Ethics and HRM

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