Ethics and HRM

Prithwiraj Deb
Ethics, Morality and HRM
Ethics is the study of morality
Morals are the standards used to judge right
and wrong
Human resource management (HRM) is
the strategic and coherent approach to
the management of an organization's most
valued assets - the people working there
Costs of Corporate Ethics
Violations
$7 trillion in stock market losses
Loss of jobs and retirement savings of
employees
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
Over the last decade, ethical scandals in
business have been on the rise:
Enron
WorldCom
Tyco
Big tobacco
Satyam
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
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
HR Responses
Take steps to eliminate and discourage
reasons for misbehavior and introduce and
encourage reasons to behave ethically
Develop an appraisal system that rewards
individuals for ethical behaviors and
punishes those who act unethically
HR can use its expertise to communicate
with the workforce to get out the ethical
message
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
Thank You