Ethics and HRM: A Review and Conceptual Analysis

Michelle R. Greenwood

ABSTRACT. This paper reviews and develops the ethical analysis of human resource management (HRM). Initially, the ethical perspective of HRM is differentiated from the mainstream and critical perspectives of HRM. To date, the ethical analysis of HRM has taken one of two forms: the application Kantian and utilitarian ethical theories to the gestalt of HRM, and the application of theories of justice and fairness to specific HRM practices. This paper is concerned with the former, the ethical analysis of HRM in its entirety. It shows that numerous theoretical shortcomings exist, least of which is the disregard of stakeholder theory. These deficiencies are explored and, as such, the analysis is advanced. It is argued that such ethical analysis is outside the scope of the modern corporation. A third way in which ethics may be applied to HRM is suggested. Ethical concerns are used as a basis to develop minimum standards against which HRM, in its various guises and practice, may be evaluated. Yet, even when judged by these standards, HRM is seriously lacking. This begs the question, not of whether HRM is ethical, but of whether HRM can be ethical. KEY WORDS: ethical analysis, ethics, human resource management, Kantian ethics, stakeholder theory, utilitarianism

Introduction Human resource management (HRM) involves the effective management of people to achieve organisational goals. The word management in this context is a euphemism for use. Indeed, HRM is commonly defined as the productive use of people in achieving the organisations strategic business objectives and the satisfaction of individual employee needs (Stone, 1998, p. 4). Whether HRM is hard or soft, or some combination of the two, it is only the nature and extent of this use which varies. HRM implicitly accepts such use. This raises a number of ethical concerns. On the face of it, HRM violates any number of ethical proscriptions against using people. To call a person a resource is already to tread dangerously close to placing that human in the same category with office furniture and computers. It is also hazardous to justify HRM on the basis that it maximises positive outcomes for those affected. Who is to say what is good and who should be included? A developing literature on the ethical dimensions of HRM has begun to examine these issues. There are, however a number of gaps in the ethical analysis of HRM to date. Firstly, the assumptions underlying ethical theories are not made explicit. Even to begin to apply ethical stances to HRM is to make significant assumptions about the purpose of the organisation, the roles and responsibilities of managers, and the rights and obligations of employees (and other stakeholders). Most ethical analysis, at the very least, assumes that employers have positive moral obligations towards their employees. Secondly, the treatment of ethical theory is at times overly simplistic. Both the application of Kantianism

Michelle Greenwood teaches and researches in management ethics and corporate social responsibility in the Department of Management, Monash University, Australia. Her research interests include stakeholder theory, social auditing and ethical issues in HRM. She has published in several international journals.

Journal of Business Ethics 36: 261278, 2002. 2002 Kluwer Academic Publishers. Printed in the Netherlands.

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Michelle R. Greenwood Perspectives of HRM A mainstream perspective of HRM The existence of a mainstream perspective of HRM, though rarely acknowledged, has been alluded to recently by several authors (Kamoche and Mueller, 1998; Warren, 2000). It is contended in this discussion that there is a common paradigm that is pervasive throughout research and practice in HRM. The features of this mainstream viewpoint are that it tends to be U.S. based (Legge, 2000) and practitioner focused, its content is prescriptive and often relies on nave generalisations that assume the value of HRM. Much of the writing has been concerned with either the offer of practical advice or the presentation of empirical data (Wright and McMahan, 1992). It takes a systems maintenance or functionalist approach, viewing HRM as a mechanism for the attainment of organisational goals, and thus reflects concerns with improvement in efficiency that derive from classical management theory (Townley, 1993). It also tends to assume an individualistic (focuses in the individual employee as a unit) and unitarist (assumes singularity of purpose and goals) perspective of the employment relationship (see Figure 1).
CRITICAL HRM U.K. based Collectivist Pluralist Analytic Academic oriented Conceptual investigation Social constructivist methodology (in depth case analysis) HRM as a control device Questions power inequities Figure 1. Characteristics of HRM paradigms.

and utilitarianism (see Legge, 1996; Legge, 1998) needs much greater attention. Related to these two points is the third problem, the fact that the role of stakeholder theory in this debate has been overlooked. Stakeholder theory represents a significant part of the debate in business ethics and has many obvious connections to HRM. Finally, there is the concern that although this analysis may be of theoretical interest, it does not necessarily assist in understanding how individuals or organisations make ethical assessments. Discourse involving ethical theory is of a too complex and impractical nature for managers (Rowan, 2000). This paper seeks to further ethical analysis of HRM. The first section identifies and examines theoretical perspectives of HRM, considering the pervasiveness of the mainstream paradigm of HRM, the substance of the alternative critical perspective and the development of an ethical perspective. The next section seeks to further the ethical analysis of HRM by examining the deficiencies in the existing literature in the area. Finally HRM in its various guises and practices is examined and evaluated against a set of minimal criteria. It is concluded that HRM is ethically deficient.

MAINSTREAM HRM U.S. based Individualist Unitarist Prescriptive Practitioner oriented Empirical investigation Postivist methodology (quantitative large scale data analysis) HRM as a valuable tool Reinforces power inequities

Ethics and HRM The values and practices of this mainstream view of HRM developed within the individualistic enterprise ideology of the 1980s and continue to reflect this ideological climate. This perspective continues to be dominant and pervasive. There are a number of reasons for this managerialist orientation of HRM. Firstly, there is the strategic focus of HRM. The link between strategy and HRM developed from a need to establish importance and distinctiveness for what was then a new discipline in the 1980s. One implication of this focus is that HRM is primarily concerned with those who determine and implement strategy, namely senior managers (Clark et al., 1998). Secondly, in countries like the U.K., Australia and New Zealand, a shift from centralised, union negotiated, award-based industrial relations to enterprise based individual employment agreements has resulted in a significant change in the employment relationship (Moorhead et al., 1997). Managers now have greater control over employment relations, employees are more likely to be employed on staff (or to be on contract), and there is less likelihood of a union involved as a third party. The result is a more individualistic and unitarist environment. Thirdly, there is the significant influence of popular management writers and theories. Books written by Peters and Waterman (1982) and Covey (1989) have sold in the millions and often reached best-seller lists. These writers present simple, prescriptive, new ways of organising and communicating which will (supposedly) bring about more effective and successful individuals and organisations. Influential and prolific HRM academics present a quasi-empirical literature which parallels the work of the popular writers (see for example Ulrich, 1998; Pfeffer and Veiga, 1999). This gives rise to the final point, that positivism is the dominant epistemological approach in HRM (Legge, 1995). Positivism seeks to explain and predict what happens in the social world by searching for regularities and causal relationships between its constituent elements (Legge, 1995, p. 308). The sorts of questions asked in HRM research tend to reinforce the status quo rather than question it. Wright and McMahan (1992) express concern

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regarding the lack of a theoretical framework in HRM. Kamoche and Mueller (1998) find the apparent reluctance of many HR scholars, practitioners, and consultants to acknowledge the rationale underpinning of the practice of HRM to be remarkable. Alvesson and Willmott (1996) speak of a silence about issues such as inequality, conflict, domination and subordination, and manipulation within both orthodox and more progressive accounts of management and organisational theory. At the very least, the problem with how-to models of HRM is that, without theoretical underpinning, guidelines alone can be ambiguous. Rules without reasons can be interpreted and applied in a variety of ways. Wright and McMahan (Wright and McMahan, 1992) argue that a strong theoretical model is of great value to both researchers and practitioners. For practitioners a cogent theoretical model will provide better predictions for better decision making. For researchers strong theoretical models provide greater depth and understanding, and thus potential for further development in the discipline. The work of Wright and McMahan (1992) and Jackson and Schuler (1995) advances mainstream quality HRM beyond the how-to atheoretical stance. They present theoretical models of strategic HRM drawn from macrolevel organisational theory, finance and economics. Several of these (resource-based approach, behavioural approach, human capital theory, general systems theory and agency/transaction costs model) explain HRM in strategic and rational terms. The focus of these theories is efficiency. These models both assume and explain organisational control of employees in order to achieve strategic goals. Other theories, in contrast, focus on the relationship between an organisation and its constituencies and, thus, on instrumental and political determinants of HRM practices. Institutional theory sees organisations as social entities which conform to attain legitimacy, whilst resource dependence/power mode suggests that organisations and groups gain power over each other by controlling valued resources. Both these theories emphasise the irrational and dysfunctional characteristics of HRM and, thereby, challenge the centrality of efficiency.

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Michelle R. Greenwood 1987; Kamoche, 1994; Legge, 1995). Kamoche (1994) identifies a revival of unitarist ethos of the organisation, in order to achieve congruence of purpose within the organisation. He claims that the ideology of unitarism is being used to control any divergence of interest between managers and subordinates in order to achieve economic goals. In contrast to mainstream writers, critical theorists tend to assume a pluralist (multiple purposes and goals) and collectivist (employees as a group or groups) nature to the workplace (see Figure 1). They assume that the various parties involved in the workplace have differing views, and thus potentially, goals. This view of the workplace resonates with the stakeholder perspective of the organisation which will be discussed later. In a significant example of this type of analysis Townley (1993) presents an interpretation of HRM based on the work of Michel Foucault. She argues that HRM techniques are a means of measuring and evaluating individuals in order to render them calculable and therefore manageable. Individuals can be known through the two processes of examination and confession. Examination is a method of observing in order to measure, rank and classify. External features such as skill, performance, behaviour are commonly measured in the workplace. Increasingly, the internal dimensions of the individual such as attitudes and sentiments are also being objectified. An individuals confession or exposure of self-knowledge allows for them to be known in two ways. The technique of confession is identifiable in survey and application blanks and, particularly, in performance appraisals. Firstly, the confession requires that the individual breaks the bounds of discretion and secondly, the confession produces information that becomes part of the individuals self-understanding. Thus, HRM practices function to constitute the individual in a particular manner (Townley, 1993). According to Townley (1993, p. 538), HRM practices are
examples of procedures that constitute the subject with varying degrees in individual engagement and participation. There is the inculcation of required habits, rules, and behaviour and socially constructed definitions of the norm. However, the

The political perspective of HRM assumes that unwritten, informal activities have consequential effects on the design and implementation of HRM (Ferris et al., 1999). It is these mainstream theories which come closest to questioning or being critical of the philosophy and practice of HRM. Jackson and Schuler (1995, p. 252), however, note that available theories are inadequate . . . each deals with pieces of the larger phenomenon none addresses the whole domain of HRM in context. Nevertheless, in their opinion, research driven by incomplete theory is better than research driven by no theory at all.

The critical view of HRM an alternative perspective A greater degree of critique of HRM has mostly arisen from U.K. authors writing from a critical perspective (Legge, 1996; Guest, 1997). Development of an alternative and critical perspective of HRM was inevitable and necessary for the evolvement of the field. Writers from the disciplines of sociology, political economy and labour relations have distinct and important perspectives on the workplace. In general, the critical perspective sees HRM as rhetorical and manipulative, and thus, as a tool of management to control the workers (see Figure 1). Rather than being a way for employees to fully develop and contribute in organisation, HRM practices are a way of intervening in an employees life in order to get employees to sacrifice more of themselves to the needs of the organisation. HRM is accused of redefining the meaning of work and the organisation-employee relationship in order to gain the acceptance of such intolerable actions. HRM was cleverly depicted by Keenoy as a sheep in wolf s clothing as early as 1990 (as cited in Legge, 1995). Storey (Guest, 1987; Guest, 1999) distinguished soft people-focused HRM from hard production-focused policies and practices.1 Many sceptical commentators have suggested that soft HRM is just a hard HRM in disguise. Several theorists identify mainstream HRMs employment of an unitarist framework (Guest,

Ethics and HRM

status of the individual, that is, the individuals right to be different and everything that makes the individual truly individual tends to get lost in the process.

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Sennett (1999) also targets particular aspects of the modern corporation. He describes a chameleon organisation. Its form is a network of semi-autonomous teams in constant flux. Workers are added or shed in response to market demand. Power is centralised in an elite technical-managerial class. The inner management core gives orders to isolated cells or teams who are told what to achieve not how to achieve it. The people in power do not witness what they command. Labour is seen as purely contractual. There is no commitment, no dependence. And, there is no social cohesion. Such an organisation no longer carries on the pretence of soft HRM.

An ethical view of HRM a developing perspective The introduction of ethical theory and stakeholder theory in the discussion of HRM is a fairly rare and nascent occurrence. Whilst the aforementioned writers ruthlessly expose HRM practices as objectifying individuals (Townley, 1993), as suppressing resistance and confrontation (Sennett, 1999), in short, as manipulating employees, they take a critical rather than a normative stance. Questions such as is this right or wrong or how should organisations behave do not seem to be addressed by HRM researchers. The fact that the way employees are managed may invite ethical scrutiny appears to have been overlooked (Winstanley and Woodall, 2000). In their lengthy review of 80 years of HRM science and practice Ferris et al. (1999) identify the issue of justice and HRM as an interesting and potentially important direction for future work in HRM. The focus of the research cited in this review is at the micro-level of procedural fairness of selection, performance evaluation and compensation systems. Broader ethical issues are ignored, or mentioned in passing, when they are arguably central to the discussion. This is illustrated in the discussion of

accountability and HRM where the authors note the presence of multiple audiences, accountability perceptions and the moderating effects of context and personality differences (Ferris et al., 1999, pp. 402403) yet fail to introduce theories of ethical development, corporate social responsibility or stakeholder management. Such theories can offer insight into HRM which is different from, yet equally important to, other theories of the organisation. It is this area which will be the focus of the remainder of this discussion. To date only a few theorists have attempted to apply ethical theory to directly to HRM. Legge (1996, for example) uses both teleological (consequentialist) and deontological (nonconsequentialist) ethical theories to evaluate hard and soft HRM. She arrives at the predictable conclusion that the outcome of any evaluation of a particular form of HRM will depend upon which ethical principles are applied. In contrast, Miller (1996) provides a micro-level analysis of HRM systems, procedures and outcomes based on a framework of procedural justice. He argues ethical HRM can be achieved by applying principles of fairness and equality. He concludes that ethical or good HRM depends on good employment conditions, which in turn depends on good organisational strategy. This conclusion would come as no surprise to many HRM researchers or practitioners. If high ethics are too philosophic and unattainable, and mainstream how-tos are too scripted and atheoretical, then what form of critique do we need? A perceived need to be more practitioner focussed has led Winstanley, Woodall and Heery (1996a) to reconceive these ethical theories in more user-friendly ethical frameworks for HRM (see Figure 2). Rowan (2000) also offers managers a set of more user-friendly guidelines for the moral foundation of employees rights (see Figure 2). Whilst these frameworks are less abstract and more accessible than the doctrines of philosophic ethics employed by Legge (1996), they still represent a set of ideals to which individuals and organisations may aspire. They still imply that businesses have affirmative obligations to society.

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Practitioner focused ethical theories (Winstanley, Woodall and Heery, 1996a) Moral foundations of employee rights (adapted from Rowan, 2000) 1. Fair pay based on concepts of equity, distributive justice, autonomy, respect. 2. Safety in the workplace based on the principles of avoiding harm and respect. 3. Due process in the workplace based on concepts of respect, fairness and honesty. 4. Privacy based on concepts of respect, freedom and autonomy.

1. Basic human, civil and employment rights, e.g. job security, feedback from tests, openess and consultation over matters which affect us. 2. Social and organisational justice, e.g. proceduraljustice, egalitarianism, equity, equal opportunity. 3. Universalism, e.g. Kantian principle of an individual right not to be treated as a means toan end. 4. Community of purpose, e.g. social contract of theorganisation, shareholder view of the firm.

Figure 2. User-friendly ethical models for HRM.

Debate in the ethics of HRM has tended to extremes: either the macro-level (is the totality of HR ethical?) or the micro-level (is the individual HR practice ethical?) (Winstanley and Woodall, 2000). At the micro-end of the scale, the ethical assessment of individual practices has limited value. HRM research has moved well beyond the exploration of individual practices (see for example Guest, 1997). Mere lists of employees rights can be ambiguous and, as such, open to a variety of interpretations and applications (Rowan, 2000). At the macro end of the scale, an attempt has been made to draw ethical theory into HRM theory. This analysis is at an early stage, has many gaps and requires significant development. Firstly, the assumptions underlying the acceptance of these ethical theories are not made explicit. Even to begin to apply these ethical stances to HRM is to make significant assumptions about the purpose of the organisation, the roles and responsibilities of managers, and the rights and obligations of employees (and other stakeholders). Most ethical analysis, at the very least, assumes that employers have positive moral obligations towards their employees. Secondly, the treatment of ethical theory is at times overly simplistic. Both the application of utilitarianism2 and Kantianism3 needs much greater attention. Related to these two points is the third problem, the fact that the role of stakeholder theory in this

debate has been overlooked. Stakeholder theory represents a significant part of the debate in business ethics and has many obvious connections to HRM. Finally, there is the concern that although this analysis may be of theoretical interest, it does not necessarily assist in understanding how individuals or organisations make ethical assessments (Rowan, 2000). Discourse involving ethical theory is of a too complex and impractical nature for managers (Rowan, 2000). This paper will attempt to address these inadequacies in the ethical analysis of HRM to date.

Furthering ethical analysis Assumptions of affirmative obligation The significance of the acceptance of affirmative moral obligation of business cannot be underestimated. In the context of this discussion, the affirmative or positive obligation of a corporation is taken to mean the organisations responsibility to take action to promote the good for employees (and other non-owner stakeholders). It must be understood that classic economic constructs of the firm assume the complete opposite stance that business has no responsibility beyond that of making profit for its shareholders (Friedman, 1970). To argue that business

Ethics and HRM organisations have affirmative obligations to society has far reaching implications (Beauchamp and Bowie, 1993): Firstly, there is the concern that the obligations of the corporation to do good can be expanded without limit. Secondly, that the injunction to take social responsibilities into account and to assist in solving social problems may make impossible demands upon a corporation. Thirdly, that any such injunction ignores the impact that such activities may have on profit. And finally, there is the question of who is going to define the social problems and determine which has priority. Friedman (1970) went as far as call the principle of social responsibility a fundamentally subversive doctrine in a free society. The middle ground in this debate is occupied by concepts of the moral minimum. This stance is distinguished by the denial of obligation for businesses to undertake affirmative duties. Simon, Powers and Gunnemann (1993), for example, maintain that all individuals and social institutions ought to adhere to certain moral standards, but that these are negative injunctions. There is a difference between requiring the organisation to cause no harm and requiring it to actively promote the good. The precept that there is a minimum standard of behaviour expected of business by society was even acknowledged by Milton Friedman (1970) in his manifesto of the narrow view of corporate social responsibility. He wrote that business in its pursuit of profit must stay within the rules of the game, which is to say, engage in open and free competition without deception or fraud. At the other end of the spectrum are ethical frameworks and models that assume positive obligation. These include utilitarianism and stakeholder theory.

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The role of stakeholder theory Stakeholder theory is conspicuously absent from many discussions regarding the theoretical underpinning of HRM (see Wright and McMahan, 1992; Jackson and Schuler, 1995; Ferris et al., 1999). This is despite the fact that the belief that employees are legitimate stakeholders in the

organisation is often taken for granted either explicitly or implicitly (see for example Handy, 1991; Legge, 1998). The stakeholder concept has grown in prominence over recent years due to increased coverage in the media, public interest and concern about corporate governance, and its adoption by third-way politics (Metcalfe, 1998). The examination of practices at the level of social transactions and interactions between organisational members (managers, employees and other stakeholders) could help bridge the gap between academic theory and practice (Cornelius and Gagnon, 1999). The stakeholder perspective is in keeping with a pluralist view of employment relations which assumes that there are distinct groups with their own valid needs and interests with respect to the organisation. Credit is due to Winstanley and Woodall (2000) for recently beginning a dialogue on the employee as a stakeholder. The stakeholder theory of the corporation, as developed by Freeman (1984), is characterised by the notion that managers have a duty to attend to all those who have a stake in or claim on the organisation. This contrasts with the classic view (sometimes called shareholder value theory) that managers bear a special relationship with the owners of the organisation (see for example Friedman, 1970; Rappaport, 1986). The obvious questions raised by the stakeholder view are; who is a legitimate stakeholder, and, what is the nature of the stakeholder relationship? These issues have been addressed somewhat in the literature with some pattern developing in the responses (for a more detailed discussion see Mitchell et al., 1997; Greenwood, 2001). Generally, stakeholders may be seen in one of two manners: instrumental or functional; or normative. It was noted by Goodpaster (1991) that stakeholders may be considered in a manner that has nothing to do with ethics. A company might analyse its action in order to take into account any positive and negative effects on stakeholder for no other reason than that offended stakeholders might resist and retaliate. Just as a company has the potential to affect its stakeholders, the stakeholders have the capacity to affect the company. It is the stakeholders capacity to affect the company positively and

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Michelle R. Greenwood The notion that the instrumental and normative view of the stakeholder may not necessarily be divergent theoretical positions has been debated in the literature at length. Some writers suggest that neither approach is complete without the other, and as such any theory needs to incorporate both views (Donaldson, 1999; Jones and Wicks, 1999). Jones and Wick (1999) propose the development of a normatively and instrumentally convergent stakeholder theory. Other writers disagree suggesting that there are fundamental flaws in the idea of convergence (Freeman, 1999; Trevino and Weaver, 1999). Whether or not a distinction should be drawn between the two in theory, in practice instrumental and normative stakeholder approaches often converge. This is reflected in the old adage that good ethics is good for business (Lagan, 2000). The two stakeholder perspectives exist as discrete phenomena only in as much as they are ideal types. This is also the case for the soft and hard models of HRM. The soft-hard dichotomy has been well established in normative models of HRM, and this distinction needs to be taken into account in conceptualisations of HRM (Truss et al., 1997). However, a study by Truss et al. (1997) showed that no pure example of either form of HRM existed. Legge (1995) notes that most normative statements of HRM contain elements of both soft and hard models.

negatively (especially) through political or market mechanisms that is of concern to the company. Hard HRM, where employees are viewed instrumentally as a means to achieve organisational goals, is in line with this strategic consideration of stakeholders. However soft HRM practices are not always without strategic intent. According to Ojeifo and Winstaley (cited in Winstanley and Woodall, 2000, pp. 1314):
it is too easy for approaches to involvement based on stakeholding to be used manipulatively and duplicitously by employers anxious to bind employees into a rhetorics of excellence and enterprise, for example where employee empowerment is introduced for cost-cutting reasons but promoted on the basis of its involvement of staff in decision making.

This, of course, has significant implications for soft HRM. On the other hand, stakeholders may be considered from an ethical perspective apart from their instrumental, economic or legal potential to affect the organisation. Under this moral view of the stakeholder, the care of the interest of various stakeholders may involve a trading off of the economic advantage of the shareholders against the interest of others. The primacy of the managers relationship with the shareholder is no longer assumed and is replaced with the notion that the managers must act in the interests of the all stakeholders in the organisation (Evan and Freeman, 1988). Stakeholder theory is cast as a form of Kantian capitalism (i.e. based on the principle that no individual should be used merely as a means to an end). Soft HRM, which suggests that the employee be seen as more than instrumental, is more in line with the moral account of stakeholders. In organisational terms, each of the stakeholder groups has a right to not be treated merely as a means to some end, and therefore must participate in determining the future direction of the firm in which they have a stake. It is, therefore, the companys potential to affect the stakeholder that is of concern. Such a view of the organisation, its purpose and responsibilities, is quite revolutionary, or as Friedman (1970) would say, subversive. It implies a reconceptualisation of capitalism.

Kantian ethics According to Kant (1964, p. 96), one must act in such a way that you always treat humanity, whether in your own person or in the person of another, never simply as a means, but always at the same time. It should be noted that this dictum demands that we never treat people entirely as a means rather than that we never treat people as a means. Treating people simply as a means is to regard them as something we use for our own purposes without their full and free consents. Rawls (1972, p. 83) also holds that people are self-originating sources of valid claims and that they matter from a moral point of view because they are ends in themselves.

Ethics and HRM Rawlsian social justice can only be achieved through social contracts and the existence of institutions to support such contracts. The violation of the ethical rights of individuals, who have entered such a contract, gives rise to the necessity for external monitoring and enforcement of rights. Effectively, this is the moral argument used to justify soft HRM. Where the market mechanism has failed to safeguard individual rights (as is the case with hard HRM), corporations intervene ostensibly to prmote the rights of employees (hence soft HRM). To treat a person as end-in-themselves is to provide them with some of the end-things needed for their sustenance and well-being. Proponents who claim that soft HRM treats employees as a subject-in-themselves, base this claim primarily on the provision of meaningful work. Indeed, Bowie (1998) argues that, from a Kantian perspective, one of the moral obligations of a firm is provision of meaningful work for employees. Meaningful work, according to Bowie (1998, p. 1087) is:
work that is freely entered into, that provides a wage sufficient for physical welfare, that supports the moral development of employees and that is not paternalistic in the sense of interfering with the workers conception of how she wishes to obtain happiness.

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HRM in no way offers employees the respect and autonomy necessary to be treated as subjects-inthemselves. Understanding utilitarianism
A great deal of utilitarian thinking is present in the way which business justifies itself. . . . Business and any other practical activity must pay attention to results to remain viable and to remain ethical. (Grace and Cohen, 1998, p. 12)

This is a high set of standards for an organisation to achieve. Many would claim that they do so, or attempt to do so, through the implementation of best (HRM) practice. Such practices include as participation and empowerment, training and skill development and teams development. Critical theorists, however, view these practices differently. Absence of clear lines of authority, for example, encourages greater contribution and cross-skilling but also frees management to shift and adapt and rationalise without needing to justify their actions (Sennett, 1998; Warren, 2000). Team working encourages employee involvement and sharing but also allows the avoidance of managerial responsibility and suppresses resistance and confrontation (Sennett, 1998). From this perspective, best practice

Utilitarianism offers the criterion of producing the greatest good for the greatest number of people. Under this measure both the soft and hard types of HRM can be judged as ethical. Legge (1996, p. 35) proffers this as a relief: Happily, utilitarianism sends a far more reassuring message. Such analysis, however, is incomplete. Utilitarianism is commonly misunderstood as being nothing more than a minimalist or managerialist argument in support of the business case. It is true that utilitarianism has been used to support the classical view or shareholder model by evoking the argument, known as the invisible hand doctrine, that, if left to its own devices, a market driven economy will produce greatest good for the greatest number (Evan and Freeman, 1988). Utilitarianism cannot, however, be used to justify the business acting in self-interest to maximise its own utility,4 that is, to support the business case. As a corollary, utilitarianism can also be used to support the case for the opposing view the stakeholder model. Stakeholder theory is founded on the principles that the corporation and its managers are responsible for the effects of their actions on others, and that the corporation should be managed for the benefit of its stakeholders, that is, those who affect or can be affected by the corporation (Evan and Freeman, 1988, pp. 79 and 82). HRM policies and practices, therefore, can only be viewed as ethical using the criteria of utilitarianism on the condition that it can proved their outcome is indeed the maximisation of utility for those affected. It is at this point that both utilitarianism and HRM reach some major obstacles. There are three significant problems:

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Michelle R. Greenwood uals or groups who benefit from or are harmed by corporate actions (Evan and Freeman, 1988). However, according to Mitchell et al. (1997), stakeholder theory offers a maddening variety of signals on how questions of stakeholder identity might be answered. From a utilitarian perspective everyone would mean the set of all people (or even sentient beings) that affected in terms of utility. In considering the outcomes of HRM it seems natural to consider outcomes for the organisation (commonly interpreted as value for shareholders) and outcomes for the employee themselves. But what about the managers? We are strongly encouraged by Willmott (1997) to see the manager as more than an agent of capitalist priorities, but as human subjects, who also are sellers of labour and targets of control. In terms of stakeholder theory, managers have the potential to be stakeholders in the organisation, as do customers, suppliers, and community. Then there are competitors, government, the environment, and future generations. Most writers agree that such individuals and groups potentially all can have a stake in the company (Mitchell et al., 1997). It is the existence and nature of the stake, however, that is in dispute. There is also the question of whether those affected have equivalent interests. The doctrine of utilitarianism does not allow a moral agent to differentiate between the claims of intimates or dependents and those of independents (Petit, 1991). Rawls (1972) is highly critical of this principle on the grounds that it denies any distinction amongst persons. In addition, there is the striking feature of the principle of utility that it does not matter how the sum of benefits is distributed among individuals. Thus, there is no reason in principle why the greater gains of some should not compensate for the lesser losses of others. According to Rawls (1972), this doctrine is irrational because it is in total contradiction with the fact that in individual liberties are fundamental to a just society. Indeed, individual rights are entrenched in law and unable to be traded off against the greater needs of society. Acceptance of this argument undermines the utilitarian justification of many HRM policies and practices. For example, in recent years, most industrialised

the problem of identifying outcomes, the question of who is affected, and issue of determining the interests of others. Firstly, how can the outcome of a particular HRM practice, or bundle of practices, be proved? This would require the demonstration of causal relationships between constituent elements. The link between HRM and organisational outcome is the focus of much HRM research. As previously noted, many mainstream writers suggest that there is HRM best practice that can be universally applied for organisational success (e.g. Wood, 1995; Huselid, 1995, as cited in Purcell, 1999). In contrast, other writers question both the methods and the findings of much of this research (Purcell, 1999; Becker and Gerhart, 1996). Guest (1999) suggests that any analysis of influences on company profits or factory outputs or even absence levels quickly leads to the conclusion that factors other than HRM are involved. Purcell (1999) identifies a number of significant problems with large-scale quantitative analysis that could potentially result in unreliable data. Becker and Gerhart (1996) also suggest that the use of large numbers of firms in order to test the relationship between HR and firm performance provides little insight into the process involved. They describe a black box5 of intervening variables between a firms HR system and the firms bottom line which must be investigated and tested with more complete models. Without such knowledge it is difficult to explain how HR influences firm performance and to rule out alternative explanations such as reverse causation. As an example, Becker and Gerhart note that the fact that profit sharing is often correlated with higher profits can be interpreted in at least two ways: profit sharing causes higher profits, or firms with higher profits are more likely to implement profit sharing. They suggest that studies within a single industry or company, case studies of single firms or plants provide a clearer, if more narrow picture of the process of HRM. They call for deeper qualitative research to complement the large-scale multiple firm studies. Secondly, there is the issue of whose interests are at stake. According to stakeholder theory, corporations have stakeholders who are individ-

Ethics and HRM countries have seen a spate of factory closures or company downsizing. Moreover, the business community now considers downsizing normal practice at large (Orlando, 1999). The empirical research on the effects on retrenched employees of downsizing shows that these individuals suffer greatly (Orlando, 1999). Yet, these actions are justified by being, not only in the interests of the owners, but of society as a whole (more competitive industry, cheaper goods, etc.). Such an ethical justification, which fails to recognise, whatsoever, the rights of others as a constraint on action may be seen as fundamentally flawed. Finally, how do we know what is in peoples best interests? We can make certain assumptions, but what if we are wrong? Is not the act of assuming we know what is best for someone else an ethical problem in itself? Clark, Mabey and Skinner (1998) suggest that the voice of those at the receiving end has tended to be underrepresented in the HRM literature. The predominance of a managerialist orientation in mainstream HRM research has been identified earlier in this discussion. Yet it is the employees who are the recipients and the consumers of HRM. Normative stakeholder theory would suggest that employees have a legitimate claim which must be attended. Further more, employees have a right to be involved in decisions regarding their well being. According to Evan and Freeman (1988, p. 82),
The corporation should be managed for the benefits of its stakeholders: its customers, suppliers, owners, employees, and local communities. The rights of these groups must be ensured, and further, the groups must participate, in some sense, in decisions that substantially affect their welfare.

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ment is akin to that of King Solomon (1988, p. 81).

Evaluating HRM Legge (1998) suggests that only HRM which treats employees as more than a means to an end is ethical. Corporations would be expected, for example, to offer training and development which would focus on the enhancement of the employees career path, not just on the skills required by the workplace. In contrast, Vallance (1995) suggests that any practice which is not productive of the business aim is unjustifiable on the grounds that it may interfere with an individuals liberty. Stakeholder theory claims a moral relationship with employees (and all other stakeholders). In opposition, shareholder value theory denies such a relationship. Sennett (1999) argues that organisations should be paternalistic. Handy (1989) argues that they should not. In the light of this spectrum of ethical offerings it is suggested that there is a need for principles which may be fairly acceptable across the board (could not be denied from any perspective) and therefore, which might be considered as a basis for a minimum standard to evaluate HR. The next stage of debate will deal with this question of non-negotiable ethical criteria against which HRM can be evaluated. However, before addressing this issue, greater consideration must be given to the nature of HRM.

The dual nature of HRM in modern organisations It is the soft model of HRM, the version that purports to care for the employee, which is of greatest concern from an ethical standpoint because it is viewed as a more subtle and potentially insidious (Guest, 1997; Warren, 2000). Popular theorists (for example Pfeffer, 1994) describe the modern organisation as characterised by a number of practices including flexibility, team work, cultural management and focus on core competencies. The rhetoric of the mainstream paradigm suggests that these practices provide employees the opportunity to participate,

Yet the interests of employees are overridden by the organisation imperative to achieve economic goals (Kamoche, 1994). The difficulties involved in carrying out this principle in the corporation are clearly significant. It has been argued that to accept such an ethical relationship with stakeholders is almost as problematic as ignoring stakeholders (ethically) altogether (Goodpaster, 1991). This is even recognised by Evan and Freeman when they state the task of manage-

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Michelle R. Greenwood significantly has been discussed in the literature (Robinson et al., 1994; Dunford, 1999; Sennett, 1999). According to Rousseau and Parks (1992) mutual obligations are the essence of a psychological contract between employers and employees. Legal and contractual models of the employment relationship need to be stretched to encompass a psychological dimension (Winstanley et al., 1996b, p. 191). Various and deep changes to working relationships between employers and employees over recent years have been identified (Anderson and Schalk, 1998). Organisational restructuring has significantly changed the nature of this contract (Dunford, 1999). Where a contact is not fulfilled or is changed without agreement it can be seen as violated. Such violation can run the gamut from subtle misinterpretation to stark breaches of good faith (Rousseau, 1995, p. 111). Managers have decried the decline of employee loyalty at the same time that employees have been counselled to eschew reliance on job security or employer commitment in favour of taking charge of their own employability (Robinson et al., 1994). It has been claimed that contract violation is the norm rather than the exception (Robinson and Rousseau, 1994). The trend in modern management is to command and then to depart; to sacrifice authority and leadership for self-protection. Any kind of dependency, such as existed in bureaucratic hierarchies of command, is shunned (Sennett, 1999). The new chameleon organisation therefore has enormous problems arousing commitment and loyalty among its employees. Dunford (1999) suggests that there are two contrasting positions that can be taken with respect to this experience. An employment relationship free from obligation and commitment may be characterised as challenging, mature, free and creative (Dunford, 1999). Loyalty and commitment can have negative connotations, suggesting a less-thanmature stage of individual development, narrowmindedness and oppression. Noer (cited in (Dunford, 1999, p. 73) describes the traditional employment relationship as one of co-dependency in which individuals enable the system to control their sense of worth and self-esteem and in doing so make themselves into perma-

gain greater skills, perform a wider range of tasks and have more control over their work. The suggestion is that the organisation feels an obligation to care for its employees. Measured against the Kantian dicta of seeing employees as an end in themselves, and respecting the rights of the individual, soft HRM appears to score well. Critical theorists, however, as discussed earlier, have identified the other side of a doubleedged sword. Even if the rhetoric of HRM is soft the reality is almost always hard (Legge, 1995). If the potential duality of these practices is accepted and we are no longer assured that individuals rights are being respected then their approval under the conditions of Kantian ethics is precarious. Soft HRM practices are evaluated against Kantian criteria as ethical if the individual is not seen entirely as a means to an end that is considered at least in part as having intrinsic value. Hard HRM practices are seen as unethical from the same perspective as they only treat employees as a means to an end. There is, however, an alternative way of looking at this argument. If we cannot be assured of the soft nature of HRM practices (cannot be assured that the sheep is not a wolf in sheeps clothing) then it is more dangerous for the employee to be exposed to such practices than for them to be faced with blatant hard HRM practices. Surely a wolf provides less threat than a wolf in sheeps clothes because we know to approach with caution. In practice, could the removal of soft HRM rhetoric have an empowering and liberating effect on employees? Vallance (1995) suggests that any practice which is not productive of the business aim is unjustifiable on the grounds that it may interfere with an individuals liberty. In the light of this blurring of lines between soft and hard HRM the question of ethical concern is raised: under what circumstances, if any, is it allowable for employees to be used as a means to an end.

Issues of rights, obligations and interference The idea that obligation and commitment in the employment relationship has recently changed

Ethics and HRM nent victims. That labour is seen as freed of any paternalistic taint is widely proclaimed as a virtue (Sennett, 1999). If paternalism is carried too far it is at the expense of respect (Bowie, 1998). Loyalty is seen as a concept whose time has passed, yet there is a striking resonance with much earlier conceptualisations of the employment relationship. Hayek (as cited in Sennett, 1999) and Friedman (1970) argued long ago that the workplace was not a source of social fulfilment. This version of the employment relationship is thus in keeping with a narrow or classic view of the organisation and also in keeping with a hard model of HRM. Alternatively, an employment relationship free from obligation and commitment may be characterised as cynical, evasive, meaningless and exploitative. The claim that our employees are most valued asset is common in many organisations. The importance of commitment and involvement in the organisation has been both conceptually and empirically identified (Walton, 1985; Lawler, 1992). Any benefit the organisation may derive is likely to be threatened by practices which are inconsistent with such rhetoric. Senior management may find their own rhetoric thrown back at them and a degree of cynicism may develop among employees (Dunford, 1999). Sennett (1999) argues that the problem with the modern organisation is a lack of commitment and dependence in the name of autonomy. The result is a loss of social cohesion at work. He suggests that the failures, betrayals and inadequacies people experience in their dealings with one another serve as reasons for withdrawal rather than for coming together: There is a kind of negative magnetic charge (Sennett, 1999, p. 27). He argues that mutual obligation, indeed paternalism, is necessary to restore social cohesion in the workplace thereby re-establishing the dignity of men and women as workers. Such an argument can be seen as promoting the soft model of HRM. This debate introduces the ethical question: to what extent, if at all, should the organisation care for or protect employees? Developing ethical criteria

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As a result of this discussion, two questions of ethical concern have been raised. The first: Under what circumstances, if any, is it allowable for employees to be used as a means to an end realises questions of individuals rights. The second: To what extent, if at all, should the organisation act in the interest of employees also brings forward questions of individuals rights, but particularly with respect to liberty. These ethical concerns can be used as a basis to form a set of ethical criteria by which to evaluate HRM. Thus two propositions have been formed. The proposition that individuals must be treated with respect is not suggesting that people can never be used as a means to an end. Clearly, in organisational terms the idea that employees cannot be used as a means to the companys end is completely untenable. The reason why people are employed is to contribute to the achievement of the companys goals. The most commonly accepted definitions of HRM assume effective use of employees for the achievement of organisational purpose. Perhaps the suggestion should therefore be that employees should not be used exclusively as a means to an end, or not used as a means to an end under specific circumstances. There are, therefore, certain moral rights that the employee has which cannot be violated. Hence, the first proposition: that individuals (employees) must be treated with respect. The stance that there are minimal requirements of societal institutions is consistent with notion that we should not interfere with the freedom of others. The proposition that one should not interfere with another persons freedom is not suggesting that no one can ever do anything which impinges on anothers actions. Once again, in organisational terms, the idea that the company cannot ask its employees to do anything the employees do not wish to do is completely unworkable. The employment contract cannot precisely state everything that is expected of an employee thereby allowing an employee to refuse to do anything not explicitly included. Through the selling of their labour to an organisation employees are selling their willingness to act in the interest of the company. The

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Michelle R. Greenwood sidered as a denial of an individuals right to freedom. Modern management practices and soft HRM practices readily open themselves up to claim of manipulation. Employee assistance programs which offer counselling, training programs aimed at self-development, family friendly work policies (you can take your children to work and your laptop to your home) are just a few examples of practices which could be construed as overly controlling. Rather the wolf than the wolf in sheeps clothing. The right to well-being can be understood as the right of individuals to pursue their own interests and goals (Rowan, 2000). The right of an employee to purse their own goals does not necessarily mean that the organisation must pursue the interests of the employees (or any other stakeholder for that matter) as would be demanded by moral stakeholder theory. It does however mean that the organisation must recognise the existence of employees interests and goals. This is embodied by the International Labour Organisationss Declaration on Fundamental Principles and Rights at Work (ILO, 1998) that all workers have the fundamental rights of freedom of association and to collective bargaining. In the business context, as all persons have goals and interests, a manager who herself is employed in an effort to pursue her goals cannot fail to recognise that her employees are doing the same (Rowan, 2000, p. 258). Acceptance of this argument poses a problem for any unitarist or managerialist models of the workplace. A company which either explicitly or implicitly treats their employees as not having goals and interests which potentially differ from those of the organisations would be considered to be infringing upon this right. Rather not the wolf at all (slinks away, tail between his legs). Of the three rights demanded, the right to equality seems to pose the least difficulty. Equity, equal opportunity, fairness are all ideals which are well accepted in both societal and organisational contexts. However, taken in isolation of the rights to freedom and well-being, the right to equality cannot be fulfilled. Equality implies that everyone has rights to freedom and wellbeing equally.

question then is when and how is it permissible for the company influence employees actions. Hence the second proposition: that one (a company or manager) should not undermine the autonomy of an individual.

Does HRM pass the ethics test? HRM involves the effective management of people to achieve organisational goals. The word management is in this context a euphemism for use. Whether HRM is hard or soft or some sort of combination of the two, it is only the nature and extent of this use which varies. HRM implicitly accepts such use. If one takes the doctrine that an individual can never be used as a means to an end, then any form of organisation would necessarily fail its demands. Hence the less arduous proposition that individuals (employees) must be treated with respect. The rubric of respect, according to Rowan (2000) includes the rights of an employee such as the right to freedom, the right to well being and the right to equality. The right to freedom includes not only negative freedom, such as the right to not be physically restrained, but also positive freedom such as the right to not be coerced or hindered by the effect of external forces (Berlin, 1984 cited in Rowan, 2000, p. 358). Controlling influences over an individual can be described as a continuum which ranges from coercion to persuasion (Beauchamp, 1993). Coercion as a point on the continuum is a completely controlling influence which removes and individuals freedom. Persuasion at the other end is a wholly non-controlling influence which in no way undermines a persons free choice. Between the two ends of the spectrum is manipulation a class of influence which are sometimes controlling. Manipulation is a broad category that includes any successful attempt to elicit a desired response from another person without the means of physical force (coercion) or rational argument (persuasion). A person who is manipulated makes a choice based on incorrect or unsound reasoning, as a result of a deliberate attempt by another to mislead or deceive them. Such a situation would be con-

Ethics and HRM Conclusion Interpretation of HRM has evolved significantly in the last decade. Many of the writers providing substantive and theoretical analysis of HRM policy and practice are aligned with the critical perspective. More recently some writers have began to use ethical theory in their inquiry. The use of such theory has limitations. Micro-level analysis of specific HRM practices or bundles of practices is of limited value and detract from questions surrounding the big picture. Macrolevel analysis based on ethical theory has both theoretical and practical failings. The significance of, and difficulties involved in, the use of ethical frameworks which evoke affirmative obligations, specifically utilitarianism, Kantian and stakeholder theory, have been comprehensively discussed. At the very least, the acceptance of such analysis will depend on whether one embraces the original ethical framework. In the light of this spectrum of ethical offerings it is suggested that there is a need for principles which may be fairly acceptable across the board (could not be denied from any perspective) which might be considered as a basis for a minimum standard to evaluate HR. Pursuit of such an approach has its own limitations. Firstly, there is the concern that the development of any ethical standards for HRM could degenerate into another best practice recipe for HRM. This would be ironic considering that the ethical critique of HRM has developed, at least in part, from the critical perspectives abhorrence of such a normative model. Secondly, there is the concern that any minimal or lowest-common denominator approach will degenerate into a diluted, ineffectual statement of rights. Despite these limitations, it is contended in this paper that the majority of people would accept the ideas that an individual or organisation must treat individuals with respect, and that an individual or organisation does not have the right to interfere with the freedom of an individual. These two minimum standards are used to assess HRM. HRM in its various guises fails this evaluation. The question is raised by this discussion as to whether human resource management polices

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and practices, as applied by business organisations in their current conception, can be ethical. The only alternative model given any credence in the literature is the stakeholder model of the organisation. Under these circumstances it would seem that research into HRM within a stakeholder model is a necessity.

Notes
1

The distinction between hard and soft models of HRM policies and practices was first made by Storey (Guest, 1987; Guest, 1999) The hard version of HRM explicitly presents workers as a key resource for managers to exploit, thus reflecting the capitalist view of the worker as a commodity. Under this view the employment relationship is seen as an economic exchange to be terminated when no longer required. In contrast, the soft version of HRM views objects as means rather than objects. This view sees HRM as a way of gaining the commitment of employees in order to achieve organisational goals. The focus is therefore on winning the hearts and minds of the workers. These models should be understood as ideal types which are unlikely to be seen in their pure form. 2 Utilitarianism is based on the writings of Jeremy Bentham (17481832) and John Stuart Mill (18061873). Utilitarian theories hold that moral worth of actions or practices is determined solely by their consequences. Utilitarianism is committed to the maximisation of the good and the minimisation of harm and evil (Beauchamp and Bowie, 1993, pp. 2122). 3 From the ethical theory of Immanuel Kant (17241804) based on the respect-for-persons principle that persons should be treated as ends and never only as means. Respect for human beings is demanded because human beings possess a moral dignity and therefore cannot be treated as if they merely have conditional value. Respect for persons has sometimes been expressed in corporate contexts as respect for the individual (Beauchamp and Bowie, 1993). 4 This is in fact the argument of ethical egoism (see Beauchamp and Bowie, 1993). 5 The question of the nature of the black box of internal HRM processes and outcomes has been debated at length for many years. For Shuler and Jackson (1987) the black box referred to employee outcomes such as employee commitment, job satisfaction, motivation and employee role behaviours.

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Bowie (eds.), Ethical Theory and Business (Prentice Hall, Englewood Cliffs, NJ). Ferris, G. R., W. A. Hochwarter, M. R. Buckley, G. Harrell-Cook and D. D. Frink: 1999, Human Resource Management: Some New Directions, Journal of Management 25(3), 385423. Freeman, R. E.: 1984, Strategic Management: A Stakeholder Approach (Pitman, Boston). Freeman, R. E.: 1999, Divergent Stakeholder Theory, Academy of Management Review 24(2), 233236. Friedman, M.: 1970, The Social Responsibility of Business is to Increase Profit, The New York Times Magazine. Goodpaster, K. E.: 1991, Business Ethics and Stakeholder Analysis, Business Ethics Quarterly 1(1), 5373. Grace, D. and S. Cohen: 1998, Business Ethics: Australian Problems and Cases (Oxford University Press, Melbourne). Greenwood, M. R.: 2001, The Importance of Stakeholders According to Business Leaders, Business and Society Review 106(1), 2949. Guest, D.: 1987, Human Resource Management and Industrial Relations, Journal of Management Studies 24(5), 503521. Guest, D.: 1997, Human Resource Management and Performance: A Review and Research Agenda, International Journal of Human Resource Management 8(3), 263276. Guest, D.: 1999, Human Resource Management the Workers Verdict, Human Resource Management Journal 9(3), 525. Handy, C.: 1989, The Age of Unreason (Century Hutcheson, Handy, C.: 1991, What Is a Company For?, RSA Journal, . I. L. O.: 1998, Declaration on Fundamental Principles and Rights at Work, 86th Session (Geneva, Switzerland). Jackson, S. E. and R. S. Schuler: 1995, Understanding Human Resource Management in the Context of Organizations and Their Environments, Annual Review of Psychology 46(1), 237265. Jones, T. M. and A. C. Wicks: 1999, Convergent Stakeholder Theory, Academy of Management Review 24(2), 206221. Kamoche, K.: 1994, A Critique and a Proposed Reformulation of Strategic Human Resource Management, Human Resource Management 4(4), 2947.

The debate is still continuing (see for example Academy of Management, 2000).

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Department of Management, Faculty of Business and Economics, Box 11e, Monash University, Victoria 3800, Australia, E-mail: Michelle.Greenwood@BusEco.monash.edu.au