ETHICALASPECTSOFHRM

EthicsDefined
BridgetisthenewCEOofalargeenergycompany,andshehasaproblem.Shewasbrought
inwhenherpredecessorwasaskedtoresignafterthecompanysufferedaseriesofethical
scandals.Ithascausedaseriesofoilspillsandthenmismanagedthecleanup.Thecompany
hasalsobeenusingsomecreativebookkeepingtokeepinvestorsoptimisticaboutthe
financialhealthandfutureprofitabilityofthecompany.
Bridgetisfacedwithtwomajorconsequencesfromhercompany'squestionableethical
behavior.Theenvironmentaldisastersandbungledhandlingofthemhascreatedapublic
relationsnightmareandisdrivingthecompany'sstockdownasprofitscontinuetodecline
becausecustomersaremovingtocompetitorsinretaliation.Andtomakemattersworse,the
SECisstartinganinvestigationofthecompany'sfinancialreporting.Thisannouncementhas
createdevenmoredownwardpressureonthecompany'sstockprice.Stockholdersareangry.
Bridgetseesafailureofethicalbehaviorasarootcauseoftheproblemsplaguingthe
company.Ethicsisasystemofrulesandprinciplesofappropriateconductinanygiven
culture,societyororganizationthatguidespeopleintheirdecisionmakingand
responsibilities.Insimplerterms,it'sasystemofrulesthattellsuswhatbehavioris'good'
andwhatbehavioris'bad.'Forexample,itisusuallyconsideredunethicaltolie.
OneofBridgett'sbiggestconcernsiswhetherheraccountingdepartmentcrossedthelineinto
fraudwithitscreativebookkeeping.Acompanyactsthroughitsemployees,andemployee
selectionanddevelopmentiswithinthepurviewofthehumanresourcesdepartment.This
makesHRanimportantteamplayerindevelopingandmaintainingasystemofethicsforan
organization.So,BridgettdragsinDan,theVPofHumanResources,todiscusswhatneeds
tobedoneregardinghumanresourceethics.
Law,RegulationsandEthics
Sometimesthegovernmentdecidestoimposeethicalrulesuponbusinessesthrough
legislationandregulations.OneofthemostimportantoftheselawsistheSarbanesOxley
Act,whichwasenactedtoimprovefinancialdisclosurestoinvestorsandpreventaccounting

fraud.Infact,BridgettisconcernedabouttheSarbanesOxley'sapplicabilitytothe
company'scurrentaccountingsnafu.
FromanHRperspective,DanneedstomakesurethatHRpoliciesandproceduresfitinto
compliancepoliciesdevelopedbythelegaldepartment.Healsoneedstomakesurethatthe
companydoesn'tunlawfullyretaliateagainstwhistleblowers.Theseareemployeeswho
reportaviolationofthelawcommittedbythecompany.Finally,hemaybeaskedtoassistin
compliancetraining.
CodeofEthics
BridgettheninstructsDantohavehispeoplestartreviewingthecurrentcompanycodeof
ethicsforrevision.Acodeofethicsisawrittenstatementofanorganization'svaluesand
principlesthathelpguideorganizationalmembersintheirdecisionmakingand
responsibilitiestothoseinsideandoutsidetheorganization.
Codesofethicscanbecompliancebasedorintegritybased.Uponherreview,Bridget
discoversthatthecompanyhasacompliancebasedcodeofethics.Acompliancebasedcode
ofethicsisfocusedonpreventingunwantedbehavior,suchasillegalacts.However,Bridget
knowsthatyoucanbeprettydarnunethicalandstillobeyeverylaw.Shethinksa
compliancebasedcodeofethicsisinadequate.
Anintegritybasedcodeofethicsisconcernednotonlywithprohibitingconductthat'sillegal
butalsoencouragingemployeestoengageinrightactionsinaccordancewithcompany
values.Forexample,ifthecompanyhadanintegritybasedcodeofethicsthatvalued
ecology,thecompanymighthavetakenmoreprecautionsinitsdrillingtopreventthecurrent
oilspilldisasters.Bridgetwantstotakethehighroadandadoptanintegritybasedcodeof
ethics.
CorporateSocialResponsibility
OneoftheconditionsBridgethadforacceptingthejobandcleaningupthecurrentmesswas
acommitmentfromtheBoardofDirectorssupportingapolicyofcorporatesocial
responsibility(CSR).Corporatesocialresponsibilityistheideathatabusinesshasduties
andobligationsbeyondmakingprofitsforshareholdersandincludesresponsibilitiestoother
stakeholders,includingsocietyatlarge.

Notallagreethatabusinesshassocialresponsibilities.Otherpeoplebelieveabusinessisin
businesstomakemoneyandnothingelse.Bridgetdoesn'ttakethisviewandexpectsher
companytooperateinasociallyresponsiblemanner.
StakeholderTheoryandHR
Bridgetplansonusingastakeholdertheoryinhelpingtoguidethecompanyethicallyand
meetingitscorporatesocialresponsibilities.Astakeholderisapersonororganizationthat
affects,orisaffectedby,thecompany.Stakeholderscanbeinternal,suchasemployeesand
managers,orexternal,suchassuppliers,creditors,customers,shareholders,competitors,
governmentandsocietyatlarge.

CashandCompensationPlans
Thereareethicalissuespertainingtothesalaries,executiveperquisitesandtheannual
incentiveplansetc.TheHRmanagerisoftenunderpressuretoraisethebandofbase
salaries.ThereisincreasedpressureupontheHRfunctiontopayoutmoreincentives
tothetopmanagementandthejustificationforthesameisputastheneedtoretain
thelatter.FurtherethicalissuescropinHRwhenlongtermcompensationand
incentiveplansaredesignedinconsultationwiththeCEOoranexternalconsultant.
Whiledecidinguponthepayoutthereispressureonfavouringtheinterestsofthetop
managementincomparisontothatofotheremployeesandstakeholders.

Race,genderandDisability
Inmanyorganisationstillrecentlytheemployeesweredifferentiatedonthebasisof
theirrace,gender,originandtheirdisability.Notanymoreeversincetheevolutionof
lawsandaregulatoryframeworkthathasstandardisedemployeebehaviourstowards
eachother.Ingoodorganisationstheonlydifferentiatingfactorisperformance!In
additionthepoweroffilinglitigationhasmadeputorganisationsonthebackfoot.
Managersaretrainedforaligningbehaviourandavoidingdiscriminatorypractices.

EmploymentIssues

Humanresourcepractitionersfacebiggerdilemmasinemployeehiring.Onedilemma
stemsfromthepressureofhiringsomeonewhohasbeenrecommendedbyafriend,
someonefromyourfamilyoratopexecutive.
Yetanotherdilemmaariseswhenyouhavealreadyhiredsomeoneandhe/sheislater
foundtohavepresentedfakedocuments.Twocasesmayariseandbotharecritical.In
thefirstcasethepersonhasbeentrainedandthepositioniscritical.Inthesecondcase
thepersonhasbeenhighlyappreciatedforhisworkduringhisshortstintorhe/she
hasauniqueblendofskillswiththerightkindofattitude.Boththesituationsare
sufficientlydilemmatictoleaveevenaseasonedHRcampaignerinafix.

PrivacyIssues
Anypersonworkingwithanyorganisationisanindividualandhasapersonalsideto
hisexistencewhichhedemandsshouldberespectedandnotintruded.Theemployee
wantstheorganisationtoprotecthis/herpersonallife.Thispersonallifemay
encompassthingslikehisreligious,politicalandsocialbeliefsetc.Howevercertain
situationsmayarisethatmandatesnoopingbehavioursonthepartoftheemployer.
Forexample,mailscanningisoneoftheactivitiesusedtotracktheactivitiesofan
employeewhoisbelievedtobeengagedinactivitiesthatarenotinthelargerbenefit
oftheorganisation.
SimilarlythereareethicalissuesinHRthatpertaintohealthandsafety,restructuring
andlayoffsandemployeeresponsibilities.Thereisstilladebategoingonwhether
suchactivitiesareethicallypermittedornot.Layoffs,forexample,arenomore
consideredasunethicalastheywerethoughtofinthepast.