ETHICS in HR Function

Presented by –

Group 3

Abhishek Raj (F – 005)

Indrajit Das (F – 024)

Manu Singhal (F – 030)

Suhail Pawaskar (F-056)

Sourabh Kothari (F- 055)

Ankit Kumar (F-069)

Hemant Agrawal (F-104)

AgendaIntroductionAssess Alternatives – Ethical

ApproachesLawsCases and ExamplesSurvey

Ethics in HRM-Introduction

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

Covers those ethical issues arising around the employer-employee relationship, such as the rights and duties owed between employer and employee.

Benefits of ethics in HRMAttention to business ethics has substantially improved society

Ethics programs help maintain a moral course in turbulent times

Ethics programs cultivate strong teamwork and productivity

Ethics programs support employee growth

Ethics programs are an insurance policy -- they help ensure that policies are legal

Ethics programs help avoid criminal acts of omission and can lower fines

Ethics programs help manage values associated with quality management, strategic planning and diversity management -- this benefit needs far more attention

Human Costs

Demotivate individuals

Make good employees leave the company

Attract unethical employees

Lead to the lack of trust by the employees for the company

Ethical Issues in Management

• Lying to supervisors• Employee drug use or

alcohol abuse• Falsification of records

Most Common Forms of Unethical Conduct

• Gift giving and bribery• Discrimination in hiring and

treatment

International Ethical Issues

• Code of ethics• Training managers and

employees

Addressing Ethical Issues

Common Unethical Business Practices

• Many spies in the world of business hoping sift out important corporate trade secrets that may benefit their own business agendas pretending to be customers or clients but interested in the important details on how you run and manage your business

Business Espionage

• Professional and confidential communication line is essential in business transactions and correspondences but not answering clients and customers after initial e-mail exchanges, telephone conversations, and business information sharing is not a good business practice

Cold Treatment

• Getting favourable reviews and testimonials can boost business reputation and reliability

Fake Customer Testimonials

• Contracts are important business documents and changing it frequently and not paying the dues agreed upon are mortal sins in business transactions

Shady Contracts and Delinquent

Payments

• Terminating a contract abruptly for made up reasons can spark legal actions from them

Breach of Contract

Other Unethical HR PracticesOff-shoring and exploiting ‘cheap’ labour markets

Reneging on company pension agreements

Favoritism in hiring, training and promotion

Sexual harassment

Inconsistent disciplinary measures

Non performance factors used in appraisal

Not maintaining confidentiality

Unethical practices in termination of employees

On basis of sex, race,

color, ethnicity

On basis of medical disability

On basis of religious

faith

On basis of pregnancy

On base of age, etc

Reasons for Unethical Behavior

• Pressure can drive people to do things they wouldn’t normally do. Pressure to succeed, pressure to get ahead, pressure to meet deadlines and expectations, pressure from co-workers, bosses, customers, or vendors to engage in unethical activities or at least look the other way

• Some people make unethical choices because they are not sure about what really is the right thing to do. Often, ethical problems are complicated, and the proper choice may be far from obvious

• Self-interest, personal gain, ambition, and downright greed are at the bottom of a lot of unethical activity in business

• Misguided loyalty is another reason for unethical conduct on the job. People sometimes lie because they think in doing so they are being loyal to the organization or to their bosses

• Managers at automobile companies who hide or falsify information about defects that later cause accidents and kill people or managers at pharmaceutical companies who hide information about dangerous side effects of their drugs

• Some people have no personal ethical values, they do not have any basis for understanding or applying ethical standards in business and they do not think about right and wrong

Dealing with Unethical Behavior

• Avoid unethical management, the quality of the management tends to reflect the quality of workers that are being hired, and the management's refusal to act on unethical circumstances and even encouraging certain behaviors also reflects corruption

• Address the issue assertively and confidently

• Inform a Supervisor , Speak with a supervisor and explain the situation

• Unethical behavior can result in legal issues if it continues to go unaddressed and is discovered

• Change jobs because if the behavior continues and management does not act accordingly, it is best to find another job.

Code of Ethics Statement of values adopted by

company, its employees and directors and sets official tone of top management regarding expected behavior

Code of ethics establishes rules by which organization lives and becomes part of organization’s corporate culture

Ethics Officer

Larger firms appoint ethics officer

Keeps code on front burner for employees

Ethics committee often established

Guidelines for managing ethics in workplace

Recognize that managing ethics is a process.

The bottom line of an ethics program is accomplishing preferred behaviors in the workplace.

The best way to handle is to avoid their occurrence in the first place.

Make ethics decisions in groups.

Use cross-functional teams when developing and implementing the ethics management program

Areas of HRM ethicsBasic 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 equal opportunity

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

Safety in the workplaceRespect, fairness and honesty based process

in the workplacePrivacy

(Egalitarianism (derived from the French word égal, meaning equal) is a political doctrine that holds that all people should be treated as equals and have the same political, economic, social, and civil rights)

Is HRM as a function full of conflicts? Yes

Rhetoric of HRM Reality of HRM

Flexibility Mgt can do what it wants

De-layering Reducing the no. of middle mgrs

Downsizing/Rightsizing Redundancy

New working patterns Part-timers to replace full-timers

Empowerment Making people take risk/responsibility

Training & Development Manipulation/Exploitation

Employability No job/employment security

Recognizing individual contribution

Undermine the trade union and collective bargaining

Teamwork/synergy Reducing the individual’s discretion

Assessing Options – Ethical Approaches

Utilitarian ApproachNon Consequentialist ApproachVirtue ApproachRights ApproachDistributive Justice Approach

Utilitarian Approach

Main premise suggests that the morality of an act is determined by its consequencesPeople should do that which will bring the greatest utility (whichis generally understood to mean whatever the group sees as good) to the greatestnumber affected by a given situation.

•Which action will do the most good and the least harm for everyone who is affected?•How did you determine what is “the most good” and “the least harm”? Did all team members agree?

Non- consequentialist Approach

This approach, associated with Immanuel Kant (1724–1804), is sometimes referredto as ‘duty ethics’. Kant’s aim was to establish a set of absolute moral rules, developed through the application of reason. He also put forward an acid test for evaluating the quality of moral rules and this is termed: the categorical imperativeMoral rules should follow the principle of reciprocity: do as you would be done by.

The development of codes of good or ethical practice within organisations and professional associations stems from the deontological approach. However, the approach has been seen to present problems in its implementation, as follows:•How do you judge that a rule is a good one?•What, in the final analysis, is fair?•Can we all agree?•How should we proceed in cases where principles compete?

Approaches to Assess Alternatives Ethically

Virtue Approach

This is concerned with identifying the qualities of good people rather than that of good acts, or principles.The virtues include both intellectual and character virtues. Macintyre includes the needto feel that what one is doing is good and right; to have an emotional as well as a cognitive appreciation of morality is an essential component of virtue

• What action(s) displays virtuous character traits (e.g., integrity, honesty, fairness, loyalty, etc.)? What virtues are displayed?• What action(s) displays vices (e.g., dishonesty, deceit, selfishness, etc.)? What vices are displayed?

Rights Approach

There is recognition of a core set of human rights. Where a human right exists, there must also be a duty or responsibility to recognize, support andacknowledge that right.

•Which action protects and furthers the rights of the stakeholders?•When stakeholder rights are in conflict, how do you decide whose rights take precedence?•Which action would you want done to you if the roles were reversed?

Approaches to Assess Alternatives Ethically

Distributive Justice Approach

Distributive justice is conceptualized as fairness associated with outcomes decisions and distribution of resources.

The outcomes or resources distributed may be tangible (e.g., pay) as well as intangible (e.g., praise).

Distributive justice affects performance when efficiency and productivity are involved (Cohen-Charash & Spector, 2001).

Improving perceptions of justice increases performance (Karriker & Williams, 2009).

•Which action produces a fair distribution of benefits and costs for all stakeholders?

•How do you determine what is fair? Who decides?

•What action provides stakeholders with equal liberty and equal opportunity?

Approaches to Assess Alternatives Ethically

Laws governing HRM in India – Indian ConstitutionArticle 14 there shall be equal protection of the law and equality before the law 

the Courts or any Law enforcement agency should not discriminate between a man and a woman

Article 15 guarantees the right against discrimination

Article 15(3) talks about the special protection for women

Article 16 provides the right to equal opportunity in terms of public employment irrespective of the sex of the person

More Acts related to HRMMaternity Benefit Act - 90 days of paid leave on delivery or on

miscarriage

Equal Remuneration Act, 1976 - Payment of equal remuneration to men and women workers

Industrial Disputes Act, 1947

Regulating the rights of the employers and employees for investigation

Empowers the government to constitute a court of inquiry, for inquiring into any matter pertaining to an Industrial Dispute

Provision for resolving the Industrial Dispute by way of arbitration, which leads to a final and binding award

Trade Dispute Act, 1929 - Provisions for restraining the rights of strike and lock out but no machinery was provided to take

care of disputes.

Laws in other countries (UK)

Equal Pay Act, 1970 - covers

everything relating to pay and

conditions

Sex Discrimination Act, 1975 - covers those areas which fall outside the purview of the EPA

EPA implies an equality clause into

the employment

contract ensuring that

there is no less

favourable treatment than the

treatment a comparable

person receives

Sex Discrimination Act covers four forms of

discrimination, direct, indirect

discrimination, harassment

and victimisation

Also includes contracts of

service; apprenticeshi

p and personal

contracts for execute any

work or labour and

related expressions

The Equality Act, 2006,

has a provision creating a

public duty to promote

equality on the grounds of gender

Cases & ExamplesJet Airways CaseIT CompaniesCapGeminiWalmart

Ethical issues in Jet Airways retrenchment case

Case

• Oct 16, 2008, Jet announced that it would lay off nearly 1,100 of its staffs to streamline operation.

• A day after it had already laid off around 800 of its cabin crew members.

• Simultaneously announced second phase of lay-off of 1100 employees, mainly from departments like flight attendant, cockpit crew etc

• November 2008, Jet decided on a 20% cut in the salaries of its pilots, engineers, and some other staffs.

Ethical issues

• Employees were FIRED with no PRIOR NOTICE• The entire force of unconfirmed staff was being laid off

on a 30-day compensation package• Company took action only against lower staffs.• Where would those 1900 employees go?• Why took action only against lower grade staffs?• Senior management was very less affected.• What would be the future of those students currently

taking courses in cabin crew, captain etc?

Case – IT companies in IndiaNasscom in nexus with IT companies promoting dubious policies

To restrict attrition – proposal for a longer notice period of 3 months

Collecting caste information

Mandatory relieving letter, experience letter

Blacklisting – sharing exaggerated information with networked companies to breed sub-ordination and obedience

Forcing new joiners to accept bizarre policies like ‘flexibility of working in night shifts and weekends’ etc

Case – Cap Gemini

During recession, the company sent out an email to employees saying they need not serve a 90-day notice period when

they quit their jobs

The notice period was reduced to 30 days

This method has been adopted to lay off around 2,000 employees and results in

huge savings

“as per Indian laws, companies cannot shrink the notice period in the case of permanent employees. But it can be done with those still on probation”

Few who decided to raise their voice to the HR was  responded by de-activating

their email IDs

Case WALMART

Case

• Collision with a trailer left Deborah Shank handicapped

• A court settlement of $ 417k from the trucking company

• After 6 years Walmart sues her for $470k, it had spent on her treatment

Issues

• In the fine print of employment contract it said that money won in damages after an accident belonged to Wal-Mart

• Wal-Mart was fully entitled to the money. Judge had to rule in favor of Walmart

• Treatment of employees as a commodity• Lack of compassion

Ethics in HR Function - Survey

Do you think you can perform your role while being ethical at the same time?

Yes34%

No66%

How important are the rules and regulations(ethical) for a company?

Very Impor-tant38%

Little Impor-tanT45%

Not important17%

Survey Results

What according to you is the biggest problem wrt an ethical code of conduct in HR?

0%

20%

40%

60% 50%

30%40%

10%

40%50%

Private firms Public firms

Survey Results

What can be the most effective way to prevent unethical practices in HR

Code of conduct

Auditing Reporting procedure

clarity

Training0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

85%

55%

45%

60%

Survey Results

In HR function, how often do you have to manipulate the employees to working hard towards the organizational goal?

Alway

s

Never

Yes bu

t acc

ordi

ng to

situ

atio

n0%

10%

20%

30%

40%

50%

35%

45%

20%

Survey Results

How strongly is the HR function in your company committed towards ethical behaviour and morality in its routine activities?

Strongly Weakly Not at all0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

25%

45%

30%

Survey Results

References http://hr.blr.com/HR-news/HR-Administration/Workplace-Ethi

cs/Common-Reasons-for-Unethical-Behavior/ http://highered.mcgraw-hill.com/sites/dl/free/0077111028/5

36508/EHR_C02.pdf http://www.shrm.org/education/hreducation/documents/gus

dorf_ethics%20in%20human%20resource%20management_im_final.pdf

http://www.managementstudyguide.com/ethics-in-human-resource-management.htm

http://www.managementstudyguide.com/ethical-issues-in-hr.htm

Paper on ‘A ROLE FOR HR IN CORPORATE ETHICS?’ by Lj Van Vuuren and Rj Eiselen

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