Ethics and HRM

K. Michele Kacmar
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
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
How Do We Get Values?
Parents, family and friends
Experiences
The environment (media, education)
Conflict of Values
Dramatic outcomes can occur when
individuals and groups hold
conflicting core values:
Religious wars
Business scandals
Crime
Environmental Factors
Over the last decade, ethical
scandals in business have been on
the rise:
Enron
WorldCom
Tyco
Health South
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).
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
Other External Regulations
Other external regulations include
regulations related to:
Minimum wage
Overtime compensation
Discrimination
Health and Safety
Privacy

Organizational Responses
Codes of ethics including:
Explicit standards of rules to be followed
Corporate values statements
Explicit Standards
Explicit standards define precisely
acceptable and unacceptable conduct
such as accepting gifts and the
amount allowable
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
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
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
HR Responses Continued
Take steps to eliminate and
discourage reasons for misbehavior
and introduce and encourage
reasons to behave ethically
HR Responses Continued
Develop an appraisal system that
rewards individuals for ethical
behaviors and punishes those who
act unethically

HR Responses Continued
HR can use its expertise to
communicate with the workforce to
get out the ethical message
Costs of Corporate Ethics
Violations
$7 trillion in stock market losses
Loss of jobs and retirement savings
by employees
Costs of Corporate Ethics
Programs
Costs of implementing and
maintaining compliance to create an
ethical business environment

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

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
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
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