Ch 14

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PART FIVE EMPLOYEE RELATIONS

C H A P T E R F o u r t e e n

Ethics, Justice andFair Treatment

in HR Management 14Lecture Outline

Strategic Overview

Ethics and Fair Treatment at Work

The Meaning of Ethics

Ethics and the LawEthics, Fair Treatment, and Justice

What Shapes Ethics Behavior at Work?

Individual Factors

Organizational Factors

The Boss’s Influence

Ethics Policies and Codes

The Organization’s Culture

The Role of HR Management in Fostering Ethics

and Fair Treatment

Why Treat Employees Fairly?

HR Ethics Activities

Building Two-Way Communications

Employee Discipline and PrivacyFormal Disciplinary Appeals Processes

Discipline Without Punishment

Employee Privacy

Managing Dismissals

Grounds for Dismissal

Avoiding Wrongful Discharge Suits

Personal Supervisory Liability

The Termination Interview

Layoffs and the Plant Closing Law

Adjusting to Downsizings and Mergers

In Brief: This chapter explores

issues, policies, and problems related

to ethics, fair treatment, discipline

and termination of employees. Theseissues have become more critical in

today’s environment.

Interesting Issues: With the recent

events at Enron, WorldCom andother scandals, ethics has become a

major issue in today’s world. It is

worth discussing what has changed to

make this an issue. Is there moreunethical behavior or have standards

changed, or is it simply that todays

media and communications shedmore light on the problems?

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ANNOTATED OUTLINE

I. Ethics and Fair Treatment at Work

A. The Meaning of Ethics – Ethics refers to “the principles of conduct governing anindividual or a group.” Ethical decisions also involve morality, which is society’saccepted standards of behavior. It would simplify things if it was always clear which decisions were ethical and which were not. Unfortunately, it is not.

B. Ethics and the Law – The law is not the best guide about what is ethical, becausesomething may be legal but not right, and something may be right but not legal.“Don’t lie, don’t cheat, don’t steal. We were all raised with essentially the samevalues. Ethics means making decisions that represent what you stand for, not

just what is legal.

C. Ethics, Fair Treatment, and Justice – Experts generally define organizational justice in terms of its three components—distributive justice, procedural justice,and interpersonal or interactive justice. Distributive justice refers to thefairness and justice of the decision’s result. Procedural justice refers to thefairness of the process. Interactional or interpersonal justice refers to “themanner in which managers conduct their interpersonal dealings with employees,”and in particular to the degree to which they treat employees with dignity asopposed to abuse or disrespect.

The New Workplace: Employment Contracts – In Europe, mostcountries require employers to give detailed information to newemployees about their employment contract. Most of these includesuch things as grievance procedures.

Ø NOTES Educational Materials to Use

II. What Shapes Ethics Behavior at Work?

A. Individual Factors – Because people bring to their jobs their own ideas of what ismorally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes.

B. Organizational Factors – The scary thing about unethical behavior at work is thatit’s usually not driven by personal interests. Being under the gun to meetscheduling pressures was the number-one factor in causing ethical lapses. Mostethical lapses occurred because employees felt pressured to do what theythought was best to help their companies.

C. The Boss’s Influence – The boss sets the tone, and by his or her actions sendssignals about what is right or wrong. According to one report, for instance, “thelevel of misconduct at work dropped dramatically when employees said their supervisors exhibited ethical behavior.”

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D. Ethics Policies and Codes – An ethics policy and code is one signal that the firmis serious about ethics. Sometimes ethics codes work, and sometimes they don’t.

E. The Organization’s Culture

1. What is Organizational Culture? – Organizational culture is the characteristicvalues, traditions, and behaviors a company’s employees share. A value is abasic belief about what is right or wrong, or about what you should or shouldn’t do. To an outside observer, a company’s culture reveals itself inseveral ways. You can see it in employees’ patterns of behavior, such asceremonial events and written and spoken commands. You can also see itin the physical manifestations of a company’s behavior, such as written rules,office layout, organizational structure, and dress codes.

2. The Manager’s Role – When it comes to creating a corporate culture,effective managers do not leave it to chance. Things that help are: ClarifyExpectations, Use Signs and Symbols. Symbolism, Provide PhysicalSupport, Use Stories, Organize Rites and Ceremonies


III. The Role of HR Management in Fostering Ethics and Fair Treatment

A. Why Treat Employees Fairly? – There are some practical reasons for taking carethat you treat the firm’s employees with the fairness and justice that allemployees deserve. An increasingly litigious workforce is one reason.Perceptions of fairness relate to enhanced employee commitment; to enhancedsatisfaction with the organization, with jobs, and with leaders; and toorganizational citizenship behaviors.

B. HR Ethics Activities

1. Staffing and Selection – Screening out undesirables can actually start beforethe applicant even applies, if the HR department creates recruitmentmaterials containing explicit references to the company’s emphasis onintegrity and ethics. The selection process also sends signals about what thecompany’s values and culture really are, in terms of ethical and fair treatment.

2. Training – Ethics training typically plays a big role in helping employersnurture a culture of ethics and fair play. Such training usually includes

showing employees how to recognize ethical dilemmas, how to use ethicalframeworks to resolve problems, and how to use HR functions in ethicalways.

3. Performance Appraisal – The firm’s performance appraisal processesprovide another opportunity to emphasize its commitment to ethics andfairness. First, the appraisal can actually measure employees’ adherence tohigh ethical standards.

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4. Reward and Disciplinary Systems – ensure that the firm rewards ethicalbehavior and penalizes unethical behavior

5. Workplace Aggression and Violence – workplace aggression and violenceare increasingly serious problems. Many HR actions, including layoffs, beingpassed over for promotion, terminations, and discipline can promptperceptions of unfair treatment that translate into dysfunctional behavior.

6. Other HR Activities – Employers’ ethics committees will often include HRprofessionals.

Improving Productivity Through HRIS : Complying with Sarbanes-Oxley – Among other things, the act requires that the CEO and theCFO of publicly traded companies personally attest to the accuracyof their companies’ financial statements, and also to the fact that itsinternal controls are adequate. With their personal credibility on theline, the new law has focused top management’s attention onensuring that all the firm’s employees take ethics very seriously. Theproblem is, training and following up programs like this can be veryexpensive. All of one company’s employees have easy access to a

standardized ethics training program through their PCs, and they caneasily track who has taken the training and who has not.

C. Building Two-Way Communications

The opportunity for two-way communication plays an important role in our perceptions of how fairly we’re being treated.

When You’re on Your Own, HR for Line Managers and Entrepreneurs: Small Business Ethics – studies suggest that smalland midsize enterprises are prone to the same unethical corporatebehavior as big firms. There are several steps a small businessowner can take to establish a workable, simple ethics program.

First, size up your company’s current ethics-related activities as theystand now. Second, create a code of conduct, and make it clear toall employees that you take it seriously. Third, train your people.Fourth, make it easier to solicit feedback from your employees.


IV. Employee Discipline and Privacy

The purpose of discipline is to encourage employees to behave sensibly at work. Inan organization, rules and regulations serve about the same purpose that laws do insociety; discipline is called for when one of these rules or regulations is violated. Afair and just discipline process is based on three pillars: clear rules and regulations, asystem of progressive penalties, and an appeals process.

When You’re on Your Own, HR For Line Managers and Entrepreneurs: Disciplining and Employee – Even if you’re a

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manager in a Fortune 500 company, you may find yourself withoutcompany guidelines when you’re thinking of disciplining or discharging an employee for violating company rules. Thirteenguidelines are given to assist the manager who must implementdisciplinary action.

The New Workplace: Comparing Males and Females in aDiscipline Situation – A study is cited in which female employeeswere disciplined much more harshly for the same violations thanwere male employees. The gender of the boss made no differencein the differential treatment.

A. Formal Disciplinary Appeals Processes – even companies without unions mayhave a very formalized appeals process.

B. Discipline Without Punishment – aims to avoid disciplinary problems. It does thisby gaining employees’ acceptance of the rules and by reducing the punitivenature of the discipline itself.

C. Employee Privacy – The four main types of employee privacy violations upheld

by courts are intrusion, publication of private matters, disclosure of medicalrecords, and appropriation of an employee’s name or likeness for commercialpurposes. Background checks, monitoring off-duty conduct and lifestyle, drugtesting, workplace searches, and monitoring of workplace activities trigger mostprivacy violations.


V. Managing Dismissals

Dismissal is the most drastic disciplinary step the manager can take. Because of this,special care is required to ensure that sufficient cause exists for it.

A. Grounds for Dismissal

1. Unsatisfactory performance

2. Misconduct

3. Lack of qualifications for the job

4. Changed requirements (or elimination) of the job

Know Your Employment Law : Gross Misconduct – There areinstances in which the employee’s conduct is so outrageous that itqualifies as “gross misconduct.” A list of factors extracted from courtdecisions on gross or willful misconduct by employees in other contexts will aid the employer in writing its policy on grossmisconduct

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B. Avoiding Wrongful Discharge Suites – Wrongful discharge occurs when anemployee’s dismissal does not comply with the law or with the contractualarrangement. Avoiding wrongful discharge suits requires a two-prongedapproach. First, set up employment policies and dispute resolution proceduresthat make employees feel they are treated fairly. Second, do the preparatorywork – Paying particular attention to the employee handbook – that will helpavoid such suits.

C. Personal Supervisory Liability – Courts sometimes hold managers personallyliable for their supervisory actions. Managers should be fully familiar withapplicable federal, state, and local statutes and know how to uphold their requirements.

D. The Termination Interview – Guidelines include: 1) Plan the interview carefully,2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of the severance package, 6) Identify the next step.

1. Outplacement Counseling – is a systematic process by which someoneyou’ve terminated is trained and counseled in the techniques of conducting aself-appraisal and securing a new job appropriate to his or her needs and

talents.

2. Exit Interview – Many employers conduct exit interviews with employees whoare leaving the firm. They aim to elicit information about the job or relatedmatters that might give the employer a better insight into what is right—or wrong—about the company.

E. Layoffs and the Plant Closing Law

1. The Plan Closing Law – requires employers of 100 or more employees togive 60 days’ notice before closing a facility or starting a layoff of 50 peopleor more. It simply gives employees time to seek other work or retraining by

giving them advance notice of the shutdown.

2. Bumping/Layoff Procedures – Employers who encounter frequent businessslowdowns and layoffs may have procedures that let employees use their seniority to remain on the job.

3. Alternatives to Layoffs – Given the investments they have in recruiting,screening, and training employees, many employers are hesitant to lay off people at the first sign of business decline. There are several alternatives.

F. Adjusting to Downsizings and Mergers

Firms often use downsizing—reducing, usually dramatically, the number of

people the firm employs—to better their financial position. Yet many firmsdiscover operating earnings don’t rise after major cuts. Low morale among thoseremaining may be part of the problem. Regardless of why you’re downsizing,think through the process, both to avoid unnecessary consequences and toensure the process is fair. Some guidelines for implementing a reduction in forceare provided.

The HR Scorecard Strategy and Results: The Hotel Paris’s NewEthics, Justice, and Fair Treatment Process: Having fair and justprocedures in place effected employee morale and behavior, and

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thus company performance. supervision. Procedural justice andsatisfaction with supervision were both related to improved employeecommitment. And employee commitment was related to intention toremain with the hotel, and therefore to reducing employee turnover.Procedural and interpersonal justice led to improved employeesatisfaction with supervision and commitment, and thus, to improvedemployee discretionary behaviors, and ultimately to higher guestservice satisfaction.


DISCUSSION QUESTIONS

1. Explain how you would ensure fairness in disciplining, discussing particularly theprerequisites to disciplining, disciplining guidelines, and the discipline without punishmentapproach. There are many things that can be helpful: • Make sure the evidence supports the chargeof employee wrongdoing. • Ensure that the employee’s due process rights are protected. • Warn theemployee of the disciplinary consequences. • The rule that was allegedly violated should be“reasonably related” to the efficient and safe operation of the particular work environment. • Fairly andadequately investigate the matter before administering discipline. • The investigation should producesubstantial evidence of misconduct. • Rules, orders, or penalties should be applied evenhandedly. •The penalty should be reasonably related to the misconduct and to the employee’s past work history.• Maintain the employee’s right to counsel. • Don’t rob a subordinate of his or her dignity. • Remember that the burden of proof is on you. • Get the facts. Don’t base a decision on hearsay or on your general impression. • Don’t act while angry. • Create a formalized appeals process. • Make sure allrules and policies are communicated and clearly explained in advance.

2. Why is it important in our highly litigious society to manage dismissals properly? If you do notfollow the law, and your own policies and procedures, you are likely to have the courts rule againstyou. This can be very costly and damaging to employee morale and your reputation.

3. What techniques would you use as alternatives to traditional discipline? What do suchalternatives have to do with “organizational justice”? Why do you think alternatives like theseare important, given industry’s need today for highly committed employees? If you are going toattract and retain top quality employees, it is critical to have a strong sense of organizational justice.Disciplinary techniques and methods can be related to the legal techniques and methods in our society at large. If they work well, people believe justice is served. If the do not work well, peoplefeel there is injustice.

DESSLER COMPANION WEB SITE

We invite you to visit the Dessler homepage ( http://www.prenhall.com/dessler ) on

the Prentice Hall Web site for the best online business support available. This site

provides professors with a customized course Web site, including new

communication tools, one-click navigation of chapter content, and great resources,

such as Internet Resources, an HRCI Exam Prep Guide, assessment exercises, and

more.

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INDIVIDUAL AND GROUP ACTIVITIES

1. Working individually or in groups, interview managers or administrators at your employer or college in order to determine the extent to which the employer or college endeavors to buildtwo-way communication, and the specific types of programs used. Do the managers think

they are effective? What do the employees (or faculty members) think of the programs in useat the employer or college? Encourage students to be precise and inquisitive in their pursuit of thisinformation.

2. Working individually or in groups, obtain copies of the student handbook for your college anddetermine to what extent there is a formal process through which students can air grievances.Based on your contacts with other students, has it been an effective grievance process? Whyor why not? Ask what effect this has on the sense of organizational justice.

3. Working individually or in groups, determine the nature of the academic discipline process inyour college. Do you think it is effective? Based on what you read in this chapter, would yourecommend any modifications? Encourage students to be inquisitive and insightful as theyexamine this critical and real issue.

4. The HRCI “Test Specifications” appendix at the end of this book lists the knowledge someonestudying for the HRCI certification exam needs to have in each area of human resourcemanagement (such as in Strategic Management, Workforce Planning, and Human ResourceDevelopment). In groups of four to five students, do four things: (1) review that appendixnow; (2) identify the material in this chapter that relates to the required knowledge theappendix lists; (3) write four multiple choice exam questions on this material that you believewould be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone fromyour team post your team’s questions in front of the class, so the students in other teams cantake each others’ exam questions. Material from this chapter that applies to the HRCI exam wouldinclude: the meaning of ethics, ethics and the law, ethics fair treatment and justice, what shapesethics behavior at work, ethics policies and codes, the organization’s culture, HR ethics activities,building two-way communications, formal disciplinary appeals processes, discipline withoutpunishment, employee privacy, grounds for dismissal, avoiding wrongful discharge suits, personalsupervisory liability, the termination interview, layoffs and the plant closing law, adjusting todownsizings and mergers.

5. In a recent research study at Ohio State University, a professor found that even honest people,left to their own devices, will steal from their employers. In this study, the researchers gavefinancial services workers the opportunity to steal a small amount of money after participatingin an after-work project for which the pay was inadequate. Would the employees steal to makeup for the underpayment? In most cases, yes. Employees who scored low on an honesty teststole whether or not their office had an ethics program that said stealing from the companywas illegal. Employees who scored high on the honesty test also stole, but only if their officedid not have such an employee ethics program—the “honest” people didn’t steel if there wasan ethics policy. In groups of four or five students, answer these questions: Do you thinkfindings like these can be generalized? In other words, would they apply across the board to

employees in other types of companies and situations? If your answer is yes, what do youthink this implies about the need for and wisdom of having an ethics program? You shouldreceive a wide variety of responses to this question. It is a real question of whether the employeeswho score high on honesty tests will, in fact, respond differently based on the existence of an ethicspolicy.

EXPERIENTIAL EXERCISES & CASES

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Experiential Exercise: Discipline or Not?

The purpose of this exercise is to provide the student with some experience in analyzing and handling anactual disciplinary action. Students have the opportunity to look at a disciplinary action that went toarbitration and see if they come up with the same decision that the arbitrator did.

Application Case: Fire My Best Salesperson?

1. What should you do now? The salesperson should be fired.

2. Why should you do it? Because his actions represent gross misconduct.

3. How would you do it? Guidelines in the textbook for a termination interview include: 1) Plan theinterview carefully, 2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of the severance package, 6) Identify the next step.

Continuing Case: Carter Cleaning Company Guaranteeing Fair Treatment

1. What you do if you were Jennifer, and why? The difficulty is that even though they have always“felt strongly about not allowing employees to smoke, eat, or drink in their stores,” they had

apparently never established any policies about this. Given this, it seems appropriate to give them astrong verbal warning, including the explanation that future violations will result in more severedisciplinary action.

2. Should a disciplinary system be established at Carter’s Cleaning Centers? Definitely.

3. If so, what should it cover, and how would you suggest it deal with a situation such as the onewith the errant counter people? It should cover all behavior and performance that is expected of employees. It would identify the steps of the process, including verbal warnings, written warnings,and dismissal.

4. How would you deal with the store manager? The real question is whether the store manager knew about their beliefs about eating in the store. If he or she did, then a written warning is in store, if

not, then a strong verbal warning similar to the employees.

KEY TERMS

ethics The principles of conduct governing an individual or a group; specifically,the standards you use to decide what your conduct should be.

distributive justice The fairness and justice of a decision’s results.

procedural justice The fairness of the process.

interactional justice The manner in which managers conduct their interpersonal dealings withemployees.

organizational culture The characteristic values, traditions, and behaviors a company’semployees share.

nonpunitive discipline Discipline without punishment.

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discipline without A disciplinary process in which employees who violate policies are givenpunishment oral reminders, then a written reminder, then a one-day decision-making

leave, then dismissal.

1. List three specific steps Hotel Paris should take with respect to each individual human

resource function (selection, training, and so on) to improve the level of ethics in thecompany.

Answers will vary. However, some possible steps would be to incorporate honesty testing in selection, to

train employees using ethics cases, and to discipline immediately and severely for ethics breaches on

the part of any employee. (LO 14.3; AACSB: Analytic Skills; Learning Outcome: Describe the role of

human resource management in promoting ethics and fairness)

2. Based on what you read in this chapter, create in outline form a strategy map showing

how the Hotel’s HR function can foster employee ethics.

A. Highlight the importance of ethics and fair treatment within the new employee orientation.

B. Provide additional training to all supervisory staff on employment legislation and the importance

of building and maintaining a culture of fair treatment and equity.

C. Develop and implement a policy that stresses the importance of all staff being treated in a fair and

equitable manner. The policy should also outline why ethics in the workplace is important.

D. Implement a program where claims of discrimination or unethical treatment can be reviewed and

addressed. Appeals to the final decision should rest with senior leadership.

E. Periodic staff meetings should be conducted where the topic of ethics and fair treatment are

addressed and staff has the option to ask questions and/or discuss concerns. (LO 14.1-3;

AACSB: Analytic Skills; Learning Outcome: Describe the role of human resource management inpromoting ethics and fairness)

3. Based on what you learned in this chapter, write a short (less than one page) explanation

Lisa can use to sell to top management the need to improve the hotel chain’s fairness and

justice processes.

Senior leadership should be educated that claims of unfair treatment can be both expensive and

expansive. Litigation to defend a claim can be costly and result in an unpopular reflection of the

organization in the media. Also, recent cases have included personal liability on the part of senior

management. Senior management can have the most significant impact on creating and maintaining

a culture of fair treatment. (LO 14.4; AACSB: Reflective Thinking Skills; Learning Outcome: Describethe role of human resource management in promoting ethics and fairness)

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