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Hydro One Was Wrong to Fire Hooligan Employee

A substantial minority of men are capable of boorish, sexist behaviour in public. A world in which all such men were unemployed would not be a better world.

By now many of you will have seen the video that led Hydro One to fire one of its employees. The government-owned electricity distribution company fired engineer Shawn Simoes after he and friends shouted vulgarities at a female news reporter during a live broadcast at a soccer match in Toronto.

This much is clear: what Simoes did was boorish, and offensive. The reporter who was the target of their abuse should not have to put up with that sort of thing — nor should any other woman. What’s less clear is whether his employer is ethically justified in firing him for it. And as much as I hate to say it, I think the answer is no. I’m not going to defend the man’s actions, which are indefensible. Drunkenness is a factor, but not a defence. But just as there is a difference between what is unethical and what is illegal, there is a difference between what is boorish and offensive and what you should be fired for.

Recall the case of Ray Rice, the NFL player who was caught on video knocking his fiancee unconscious. Nothing about this behaviour implied any lack of ability to do his job, indeed to do it very well. But Rice’s behaviour was good grounds for dismissal because, as a football player, he’s a brand ambassador and is supposed to be able to serve as a hero for kids. And his behaviour made him terrible at both. Or compare the case of Jian Ghomeshi, fired by the Canadian Broadcast Corporation after he was accused, by a number of women, of various forms of abuse and assault. This, too, was good grounds for dismissal. After all, in addition to being a brand ambassador, Ghomeshi needed to be able to work closely with female co-workers, something no one would reasonably trust him to do in the wake of such serious and credible allegations.

Simoes’ case is quite different. He wasn’t wearing a Hydro One t-shirt or anything. (The fact that he was a Hydro One employee apparently took considerable online sleuthing.) And it’s not at all clear that his boorish behaviour implies a threat to his female co-workers. Is there a pattern here? Perhaps his supervisor has insight into that.

Hydro One says Simoes violated the company’s code of conduct. But the relevant section of the company’s Code merely says “We treat employees and persons with whom we do business with dignity and respect. Hydro One does not tolerate harassment or discrimination.” It’s a stretch to think that that applies to all employees, all of the time, including when they’re off the job.

There are two key reasons to worry about the firing. One is that the punishment doesn’t fit the crime. The behaviour was very bad, yes, but not physically dangerous and it doesn’t imply an inability, on Simoes’ part, to do his job. Also, there’s reason to worry about the consequences. We don’t know whether Simoes has dependents, but what if he did? It’s bad enough, as a kid, to have a dad seen behaving like that. It’s even worse when Dad loses his job and can’t afford to support you anymore.

The other reason to worry about the firing is that the move implies that employers own you, and your behaviour, 24 hours a day. It implies that there’s no private sphere. After all, there are all kinds of things that you could do, off the job, that might displease your employer. Should they all be firing offences? What if you were filmed taking part in an illegal environmental protest? What if you were spotted smoking marijuana in the park? That’s illegal in many jurisdictions. What if you were spotted taking part in your local Gay Pride parade? That’s legal in most places, but what if your employer is super conservative? It’s simply not healthy for employers to be allowed to make those kinds of calls about off-the-job behaviour.

So I think Hydro One made the wrong call in firing Simoes. We should not tolerate sexual harassment, in public or at work. But unwillingness to tolerate it means we should be ready and willing to speak up against it, even to do so quite aggressively. It doesn’t mean that our employers should get to hand out punishments for behaviour that happens off the clock.


    
 


Hydro One Was Wrong to Fire Hooligan Employee

A substantial minority of men are capable of boorish, sexist behaviour in public. A world in which all such men were unemployed would not be a better world.

By now many of you will have seen the video that led Hydro One to fire one of its employees. The government-owned electricity distribution company fired engineer Shawn Simoes after he and friends shouted vulgarities at a female news reporter during a live broadcast at a soccer match in Toronto.

This much is clear: what Simoes did was boorish, and offensive. The reporter who was the target of their abuse should not have to put up with that sort of thing — nor should any other woman. What’s less clear is whether his employer is ethically justified in firing him for it. And as much as I hate to say it, I think the answer is no. I’m not going to defend the man’s actions, which are indefensible. Drunkenness is a factor, but not a defence. But just as there is a difference between what is unethical and what is illegal, there is a difference between what is boorish and offensive and what you should be fired for.

Recall the case of Ray Rice, the NFL player who was caught on video knocking his fiancee unconscious. Nothing about this behaviour implied any lack of ability to do his job, indeed to do it very well. But Rice’s behaviour was good grounds for dismissal because, as a football player, he’s a brand ambassador and is supposed to be able to serve as a hero for kids. And his behaviour made him terrible at both. Or compare the case of Jian Ghomeshi, fired by the Canadian Broadcast Corporation after he was accused, by a number of women, of various forms of abuse and assault. This, too, was good grounds for dismissal. After all, in addition to being a brand ambassador, Ghomeshi needed to be able to work closely with female co-workers, something no one would reasonably trust him to do in the wake of such serious and credible allegations.

Simoes’ case is quite different. He wasn’t wearing a Hydro One t-shirt or anything. (The fact that he was a Hydro One employee apparently took considerable online sleuthing.) And it’s not at all clear that his boorish behaviour implies a threat to his female co-workers. Is there a pattern here? Perhaps his supervisor has insight into that.

Hydro One says Simoes violated the company’s code of conduct. But the relevant section of the company’s Code merely says “We treat employees and persons with whom we do business with dignity and respect. Hydro One does not tolerate harassment or discrimination.” It’s a stretch to think that that applies to all employees, all of the time, including when they’re off the job.

There are two key reasons to worry about the firing. One is that the punishment doesn’t fit the crime. The behaviour was very bad, yes, but not physically dangerous and it doesn’t imply an inability, on Simoes’ part, to do his job. Also, there’s reason to worry about the consequences. We don’t know whether Simoes has dependents, but what if he did? It’s bad enough, as a kid, to have a dad seen behaving like that. It’s even worse when Dad loses his job and can’t afford to support you anymore.

The other reason to worry about the firing is that the move implies that employers own you, and your behaviour, 24 hours a day. It implies that there’s no private sphere. After all, there are all kinds of things that you could do, off the job, that might displease your employer. Should they all be firing offences? What if you were filmed taking part in an illegal environmental protest? What if you were spotted smoking marijuana in the park? That’s illegal in many jurisdictions. What if you were spotted taking part in your local Gay Pride parade? That’s legal in most places, but what if your employer is super conservative? It’s simply not healthy for employers to be allowed to make those kinds of calls about off-the-job behaviour.

So I think Hydro One made the wrong call in firing Simoes. We should not tolerate sexual harassment, in public or at work. But unwillingness to tolerate it means we should be ready and willing to speak up against it, even to do so quite aggressively. It doesn’t mean that our employers should get to hand out punishments for behaviour that happens off the clock.


    
 


The Downside, and the Upside, of the Underground Economy

Statistics Canada has just released this report on The underground economy in Canada, 2012 — essentially an attempt to gauge the extent of “market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature”.

The report’s key finding:

In 2012, total underground activity was $42.4 billion in Canada or about 2.3% of gross domestic product.

The residential construction industry is the key culprit, accounting for 28.3% of the total. In other words, lots of people are having home renovations done, paying cash, and the contractors aren’t charging — or forking over to government — the required taxes.

The government’s concern, of course, is not merely with measuring the extent of the underground economy. Market activities that “escape measurement” because of their “hidden, illegal or informal nature” are not just unmeasured, but untaxed. So the missing $42.4 billion means a lot of forgone tax revenue.

Ethically this is not good. Contractors (for example) who don’t charge the required taxes are not competing fairly. And consumers who are complicit in such tax avoidance aren’t paying their fair share of the national tax burden; they are, to use the standard mass transit metaphor, “free riders,” letting the rest of us pay to support the tax-funded services that we all enjoy.

Part of the problem, naturally, is that those who engage in ‘underground’ transactions may tell themselves that it’s a victimless crime. But that’s simply false. If you don’t pay your share, you’re not stealing from the government — you’re stealing from the rest of us.

Naturally, some will blame the tax system. Taxes are too high, they’ll say. Or the tax system is too complicated. Fair enough: if that’s your view, work to change the system. Go vote. Write your MP. I realize none of that is guaranteed to get results. But if you break the law in order to protest it, you should at least do it openly. Anything else requires an awful lot of self-serving rationalization. The fact that you feel like you’re already paying too much doesn’t mean that you actually are.

Of course, we needn’t be entirely sanctimonious about this either. Consumers, for their part, can’t plausibly be expected to enquire, for every cash transaction, whether the business involved is paying its taxes. And there’s room for sympathy — always — for those on the bottom rungs of the economic ladder. If you’re living below the poverty line and cutting lawns or babysitting to make ends meet, I have some sympathy for playing fast and loose with the tax rules. But then, that same justification doesn’t apply to the upper-middle-class household paying under the table to have a deck built on the back of their suburban house.

Finally, it’s worth noting the upside, the good news implied by the fact that a bunch of people aren’t actually paying their share. The upside is this: if a bunch of people are getting away with not paying their share, it means we don’t live in an utterly repressive totalitarian state. Consider what it would take to reduce the underground economy to zero: that kind of government intrusion into our lives would be unbearable.

So, the fact that some people get away with it is a good thing. But the impulse to do it — the impulse to avoid paying your share — is not.


    
 


Why diversity quotas in the boardroom may be a good idea
Today we feature a guest post from our colleague over in the law school, Aaron A. Dhir, who is an Associate Professor at Osgoode Hall Law School and a Senior Research Scholar at Yale Law School. Aaron's book on boardroom diversity is out next month and it is causing quite a stir. So we asked him to tell us a little about the issue of diversity quotas on boards and why, despite the controversy, his research suggests that it might be a good idea. 
The lack of diversity in the governance of business corporations is quickly becoming one of the most discussed topics in corporate governance.  It has ignited a heated global debate, leading policymakers to wrestle with difficult questions that lie at the intersection of market activity and social identity politics.
My new book, Challenging Boardroom Homogeneity, will be published next month by Cambridge University Press.  In it, I draw on semi-structured interviews with corporate board directors in Norway and documentary content analysis of corporate securities filings in the United States to empirically investigate the two main regulatory models designed to address diversity in the boardroom — quotas and disclosure.
In this post, I focus on quotas.  While quotas are anathema in the United States, their presence in Europe has ignited a heated global debate.  In their most potent form, quotas mandate particular levels of gender balance in the boardroom.  Countries such as Norway, France, Italy, Iceland, Belgium, and (just last month) Germanyhave all taken this path.  In Germany, both genders must constitute at least 30 percent of the supervisory boards of specified German companies beginning in 2016.  In Norway, non-compliant firms run the risk of court-ordered dissolution.
Little is known about the day-to-day operation of corporate quotas around the world.  To fill this void in our knowledge, I interviewed Norwegian corporate directors about their experiences under Norway’s controversial law – the very first quota on the books.  The participants in my study included men and women, as well as directors appointed before and after the law came into effect.
 
A strong majority of the directors I interviewed supported the law.  The dominant narrative my interviewees conveyed was that quota-induced gender diversity has positively affected boardroom work and firm governance.  Generally, respondents emphasized the range of perspectives and experiences that women bring to the board, as well as the value of women’s independence and outsider status.  They also stressed women’s greater propensity to engage in more rigorous deliberations, risk assessment, and monitoring.
But even if diversification has positive effects on company governance, the question remains:  Why are quotas an appropriate mechanism by which to achieve those benefits? 
 
Some commentators impugn the wisdom of quotas, charging that they stigmatize and marginalize their beneficiaries.  As one critic wrote in The New York Times:  “women admitted to boards in order to fulfill a quota are unlikely to be seen as equals whose presence at the table is merited.”  These critiques must be taken seriously.  If the recipients of affirmative action feel isolated, or that they are perceived as mere tokens, how can such measures possibly be justified?
Without question, quotas are an imperfect means of diversifying corporate boardrooms and in the book I explore the limitations of the quota model.  That said, critics sometimes paint an incomplete picture and seldom ground their arguments in the voices of those who presumably matter the most — those who actually live under quota regimes.  What do they themselves say about quotas’ possibly pernicious effects? 
 
My research asks exactly that question.  Only a small minority of board members I interviewed felt that female directors were stigmatized or isolated.  My female interviewees explained this in different ways.  Some highlighted the importance of the substantial number of women required by the law.  By mandating gender balance, the law made marginalization difficult, if not impossible.  As one female director told me:  “you can’t stigmatize 40 percent of the board. . . . [Y]ou could have stigmatized one person, or 15 percent. . . . But you can’t stigmatize 40 percent.”
The majority of female participants reported that they felt comfortable on the boards on which they sat, discussed their contributions to these boards, and confirmed the feeling that their boards recognized or appreciated these contributions.  Though their stories are complex, most characterized the quota as a positive vehicle that had democratized access to the upper echelons of the corporation — a space previously closed to them.  This suggests that the benefits of the quota law have outweighed any stigmatizing costs, to the extent that these costs have materialized. 
Some critics may suggest that these results are self-evident – of course the beneficiaries of quotas will support the measures that opened up the otherwise closed doors of the boardroom.  The reality, however, is far more complex.  Most directors, including women, were initially opposed, hesitant, or agnostic about quotas.  It was only after seeing the law in action and directly experiencing its effects that they eventually came to endorse it.  A significant degree of the support ultimately stemmed from the view that the law was necessary to diversify boards in a meaningful way.  For some directors, this acceptance of quotas caused them to question their own deeply held beliefs in free market principles.There are many difficult and unresolved questions about the value and effects of quota laws.  Whether a quota is appropriate for a given country will depend on that country’s socio-political context, its corporate governance culture, and characteristics particular to firms and industries.  As policymakers around the world wrestle with these issues, however, it will be important to draw from the experiences of those who have lived under quota regimes.  These narratives give us reason to believe that quotas are worthy of careful public policy consideration.
 
This post first appeared (in modified form) on The Faculty Lounge. My sincere thanks to Andy and Dirk for inviting me to contribute this guest post to the Crane and Matten blog. 
 
Aaron A. Dhir, Associate Professor, Osgoode Hall Law School & Senior Research Scholar, Yale Law School. 
    
 


Why Gravity Payments’ $70,000 minimum salary, sadly, won’t catch on

What are we to think when a CEO slashes his own salary by 93%, and then uses the money — along with a big chunk of corporate profits — to ensure that every one of his employees makes a minimum of $70,000 per year?

That’s what Dan Price, founder and co-owner of Gravity Payments is doing. The CEO of the Washington-based firm made jaws drop when he announced that, over the next couple of years, all of his employees would be brought up to the $70k mark — a change that would mean doubling the income of his lowest-paid employees.

This has been the feel-good news story of the week. I, too, think it’s a terrific thing, and I congratulate Mr. Price on the move.

But still, there are a few points worth raising.

1) It seems to me that different people are applauding the move for different reasons. Is Price’s decision a move towards social justice? Or, on the other hand, is it an admirable act of charity — a rich guy giving a bunch of his own money to a few dozen colleagues? Note also that market conservatives can applaud the fact that this is a purely private move, involving no statutory fiddling with minimum wage.

2) It matters a great deal that Gravity is a private company. Since Mr. Price is not just the CEO but also the majority owner, he can pretty much do as he pleases with his own salary. At a publicly traded company, it wouldn’t be so straightforward. A corporate board could not pillage profits that way to top up employees. And they couldn’t lower CEO compensation without risking losing a talented leader. This fact limits the generalizability of the Gravity move.

3) It’s worth at least contemplating what effect this change will have on people at Gravity who were already at the $70k mark. Just picture it: you went to college for 4 years, and got your degree. You interviewed successfully for a job at a hip young firm, and struggled to get recognized, to get promoted, to earn a raise. And next thing you know, the kid in the copy room is making the same salary you are. What was the point? I’m sure no one is going to begrudge the raises, but it does make me wonder about the possibility of demotivating certain employees.

4) As an act of charity, the move isn’t a winner. If you want to do good in the world, you don’t do it by giving someone who already earns $60k an extra ten. Instead, you donate it to an organization that is engaged in helping those who are worst off. As an act of solidarity, however, the move fares much better.

5) It’s worth at least considering the possibility that the move is a savvy business move on Mr. Price’s part. Surely this is going to be terrific for morale, generally. And I think we can reasonably expect that applicants will be lined up around the block the next time Gravity posts a job opening. This is not to impugn his motives. It’s just to say that he might well, and reasonably, be aware that there’s an upside to his generosity. (And note: his own salary is set to rise again once the company has its profits back up to the level they were at before this move.)

6) Is this the first step towards a new trend? That’s hard to say. One report says Price has already “heard from almost 100 other CEO via email and text who say they support his move.” Emails are one thing. Volunteering to cut your salary is another. But we shouldn’t be too cynical about this: sometimes one person doing something is what makes others realize that it’s a real possibility. Bill Gates giving away the bulk of his vast fortune to charity was clearly instrumental in convincing Warren Buffett to do the same thing.

6) As Matthew Yglesias points out, it also matters that Gravity is a small company. Gravity has something just over 100 employees. So the money Price is redistributing from himself to others goes a long way. But consider what difference a similar move would make at, say, a company like Starbucks. There, CEO Howard Schultz makes about $21 million per year. That’s a lot. So what would happen if Schultz magnanimously offered to cut his salary by 93% and distribute the money across the company’s 182,000 employees? Each employee would see their annual income increase by $107.31. In other words: don’t look to CEO salaries as the well from which economic equality is going to be drawn.

So, congrats to Dan Price and his employees. The changes at Gravity are a genuinely good thing. Economic disparity has been diminished in a meaningful way for a handful of people, and that’s a welcome change. But we should be cautious about reading into it anything more than that.


    
 


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