Enhancing Employee Voice: Are Voluntary Employer–Employee Partnerships Enough?

Enhancing Employee Voice: Are

Voluntary Employer–Employee

Partnerships Enough?Harry J. Van Buren, III

Michelle Greenwood

ABSTRACT. One of the essential ethical issues in the

employment relationship is the loss of employee voice.

Many of the ways employees have previously exercised

voice in the employment relationship have been rendered

less effective by (1) the changing nature of work, (2)

employer preferences for flexibility that often work to the

disadvantage of employees, and (3) changes in public

policy and institutional systems that have failed to protect

workers. We will begin with a discussion of how work

has changed in the last 20 years in countries like Australia

and the United States, and then take up the issue of

employees as organizational stakeholders and the ethical

duties that are owed them, with special attention given to

issues of power. We will then consider whether voluntary

action by employers such as social auditing is sufficient to

ensure equity for employees, and conclude with a dis-

cussion of how changes in public policy might ensure

greater fairness in the employment relationship by

bringing employers and employees together in partner-

ship.

KEY WORDS: employment, unions, partnerships,

consent

Much has changed in the employment relationship

in the last 20 years. Work has become increasingly

globalized. Returns to education for employees

have increased; employees with low levels of

education compete with many others worldwide

for low wages while employees with high levels of

education still experience wage increases. Com-

panies in developed countries like Australia and

the United States have increasingly moved into

service- and information-oriented industries;

manufacturing (including agriculture) has corre-

spondingly become less important in such econo-

mies. Companies have increasingly moved away

from stable, long-term employment relationships.

For scholars interested in the intersection of ethics

and employment practices, it is a most interesting

time.

One of the essential ethical issues in the

employment relationship is the loss of employee

voice – the ability of employees to raise concerns

and to negotiate about the terms of exchange with

their employers (including wages, working condi-

tions, and so on) and to negotiate changes thereof.

In the past, many employees exercised voice in the

employment relationship through membership in a

union that bargained collectively on their behalf.

But unions have declined in importance in the

private sector in a number of countries (Kochan,

2005) and in other countries the right to collective

bargaining is little more than a chimera. In a

number of countries – including Australia and the

United States – unionization rates have fallen over

time (de Ruyter and Burgess, 2003; Johnstone

et al., 2004; Kochan, 2005), to the detriment of

workers’ rights and abilities to exercise voice. For

many employees, the loss of voice has meant that

their relationships with employers are governed by

contracts of adhesion, in which employers set

terms of employment that employees can either

take or leave (Radin and Werhane, 2003; Van

Buren, 2003). Most employees – unless their skills

are perceived to be so rare and valuable that they

possess significant market power or are covered by

a union contract – are unable to bargain over basic

elements of the employment relationship, includ-

ing wages, benefits, and dispute resolution mech-

anisms (Blades, 1967; Keeley, 1983; LeRoy and

Feuille, 2002; Witt, 2000).1 Employees, in short,

feel more insecure in their jobs because they are in

fact less secure (Wallulis, 1998).

Journal of Business Ethics (2008) 81:209–221 � Springer 2007DOI 10.1007/s10551-007-9489-y

Often lost in discussions about the utility of

changing employment patterns is a discussion of the

ethical principles that should underpin employer–

employee relationships. Much of the literature on

employment practices has considered whether par-

ticular kinds of practices are good or bad for

employers (Roehling et al., 2000) or employees

(Berg, Kalleberg, and Appelbaum, 2003; Guest and

Conway, 1999). Our analysis will begin with a dis-

cussion of how work has changed in the last 20 years

in countries like Australia and the United States. We

will then take up the issue of employees as organi-

zational stakeholders and the ethical duties that are

owed them, with special attention given to issues of

power. We will then consider whether voluntary

action by employers such as social auditing is suffi-

cient to ensure equity for employees, and conclude

with a discussion of how changes in public policy

might ensure greater fairness in the employment

relationship by bringing employers and employees

together in partnership.

How have employment practices changed in

the last 20 years?

Employment practices have changed radically in the

last 20 years. Such changes can be ascribed to a

variety of factors. Corporations are increasingly

using labor from multiple countries. Employers have

sought greater flexibility in hiring, firing, and

deploying workers. There have also been vast

changes in terms of public policy and institutional

systems to protect workers. All of these changes

together help explain how work – and employee

treatment – has changed in the last 20 years.

The use of labor from multiple countries

It is well established that many corporations use labor

from multiple countries, whether in their own oper-

ations or indirectly through the use of suppliers

(Kaplinsky, 2004; Williamson, 1998). At one time,

globalization was largely thought to affect manufac-

turing employment primarily. However, globaliza-

tion has increasingly affected professional- and

service-class jobs (Jang, 2005; Ostry and Spiegel,

2004). Scheve and Slaughter (2004) argue that glob-

alization of labor markets has increased the volatility of

wages and employment for a variety of occupations.

The effects of globalized labor markets on em-

ployee voice are 2-fold. First, as an organization’s

employees and suppliers are spread across many

different countries, it is harder for them to coordi-

nate action and to exercise voice (including using

collective bargaining) than if they are all concen-

trated in one country. The use of labor from mul-

tiple countries therefore decreases dependence on

any one labor source, with negative effects on the

ability of employees in any one locale to exercise

voice. Second, the threat of moving jobs from one

country to another if workers demand too much

from employers also constrains employee behavior.

Many proponents of globalization extol the value of

globalized labor markets in terms of creating

opportunities for workers (Friedman, 2005; Rivoli,

2005). But the use of labor from multiple countries

also can cause employees to lower their demands for

wages and benefits out of fear that if they do not,

their jobs will be moved to another locale.

It is true that there can be salutary effects of capital

flows to developing countries. However, competi-

tion for capital therefore causes many political

leaders (whether concerned about the fate of their

citizens or not) to bid down for capital, lowering

worker protections and effective wage levels as a

result (Stiglitz, 2000). A practical effect of global-

ization is the creation of opportunities for employers

to exploit employees. It is not necessary in many

cases for a company actually to move from one

country to another; the mere threat (or perception of

a treat) to move operations is sufficient to prevent

increases in wages and working conditions.

Employer preferences for flexibility

Cavanaugh and Noe (1999) suggest that the domi-

nant model for contemporary employment practices

in the United States includes three components:

personal responsibility for career development,

commitment to a particular kind of work rather than

a particular employer, and an expectation of job

insecurity. From the employer’s perspective, such a

model of employment transforms labor relationships

from long-term relationships to short-term transac-

tions.

210 Harry J. Van Buren, III and Michelle Greenwood

More interesting for the present analysis is the

decline in internal labor markets and the corre-

sponding costs imposed on employees. Internal labor

markets have traditionally served the interests of

employers and employees: employers benefit by

having access to a pool of labor that (1) has

knowledge of the organization and (2) can be cate-

gorized in terms of skills and abilities that particular

organizations need, while employees benefit by

being able to construct career ladders within a single

organization. But internal labor markets impose their

own costs on employers: these costs can be catego-

rized in terms of network maintenance costs (it is

costly to maintain the internal systems needed to

make internal labor markets work) and stability costs

(in order for internal labor markets to work,

employers need to provide assurances that loyalty to

the organization will be rewarded to employees

through provision of promotion opportunities and

less exposure to layoffs; see McCall, 2001).

Employers increasingly want to avoid such costs, as

employment practices like downsizing and the use of

contingent workforces illustrate (Leana and Van

Buren, 1999).

Employees, however, generally prefer more stable

employment relationships (Freeman and Rogers,

1999). Transitions between employers are not always

easily navigated by employees, even under the best

of circumstances; there are personal and financial

costs associated with finding a new job. Further,

some individuals – especially older people and

people of color – find it more difficult to find new

jobs, much less jobs that pay comparable salaries and

benefits (Blair, 1995). Finally, as employees age and

their families grow, there is a presumptive preference

for stability on their part; employees with family

obligations would generally prefer stable employ-

ment relationships that will allow them to plan for

the future. There is, in short, a mismatch between

the preferences of employers and employees with

regard to the employment relationship.

Changes in public policy and institutional systems

In many countries oriented toward neo-liberal

economics – including Australia and the United

States – legislation in the middle part of the 20th

century sought to expand rights for workers,

including collective-bargaining rights. The high

water mark of employee rights in the United

States, for example, with regard to collective bar-

gaining and unionization came in the 1950s and

1960s, and have steadily eroded ever since (Morris,

2005). For a variety of reasons – changes in em-

ployer preferences, globalization, and changing

political philosophies to name but three – public

policy in a number of countries has failed to re-

spond to changes in the employment relationship

in ways that would have ultimately benefited

employees. In large part there have been inten-

tional public-policy choices that have strengthened

the hand of employers to the detriment of

employees – as is the case of failing to protect

workers seeking to organize an independent labor

union in the United States (Bronfenbrenner,

1997). The loss of employee voice has occurred

over many years and will not be easily reversed.

On this point Kochan (2005: 171–172) is

instructive:

The cumulative effects of labor union decline have

left a void in worker voice at work, eroded the

standard of living in America, and weakened our

democracy. Standard calls for union resurgence – to

put forth more resources toward traditional union

organizing, to reform labor law, or even to promote

greater dialogue, cooperation, or consensus be-

tween business and labor – have not worked and

will not on their own reverse the decline in worker

voice.

Imbalances in power between employers and

employees help to explain why employee voice and

the likelihood of employee collective action have

both declined over time.

Our analysis in this article is primarily normative

in nature; analyses of whether particular employ-

ment practices are good or bad for employers are

beyond the scope of this article. There is some

evidence that high-involvement and -commitment

employment practices have positive effects for

employers and employees (Appelbaum et al., 2000).

We note here that many employers perceive flexible

employment arrangements and inattention to ethical

obligations owed to employees to be congruent with

their interests. If this is so, then attention to devel-

oping empirical evidence related to the efficacy of

Enhancing Employee Voice 211

more-just employment relationships from employ-

ers’ standpoints and to public-policy mechanisms to

ensure that employers satisfy their ethical obligations

would be merited.

Employees as organizational stakeholders

and the ethical duties owed them

Employees have long been recognized as organi-

zational stakeholders (Clarkson, 1995; Freeman,

1984; Van Buren, 2003). We propose that the

particular moral claims of employees should have

practical effects on their abilities to exercise voice

in the employment relationship, but it is first

important to define what we mean by ‘‘voice’’ and

‘‘fairness.’’

By ‘‘voice’’ we mean that employees are able to in

some way participate meaningfully in creating and

changing the terms of the employment relationship.

We recognize that the modifier ‘‘meaningfully’’ is

subject to interpretation and is therefore imprecise,

but we believe that the utility of voice in the

employment relationship involves participation by

employees in setting the terms of employment in-

stead of allowing employers to set the terms of

employment unilaterally. Adams (2005) notes that

voice on its own has no value; it is only valuable to

the extent that it corrects some market failure. We

propose that voice corrects an important market

failure: the inability of many employees to effect

changes in their treatment by employers. Not all

economic actors are equal with regard to resources,

knowledge, and bargaining power (Adams, 2005).

Voice exercised by stakeholders like employees does

not, of course, ensure a particular outcome but ra-

ther makes a more-just outcome more likely. On

this point Budd (2004: 75), building on Rawls’ idea

(1971) of the veil of ignorance, notes that ‘‘faced

with the prospect of being on the subservient end of

the autocratic employment relationship once the veil

[of ignorance] is lifted...most would instead create

workplaces with a voice mechanism from behind the

veil.’’

Voice has collective and individual components

(Budd, 2004). Collective voice is best understood

in terms of unionization and collective bargaining.

Individual voice involves the direct relationship

between a particular employee and an employer.

Collective and individual voice together are

arguably complements rather than substitutes;

without collective voice, it is unlikely that indi-

vidual voice can be freely exercised. That said,

collective voice has been the traditional focus of

enhancing employee power in the employment

relationship and has largely been eroded in many

countries, including both the United States and

Australia.

By ‘‘fairness,’’ we simply mean procedural (fair

procedures for structuring the employment rela-

tionship – including hiring and promotion) and

distributive (who gets the benefits of economic

activity) fairness. Van Buren (2001) notes that

there is a relationship between stakeholder partic-

ipation in creating and maintaining corporate

policies and practices – which we cast here in

terms of collective and individual employee voice

– and both procedural and distributive fairness.

Power imbalances and lack of stakeholder voice do

not make unfair treatment of stakeholders by an

organization inevitable, but certainly more likely.

Our primary concern here is increasing fair treat-

ment of employees.

We suggest that voice and fairness are therefore

related in all stakeholder-organizational relation-

ships, including the employment relationship. Ko-

chan (2005: 158) is instructive in this regard:

[U]nion leaders have come to recognize the need to

go beyond collective bargaining to get access to

where the real power lies in corporations and where

the key decisions are made that shape workers’

long-term security and welfare – in the inner circle

of executive decision making and corporate gov-

ernance. This level of management has traditionally

been viewed as off-limits to workers and their

unions.

Similarly, Rawls (2001: 57) notes that the basic

structure of a well-ordered society ‘‘comprises social

institutions within which human beings may de-

velop their moral powers and become fully coop-

erating members of a society of free and equal

citizens.’’ When employees feel compelled to accept

unfair contracts of adhesion or lack the ability to

exercise voice in the employment relationship, they

cannot be fully cooperating free and equal citizens in

their organizational lives.


Employees as ‘‘claimant’’ stakeholders

Employees are identified as stakeholders in the

organization from almost all stakeholder perspec-

tives. Employees are closely integrated with the firm

and this gives them a ‘‘peculiar role among stake-

holders’’ (Matten and Crane, 2003: 224). The

employees actually ‘‘constitute’’ the firm: they are in

many cases the most important factor or ‘‘resource of

the corporation, they represent the company toward

other stakeholders, and they act in the name of the

corporation’’ (Matten and Crane, 2003).

In addition, employees are greatly affected by the

success or failure of the firm. Employees have a

continuing investment in the firm – of experience,

specialized skills (Maltby and Wilkinson, 1998), ac-

crued resources, and personal relationships.

Employees may become financially dependent on

organizations over time. The company is likely to

form the basis of employees’ economic livelihood

through their income or share ownership. Given the

investment in time and effort individuals often place

in their jobs and careers, they may also depend on

their work for social relationships, self-identity, and

self-actualization (Matten and Crane, 2003).

Employees can be identified as stakeholders in the

firm for one of two reasons: because the contribu-

tion they have made to the firm; or, by virtue of

their capacity to influence the firm. Definitions of

stakeholders as claimants on the firm imply that the

business owes a duty to these stakeholders and, as

such, are seen as ‘‘moral’’ definitions. In contrast,

definitions of stakeholders as having an influence on

the organization, as being influenced by the orga-

nization, or as mutually influential, hold only stra-

tegic considerations and thus are seen as morally

neutral (Kaler, 2002). Thus, for the purpose of thi-

sarticle, employees are identified as moral ‘‘claim-

ant’’ stakeholders.2 To identify employees as moral

claimants on the firm has specific implications.

Linking employee stakes to organizational duties

We have argued that the deontological view pro-

vides the strongest normative explanation of the

‘‘stake’’ of the stakeholder (Gibson, 2000). Gener-

ally, the purpose for the stakeholder of contributing

to the organization is the right to claim benefit from

or be protected by the organization (Kaler, 2003).

That stakeholders hold specific rights beyond general

duties owed other entities marks them as stake-

holders (Phillips, 1997). These rights are a moral

form of the psychological contract: ‘‘beliefs, based

upon promises expressed or implied, regarding an

exchange agreement between an individual and, in

organizations, the employing firm and its agents’’

(Rousseau, 1996: 8).

Employees are no exception. While the amount

that employees contribute to the firm may vary, and

the reasons employees contribute to the firm may

vary, it is likely that all employees seek benefit, and

protection from harm, from the organization. For

instance, an unwritten agreement of informal yet

specific pragmatic expectations and obligations be-

tween employer and employee may confer a right to

employment security for a long term employee be-

yond that which is formally mandated. Accordingly,

it is the duty of the company to return the invest-

ment of the employee with the corresponding re-

compense. A duty-based perspective would suggest

that the acceptance of the benefit of another party’s

sacrifice or contribution generates an obligation to

that party that in turn generates a right of that party

to the fulfillment of the obligation (see Figure 1;

Phillips, 1997). It follows that if a contribution is

made or a risk taken by one party, and this contri-

bution or risk is accepted by the other party, then

this party is obliged to return a benefit (or protection

from harm) to the risk-taker. Thus the act of con-

tributing a stake, if accepted by an organization,

confers rights to the stakeholder-contributor. Cor-

respondingly, the act of accepting the contribution

from the stakeholder imparts responsibilities to the

organization – even if differences in power allow the

organization to avoid such responsibilities.

It is important to note that voice and stakeholder

participation can sometimes have negative out-

comes. A stakeholder with lots of power relative to

an organization might be in a position to extract

unwarranted rents in the same way that powerful

organizations can force employees to accept less than

fair wages and working conditions. We do not think

that most employees will be able to exercise too

much power, however. Rather, the problem is that

employee voice and power have diminished in many

places – including the United States and Australia –

and unfair treatment has resulted. When employers


have the ability to treat employees unfairly,

employers owe perfect duties to employees.

Thus, employees can be identified as moral

‘‘claimant’’ stakeholders (Kaler, 2002) to whom the

company has morally obligatory perfect duties

(Gibson, 2000; Kaler, 2003). But why might these

moral duties be breached by organizations? We now

turn to the issue of power in stakeholder-organiza-

tion relations.

The role of power

We previously noted that organizations owe perfect

duties to employees due to the latter’s status as a

moral claimant. Such duties adhere to organizations

whether they are observed or not. But we note here

that differences in power provide clues as to why

many employees may not receive the benefits due to

them, based on their moral status as stakeholders.

Owen et al. (2001) further suggest that most social

audits fail to account for the issue of power imbal-

ances between organizations and stakeholders. Social

audits, of course, necessarily reflect an organization’s

preferred narrative about its behavior, which is likely

to be flattering to itself. Few organizations are likely

to discuss deeper issues like power imbalances in

their social reports, for to so would naturally cause

stakeholders to ask what is being done to ameliorate

power imbalances. The fact that members of a

stakeholder group (like low-paid employees) have

accepted benefits does not demonstrate that they

have consented to their treatment by – or the terms

of the deal with – an organization (Van Buren,

2001). Rather, we propose that the possession of

meaningful power by a stakeholder group allows it

to negotiate a better deal with a company than

would have been possible in the absence of such

power.

Concerns about the ways in which stakeholders

negotiate the terms of exchange agreements with

organizations have long been present in the stake-

holder literature: Freeman and Evan (1990: 338)

propose that ‘‘stakeholders be accorded voting rights

with respect to deciding how to manage the affairs of

the corporation.’’ In short, meaningful employee

voice ensures that stakeholders are treated fairly and

an absence of voice generally leads to exploitation. As

we have previously noted, contracts of adhesion that

workers must accept as a condition of employment

cannot be construed as fair; if employers use their

economic power over employees to dictate the terms

of exchange, the former is free riding on the efforts of

the latter. Contracts of adhesion also are likely to exist

when there is little or no opportunity for employee

voice or employee collective action.

This is not to say that the possession of power

ensures that a stakeholder will get a ‘just’ result. We

have not yet said anything about how much power

the stakeholder group possesses, the relative amount

of power that the corporation has, the corporation’s

incentives, or the existence of other powerful

stakeholders – to name but a few possible con-

founding factors. Rather, our claim is more modest.

When a stakeholder group lacks power, it is up to

the corporation (subject to limits imposed by other

stakeholders, like government) to determine the

terms of exchange with that stakeholder. It is pos-

sible, of course, that the organization will not use

power imbalances against powerless stakeholders to

get a better deal for the organization. But to the

extent that the stakeholder is able to demand better

treatment because it has power, that stakeholder can

better advocate for its interests.

Of course, it should not be assumed that stake-

holders do not engage in rent seeking behaviors

when they have power over an organization. In-

deed, such behavior should be expected. It would be

The relationship between stakes, rights and duties

Contribution, risk or sacrifice (“stake”) acceptance of benefit from the stake

right (“claim” to benefit or protection from harm) duty /obligation (responsibility)

Figure 1. The relationship between stakes, rights and duties.


unreasonable to expect a stakeholder group to self-

lessly devote itself to making an organization and its

managers better off. Like organizations and their

managers, stakeholders are self-interested. Too much

power – whether held by a stakeholder group or an

organization – may lead to an unjust result. We are

concerned with employees who lack voice in the

employment relationship because voice (and the

power that generally accompanies it) means that

employees are more likely to be treated fairly than if

voice is absent.

The moral duties that employers owe employees

by virtue of accepting benefits from employees are

perfect, and ought to be honored even if the orga-

nization possesses the ability to breach them. A lack

of employee voice is likely to lead to such a breach.

It is then logical to ask: Might voluntary action by

employers be sufficient in this regard? In response,

consideration will be given to the voluntary practice

of social auditing which has been promoted as a

method for the acquittal of accountability and

responsibility to stakeholders generally and

employees specifically (Owen et al., 2000). We note

that voluntary action is unlikely to lead to adequate

voice or just outcomes for many employees.

Is voluntary action enough to ensure equity

for employees?

Is voluntary business action sufficient to ensure the

moral treatment of employees? This section will

consider the voluntary business practice of social and

ethical auditing and consider whether this practice

enhances the moral treatment of employees.

Social auditing at the Body Shop International

The term social audit is used to refer to the whole

process by which an organization determines its

impacts on society and measures and reports the

same to its stakeholders (Owen et al., 2000). More

specifically, social and ethical auditing can be

understood as:

A voluntary, ongoing process, which is embedded

into an organization’s daily practice, that measures

the perceptions of the stakeholders of the organi-

zation’s social performance and that is externally

verified (AccountAbility, 1999; Gray et al., 1996).

Employees are a significant stakeholder in the social

and ethical auditing process. It is implied that the

practice of social and ethical auditing enables the

company to acquit its moral responsibility toward

employees.

The Body Shop International (BSI) provides an

example of an organization that has undertaken so-

cial and ethical auditing. In the mid-1990s BSI was

at the forefront of social and ethical auditing (BSI,

2004). It published a 219 page document called the

Values Report 1997 (BSI, 1998), which was the

manifestation of extensive involvement of stake-

holders in this accountability process in 1995. The

report was lauded as pioneering (Logsdon and Le-

wellyn, 2000) including being ranked highly by

United Nations Environmental Programme and

SustainAbility and in their reviews of International

Corporate Environmental & Social Report (see

UNEP website for most recent review (UNEP,

2005). Nevertheless ‘‘a flurry of controversy erupted

about the report and some allegedly intentional

misinformation it contained’’ (Logsdon and Lewel-

lyn, 2000: 428). Further, despite its apparent com-

mitment to social and ethical auditing, BSI did not

produce a further report for 8 years. The dearth of

reporting coincided with a period of management

and financial problems for BSI. Anita Roddick re-

signed as CEO of the company in 1998 after profits

collapsed by 90% (Lyons, 2005). She was replaced by

former Danone director Patrick Gournay. The

company however did not really recover until Peter

Saunders, previous head of the U.S. operation, took

over in 2002 (Lyons, 2005). Since then the share

price has risen from 56 pence in January 2003 to 262

pence in December 2005. Social reporting recom-

menced in 2004, with the first report in 8 years

published in 2005.

Challenges to voluntary engagement

Without undertaking a comprehensive study of

voluntary engagement initiatives, we must be cau-

tious as to not to draw spurious conclusions from the

Body Shop example. Nevertheless, a few observa-

tions can be made: First, there is the obvious factor


that the social and ethical auditing process is entirely

in the control of the organization. Second, there is

the feature that the value of the social and ethical

audit cannot be determined directly by the stake-

holders. Third, there is the observation that social

(end environmental) activities, where voluntary,

tend to be of lower priority than financial measures

of corporate performance.

It is the purported goal of those undertaking social

and ethical auditing to make the activities of the

organization more transparent and, as a result of this

transparency, to make the organizations more

accountable (BSI, 1998) by giving voice to those

affected by an organization (Zadek and Raynard,

1995). It is worthwhile to question both of these

possibilities, particularly in light of the aforemen-

tioned observation – that the social and ethical

auditing process is within the control of the orga-

nization and involves stakeholders entirely at the

behest of the organization. By being transparent,

firms ostensibly seek to make known to those out-

side (as well as to those in other parts of their own

organizations) what they are ‘‘really’’ doing (Livesey

and Kearins, 2002). The process of standardizing and

quantifying information endows that information

with an objectivity that may not be warranted.

Hence, what starts off as data collected by the

organization, ends up being the ‘‘truth.’’ Further, the

analysis of stakeholders’ concerns must be considered

separately to the synthesis of such concerns (Good-

paster, 1991). How the organization uses the infor-

mation gathered through the social and ethical

auditing process is of paramount importance to the

moral treatment (or otherwise) of stakeholders.

The stakeholders’ capacity (especially on the part

of employees) to directly observe or influence the

social and ethical auditing process is limited. One of

the features of social and ethical auditing is that the

process is externally verified by an independent and

skilled verifier. The verifier takes the role of the

stakeholders’ proxy or agent, undertaking what the

stakeholder would do if they had the capacity to do

so, that is, examining the auditing process undertaken

by the company to ensure the audit is fair and true.

The external verification process, however, is highly

susceptible to ‘‘internal capture’’ (managerial control

and construction of the audit process) due to issues

regarding verifier independence, degree of the rigor

applied to verification work, and whether the per-

formance dimension is meaningfully addressed (Ball

et al., 2000). In their study of ‘‘best practice’’ envi-

ronmental reports, Ball et al. (2000: 19) found that

‘‘there is no evidence of the verifier (with the

exception of non-profit verifiers) attempting to ad-

dress the concerns of external constituencies with

regard to deficiencies in performance’’ and conclude

that what is in fact being assessed is the quality of the

managerial control systems rather than the quality of

social and environmental performance. One practical

issue in social auditing, therefore, is whether stake-

holders like employees participate in setting ethical

expectations for the audit – which would increase the

voice of such stakeholders. We find that even in the

best of circumstances, such participation is lacking.

We also note that the inclusion of particular topics

and stakeholder concerns in social auditing reporting

is often idiosyncratic (Owen et al., 2001) and driven

in part by concerns faced by particular industries.

Extractive industries, for example, are likely to focus

heavily on environmental issues – even though

employment issues are of considerable importance as

well. Other social audits in other industries might

focus to a greater extent on employee issues, but

again the treatment of this or any other topic is often

within the exclusive purview of the organization.

The lack of stakeholder participation and external

validation also means that many social audits are not

exercises in true accountability to stakeholder con-

cerns, but rather public relations (Laufer, 2003).

Social and ethical auditing potentially suffers the

same fate as any organizational practice not directly

linked to the financial performance of the company.

Much of the empirical research in the areas of HRM

and CSR focuses on ‘‘proving’’ the relationship

between organizational practice and organizational

performance. High commitment HR practices,

philanthropy, and other CSR practices may be

considered luxury items that are expendable with

utilitarian justification during tough times. Further,

stakeholder engagement and accountability practices

are at risk of being reputation-management practices

and therefore only desirable as long as they have the

desired market impact. Owen et al. (2000: 91) ex-

press concern ‘‘lest the new social audit becomes just

another management fad, or the latest ‘product’ in

the management consultant’s toolkit.’’ Employee

voice – as expressed through voluntary initiatives

like social auditing – is likely to be less than ideal,


although certainly greater for firms that undertake

social auditing than in organizations that do not

undertake such initiatives.

The essential role of labor unions and public

policy in ensuring employee voice

We previously noted that voluntary initiatives like

social auditing are problematic with regard to safe-

guarding employees’ rights because of the lack of

input in and control of such process on employees’

parts, the voluntary nature of social auditing, and the

link to financial results rather than moral duties. The

BSI case suggests that, despite their stated ethical

standards and their acknowledgement of moral du-

ties owed employees, voluntary action is unlikely to

bring about fair outcomes. Voluntary action that is in

the control of the employer almost inevitably will focus

on the employer’s needs primarily and employees’

needs secondarily, and voluntary action can always

be reversed or withdrawn by employers.

We conclude, therefore, that voluntary action is

insufficient to protect employees – with the clear

implication being that one role for public policy is to

require that organizations ensure both employee

voice and the ability to engage in collective action.

Labor unions, because they are chosen by workers to

represent their interests and to bargain collectively

on their behalf, are one element of any solution to

the problem of employee voice. We posit that in the

absence of a real right to organize and to bargain

collectively (both primary elements of what unions

bring about for employees), the perfect moral duties

owed employees by employers are increasingly likely

to be breached by organizations.3

Unions may be part of the solution to the prob-

lem of employee voice and unfairness in the em-

ployer–employee relationship, but they are not the

complete answer. Not every worker wants to join a

union (Freeman and Rogers, 1999). But for many

workers who do not want join labor unions, the

exercise of voice at work is important. ‘‘Fixing the

basics’’ of labor law like the right to organize is

essential, but insufficient to restore employee voice

at work (Kochan, 2005). We have noted that perfect

moral rights are possessed by stakeholders like

employees. Hence, employer duties with regard to

the treatment of employees exist, whether observed

by employers or not. Here public policy should seek

to move organizations toward greater cooperation

and collaboration with employees, increasing the

likelihood of fair treatment of the latter. To this

effect we believe that several propositions underpin

the kinds of public policy that are most helpful in

this regard:

Proposition 1:

Employees have a right to organize and

bargain collectively if they wish, free

from interference from employers.

The right to organize – which has been eroded for

many workers – must be restored for workers in many

countries, including the Australia and United States

(not to mention China and many developing coun-

tries). Freedom of association is a core human right

that underpins many other rights. One role for gov-

ernment is to protect the right to organize and to join a

labor union of one’s choosing.4 To the extent that

economic and institutional changes have made pos-

sible the breach of this right, public policy should

intervene in ways to help remedy the effects of power

imbalances between employers and employees.

We note, however, that there is more to em-

ployee voice than whether or not a worker is a

union member or a workplace is unionized. Broader

rights of employee participation help to ensure that

employees are treated fairly, as denoted in proposi-

tion 2:

Proposition 2:

Employers should be required to provide

mechanisms by which employees can

participate in organizational decision

making.

We have argued that the ability of employers to

control employee input and to set terms and condi-

tions for employment puts employees at a disadvan-

tage. Even in the case of organizations like BSI, setting

social audit standards and the frequency of social

auditing means that organizations have too much

autonomy with regard to the employment relation-

ship – even in the best of circumstances. Legal

requirements for employee participation – whether

workers or workforces are unionized or not – would


do much to honor the moral rights of employees that

are too-frequently breached.

Proposition 3:

Employers should be required to report

to their stakeholders about how

employees are treated and about the

outcomes that employees experience.

We conclude by reiterating that voluntary dis-

closure of information regarding employment prac-

tices is insufficient to ensure fair treatment of

employees. Taking away some of the autonomy of

employers to choose what and whether to report

publicly on employee-related outcomes would do

much to improve employer behavior.

The salutary effect of public policy with regard to

ensuring that employers meet their moral obligations

to employees is thus significant, but in recent years

has not been particularly large. Future public policy

in this area should focus on ensuring that employees

have adequate opportunities to express voice in the

employment relationship – whether through a labor

union or some other means – and then to increase

employer accountability through mandated infor-

mation disclosure.

Conclusion

Changes in public policy and institutional arrange-

ments with respect to the employment relationship

in both the U.S. and Australia have brought about a

decline in employee collective action and collective

voice. There has been little discussion as to how new

enterprise-based arrangements will redress this ad-

verse occurrence. The moral rights of employees,

and the consequential moral duties of employers, are

significant. However, given the privileged position

of power and control that employers occupy, it is

unlikely that the moral responsibilities owed by

employers to employees will be fulfilled. The case of

a ‘‘good’’ organization can only go to reinforce this

thesis.

The Body Shop International, with its stated goals

of stakeholder fulfillment and social responsibility,

uses social and ethical auditing as mechanisms for

employee voice. Despite rigorous processes and

apparent good intent, the company’s social auditing

procedure does not deliver all that it promised.

Voluntary employer initiatives face two distinct

challenges as mechanisms for employee voice. One

is that, despite efforts on behalf of the company, as

long as the initiative is controlled and resourced by

the company it cannot truly represent the employee.

The other is that, unless it can be shown to directly

contribute to the financial goals of the company, it is

likely that the initiative will be resistant to conflict-

ing organizational goals. In response, we propose

that public policy should direct the employment

relationship in the following manner: by ensuring

the right of employees to organize and bargain col-

lectively, by requiring employers to provide mech-

anism for employee voice, and by requiring

employers to fully disclose how they treat their

employees.

A fuller treatment of specific public policies and

management practices that would defend and en-

hance employee voice is beyond the scope of this

article. We do offer two provisional proposals. First,

public policy should more explicitly recognize

power imbalances between employers and employ-

ees in creating collective-bargaining legislation and

other means of enhancing employee voice. The

right to organize has been largely eroded in countries

like the United States and others that tend to follow

neo-liberal economic policies (Bronfenbrenner,

2005). Making it easier for unions to be organized –

including elements like card-check recognition and

mandatory first-contract arbitration – would do

much to enhance employee voice (Martinez-Ortega,

2006), even for employees who choose not to join a

union but desire better treatment and more voice.

Second, organizations possess perfect duties

toward their employees, whether those duties are

fulfilled or not. Although we have been critical of

purely voluntary means of ensuring corporate social

responsibility, it does not follow that voluntary

organizational initiatives have no value. Organiza-

tions should therefore broaden both their codes of

conduct and their social reporting regimes in ways

that better account for the ethical obligations they

owe employees. We also note that legislation might

bring about more voluntary corporate social

responsibility. The signals that elected policy

makers send to corporations about ethical respon-

sibilities toward workers will have spillover effects


on the actions that corporations take of their own

accord.

In this article, we have sought to defend the broad

idea of employee voice and connect it to improved

outcomes experienced by employees. The fact that

employers can avoid ethical obligations to employees

does not mean that they ought to do so. Voluntary

means of engagement proffered by companies are

insufficient to ensure fair outcomes for employees.

Mandatory means of ensuring employee voice are

therefore needed. While it might seem unrealistic in

the current political climate in many countries to

suppose that such regulation is imminent, more

normative and empirical research about the necessity

of real employee voice might help to bring it about.

Notes

1. To claim that most employment contracts are con-

tracts of adhesion would not be to say that employees

lack all ability to advocate for changes in how they are

treated by organizations. Rather, it is only necessary to

demonstrate that the most-significant elements of the

employment relationship – wages, working conditions,

promotion opportunities, and dispute resolution mecha-

nisms – are in the control of the employer with no

meaningful participation by employees. We believe this

to be the case for most employees. The trend in areas

like dispute resolution with regard to claims of discrimi-

nation, for example, is supportive of such a claim (Witt,

2000); employees are increasingly being required to

submit such claims to binding arbitration rather than

sue their employers.2. It should be noted that according to this classifica-

tion, Freeman’s original definition of stakeholders as

being ‘‘any group or individual who can affect or is af-

fected by the achievement of organization objectives’’

(Freeman, 1984: 46) is clearly an ‘‘influencer’’ defini-

tion. Slinger (2000: 68) asserts that this definition is

‘‘does not say all he (Freeman) would like to say’’ and

is ‘‘simply not strong enough.’’3. It is not necessary for every worker to be unionized

for employee voice to increase. Credible threats of

unionization are often sufficient to shape the behavior

of employers, who generally would like to avoid having

a union and might provide better treatment of employ-

ees to do so.4. Morris (2005) provocatively argues that employees

have a right to bargain collectively when they join a

union, even if that union is not recognized by a com-

pany or has a majority of members within a bargaining

unit. Such a notion of collective bargaining might break

through the impasse that typifies labor relations in

countries like the United States, where an all-or-noth-

ing model of collective bargaining makes organizing in

private workplaces extremely difficult.

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Michelle Greenwood

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Box 11e, Clayton,

VIC, 3800, Australia


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