Archive for the ‘pay’ Category

HuffPo, AOL and the Ethics of Unpaid Labour

AOL bought the Huffington Post this week. Now, many of HuffPo’s volunteer bloggers are up in arms, accusing the left-leaning news-and-aggregation site of two related crimes: selling out to a (presumably) evil corporate media giant, and failing to share the wealth with thousands of volunteer bloggers who, over the years, have contributed probably millions of words to HuffPo’s archive of content.

But criticism was not limited to the volunteer bloggers themselves. Tim Rutton, of the LA Times, wrote:

To grasp its business model, though, you need to picture a galley rowed by slaves and commanded by pirates….

Adbusters — the slightly-past-its-best-before-date organization whose sole purpose is to bash capitalism and consumerism — put it this way:

Socialite Arianna Huffington built a blog-empire on the backs of thousands of citizen journalists. She exploited our idealism and let us labor under the illusion that the Huffington Post was different, independent and leftist. Now she’s cashed in and three thousand indie bloggers find themselves working for a megacorp….

On the face of it, this sounds like a strong criticism. Use unpaid labour to build a truly massive (and profitable) online presence. Keep that unpaid labour in the fold by espousing values they believe in. And then sell out for hundreds of millions to a corporation that almost certainly could not care less about the aforementioned values. It really does sound tantamount to slavery, with a touch of ideological treason thrown in for good measure. But to understand this better, we need to know a little more about the economics of blogging. As a good starting point, see this piece by stats guru Nate Silver: The Economics of Blogging and The Huffington Post

The fact is, however, that sentiments like [the LA Times’s] Mr. Rutten’s reflect a misunderstanding of The Huffington Post’s business model. Although The Huffington Post does not pay those who volunteer to write blogs for it, this content represents only a small share of its traffic. And, to put it bluntly, many of those blog posts aren’t worth very much….

Silver goes on to be much more specific, calculating the likely dollar value of the contribution of the average volunteer HuffPo Blogger.

The point is that for something over 99% of bloggers, blogging is a hobby. The contribution of most HuffPo bloggers to the website’s success is minimal. Those thousands of volunteer bloggers on whose “backs” HuffPo was supposedly built were likely more important as audience than as generators of content. Should the volunteer bloggers feel jilted? I’m reminded of a commercial from a few years back, in which a mom consoles her 8-year-old boy whose team just lost a game of soccer or hockey or something. “Did you try your hardest?”, asks the mom. “And did you have a good time? That’s all that really matters.”

Of course, if the volunteer bloggers are worried about the integrity of HuffPo’s editorial voice, you would think they would be somewhat consoled by the fact that Arianna Huffington is retaining the reins in that regard, and in fact will be gaining the key editorial role at AOL as a whole. But then, that’s reason why the rest of us should be deeply concerned, given Huffington’s penchant for featuring dangerously bad pieces related to things like healthcare, including some that are the intellectual equivalent of evolution denial.

Death by Pizza Delivery: Domino’s Korea

During most of the 80’s (starting in 1984), customers of Domino’s Pizza in the U.S. enjoyed the benefits of a catchy promise of speedy delivery: Domino’s promised to deliver your pizza in “30 Minutes Or It’s Free.” The only problem: soon after the slogan was introduced, a rise in deaths due to accidents involving Domino’s drivers was noted. The assumption was that drivers were facing pressure to make good on the promise, and were therefore driving faster, which meant they were more likely to have accidents, some of which were fatal. Lawsuits ensued. Big ones. As a result, the “30 Minute” delivery promise ended back in 1991, in the U.S. But apparently the same can’t be said for Domino’s Korea.

Here’s the story, by blogger Lee Yoo Eun, blogging at Global Voices: South Korea: Backlash After ‘30 Minute’ Pizza Delivery Death

A popular Domino’s Pizza marketing strategy promising pizza delivery within 30 minutes of an order has met with a public backlash in South Korea, following the deaths of several young delivery personnel.

The Young Union, the union For Occupational and Environmental Health (FOEC) and several labor unions held a press conference on 8 February, 2011, in front of Domino’s Pizza’s headquarters in South Korean capital Seoul, pressuring the company to abolish the ‘30 Minute’ delivery system….

Here’s another version of the story, from the Korea Times: Quick delivery jeopardizes drivers.

In often discuss the story of “30 Minutes or It’s Free,” as it played out in the U.S., in my business ethics class. I use the case to illustrate 3 key points:

  1. A simple business decision can have large and unforeseen consequences, ones that result in a major ethical challenge for a company. In this case, a simple (and frankly brilliant) marketing slogan resulted in Domino’s executives being called killers and the company facing multi-million dollar lawsuits.
  2. The ethical thing to do is not always obvious. We spend a lot of time chastising companies for bad behaviour, but in at least some cases it is genuinely difficult to know what to do. In the Domino’s case, my students are typically unified in the opinion that something had to be done to reduce the rate of accident-related deaths involving Domino’s drivers, but they’re typically deeply divided on a) how far the company needs to go and b) just what strategy they should adopt.
  3. Putting an ethical decision into action can be very difficult. Back in the late 80’s, there were several thousand Domino’s pizza franchises in the U.S., and tens of thousands of drivers. Any decision made by Head Office was going to have to be implemented by all those franchisees and acted on by all those drivers. Making that sort of thing happen is anything but straightforward.

As for Domino’s Korea — frankly I’m stunned to find out that the people in charge of the Domino’s brand haven’t done more to make sure that a lesson learned 20 years ago, at great expense, is reflected in their international operations.

Should Workplaces Ban Lotteries?

Should workplaces ban lottery pools? Lots of offices feature “pools” of various kinds, with groups of employees joining together collaboratively or competitively to speculate on, e.g., the outcome of the NFL playoffs. Very likely lots of managers regard it all as harmless fun, boosting morale by giving employees a break from the tedium of their cubicle farms. But a lottery pool is unlike, say, a hockey or football pool. In a hockey or football pool, there are winners and losers, but typically the dollar amounts are pretty small. But when employees band together to buy lottery tickets, the possibility is there for all hell to break loose.

To see what I mean, take a look at this story, from the CBC: More claiming share of $50M lottery prize

Some of the claimants to the disputed $50-million Lotto Max jackpot were at the Ontario Lottery and Gaming prize centre on Wednesday being questioned about the win.

The original claimants — 19 Bell Canada call centre workers from east Toronto — validated the winning ticket on Monday, said OLG spokeswoman Sarah Kiriliuk.

But since then, several more people have come forward to say they should have a share of the prize, said Kiriliuk, although she refused to say exactly how many….

Clearly, this is an anxious moment for the winners. But it’s also surely a rather anxious moment for their employer, telecommunications giant Bell Canada.

My friend Andrew Potter (author of The Authenticity Hoax) suggested to me that there are at least a couple of reasons reasons why employers might legitimately choose to ban lottery pools.

The first reason Andrew suggests is the potential for a highly disruptive exodus of an entire group of employees in the event of a lottery win. Most people, when asked, say that the first thing they would do if they won the lottery is quit their jobs. Losing a good employee can be a bad thing. So what happens when a dozen or 20 employees win together, and very likely depart en mass? Clearly, employers have a significant interest in avoiding such an outcome. Of course, the odds against such a thing happening are, well, tiny…one in many millions. How tiny do they have to be for us to say that the employer would be out of line to try to prevent it?

Second, and I think more significantly, Andrew suggests that employers might have a strong interest in avoiding the possible legal troubles that could result from a group of employees winning a lottery. Even for a win much smaller than the $50 million win in the story above, there’s the chance that employees will come forward who say they were unfairly excluded for one reason or another. And with money on the line, lawsuits are far from unlikely. And when lawsuits happen, chances are that everyone is going to get sued, including the employer. After all, an excluded employee can reasonably claim that the employer was effectively hosting the lottery pool, and hence bears some responsibility for making sure that it is run fairly. Even if the dollar amounts are too small to result in lawsuits, I can imagine considerable disruption of the working environment when there’s disagreement over a lottery win. Just take the usual petty office grievances and multiply them by a few tens of thousands of dollars, and then a win for employees equals trouble for their employer.

Now, I’m not sure there’s a huge risk here, but I think it’s an interesting question. Obviously, it behooves employers to allow employees a little breathing room when it comes to lunch-break entertainment. In general, it’s good for employers to respect employees’ privacy and autonomy, and that might include the freedom to engage in things like office pools. For most of us, our employers already dominate our lives in ways that are at least sometimes regrettable, so employers should be cautious about imposing unnecessary constraints. But given that lotteries are already widely-criticized as a regressive form of taxation (or, more bluntly, as a ‘tax on the inability to do math’), it might well be that eliminating office lottery pools would be a reasonable move.

Addendum: it’s a little-known and sad fact that a relatively high proportion of lottery winners eventually file for bankruptcy. [URL updated Aug. 2011]

Wall Street (1987) — “Greed is Good”

I just re-watched the original 1987 film, Wall Street. (The sequel, Wall Street: Money Never Sleeps, is in theatres now, and apparently doing very well.)

In the original Wall Street, Michael Douglas’s character, Gordon Gekko, is a corporate raider — essentially, he buys up underperforming companies, breaks them up and sells their parts at a healthy profit. What drives him? Greed, pure and simple. In one scene, Gekko appears at the annual shareholders’ meeting being held by Teldar Paper. Gekko owns shares, but wants more. He wants control of the company, though his motives for doing so are hidden. It is there that he delivers the speech that includes the movie’s most famous line. “Greed,” he tells the shareholders of Teldar, “is good.”

That line is the only thing a lot of people alive in the 80’s remember about Wall Street. And that’s a shame.

Here’s Gordon Gekko’s famous “Greed is good” speech, in its entirety:

Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.

The first thing to note about this speech is how little of it is actually about greed — roughly the last third of the speech. The first two thirds is a critique (disingenuous, as it happens, but not therefore off-target) of the complacency of overpaid corporate executives. Gekko is advising Teldar’s shareholders that the people responsible for protecting their interests — Teldar’s executives and Board — have been doing a bad job.

How does that first part relate to the final third of the speech, the part about greed being good? Well, it’s worth noting that when Gekko first uses the word “greed,” he does so “for lack of a better word.” And Gekko, one-dimensional character that he is, probably does lack a better word for it. For him, it really is greed — the unseemly and excessive love of money. But Teldar’s shareholders don’t need personally to embrace greed in the Gordon Gekko sense. All they need to do is to see that their interests are not being served well, and to understand that Gekko’s own greed is likely to serve them better: he wants to make a killing on the Teldar deal, and if they let him do so, they’ll all make a little money themselves, along the way. His greed is good for them.

Is Gekko’s greed a good thing over all? Well, Gekko says nothing, in his speech, about the interests of other stakeholders in Teldar Paper, stakeholders such as the company’s employees for example. If Gekko breaks up the company, shareholders may benefit but employees will lose jobs. That’s a bad thing, but it’s also sometimes inevitable. Not all companies should stay in business.

No, greed is not good. But the point — the grain of truth in Gordon Gekko’s Machiavellian speech — is that if shareholders allow executives and Boards to operate inefficiently, rather than using what little power they have to improve their lot, then they are suckers, being taken for a ride. And there’s no particular virtue in that.

Ethics of Hiring Illegal Immigrants

Should restaurants (and other companies) stop hiring illegal immigrants? What would happen if they did?

The question is posed here, on the NYT‘s “Diner’s Journal” blog: What If Restaurants Stopped Hiring Illegal Immigrants?

What if the restaurant industry — one of the largest employers of immigrants, a good number of whom, it is no secret, are undocumented — had to do it all above board? (According to 2008 estimates from the Pew Hispanic Center, illegal immigrants make up about 20 percent of the nation’s chefs, head cooks and cooks, and about 28 percent of its dishwashers.) That’s the intention, at least, of the Obama Administration’s intensified crackdown on employers that hire illegal immigrants, with businesses including restaurants now facing more scrutiny than they have in decades.

Some restaurateurs say that the cost of a meal would shoot up if they were forced to comply with immigration and labor laws….

So, let’s think through some of the ethically-relevant factors.

First, refusing to hire (or choosing to fire) illegal immigrants would drive up the cost of a restaurant meal. That would be bad for restaurant customers. Now, most people think of restaurant meals as a luxury, so a slight increase in price isn’t exactly ethically abhorrent. But when we think of an increase in the price of restaurant meals, we shouldn’t only think of fine dining: such increases would presumably also affect greasy spoons and other non-glamourous eateries, and hence hit many middle- and working-class families in the pocketbook. But still, restaurant meals are generally not a necessity, and anyone who wants one arguably has an obligation to pay the full price of legally obtaining the factors that go into producing it.

Second, it’s worth pointing out that, ethically, there is a general and strong presumption in favour of following the law. And if the term “corporate citizenship” means anything at all, it ought to include a citizen-like duty to act in a law-abiding way.

Third, if restaurants stopped hiring illegal immigrants, it would obviously be bad for those illegal immigrants; and it would be good for whomever got those jobs instead. In terms of total numbers, this is very nearly a zero-sum game, except for the possibility that fewer people over all would be hired at the higher, legal wage. But illegals are arguably in greater need of the jobs (since fewer kinds of jobs are even possible for them, and because they don’t have the same access to the social security safety net that citizens have access to). So, thinking purely in terms of the duty to help people when you can do so, it might even be argued that restaurants have an obligation to hire illegals.

It seems to me this is an interesting case where a company’s citizenship obligations might well conflict with its more general ethical obligations. And so it’s a nice illustration of why it’s wrong-headed to use the term “corporate citizenship” to cover the various kinds of moral responsibilities that a company may have.

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