Ethics and HRM

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Ethics and HRM

• K. Michele Kacmar

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Ethics, Morality and Values

• Ethics is the study of morality
• Morals are the standards used to judge right and
  wrong
• Values are the degree of conviction about the way
  to conduct life

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Conviction

• The degree of conviction to your values can be
  described as primary, secondary, or peripheral
• Primary core values, unchanging
• Secondary Important, but changeable
  occasionally
• Peripheral Values that are known but not lived
  by

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How Do We Get Values?

• Parents, family and friends
• Experiences
• The environment (media, education)

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Conflict of Values

• Dramatic outcomes can occur when individuals and
  groups hold conflicting core values
• Religious wars
• Business scandals
• Crime

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Environmental Factors

• Over the last decade, ethical scandals in
  business have been on the rise
• Enron
• WorldCom
• Tyco
• Health South

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How To Stop Unethical Behavior

• A combination of external regulations and
  compliance programs and voluntary corporate
  ethics programs is the most effective way to
  combat inappropriate corporate behavior (Trevino,
  Weaver, Gibson, Toffler, 1999).

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External Regulations

• Sarbanes-Oxley Act (SOX)
• Requires CEOs and CFOs to sign statements making
  them personally responsible for the accuracy of
  the quarterly financial statements
• Knowingly misrepresenting the financials opens
  them up to punishments including fines and jail
  time
• Protection for whistleblowers

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Other External Regulations

• Other external regulations include regulations
  related to
• Minimum wage
• Overtime compensation
• Discrimination
• Health and Safety
• Privacy

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Organizational Responses

• Codes of ethics including
• Explicit standards of rules to be followed
• Corporate values statements

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Explicit Standards

• Explicit standards define precisely acceptable
  and unacceptable conduct such as accepting gifts
  and the amount allowable

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Corporate Values Statements

• Describes the core values the company wants its
  employees to exhibit including
• How employees are to treat one another
• How employees are to treat customers and
  stockholders

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Effective Values Statements

• Must come from the top with the CEO being
  directly involved in its development
• Top management must actively disseminate the
  values statement and then live by it
• The values statement must be focused

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HR Responses

• Conduct surveys to determine
• What behaviors are routinely being rewarded and
  reinforced
• What values and attitudes are prevalent
• How strong the pressure to engage in misconduct
  is

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HR Responses Continued

• Take steps to eliminate and discourage reasons
  for misbehavior and introduce and encourage
  reasons to behave ethically

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HR Responses Continued

• Develop an appraisal system that rewards
  individuals for ethical behaviors and punishes
  those who act unethically

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HR Responses Continued

• HR can use its expertise to communicate with the
  workforce to get out the ethical message

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Costs of Corporate Ethics Violations

• 7 trillion in stock market losses
• Loss of jobs and retirement savings by employees

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Costs of Corporate Ethics Programs

• Costs of implementing and maintaining compliance
  to create an ethical business environment

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Human Costs

• Unethical business environments can
• Demotivate individuals
• Make good employees leave the company
• Attract unethical employees
• Lead to the lack of trust by the employees for
  the company

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Ethics Effectiveness Quick-Test

• Ethics Effectiveness Quick-Test asks eight
  questions about twelve different areas that can
  help to increase the ethical effectiveness in an
  organization

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Guidelines for Fostering an Ethical Culture

• Have a well developed policy and procedures
  manual
• Enforce policies
• Reward compliance
• Recruit ethical employees
• Create a division to oversee ethics

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Conclusion

• Whenever you are required to make a difficult
  decision, especially one that is ethically
  challenging, select an option that you would be
  comfortable describing to the nation on the
  evening news