ethics in hrm and organizational culture

7/29/2019 ethics in hrm and organizational culture

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INTRODUCTION

ETHICS

Ethics, also known as moral philosophy, is a branch ofphilosophy that involvessystematizing, defending, and recommending concepts of right and wrong conductThe term

comes from the Greek word ethos, which means "character". Ethics is a complement

to Aesthetics in the philosophy field ofAxiology. In philosophy, ethics studies the moral

behavior in humans, and how one should act. Ethics may be divided into four major areas of

study:

Meta-ethics, about the theoretical meaning and reference of moral propositions and howtheirtruth values (if any) may be determined;

Normative ethics, about the practical means of determining a moral course of action; Applied ethics, about how moral outcomes can be achieved in specific situations; Descriptive ethics, also known as comparative ethics, is the study of people's beliefs about

morality;

Defining Ethics

According to Tomas Paul and Linda Elder of the Foundation for Critical Thinking, "most

people confuse ethics with behaving in accordance with social conventions, religious beliefs, and

the law", and don't treat ethics as a stand-alone concept Paul and Elder define ethics as "a set of

concepts and principles that guide us in determining what behavior helps or harms sentient

creatures"

Business Ethics

Business ethics (also corporate ethics) is a form ofapplied ethics orprofessional ethics that

examines ethical principles and moral or ethical problems that arise in a business environment. It

applies to all aspects of business conduct and is relevant to the conduct of individuals and entire

organizations.

HRM Ethics

HRM Ethics is the affirmative moral obligations of the employer (business) towards the

employees to maintain equality and equity justice Do not treat people (employees) simply as a

means for our own purposes without their full and free consent, because they are ends in

themselves
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Human Resource Management

Human resource management (HRM or simply HR) is the management of

an organization's workforce, orhuman resources. It is responsible for the attraction, selection ,

training, assessment, and rewarding of employees, while also overseeingorganizational leadership and culture, and ensuring compliance with employment and labor laws.

In circumstances where employees desire and are legally authorized to hold a collective

bargaining agreement, HR will typically also serve as the company's primary liaison with the

employees' representatives (usually a labor union).

HR is a product of the human relations movement of the early 20th century, when researchers

began documenting ways of creating business value through the strategic management of the

workforce. The function was initially dominated by transactional work such

as payroll and benefits administration, but due to globalization, company consolidation,technological advancement, and further research, HR now focuses on strategic initiatives

like mergers and acquisitions, talent management, succession planning, industrial and labor

relations, and diversity and inclusion.

We often hear the term Human Resource Management, Employee Relations and Personnel

Management used in the popular press as well as by Industry experts. Whenever we hear these

terms, we conjure images of efficient managers busily going about their work in glitzy offices. In

this article, we look at the question what is HRM ? by giving a broad overview of the topic and

introducing the readers to the practice of HRM in contemporary organizations. Though as withall popular perceptions, the above imagery has some validity, the fact remains that there is much

more to the field of HRM and despite popular depictions of the same, the art and science of

HRM is indeed complex. We have chosen the term art and science as HRM is both the art of

managing people by recourse to creative and innovative approaches; it is a science as well

because of the precision and rigorous application of theory that is required.

As outlined above, the process of defining HRM leads us to two different definitions. The first

definition of HRM is that it is the process of managing people in organizations in a structured

and thorough manner. This covers the fields of staffing (hiring people), retention of people, pay

and perks setting and management, performance management, change management and taking

care of exits from the company to round off the activities. This is the traditional definition of

HRM which leads some experts to define it as a modern version of the Personnel Management

function that was used earlier.
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The second definition of HRM encompasses the management of people in organizations from

a macro perspective i.e. managing people in the form of a collective relationship between

management and employees. This approach focuses on the objectives and outcomes of the HRM

function. What this means is that the HR function in contemporary organizations is concerned

with the notions of people enabling, people development and a focus on making the

employment relationship fulfilling for both the management and employees.

Organizational Culture

Organizational culture is the collective behavior of humans who are part of an organization

and the meanings that the people attach to their actions. Culture includes the organization values,

visions, norms, working language, systems, symbols, beliefs and habits. It is also the pattern of

such collective behaviors and assumptions that are taught to new organizational members as a

way of perceiving, and even thinking and feeling. Organizational culture affects the way people

and groups interact with each other, with clients, and with stakeholders.

Definition

The values and behaviors that contribute to the unique social and psychological environment of

an organization.

Organizational culture includes an organization's expectations, experiences, philosophy, and

values that hold it together, and is expressed in its self-image, innerworkings, interactions with

the outside world, and future expectations. It is based on shared attitudes, beliefs, customs, and

written and unwritten rules that have been developed over time and are considered valid. Also

called corporate culture, it's shown in

(1) the ways the organization conducts its business, treats its employees, customers, and the

widercommunity,

(2) the extent to which freedom is allowed in decision making, developing new ideas,

and personal expression,

(3) how powerand information flow through its hierarchy, and

(4) how committed employees are towards collective objectives.
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Ethics in Human Resource Management

Human resource management deals with manpower planning and development related

activities in an organization. Arguably it is that branch of management where ethics really

matter, since it concerns human issues specially those of compensation, development, industrial

relations and health and safety issues. There is however sufficient disagreement from variousquarters.

There are different schools of thought that differ in their viewpoint on role of ethics or ethicsin human resource development. One group of thought leaders believes that since in business,

markets govern the organizational interests and these interests are met through people, the latter

are therefore at the highest risk. They believe that markets claim profits in the name ofstakeholders and unless we have protocols, standards and procedures the same will develop into

a demon monopolizing markets and crushing human capital; HR ethics are become mandatory.

There is another group of ethicists inspired by neo-liberalism who believe that there are nobusiness ethics apart from realization of higher profits through utilization of human resources.

They argue that by utilizing human resources optimally, there is more value creation for theshareholders, organization and the society and since employees are part of the society ororganization, they are indirectly benefited. Nevertheless ethics in human resource managementhas become a perennial debate of late!

Discussions in ethics in HRD stem from employee relationships and whether or not there canbe a standard for the same. Employee rights and duties and freedom and discrimination at the

workplace are issues discussed and covered by most texts on the topic. Some argue that there are

certain things in employment relationship that are constant others disagree with the same. For

example, right to privacy, right to be paid in accordance with the work (fair compensation) andright to privacy are some areas that cannot be compromised upon.

Ethics and Market System

The kind of market system affects business and HR ethics; the latter thus becomes negotiable.

In occupations where the market conditions do not favor the employees it is necessary to havegovernment and labor union interventions in order to control the possible exploitation. In free

market system, employees and the employer are almost equally empowered, negotiation create

win win situations for both the parties. Government or labor union interventions become

harmful.

Globalization has brought about the concept of globalizing labor, trade unions have started todecline and the role of HR as such in issues like employee policies and practices has become a

debatable topic. In fact many people are of the opinion that HR is nothing but an arm of thestakeholders through which major strategic and policy decisions are divulged geared towards

profit making!

Thought there can be no single opinion on ethics in HR that is convincing. Market in itself is

neither an ethical institution nor unethical and no policies and procedures alone cannot govern


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and align markets to human well being. However the requirement of such policies and

procedures can also not be denied. In lieu of this HR ethics should take care of things like

discrimination (sexual, religion, age etc), compensation, union and labor laws, whistle blowing,health and safety of the employees etc.

Hard and Soft HRM

Hard HRM- where employees are viewed instrumentally as a means to achieve organizational

goals

Soft HRM- where employees are viewed as a subject-in-themselves.

Soft HRM promotes employee rights, empowerment, involvement, participation, etc Both

soft and hard HRM can be considered as ethical under utilitarianism concept (greatest good to

greatest number), but deontological theory may accept only soft HRM as ethically correct and

not hard HRM ( Deontological ethics or deontology is an approach to ethics that focuses on the

rightness or wrongness of intentions or motives behind action such as respect for rights, duties,or principles, as opposed to the rightness or wrongness of the consequences of those actions.)

What is the difference between hard and soft Human Resource

Management?

HRM is an essential and vital function for organizational success. Areas within HRM like

Manpower planning, Job analysis, Selection and Recruitment, Compensation and Benefits,

Performance evaluations, Contract negotiations and Labor legislations are parts of hard HRM -

whereas functions like Organizational development, conflict management, human resourceeducation, leadership development, organizational culture, and relationship building are

components of soft HRM. The hard HRM can be catogorized as the basic functions and soft

HRM as advanced functions. In today's knowledge economy, where human capital determines

the growth and success of an organization, both hard and soft HRM are sig

Hard HRM:-

*a very instrumental, practical approach

*people seen as a passive resources to be used,deployed and if necessary diposed of

*hr planning is seen as a factor of production*incompatiable with trade uions-may necessitate confrontation to implement concepts

Areas within HRM like Manpower planning, Job analysis, Selection and Recruitment,

Compensation and Benefits, Performance evaluations, Contract negotiations and Labor

legislations are parts of hard HRM


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Soft HRM:-

*sometimes known as development humanism

*stresses human side

*entails trust,collabration, skill development

*place for unions in this model where unions are marginalised and by passed on many issues or

alternative forms of employee repersentation are initiated

*above all, about commitment and partnership

functions like Organizational development, conflict management, human resource education,

leadership development, organizational culture, and relationship building are components of soft

HRM.

Ethical issues in HR

Of all the organisational issues or problems, ethical issues are the most difficult ones to handleor deal with. Issues arise in employment, remuneration and benefits, industrial relations and

health and safety.


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Cash and Compensation PlansThere are ethical issues pertaining to the salaries, executive perquisites and the

annual incentive plans etc. The HR manager is often under pressure to raise the bandof base salaries. There is increased pressure upon the HR function to pay out more

incentives to the top management and the justification for the same is put as the need

to retain the latter. Further ethical issues crop in HR when long term compensationand incentive plans are designed in consultation with the CEO or an externalconsultant. While deciding upon the payout there is pressure on favouring the

interests of the top management in comparison to that of other employees and

stakeholders.

Race, gender and DisabilityIn many organisations till recently the employees were differentiated on the basis

of their race, gender, origin and their disability. Not anymore ever since the evolutionof laws and a regulatory framework that has standardised employee behaviours

towards each other. In good organisations the only differentiating factor is

performance! In addition the power of filing litigation has made put organisations onthe back foot. Managers are trained for aligning behaviour and avoiding

discriminatory practices.

Employment IssuesHuman resource practitioners face bigger dilemmas in employee hiring. One

dilemma stems from the pressure of hiring someone who has been recommended by a

friend, someone from your family or a top executive.

Yet another dilemma arises when you have already hired someone and he/she is

later found to have presented fake documents. Two cases may arise and both are

critical. In the first case the person has been trained and the position is critical. In thesecond case the person has been highly appreciated for his work during his short stint

or he/she has a unique blend of skills with the right kind of attitude. Both the

situations are sufficiently dilemmatic to leave even a seasoned HR campaigner in afix.

Privacy IssuesAny person working with any organisation is an individual and has a personal side

to his existence which he demands should be respected and not intruded. The

employee wants the organisation to protect his/her personal life. This personal life

may encompass things like his religious, political and social beliefs etc. Howevercertain situations may arise that mandate snooping behaviours on the part of the

employer. For example, mail scanning is one of the activities used to track the

activities of an employee who is believed to be engaged in activities that are not in

the larger benefit of the organisation.

Similarly there are ethical issues in HR that pertain to health and safety,

restructuring and layoffs and employee responsibilities. There is still a debate goingon whether such activities are ethically permitted or not. Layoffs, for example, are no

more considered as unethical as they were thought of in the past.


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To what extent should the organization follow HRM ethics?

Here, the two ethical concerns are To what extent should people be used as a means to an end

To what extent the mgt has to act in the interest of the employees The last part of the definition

of HRM effective and efficient utilization of HR supports the first concern The part to

achieve personal/individual goals in the definition supports the second concern The definition

of HRM clearly says that organizational interest cannot be compromised while doing justice to

employees and vice-versa

Areas of HRM ethics

Basic human rights, civil and employment rights. E.g. Job security, feedback from tests, openness and

consultation over matters which affect the employees

Social and organizational justice. E.g. procedural justice, egalitarianism, equity and equalopportunity

Equity/Distributive justice (proportionate pay for proportionate contribution), autonomyand respect

Safety in the workplace Respect, fairness and honesty based process in the workplace Privacy ( Egalitarianism (derived from the French word gal , meaning equal ) is a

political doctrine that holds that all people should be treated as equals and have the samepolitical, economic, social, and civil rights)

Is HRM as a function full of conflicts?

Yes Reducing the individuals discretion Teamwork/synergy Undermine the trade union

and collective bargaining Recognizing individual contribution No job/employment security

Employability Manipulation/Exploitation Training & Development Making people take

risk/responsibility Empowerment Part-timers to replace full-timers New working patterns

Redundancy Downsizing/Rightsizing Reducing the no. of middle mgrs De-layering Mgt can do

what it wants Flexibility Reality of HRM Rhetoric of HRM

Employees rights and duties

To job satisfaction For healthy and safe working conditions For participation Cooperation with

boss/subordinates To due process Maintain secrecy/confidentiality For freedom of speech Just

contribution to the organization For privacy Respect the rights of the employer To free


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association and strike Respect for current legal and moral norms For just compensation Loyalty

to the firm To work Duties Rights

Improving QWL Acceptance of labour court jurisprudence in conflicts Peaceful ways of

settlement Acceptance of criticism from workers No disruption in work Work oriented code of

conduct Requirement of correct behaviour at the workplace Fair compensation Loyalcooperation from employees No discrimination in rules for recruitment and conditions for firing

Demand minimal productivity from employees Duties Rights

Organizational Culture's Influence in Ethical Policies

Ethics is an integral part of a functioning society, but many people struggle to define ethics

and put it into practice in a business setting. Owners and managers set the bar for ethics in an

organization, but they aren't the only participants. Employees and other business players also

influence and perpetuate ethics. In the case of small businesses, managers need to know how tocarry out ethical policies in addition to knowing the virtues.

Employees

From the point of view of employees, management sets the tone and shapes the overall

working environment. It's easy to sow the seeds of unethical behavior into the minds of

subordinates, especially if the people who sign the paychecks are not setting a good example.

Employees need to know that they have personal and professional rights within a small business

operation. For example, if an employee suffers any kind of harassment, management should take

it seriously. Working conditions should be safe. Work schedules should be considerate and fair.Management that does not uphold the ethical rights of employees will end up creating policies

that can adversely affect the morale and motivation of workers.

Business Customers

Small businesses frequently interact with other companies, such as suppliers and bankers. It is

important to gain the trust and respect of these third-party organizations. You don't want to anger

another company that supplies your business with a critical part in your manufacturing process or

the lender at the bank that offers short-term loans to help your business meet payroll.

Furthermore, you don't want to intimidate or strong-arm other businesses, because owners,

managers, and even employees will take it personally. Companies should develop ethical policiesthat instill a sense of reliability and integrity, such as staying on top of bills due to other

businesses in accounts payable or setting reasonable fees and terms when transacting or

exchanging goods and services with another company.


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Consumers

While most people understand the concept of paying for goods and services that are

consumed, the public usually does not take kindly to unfair pricing and billing practices. Also,

consumers want assurances that they will get quality products and services, based on truthful

advertisements and presentation. Price gouging or accepting payment but not delivering thegoods is a sure way to lose a customer. Furthermore, consider that many consumers don't have a

lot of business savvy and they trust companies to do the right thing. When that trust is violated, a

single angry customer can form into a wave of resentment from other people who have had

similar unethical experiences. In the age of social networking websites and consumer advocacy

groups, bad publicity can destroy a company. Businesses large and small should have customer

service policies and procedures in place to address consumer concerns before they get out of

hand.

Community

Local businesses need to respect the institutions that keep a community intact and vibrant. In

particular, city councils, county boards and state legislatures are all gaining influence in local,

national and even global business matters. If lawmakers and enforcers become aware of

unethical business practices, they can do more than express concern; they can enforce existing

and create new laws that correct unethical behavior. Companies might need to consider creating

legal policies, in addition to ethical policies. For example, convenience store clerks might make

it a habit to check all driver's licenses and identification, no matter a person's age and

appearance, before selling alcohol and tobacco products.

Society

In addition to respecting citizens, employees and community institutions, companies must

respect the environment that society depends on. Social responsibility is the term that describes

how businesses set out to be good stewards of the earth. Many larger firms have an entire section

of a public website that clearly lays out the commitment to social responsibility. Some even hire

staff who are environmental and sustainability specialists, helping the company develop these

policies. Although small businesses often lack the extra resources to create new departments,

managers can make a concerted effort to adopt more reasonable policies, such as recycling some

trash or using energy-efficient lighting.

Relationship between organizational culture and ethics

There is a direct relationship between organizational culture and ethics. Organizational

culture affects the way employees respond and react when placed in ethical dilemmas. The studyof an organizations culture can reveal the unwritten ethical standards that guide employees in

their decision-making. Using this information, businesses can avert risky ethical behavior by

changing their organizational culture.


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Organizational culture is the study of the attitudes, beliefs and psychology within an

organization. It not only encompasses how employees interact with each other, but also how they

communicate with others outside of the organization. Ethical standards are the code of conductrequired by the organization for employees to follow. The relationship between organizational

culture and ethics is that the organizational culture guides employees when faced with ethical

dilemmas. If the organizational culture counters what they are required to do ethically,employees may put the organization in risk by not acting ethically.

When an employee is faced with a decision that others within the organization deem as

appropriate, though it is unethical, the employee may follow what is acceptable as per the

culture. For instance, if the organization rewards employees for gaining the most contracts at anycost, an employee may start bribing potential clients in order to gain more deals. If the corporate

culture is to gain the most contracts but through normal techniques, an employee may not be as

easily persuaded to do something unethical. It is this relationship between organizational culture

and ethics that can get businesses into significant trouble in the long term. An organizational

culture that supports risky decisions and unethical behavior will need to change its culture.

Changing a businesss organizational culture is difficult but often necessary when a business

is having trouble with employees making ethical decisions. Organizational culture and ethics areboth psychologically linked, so employees must change their ways of thinking in order to accept

a new direction. This is often difficult to do when employees have worked with the organizationfor a long time or are not provided with acceptable methods of doing business ethically.

For instance, if the business wants employees to stop bribing foreign officials in order to gain

contracts, it should provide employees with other effective methods that will work to gain thesame results. If there are no other ways to gain the same results, the company needs to make sure

it does not punish employees for not being able to sustain the old same results. Since

organizational culture and ethics are linked, the business must change its culture in order to seeresults in its employees' ethical decision making.

CREATING AN ETHICAL CULTURE

Why is it important?

Ethical leadership is a combination of character, of who you are as a person, and

performance, the active promotion of principled behavior within the organization.

Turknett has developed a process that can help ensure that your organization has an ethical

culture and that you have leaders who lead with character. Investing in a process that seeks to

instill an ethical culture is especially important in the case where there is an ethical breach.Recent legal actions have been lessened for those who have invested in such programs.

Developing a Culture of Characterthe three Cs
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We believe that the concepts of Code, Character and Conversation provide a good framework

for thinking about infusing ethics into organization culture. Turknett has developed a process

called Growing Leadership Character that you can use to cascade these concepts deep into theorganizational ranks.

1-Code

Start with a clear code of ethics Model the code every day. Leaders must make certain that their actions and ideals are

visible and known

Know personal values. Each employee must have a personal ethical code.2-Character

Make the code live. Organizations must have leaders who create a culture of characterand support a continuing conversation to keep ethics front and center.

Use a guide like the Leadership Character Model for creating character in individuals andorganizations.

3-Conversation

Make ethics front and center every day. Ethical issues cant be separate from everydaybusiness practices.

Develop a culture where ethics is everyones job. Great leaders create practices that keepthe ethical conversation alive. Read more.

PROCESS:

Growing Leadership Character

Growing Leadership Character is an effective way to develop leaders and broaden the ethical

conversation within an organization. It provides the structure for developing leadership characterin management and throughout the organization.

Growing Leadership Character (GLC)is a cascading learning process. It is designed to

expose an entire organization to specific concepts of integrity-based leadership. Because the

most effective way to learn is to teach, we utilize a cascading Leaders Teaching Leaders

approach. This approach allows leaders to be heavily involved in both facilitating and modeling

the key concepts with a minimal impact on their time.

Overall goal: to create an organization where every person understands and lives the

qualities of the Leadership Character Model.This simple yet profound model is grounded inthe belief that character is the foundation for leadership. In an organization, leaders with Integrity

create trust. Leaders who demonstrate a high degree of Respect create engagement and
http://leadershipcharacter.com/http://www.turknett.com/sections/documents/ThreeEssentialsforRebuildingTrustCodeCharacterandConversation.pdfhttp://www.leadershipcharacter.com/http://www.leadershipcharacter.com/http://www.turknett.com/sections/documents/ThreeEssentialsforRebuildingTrustCodeCharacterandConversation.pdfhttp://leadershipcharacter.com/


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commitment, and those who live Responsibility create initiative and

discipline. Ultimately,leaders with Integrity who balance Respect and Responsibility willalways deliver maximum results.

In multi-level organizations, the GLC process is typically rolled out in three phases:

I. In Phase I, senior leaders attend a one-day Leadership Character workshop during which theywill learn the basics of the Leadership Character Model, receive feedback on their own

Leadership Character, and prepare to teach a 1.5-hour training module to other managers in the

organization.

II. In Phase II, the next management tier completes the same process in preparation to teach the

remaining modules to the next level of supervisors.

III. In Phase III, first-level supervisors attend a full day Leadership Character Workshop and

receive feedback on their Leadership Character. Leaders at all levels will take part in

reinforcement activities.

Overall benefits:

Managing ethical values in the workplace legitimizes managerial actions, strengthens the

coherence and balance of the organizations culture, improves trust in relationships between

individuals and groups, supports greater consistency in standards and qualities of products, and

cultivates greater sensitivity .

The Key Role of HR in Organizational Ethics

What is important to discuss today is how research informs us about the pivotal role human

resource professionals can and should play in ethics management. Research suggests that

successful ethics management depends less on formal ethics programs and more on employees'

fairness perceptions, ethical leadership at all levels, and the alignment of multiple formal and

informal cultural systems to support ethical conduct. To the extent that HR systems invoke

fairness evaluations, HR managers designleadership training, and HR systems help to create and

maintain organizational culture, HR professionals must play a key role in ethics management.

Research has found that employees' perceptions of fairness are equally or more important

than other factors in terms of their influence on ethics-related outcomes. Fair treatment is soimportant because employees who perceive unfair treatment will rebalance the scales of justice

by harming the organization. Employees who perceive fair treatment, on the other hand, will

reciprocate by going above and beyond the call of duty to help management (by reporting ethical

problems, for example). To ensure that employees feel they are treated fairly, it is important to

design HR systems and interventions with perceived fairness as a key goal, with an emphasis on

procedural (fair decision making procedures) and interaction (fair interpersonal treatment)


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fairness. Employees' perceptions of fair treatment should be monitored regularly via employee

surveys, and changes should be made based upon the results.

It is also important for HR managers to work with the ethics/compliance office to follow up

on employees' ethics concerns because a large percentage of reported concerns are fairness and

therefore HR system-related. Most employees equate ethics and fairness; for them, there is nobright line between the ethics and HR offices.

Ethical leadership is vital to creating an ethical workforce. It is a myth that employees are

fully formed moral agents who can 'lead themselves' when it comes to ethics. Research indicates

that most employees look outside themselves to significant others for guidance in ethical

dilemma situations. If this leadership and guidance is not provided by the leader of the

organization, employees will seek it elsewhere, most likely from their peers.

According to research on ethical leadership, an ethical leader is a leader who cares, listens to

what employees have to say, and has the best interests of employees in mind. In addition, anethical leader communicates an ethics and values message. When making decisions, he/she asks

"what is the right thing to do?" An ethical leader also role models ethical conduct and conducts

his/her personal life in an ethical manner. This role model is trusted by employees and sets an

example of how to do things the right way in terms of ethics. An ethical leader holds everyone

accountable, and defines success not just by results but also by the way they are obtained

It is important that HR managers design performance management, career development,

and training systems that:

1. Hold leaders accountable for the ethical dimension of their leadership;

2. Identify ethical leaders and rely on them for role modeling and mentoring others;

3. Incorporate the ethical dimension of leadership into all leadership training and development

programs

Documents

ethics in hrm and organizational culture