Question

Business Ethics:

Some opine that employee pay should be tied in part to the compensation of the owner/ chief operating or executive officer of the business, with the lowest paid employee being paid no less than a certain percentage of the highest paid employee. Using Rawls theory and using the Libertarian approach is this an ethical way of determining compensation?

Please cite any information used.  

Answer 1

The Rawls theory is based on justice and liberal tradition. According to him there is equal opportunity for every citizens and having equal rights in the society. Applying his rule in the economy will considered every citizen as equal and will combine the whole society as one.Now following this if the society is considered as whole than anyone can pay for any citizen making it ethical approach. Moreover giving fair chances and equal rights as per Rawls will motivate the higher paid to do something to mitigate the misfortunes of lower one.

But the other side of the story is this practically applicable ?The other are getting benefits of the eligible one hence creating hindrances in the market. The deserving and the non deserving both are paid same is this ethical? So the answer is no it is not the ethical approach . The usage of his theory is not practically applicable as the deserving candidates should be paid more or we can say that the employee should be paid as per there deserving ability.Hence it is unethical to follow the Rawls theory.

For example A and B are working in the same organization A being the experienced and more educated than B . In a production due to B's mistake the whole project suffers. The management punishes all the employees associated in that project including A. In this justified?

Following Rawls theory and making everything equal is justified? In this case the employees without justification are also getting the same pay and the employees with justification are getting punished without any say.Therefore the approach is unethical.

Now as per Libertarian Approach : In the name itself the word liberal is used that means open to new ideas.In this approach the employee is master of its own decision and ideas. Being the part of the society they are acceptable and are allowed to think and take decision however the society is not responsible or taking any obligation for the wrong decision they have taken neither the society will compensate for their mistakes. In this approach the deserving will be paid and the citizens committing mistakes cannot pass their burden to any other citizen in the society.

Hence in this era the approach of Libertarian is followed where people are responsible for their own mistakes and cannot pass this burden to anyone. Moreover the Rawls theory is not practically possible because although the rights are equally distributed but following it is not possible and unethical as well.

Therefore my answers to the question is no it is not ethical to pay compensation like this where one has to suffer due to mistakes of others.

References : Shaw & Barry , 2013