Improving Employer-Employee Relationships: A Historical Perspective
Gordon Cohn, Ph.D.
Assistant Professor of Accounting
Department of Economics
Brooklyn College of the City University of New York
Hershey H. Friedman, Ph.D.
Professor of Business and Marketing
Department of Economics
Brooklyn College of the City University of New York
Submitted for Publication to Journal of Business Ethics
Improving Employer-Employee Relationships: A Historical Perspective

The authors demonstrate that the Bible provides many insights on how employers and employees are supposed to behave. Issues discussed include petty theft by employees, providing an honest day's work, providing employees with meaningful and dignified work, paying wages on time, providing fringe benefits for employees, and honesty in negotiations.

Improving Employer-Employee Relationships: A Historical Perspective

Most organizations realize that being ethical is good business practice and pays in the long run. To be ethical requires treating others -- customers and employees -- properly and fairly. A company that is interested in growth and profits must establish relationships with customers and employees based on trust. Improvement of the employer-employee relationship is important to both parties for several reasons. First, employee productivity increases when employers treat their employees with more respect [McGregor (1960)]. Second, employees may find that increased ethical behavior on their part actually results in higher compensation. For example, many companies are involved in relationship marketing, which is the process of creating and maintaining long-term relationships with customers. Relationship marketing, which can help a company increase its profits, requires the cooperation of employees. Employees that perform their jobs conscientiously and diligently are frequently rewarded with higher wages. Third, even if there is no material gain, ethically appropriate behavior provides an intrinsic sense of self-satisfaction [Bhide (1990)]. Therefore, it is advantageous for every organization to maintain high ethical standards and thereby foster trust between a company and its employees.

Noreen (1988) uses the problems presented by agency theory to explain how everyone's utility can be maximized by more ethical behavior. Agency theory suggests that dysfunctional behavior can be controlled through designing a system of rewards and punishments. However, this solution is problematic in situations where activities and their outcomes are not observable. He claims that the optimal solution to this predicament occurs when the participants can be trusted to adhere to a set of ethical codes. Noreen explains how this principle applies in the well-known Prisoner's Dilemma game which is presented in Table 1.

Table 1
Prisoner's Dilemma Payoff Table
Player 1 Actions

C1 D1

Player 2 Actions C2 10, 10 -10, 15

D2 15, -10 -5, -5

Using the Prisoner's Dilemma, Noreen shows how the highest overall payoffs (10 for each player) occur in situations in which players can all rely on each other to choose the mutually beneficial solution (C1C2). According to Noreen, given enough trials, players eventually arrive at the C1C2 solution. However, he points out that reliance on ethical rules could lead to a beneficial solution much more quickly than learning by attempted exploitation, i.e., each player trying to achieve the payoff of 15 even though it results in a payoff of ­10 for the other player. He notes that one of the challenges of the organizational designer is developing systems that can help organizational members quickly achieve optimal solutions. Cultivating a veneration for ethical behaviors could assist in such endeavors.

The Bible is replete with precepts that deal with business ethics and can therefore be used as a starting point for those interested in developing moral standards for employer-employee relationships. This paper will describe some principles that can be derived from the Bible. The allegories and philosophy contained in the Bible provide insights which transcend religious denomination. They have been used as a source of inspiration for countless generations. Even in our pluralistically directed culture, those who seek moral direction can find it from exposure to the positions of the ancient and modern sages [Reich (1971), Marcuse (1967), Gouldner (1973)]. Furthermore the fact that many modern social sciences have sources in centuries old religious discourses offers evidence of the traditional doctrine's usefulness. Weber, Maslow, Freud and Jung are a few examples of modern thinkers who utilized religious concepts

This paper draws from the Hebrew Bible (specifically the Pentateuch), Talmud, and Midrash as sources of knowledge regarding workplace attitudes. The Bible is replete with precepts that deal with business ethics. It is an appropriate source for gaining insights into this subject. The Talmud, which is the compilation of Jewish oral law, explains the meaning behind the verses in the Bible. The Talmud consists of the Mishna and Gemara. The Mishna was compiled and redacted about 1800 years ago. The Gemara, consisting of commentaries and discussions of the Mishna, was put into written form about 1500 years ago. The Midrash, a separate scripture, recorded the views of the Talmudic sages and is essentially devoted to the exposition of Biblical verses.

This paper describes principles that can be derived from the Bible. Although the Bible was written at a time when individuals mainly lived in an agricultural society, many of its ideas can be easily extended to a modern industrial workplace. Furthermore, it serves as a basis for societal laws and norms.

Petty Theft

It is well known that employees have more opportunity than non-employees to steal from their employers without being detected. Continual scrutiny of insiders' activities is usually not practical. Video cameras cannot observe employee activities with the same thoroughness which they examine customers. Furthermore, it is easy for employees to rationalize the theft of small supplies such as pens, computer disks, notebooks, etc.

The Bible makes clear in various places that stealing is prohibited (e.g., Exodus 20:13; Leviticus 19:11) . Few employees would rationalize that stealing office equipment is acceptable behavior. What about small office supplies? The Talmud discusses whether the theft of an object worth less than one perutah (the copper coin of the smallest denomination in Talmudic times, roughly equivalent to one penny) constitutes theft (Sanhedrin 57a). The strict opinion that this constitutes theft would prohibit employees from even taking one paper clip or one sheet of paper. The Midrash (Midrash Rabbah 31:5) claims that one major sin of the antediluvian generation involved stealing objects worth less than one perutah. An individual would come to town with a basket of lupines for sale and everyone would come and steal only one lupine (worth less than a perutah) so that the merchant had no possibility of restitution through the legal system.

The Bible does allow one type of worker to partake of an employer's product. The Bible gives a field worker the right to eat of the produce with which he works. The Bible states (Deuteronomy 23:26-27): "When you come [as a worker] into your neighbor's vineyard, you may eat as many grapes as is your desire, to your fill, but you may not put any into a receptacle. When you come into your neighbor's standing corn, you may pluck ears with your hand, but you should not lift a sickle on your neighbor's standing corn." These laws ensure that a field worker has a right to eat a small amount of the crop he or she is working on while harvesting. These laws, however, also protect the field owner from a rapacious worker who will take too much. The Bible does not allow the worker to place any of the produce into a receptacle. The Talmud makes clear that the phrase "to satisfy your hunger" limits the worker from gorging himself, even without placing any of the food into a container (Bava Metzia 87b).

The reason for this law is obvious. Most agricultural workers were very poor and it would have been very cruel to prohibit them from eating, say, a few grapes while picking grapes. The Bible is also fair to the employer and does not give laborers carte blanche and allow them to bring home a sack of their employer's grapes. An ethical employer, especially one in the food business, should allow workers to take a reasonable amount of food for themselves or provide employees with a subsidized cafeteria. Other types of employees are definitely not allowed to take anything belonging to their employers, even something small.

The Talmud tells the story of the son of Rabbi Yochanan b. Mattia who once hired workers and agreed to supply them with food, without specifying the quantity or type of food. When his father heard about this, he said: "My son, even if you would prepare for them a banquet as majestic as those of Solomon in his grandeur, you would not fulfill your undertaking, for, after all, they are the children of Abraham, Isaac, and Jacob" (Bava Metzia 83a). All employers should have the attitude that their employees are special and must be treated well.

Providing an Honest Day's Work

An employee is obligated to work to the best of his or her ability and not malinger. Not providing an honest day's work is also a type of theft and would fall under the Biblical prohibition against stealing. Homiletically, one sees this principle in the following Bible passages.

Jacob arrived in Haran, after running away from his brother Esau, and noticed some shepherds idling around the well. He remarked to the shepherds (Genesis 29:7): "Look, the day is still long; it is not yet time to bring in the cattle. Water the sheep and go on grazing." Normally, a stranger does not question the work habits of others. This can be very dangerous, especially with the wrong element. Apparently, Jacob was surprised that these shepherds appeared not to be doing an honest day's work. Many years later, Jacob described the kind of work he had done for Laban. Jacob told Rachel and Leah (Genesis 31:6): "You know that I have served your father with all my strength." Jacob also described to Laban the kind of work he did for him (Genesis 31: 38-41): "These twenty years that I have been with you, your ewes and your she-goats have not miscarried their young, and I have not eaten the rams of your flocks. That which was torn of beasts I did not bring to you; I bore the loss of it... In the day, scorching heat consumed me, and the frost by night, and my sleep fled from my eyes."

Evidently, Jacob worked to the best of his abilities for Laban even though he was deceived by him when he substituted Leah for Rachel. An employee should work as hard as possible and do an honest day's work.

The Talmud discusses the importance of employees faithfully performing their duties. In Tractate Taanith (23a) the story is told of a committee of distinguished sages that went to Abba Chelkiya, an individual known for his righteousness, to ask him to pray for rain during a serious drought. Abba Chelkiya was extremely poor and was being paid for hoeing a field. He was so scrupulous about not wasting time that he ignored and did not even return the greetings of the committee. He later explained that he did not wish to waste time that was not his own. Abba could have easily rationalized that his employer would not know and would certainly not care if he took off a few minutes to talk to the committee of sages. From this story one can deduce that an employee has a responsibility to avoid personal phone calls and conversations while working.

The Talmud had great respect for honest work. Laborers were exempted from the Biblical obligation of standing up for elderly individuals and scholars while working (Kiddushin 33a). In Tractate Berachos (16a), the following law is discussed which further demonstrates the importance of not wasting time that belongs to one's employer. Laborers may recite various prayers while on top of a tree or on the top of a scaffolding. The worker was not permitted to climb down the tree since it would waste time that belonged to the employer. The employer, on the other hand, was obligated to climb down the tree in order to recite the prayers with more feeling. One is obligated to perform religious obligations at one's own expense, not at the expense of the employer.

Providing Employees with Dignified and Meaningful Work

McGregor (1960) was considered innovative when he introduced the idea that employers could have more success with their employees if they treated them humanely rather than mechanically. He claimed that workers' antagonism, militant unionism, and various forms of sabotage were the result of management mistreatment. Hackman and Lawler (1971) developed the idea that workers performed better when their jobs had a beginning and an end and when they saw themselves as producing something of value. Adams (1961; 1965) claimed that performance was higher when employees felt that they were being fairly compensated for their efforts.

The Bible requires that employers even treat slaves humanely. The Bible (Leviticus 25:43) states regarding a freeman sold into slavery: "You shall not rule over him through rigorous labor." Furthermore, his family has to be provided for (Leviticus 25:41) and his master is not permitted to make him perform debasing tasks (Leviticus 25:39). Although, strictly speaking, these laws apply to a slave, logic dictates that they should also apply to any employee. Righteous employers make sure that their employees are not overworked or asked to perform degrading tasks.

The Midrash (Sifra, Leviticus 25:39) provides examples of demeaning work which is not permitted. In Biblical times, heathen slaves often followed their masters with a chair. They also carried their master's clothing to the bath house. These types of tasks are considered humiliating and thus one is forbidden to order his servant to perform these jobs. The Talmudic interpretation (Kiddushin 22a) of the verse (Deuteronomy 15:16), " because he fares well with you" is that the

servant must have the same living standard as the master. In the words of the Talmud: "He must be equal to you in food and drink. You should not eat refined bread and he eat coarse bread, you drink old wine and he drink new wine, you sleep on a mattress and he on straw." The Talmud concludes that one who procures a servant acquires a master for himself!

A worker observing his boss maintaining a standard of living much higher than his own will harbor feelings of resentment. His productivity may even fall. Presumably, many management-labor conflicts have been caused by workers noting the unbelievably huge disparity between the salaries of management and labor.

Hackman and Lawler (1971) proposed that work should be purposeful and have a beginning and end. The Rabbinical interpretation of the above-cited verse (Sifra, Leviticus 25:43) is that a master should not assign his slave work that is not purposeful. For example, the master is not permitted to tell his servant to heat up a cup when he does not need it or ask the servant to hoe the vineyard until he returns. Work has to be finite and the master is only permitted to assign work until a specific time or hoe until a particular place. Providing meaningless work or vague and unspecific job requirements takes away a job's meaning and is therefore not allowed. Clearly, the Bible considers it inappropriate to give an employee work that does not have a degree of intrinsic satisfaction. Such an approach is similar to Hackman and Lawler's suggestion that work should be meaningful for employees.

Paying Wages on Time

The Bible states (Leviticus 19:13): "You shall not oppress your fellow and you shall not rob; the wages of a worker shall not remain with you overnight until morning." This is the law that an employer must pay employees on time. Withholding payment due workers is a violation of Bible law. The Talmud (Bava Metzia 111b) extends this law to all kinds of payments owed including various types of rental fees. Firms that are late in paying their landlords or suppliers have also violated this law. Many organizations violate the spirit of this law by not completing a new contract with their employees when the old contract expires. The importance of paying workers can be seen from the following episode related in the Talmud.

Some porters hired by Rabba b. Huna were negligent and broke his cask of wine. Not only did Rabba not get restitution, but Rab required that Rabba pay the workers. Rab felt that since the porters were quite poor, one must sometimes go beyond the strict letter of the law. Rab, somewhat cryptically, quoted a passage from Proverbs (2:20) to demonstrate that an ethical person sometimes must do that which may not be necessary on purely legal grounds. The verse in Proverbs states: "That you may go in the way of the good and keep the ways of the righteous" (Bava Metzia 83a).

In our own time, Aaron Feuerstein, President of Malden Mills, displayed an unusually high level of ethics after his textile company burnt down. Feuerstein could have taken the insurance money and not rebuilt his company. Not only did he choose to rebuild, primarily in order to save the jobs of 3,000 employees, but he paid his idled workers for 90 days and took care of their health-care benefits for 180 days. The total cost of his generosity was about $10,000,000. Apparently, Mr. Feuerstein chose to "keep the ways of the righteous."

Fringe Benefits For Employees

The Bible requires the master to give his or her slave a severance gift known as hanakah. The Bible states (Deuteronomy 15:13-14): "Do not send him away empty-handed. You shall give him a severance gift from your flocks, from your threshing floor, and from your wine cellar ..." An ethical employer should realize that if the Bible demands that a slave be given a severance bonus after six years of labor, it is certainly appropriate for employers to reward loyal workers who have been with a firm for numerous years.

Honesty in Negotiations

The negotiations between Ephron and Abraham over the Cave of Machpelah (Genesis 23) provides interesting insights into proper and improper ways to negotiate. Abraham's wife Sarah died and Abraham needed a place to bury her. Abraham was desperate for a burial plot. Ephron, knowing this, realized that he could overcharge Abraham and probably still get his asking price. Ephron, however, was also interested in posturing before his countrymen and looking generous. He said to Abraham (Genesis 23:11): "No, my lord, listen to me! I have already given the field to you, and as for the cave that is in it, I have given it to you; in the sight of my countrymen, I have given it to you. Bury your dead." Abraham certainly had the opportunity of saying to Ephron: "Thank you very much for this nice gift." However, Abraham probably suspected that Ephron was only offering the land because his countrymen were watching and was not sincere in his offer. Abraham replied: "If only you would listen to me! I am giving you the money for the field..." Ephron said: "My lord, hear me! Land worth four hundred silver shekels, between me and you what is it? Bury your dead." Ephron still pretending that he wanted to give away the land slyly mentions its value. Abraham understood what Ephron really wanted and ended up paying him the grossly outrageous sum of 400 silver shekels (Jeremiah paid 17 shekels for property that was better, and probably larger, than the Cave of Machpelah).

The Bible could simply have stated that Abraham paid Ephron 400 silver shekels for the Cave of Machpelah and left it at that. One reason this chapter is in the Bible is possibly to teach us the proper way to negotiate. Abraham did not want to take advantage of Ephron, knowing very well that Ephron was simply posturing. Abraham desired to pay a fair price. Ephron's behavior, on the other hand, was reprehensible. Knowing that he had the upper hand, since Abraham had a spouse to bury, he proceeded to ask for an outrageous sum. From Ephron's conduct, the Talmud derives the principle that: "wicked people promise much and do not even do a little (Bava Metzia 87a)."

Negotiations are quite common in business. In particular, there are employer-employee and buyer-seller negotiations. The story of Abraham and Ephron demonstrates the importance of being straight. Ephron comes across as a sleazy character because he promises much and then ends up overcharging for his property. Ephron was more concerned with grandstanding than in being honest and straightforward.


Business ethics is Bible ethics and should be observed as scrupulously as other laws of the Bible. The Talmudic sages thought that business ethics were so important that the first question an individual is asked in the next world at the final judgment is "Were you honest in your business dealings?" (Shabbos 31a).

When both management and labor are primarily concerned with their own self-interest, it is likely that both will be delayed in reaching the optimal solution that maximizes social welfare. However, when both subscribe to a mutually held higher value system, they can more quickly reach a mutually maximizing payoff. The philosophy of the Bible is an example of such a system.

A simple rule of business ethics can be derived from Hillel's philosophy in Avos (1:14): "If I am not for myself, who will be for me? And if I only care for myself, what am I?" An organization must achieve its goals (e.g., profit) but must also care for others, especially its employees. Hillel's version of the golden rule, "What is hateful to you, do not do to others" (Shabbos 31a), could easily be applied to organizations: Employees must treat employers fairly and employers must treat their employees equitably.

 More articles by Dr. Cohn

Adams, J. Stacey: 1963, 'Toward an Understanding of Inequity', Journal of Abnormal and Social Psychology 67, 422-436.

_____________________: 1965, 'Inequity in Social Exchange', in Leonard Berkowitz ed., Advances in Experimental Social Psychology v. 2. Academic Press, New York, 267-299.

Bhide, A. and Stevenson, H. H.: 1990, 'Why Be Honest if it Doesn't Pay, Harvard Business Review 68, 121-129.

Gouldner, A.: 1975, 'The Myth of a Value Free Sociology', in

For Sociology: Critique and Renewal. Harmondsworth Pelican Books, London.

Hackman, Richard J. and Edward E. Lawler: 1971, 'Employee Reactions to Job Characteristics', Journal of Applied Psychology 55, 259-286.

McGregor, Douglas: 1960, The Human Side of Enterprise. McGraw-Hill, New York.

Marcuse, H.: 1967, One Dimensional Man. Beacon Press, Boston.

Noreen, E.: 1988, 'The Economics of Ethics: A New Perspective in Agency Theory', Accounting, Organization, and Society 13(4), 359 - 369.

Reich, C. A.: 1971, The Greening of America. Bantam, New York.