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Chapter 9 –- Issues in Employment (pp. 363-408)
Chapter 9 starts with three case studies (pp. 363 – 378). The first two concern the United Airlines
bankruptcy, and the outcome in bankruptcy in which United was able to scrap its pension plans,
affecting tens of thousands of employees. The third is the story of a journalist working undercover at
Wal-Mart (a very prosperous company) and discovering how hard it is to make ends meet on the
minimum wage.
Article: “Employment at Will, Employee Rights, and Future Directions for Employment” by Tara J.
Radin and Patricia H. Werhane (pp. 378 – 387)
Article: “In Defense of the Contract at Will” by Richard A. Epstein (pp. 388 – 396)
Epstein strongly believes that the contract at will in employment is sought by both parties to the
contract. The employee does not want to be told that he must stay in any employment situation, nor
does the employer want to be told that he must hire someone for life. Further, government action in
the form of the National Labor Relations Act in 1935, as well as Title VII of the Civil Rights Act of
1964, offer employees protections against the unwarranted acts of their employers.
He believes that the soundness of any legal doctrine should be based on: intrinsic fairness, effects
upon utility or wealth, and distributional consequences. He believes that all point to keeping the EAW
doctrine, the first two more strongly than the third.
He expands greatly on his reasons in favor of EAW. He points to those who are opposed to it as
judging the EAW on “the occasional cases in which it is said to produce unfortunate results” while he
believes that it should be judged “by the vast run of cases where it produces a sensible private
response to the many and varied problems in labor contracting.”
Article: “Employability Security” by Rosabeth Moss Kanter (pp.396 – 398)
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In this short article, Kanter suggests some new policies for employability security. These 14 policies
or standards, are listed at the bottom of page 397 and the top of page 398.
Article: “People, Profits, and Perspective” by Jeffrey Pfeffer (pp. 398 – 408)
In concluding this chapter, Pfeffer stresses the idea of putting people, that is, employees first, and
believes that this will solve any problems associated with EAW.
He gives as examples of this doctrine Richard Branson’s “Virgin” companies, the original Wal-Mart
strategy, Men’s Wearhouse, Whole Foods, Portola Packaging, and USAA, among others.
The salient features of putting people first are: “publicly and repeatedly stating the primacy and
importance of people to organizational success, fixing the firm’s language to ensure consistent use of
terminology that does not convey disrespect or disdain of its people,” having corporate leaders who
actually act upon this belief toward their people in numerous ways, “gathering measurements so the
organization can assess how well it is doing and being willing to act on those measurements, ensuring
that those in leadership positions have people-oriented values and manage in ways consistent with
building high performance work environments,” and “recognizing the importance of people – all of a
company’s people in all organizations — to organizational success.”
Putting all these factors in play results, Pfeffer believes, in competitive advantage.
Pfeffer feels this is the strategy for modern employment but generally requires great courage to
change on the part of management.
Discussion Questions
Your boss promises you a raise next month, but the company goes bankrupt as of the 30th. Were you
lied to?
1. An undercover newsperson is critical of an employer or government program – but the nature
of being undercover means they are not in the same position as someone who is permanently
in that position – they are probably better educated and also probably have no local support
system such as family and friends accompanying them. Can such a person’s judgment be fair?
Can it be helpful? Can it be harmful?
2. 2. You take a full-time job for the summer which you intend to quit as soon as school starts
although you indicate in your employment interview that you wanted to take a year off from
school, figuring it would help you land the job. You are laid off July 5th, and likely will not
have enough money for your senior year of college. Is this fair? Were you fair to your
employer?
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Resources for further study — Film, Literature, and the Web:
Walsh, Mary Williams. “How Wall Street Wrecked United’s Pension,” New York Times, July 31,
2005.
http://www.nytimes.com/2005/07/31/business/yourmoney/31pension.html?ex=1280462400&en=d370
495e589530b8&ei=5090&partner=rssuserland&emc=rss (June 1, 2007)
Smith, Josh. “Working at Wal-Mart.” from http://workingatwal-mart.blogspot.com/ (June 1, 2007)
“A Handshake with Sam” http://walmartwatch.com/handshake (June 1, 2007)
Kennon, Joshua.“Why Wal-Mart is Good for America (and Maybe Your Portfolio).” Your Guide to
Investing for Beginners. http://beginnersinvest.about.com/od/bluechipstocks/a/aa080706a.htm (June
1, 2007)
North Carolina State University, North Carolina, “Due Process and Employment at Will.”
http://www2.Chass.ncsu.edu/avery/class3/class3.htm (June 1, 2007)
“The X Y and Z of Management Theory”
http://members.tripod.com/PeterVenn/brochure/complete/xyz.htm (June 1, 2007)