homes, a refugee hospital in Jordan and more.

big questions

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Purpose Matters

Dr. Sybille Sachs, Institute for Strategic Management: Stakeholder View

Dr. Sybille Sachs, Institute for Strategic Management: Stakeholder View

Guest blog post by Dr. Sybille Sachs

This weekend I was visiting my father who is spending four weeks in a little village in the Swiss mountains for recovery. When I entered the hotel I was pleased with the warmth of the receptionist. She gave me the feeling that I was really welcome and that she cares for me. It was not the usual customer orientation we experience in many hotels from employees who are trained to be customer oriented. It was an encounter between human beings. During the entire stay in this hotel I met various people who love their work because they like caring for others.

The hotel belongs to a foundation, which aims at providing services to human beings in all phases of life. Besides hotels they are engaged in child and elderly care.

In doing business we often have a weak connection to why we are doing this work. Rendering a good service is much easier when we know why we are doing it and what we stand for when providing these services.

This hotel stands for doing good to people. Whether we base this on Christian values or on a humanistic commitment in a philosophical sense does not matter that much. What matters is that we know with which purpose we are serving whom. Customer orientation in this perspective is not a mere technical term but a humanistic commitment in the broader sense.

Used with permission from the People for People blog.

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Organizational Interventions, Context and Stakeholders

Olsson Center Senior Fellow Bidhan Parmar has studied organizational interventions at companies and has some useful tips for business leaders implementing change. In a new video, he explains the importance of organizational context and the “ecosystem” in which these changes might take place.

VIDEO: Bidhan Parmar on the Importance of Organizational Context
TECHNICAL NOTE: Framework for Improving Organizational Interventions

Bidhan Parmar

 

 

 

 

 

 

 

 

 

 

 

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New ways of measuring company performance

by Jeffrey Harrison and Andrew Wicks

Harrison and Wicks

 

 

 

 

Firm performance is a fundamental issue for scholars and practitioners alike. We need a way of understanding what it means to do well, and what indicates sub-standard performance or failure. Existing financial performance metrics used to determine performance are important, but they are often incomplete and oversimplify the value stakeholders receive.1 Financial measures can be especially problematic when management makes efforts to meet short-term financial goals that reduce the desire of key stakeholders to support the firm and may simultaneously decrease the firms’ ability to create new value for stakeholders.

Instead of focusing primarily on economic performance measures, a stakeholder-based performance measure challenges managers to examine the broad array of ways their firms create value. Managers need to understand the stakeholder goals and aspirations, both as a way of attracting them to the firm, keeping them engaged and performing at a high-level.

Read the full article in Ethical Performance

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The Democratization of Business

by Olsson Center staff

A major U.S. bank announces new fees for checking accounts and customers revolt. Many opt to close their accounts and take their business to competitors. A popular mail movie rental service changes its strategy much to its faithful customers’ chagrin. In both instances, social media and traditional media provide a forum for customers to express their discontent. Each company decides to back down, at least in part due to the protests.

As consumers are becoming more educated they are engaging more with the companies with which they do business. This is especially true with educated millennial generation who choose to support more socially conscious companies. Consumers expect products to be tailored to their tastes and expecting companies to be accountable.

There are other places where we see changing stakeholder expectations impact how business gets done. Customers were used to the same 500 products in grocery stores for decades. With the advent of mass-produced organic foods, many consumers demanded more selection from their grocery stores. We now have more choices for food than we ever had in the past. Customers have made it clear that they do not always take what is given to them, especially if someone else is willing to provide what they want.

We are also starting to see signs of a major shift in the wireless carrier market. Consumers have grown tired of the inflexible two-year contract plans, and some companies are changing their strategy to capitalize on this discontent.

Growing stakeholder demands and technology changes appear to be driving an increase in business accountability. Review websites like Angie’s List and Yelp give consumers a voice they never had before. Transparency, driven by the Internet, is changing how businesses operate. These changes add fuel to the idea that Stakeholder Theory has come into fruition, particularly for customers.

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New Models of Business in Society

New Models of Business in Society

New Models of Business in Society

This fall Professor R. Edward Freeman will teach a free, five-week course online about the ethics of business in society. “New Models of Business in Society” is being offered through Coursera as a new way to learn. The course will not require readings, tests or graded assignments, one only has to listen and learn.

The course examines the emergence of a new story about business. This new story locates business within a societal framework. Almost every business creates or destroys value for customers, suppliers, employees, communities and society, in addition to shareholders and other financiers. A number of new models of business can be built on this idea such as corporate responsibility, philanthropy, shared value and sustainability. Profits and stakeholder value go together, and this course explains how. The final session explores the idea of how to become a stakeholder entrepreneur and create a business that makes money and makes the world a better place.

Registration is now open and the course begins on 2 September 2013. Watch a short video about the course by R. Edward Freeman here.

 

 

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Big Data and Ethics

by Olsson Center staff

Big Data was one of the buzzwords of 2012. It captured the imaginations of journalists, academics and the business world. Like all buzzwords, it encapsulates a phenomenon that was already in existence.

Large companies have been using big data for years to understand their customers and their market. University and non-profit organizations have used data mining to learn more about their prospective donors. After 9/11, big data blossomed in the community of federal intelligence agencies and defense contractors. Online users have been freely offering personal information on social networking sites for more than a decade.

Big data is a powerful business tool, with great potential for solving the toughest problems. However, it is the potential of ill intent that concerns many. In a January InformationWeek article, columnist Eric Lundquist says there is a growing need for big data ethics experts in modern business. How should organizations use big data responsibly?

Major concerns include privacy, consent to disclose information, transfers of information (buying and selling), security and uses of the information. Do consumers totally trust the companies to be good stewards of their information? Perhaps one of the most famous cases involved the father of a teen girl who was upset with Target after the company sent his daughter coupons for baby products. It turned out the company had deduced that the girl was pregnant based upon purchases while her father was unaware of the pregnancy.

Are all stakeholders taken into account when big data is at work? While in most of these cases the individual is the consumer stakeholder, but increasingly the individual is becoming the product. For example, Facebook packages user information to their true consumers, companies wishing to advertise on the site. Certainly the Internet has contributed to the amount and availability of big data.

In terms of enforcement, history has shown that government regulation tends to lag new technology. Have we as individuals fully grasped the power and consequences of big data in our daily lives?

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