To Hire or Not to Hire Smokers—That Is the Question at American Express
To Hire or Not to Hire Smokers—That Is the Question at American Express
American Express, a financial services company, found that smokers were costing the company $5,000–$6,000 more per year than nonsmokers. With medical costs rising 10 percent–15 percent per year, the board of directors wants to discuss whether the company should refuse to hire smokers.
Nationwide, about 6,000 companies refuse to hire smokers. Costs are driving the trend not to hire smokers. According to the CDC, a smoker will have 50 percent higher absenteeism and, when present, will work 39 fewer minutes per day because of smoke breaks, which leads to 1,817 lost hours of annual productivity. A smoker will have higher accident rates, cause $1,000 a year in property damage (from cigarette burns and smoke damage), and will cost up to $5,000 more a year for annual insurance premiums.
Few people would fault a company for trying to control costs and maintain a productive workforce, but the question is how far should a company go in pursuit of these goals? Law professor Don Garner believes that “If someone has the ability to do the job, he should get it. What you do in your home is your own business.” Others say such policies set a dangerous precedent. “These things are extremely intrusive,” said George Koodray, assistant U.S. director of the Citizens Freedom Alliance. If companies begin by discriminating against smokers, they might next discriminate against people who are overweight in order to cut costs.
As a manager, you have a hard decision regarding such a policy because your choice has implications beyond hiring decisions.
- On what basis should the company decide whether or not to hire smokers: the best interest of the firm, what the law allows, or individual rights?
- As a manager you have to consider both ethics and social responsibility. Ethical decision making is concerned with doing right and avoiding wrong. Social responsibility is a broader goal to pursue policies that benefit society. Should you protect an individual’s right to smoke if it places a burden on society? Is it ethical to promote society’s rights if it infringes on the rights of the individual?
- The board is charged with increasing shareholder wealth, so they particularly want a decision that’s in the best interest of the company’s financial health. Do you promote shareholders interests over those of the individual or society?
If you were in charge at American Express, what would you do?
This scenario enables us to explore fundamental questions about the nature of ethical and legal behavior in business. It also highlights the tension between our ideals and how they play out in the real world. Sometimes, acting in ways that are ethical and legal are one and the same thing. Other times, they are not.
Ethical Behavior
Ethics are a set of standards that govern the conduct of a person, especially a member of a profession. While ethical beliefs are held by individuals, they can also be reflected in the values,