Ethical perspective of I-deals

In the course “Seminar in HRS” in my masters year I had to write with three other team members an essay about different themes, this one is from the ethical perspective. “Zone of negotiability” is the part I solely wrote for the essay.

Introduction

Idiosyncratic deals (I-deals) are far more commonly used in practice than previously thought. The percentage of employees in an organisation enjoying some kind of I-deal ranges anywhere from 25% up to 40% (Rousseau, 2005). I-deals can be defined as the following: “I-deals refer to voluntary, personalised agreements of a nonstandard nature negotiated between individual employees and their employers regarding terms that benefit each party” (Rousseau, Ho, & Greenberg, 2006, p.978). In the ongoing ‘war for talent’ (Michaels, Handfield-Jones & Axelrod, 2001) I-deals are referred to as a possible solution for retaining talented employees for the organisation.  “There’re companies in our industry that don’t accommodate employees, and that may be the difference in retaining talent and losing it,”(Let’s Make an I-Deal, n.d.) says Scott Testa (chief operating officer of the intranet-software company in Norristown, Pa).

At first, the definition of I-deals seems to be ethical, since it assumes that both the employee and employer benefit from the deal. These benefits include more intrinsically satisfying work and greater well-being for employees, along with gains in employees’ attendance, retention, performance, and proactivity that employers value (e.g., Fried & Ferris, 1987; Parker, Turner, & Griffin, 2003). However, I-deals have the potential of causing conflicts within an organisation. Coworkers for example, might assess the fairness of their own treatment relative to the recipient of the I-deal (I-dealer). This impact can be either positive, neutral, or negative, depending on the nature of the I-deal and the process through which it is obtained (Greenberg, Roberge, Ho & Rousseau, 2004).

Furthermore, another important aspect that one cannot forget to mention while trying to ethically review I-deals is the zone of negotiability. The zone of negotiability refers to the conditions of employment available for negotiation by workers and their employer (Rousseau, 2001). The zone of negotiability is shaped by numerous factors, under which for example the market power and the legitimacy constraints. In this essay, I-deals will be ethically reviewed from both the coworkers’ perspective and from the zone of negotiability.

Co-workers’ perspective

Even though I-deals are defined as arrangements that individual employees negotiate with their employer, successful implementation of I-deals is also influenced by co-workers (Rousseau, 2005). If co-workers view I-deals as unethical or unfair, and thus are not willing to accept the differentiation’s between their employment condition and those of I-dealers (Rousseau, 2005), their engagement will decrease and they will show symptoms of cynicism and inefficacy (Hornung, Rousseau, Glaser, Angerer & Weigl, 2010). Employee engagement is essential, because it affects organisational performance. Since co-workers estimate the ethics of I-deals on three main factors; market factors, benefits and costs, and equal possibilities. Cultural differences as a contextual factor does matter, these will be further elaborated (Kooij, 2016).

Market factors. Organisations need high skilled and high valued employees, in order to be successful (Rousseau & Greenberg, 2006). If these high valued employees are rare, they can demand higher compensation and resources (Bartol & Martin, 1989), for example a higher degree of job control (Graen & Scandura, 1987). Especially high valued employees who are critical to the organisation have power to negotiate for I-deals (Frank & Cook, 1995).
Furthermore, differences in rewards and salaries may occur (Lawler, Mohrman, & Ledford, 1995). These differences in employment conditions will cause within group heterogeneity (Klein, Dansereau, & Hall, 1994). If co-workers are not informed about the market factors that cause the within group heterogeneity, they likely will view the I-deals as unethical (Greenberg, Roberge, Ho, & Rousseau, 2004). However, if the manager takes time to explain the market factors that caused the creation of the I-deals of new colleagues, the co-workers may view the I-deals as ethical and fair (Rousseau & Greenberg, 2006). Especially differences in salary based on market factors are likely to be accepted by co-workers (Brown & Woodbury, 1998; Rousseau & Greenberg, 2006). Concluding, the manager is responsible to inform the subordinates about influencing market factors, in order to prevent unethical feelings of the co-workers such as favouritism.

Benefits and costs. The benefits or costs for the co-worker caused by the I-deals of others will influence the ethical view of the co-worker. This can be based on the job resources – demand model (Bakker & Demerouti, 2004). On the one hand, job demands of co-workers can increase through I-deals of others. For example, if the employment conditions in an I-deal of a colleague includes extra free time, this will probably mean that the co-worker has to work harder in order to process the tasks that the colleague now cannot do (Rousseau, & Greenberg, 2006). On the other hand, job resources can increase through the I-deals of others as well. For example, if the colleague will follow extra training, after which he can teach the co-worker new things, the co-worker will gather more job resources.
An increase in job demands or job resources of the co-worker through the I-deal of a colleague will be more likely if they are interdependent (Rousseau & Greenberg, 2006). These increases in job demands and resources are linked to ethics through social exchange (Blau, 1964). If the job demands increase, the co-worker has to give more without receiving something in return. In this case the I-deal will be perceived as unethical. However, if the job resources of the co-worker increase, the co-worker receives something extra without giving something. In this case the I-deal will be perceived as ethical. Therefore the manager should always consider whether the I-deals will increase the job demands (costs) or job resources (benefits) of the co-workers or not.

Possibilities for equally or comparable desirable outcome. The ethical view of I-deals by co-workers is also influenced by the feelings of having equal possibilities. If co-workers believe they have the same opportunities to negotiate such I-deals, they will view the I-deals of others as more fair (Rousseau & Greenberg, 2006; Rousseau, Ho, & Greenberg, 2006). However, this does not imply that the co-workers think they deserve the same I-deals (Rousseau & Greenberg, 2006). The feelings of having equal possibilities held by co-workers can be linked to organisational justice (Greenberg, 1987). Co-workers view I-deals as ethical when they perceive chances to get an I-deal as distributive fair (co-workers view possibilities to obtain I-deals themselves as equal), procedurally fair (co-workers conceive their turn on future I-deals as fair) and interactional fair (co-workers view the respect they receive in comparison with the I-dealer as equal) (Lai, Rousseau & Chang, 2009).  Therefore, a manager should always consider what kind of message (s)he transfers to his subordinates regarding I-deals.

Cultural differences. “Ethical relativism is the theory that holds that morality is relative to the norms of one’s culture” (Velasquez, Andre, Shanks & Meyer, 1992). Therefore, a culture determines whether an I-deal is seen as right or wrong by co-workers in a certain society. These moral differences could depend on different cultural dimensions, like the four dimensions of Hofstede (1980).

Hofstede (1980) found five dimensions in which employees in societies differed fundamentally, four are relevant for this essay: uncertainty avoidance, power distance, individualism/collectivism, and masculinity/femininity. The perception of the fairness of I-deals by co-workers across organisations in societies could depend on these fundamental cultural dimensions. The first three are best linked to the perception of fairness of I-deals by co-workers.

Firstly, societies which score high on uncertainty avoidance prefer more stable employee obligations (Dziewanowska, Pearce & Zupan, 2016). I-deals are not standardised employee obligations, and could therefore be seen as unfair by co-workers. Societies which score high on power distance could increase the likelihood that I-deals are seen as fair by co-workers because power differences are accepted more. In a collectivistic country, social harmony and cohesion are seen as very important (Hook, Worthington & Utsey, 2008). I-deals could be seen as unfair by co-workers because differences among employees could disrupt social harmony. A masculine society has assertiveness, achievement and material success as dominant values (Hofstede, 1984). I-deals could be perceived as fair because assertiveness (negotiating an I-deal) and achievement (getting an I-deal) are highly valued. For this reason, managers should take cultural differences into account in order to make the perception of fairness of I-deals held by co-workers.

Zone of negotiability

When an employee wants to come to terms with an employer for negotiating an I-deal (s)he has to keep the zone of negotiability in regard. According to Rousseau (2006) the zone of negotiability refers to the conditions of employment available for negotiation. There are three forces working in this zone; individual, firm, society.

First, taken into account the individual perspective, the need for I-deals comes from a competitive labour market and the increasingly need to be treated as an individual with own unique preferences (Greenberg, Roberge, Ho, & Rousseau, 2004; Marescaux, De Winne, & Sels, 2013a; Rousseau, 2005). According to Rousseau (2001) there are three reasons for the existence of I-deals. First, the demand for knowledge workers is substantially in contemporary competitive markets and this leads to greater power to negotiate for employees. Second, the decreasing security of employment causes the increased mobility of employees. Therefore, employees are more likely to demand short-term rewards instead of long-term rewards. Finally, the expanding choice in the market has led to expectations for customisation in the workplace.  This leads to the more demanding “psychological contract” from the employees’ perspective compared to traditional industrial systems between employees and the firm. It is ethical for employees to change their expectations in changing labour markets; since change is inevitable (Rousseau, 2001).

Second, considering the firms’ perspective, this change in psychological contract can be perceived as unethical when mobile workers put organisations under pressure by threatening leaving for the competitor. However, considering a valued employees’ wishes is easier to justify when his or her contributions are critical and readily visible (Rousseau, 2001). Therefore, performance-based I-deals are perceived from all perspectives as ethical and will put less stress on the firm since it can more readily justify benefits and inducements.

Finally, taken the societal perspective into account, there are numerous of legal constraints in every society which should be considered when negotiating I-deals (Rousseau, 2001). For example, whether or not there is a minimum wage in a society. Society sees I-deals as unethical when they are not aligned with the rules and regulations of the nation (Rousseau, 2001).

Conclusion

In order to let co-workers perceive I-deals as ethical, managers should explain co-workers the influencing market factors, take their benefits and costs into account, and provide equal possibilities. Subsequently, perceptions of I-deals can be ethical relative to cultural dimensions. Finally, when considering the zone of negotiability, it is important to consider the employees’ and the employers side of perception of society, firm and the individual. To conclude, the take-away message is: context matters.

 

References

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