OUMM3203

PROFESSIONAL ETHICS

Ethical issues in HRM

1. Employment Issues

2. Issues related to Cash and Incentive Plans

3. Issues related to Discriminations of the employees

 Discrimination and Harassment of the employees

Human resources professionals must ensure the organization remains compliant with anti-
discrimination and harassment laws. Employee discrimination and harassment on the basis of race,
gender or religion is an ethical issue human resources personnel face daily. Laws that prohibit
discriminatory behavior such as the Civil Rights Act and Americans With Disabilities Act help HR
representatives develop training and awareness programs to prevent discrimination and harassment in
the workplace. These laws also establish procedures human resources may use to report and discipline
workers who display inappropriate discriminatory behavior.

Questions of discrimination are common in the workplace, and managers are often called upon to deal
with them. Historical discrimination on the basis of race, ethnic origin, gender or sexual orientation
has made many individuals sensitive to these problems. Accusations or lawsuits charging
discrimination are serious. They may be brought against a company as a whole or a manager as an
individual. Good managers make proactive efforts to educate themselves about discrimination and
make every effort to avoid discriminating against others, basing their hiring and promotion decisions
solely on experience, ability and other relevant factors.

4. Issues related to Performance Appraisal

5. Issues related to Privacy

Human resources are involved in most aspects of employee relations including hiring, firing,
compensation, benefits and leaves. Human resources representatives have access to extremely sensitive
information. Keeping this information private is an ethical matter facing HR. Human resources
personnel have an obligation to maintain the confidentiality of an employee's personal data.
6. Issues related to Safety and Health
 Health and Safety

Employee safety is an issue facing human resources personnel. The department must prevent and
correct potentially dangerous situations. Human resources must promptly act on hazardous conditions
that present safety concerns in the workplace. The department is also responsible for identifying
potentially dangerous employees and ensuring they do not harm themselves or others within the
organization.

HR must work to maintain safety standards and clean working conditions for employees based on
Occupational Safety and Health Administration requirements. Employees also have the right to expect
a workplace free of sexually suggestive signs or comments, and disabled employees must have
access to the building. HR must make sure lighting and air quality are adequate.

One area of ethical consideration for employers is how to balance expense control with the health and
safety interests of employees. Manufacturing plants and other workplaces where employees use
dangerous equipment or engage in physically demanding work should have strong safety standards
that not only meet federal requirements, but that also make eliminating accidents a priority. Even
standard office workplaces pose health risks to employees who are asked to sit or stand all day.
Unfortunately, certain organizations opt to cut corners on safety controls, equipment and training to
save money. This is both unethical and potentially damaging in the long run if major accidents occur

7. Issues related to Restructuring and Layoffs

8. Other issues like using forced labour, child labour,Longer working

hours,Increasing work stress,Sexual harassment.

How to Make Ethical Decisions When Conflicts Exist in the Workplace

Managers often face ethical dilemmas in the workplace but may not aware of it. One reason is the
manager is not trained in ethics so it is difficult to know when an ethical issue exists. The first step in
making ethical decisions is to be sensitive to the ethical signposts. For example, consider whether
conflicting interests exist in the situation. Ask whether your decision harms one or more parties while
benefitting others.
Ethical decision making requires that we consider the consequences of our actions on others – the
stakeholders in the situation -- prior to making a decision. For example, members of top management
should always consider how their actions affect shareholders, creditors and employees. A production
manager should consider the effects of operational decisions on production workers, suppliers and the
customer. A marketing manager should be sensitive to whether advertised product information is
truthful and does not mislead consumers.

Once the ethical issues are identified, the next step is to identify alternative courses of action and
evaluate the alternatives using ethical reasoning. This is the tricky part since most people are not trained
ethicists. Still, certain basic principles can be followed. First, be sure to follow the law and company
policy including code of conduct provisions. From an ethical perspective certain guidelines apply such
as don’t violate anyone’s rights; be fair-minded in deciding how best to resolve the dilemma; and
follow basic virtues in deciding what to do including honesty, integrity, reliability, and being
responsible and accountable for one’s actions.

After evaluating the alternatives from an ethical perspective, it’s time to think back on how your
potential decisions might affect the stakeholders. You do not want to sacrifice the trust placed in you
and your company. When I conduct ethics seminars I ask the group to always remember that it takes a
long time to build a reputation of trust but not very long to tear it down.

The final step in ethical decision-making is the most difficult one. It is to have the courage (integrity)
to carry out an ethical decision with ethical action. Sometimes pressure exists in the workplace that is
contrary to making ethical decisions but somehow benefits the company. For example, in a financial
reporting situation the chief executive officer and/or chief financial officer might pressure the
controller to go along with an accounting treatment that crosses the line between being ethical and not
ethical. In other words it violates accounting standards but, at the same time, it may enable the company
to meet financial analysts’ earnings expectations for the year. The result is higher bonuses and an
increased stock price. Everyone is happy, right? Not so because the shareholders are misled and
accounting principles have been violated. Moreover, it is wrong to manage earnings in a way that best
portrays what the company wants to show rather than what is in accordance with accepted standards
of accounting practice.

Oftentimes, when financial decisions are made to “manipulate” earnings in one year it has a snowball
effect on future years. In a sense you are borrowing revenue from a later period to make the current
period look better, a practice known accelerating revenue. The practical problem is that you now need
to cover the second year’s revenue shortfall by borrowing from the next period and then the next.
Before you know it, you have taken the first step down the proverbial “ethical slippery slope” and it
becomes very difficult to turn around and head back up to the high ground if, all of a sudden, you
“grow a conscience.” More often than not the initial action leads to a cover-up and matters eventually
spin out of control.

Returning to the accounting example, when differences exist with one’s supervisor all internal steps
should be taken to reverse the treatment including going to the audit committee (board of directors).
Before doing so be sure to find out the position of the internal auditors on this matter. Do they know
about it and what have they done to correct the situation? If the answer is that the internal auditors have
decided to go along with the accounting treatment because it has been sanctioned by top management
and the board of directors, then the ultimate step to consider is whether to bring the matter to the
attention of some outside authority (i.e., SEC). Legal advice should be sort at this point because
external whistle-blowing violate one’s confidentiality obligation to the employer and may have legal
ramifications. A good step to take at this time is to contact the external auditor, if one exists, and solicit
that parties help in approaching management and/or the board. After all, external auditors rely on the
honesty and diligence of the internal accountants in developing audit procedures.

Human resource issues:

According to Barbara Toffler, 66 per cent of ethical issues involve human resources.(Toffler, 1986,
Tough Choices: Managers talk ethics, New York, John Wiley & Sons).A common problem faced in
knowledge industry is to retain the qualified and experienced staff. The most effective way is to create
a conducive working environment. Mutual respect and appreciation are necessary for increased
production. Equity, reciprocity and impartiality are the cornerstones for the development of human
resources.

A case study:
You have interviewed candidates for the post of a senior position in management. This job requires
emotional and physical strength. The job at least for two years cannot have a vacation. The candidate
selected has an extraordinary experience for more than ten years in a similar job. But you are told that
she is pregnant, can you select her for the job? Discuss the ethical issues in this case
Conflicts of interest
Personal and professional conflicts can also take place in any organization. A supplier promises to
secure admission for the daughter of a manager in a prestigious school in a city. The supplier does not
want any favors for this, what is your stand in this case? There are many other issues like use of
company's resources, sharing information with competitors and getting gifts and compliments from
suppliers.

New skills required for managers:

1) Managing people:
The modern managers need to be proficient in hiring the best people, evaluate their

Performance and discipline them. Ethical practices like hiring the right person for a right job,
analyzing the academic and work records of the person, his emotional intelligence, honesty and values
have be followed:
At any cost bias has to overcome. Hiring, promotions and even termination should be based on
unbiased performance. People are bound to differ physically and psychologically. Bias and prejudice
have to overcome by the managers. A person may perform well in one department or at one point of
time. The very same person may not be good in another department or at a later point of time. That is
why continuous evaluation is becoming a necessity. The performance of the individual should go with
the objectives of the organization. The manager should continuously appraise the performance of each
and every employee of his department. This appraisal should take into account both the positive and
negative aspects of performance. The positive aspects to be congratulated and a feedback should be
given on negative performance. A good ethical feedback should be in proportion to the extent of
performance.

Disciplining employees cannot be postponed. Many managers ignore the shortcoming of the workers
with a hope that situation will improve. Discipline is necessary both to improve productivity and also
to tone up the organizational climate.
On the basis of research done earlier, some findings have been made on the effective ways to
discipline employees.
 First of all. The discipline must be constructive and carried out in a professional way.
Themanager should not be emotional but explain to the employee the effects of indiscipline
like late coming and find out the causes of indiscipline. He should also find out the ways of
removing these causes of indiscipline.
 Secondly. The discipline should be done privately behind the closed doors. Public criticism
encourages hard feelings.
 Thirdly. The employees should be encouraged to explain their side of explanation.
 Finally. Discipline should be consistent with what other employees have received for similar
offences.
In a world of competitive environment, some terminations are bound to take place. Termination is not
a pleasant function to be performed by a manager. There are some strong 'causes' for termination such
as forgery, fraud, violence and sexual harassment.
A case study:
Praveen is a loan officer in your bank. She has forged an approval signature on a customer loan, which
requires signatures from two loan officers. When this case is reported, she profusely apologizes. She
says her husband has been very ill and was going to surgery on the day she forged the signature. She
did not have time to find another loan officer to sign. Praveen has a spotless record of 15 years in the
bank. How will you handle this case?

Terminations have to be carried out in a most effective way. When a violent person has to be fired,
some security is to be by the side of the manager. If a number of employee’s have to be laid off,
outplacement counselors have to be with the manager. The termination news should be given well in
advance. The delivery of the news should be compassionate and quick. In any case it should not be
abusive .Rice and Dillinger say that the desire for justice is a "fundamental human characteristic.
People want to believe that the world operates on the principles of fairness; they react strongly when
that belief is violated".

2) Diversity in Work Force:

The work force in all organizations is diversified. Some are optimistic and few are pessimistic; some
have good health and some others have some health problems; some are having good habits and a few
others are addicted to alcoholic or tobacco, some are patient and many others have short tempers. A
manager is also a human being but he has to show his managerial skills in dealing with the diversified
group of his colleagues.

Imagine your strategies to manage the following cases:

1) In a male dominated department, Malathi is the only woman. In staff meetings of that department,
everybody is profusely complimenting her. They complement her dress, the way she speaks and
her style and she feels uncomfortable. She reports this matter to you. What will be your solution?
2) One of your Assistant Managers belongs to a fundamentalist church. He goes on preaching to his
co-workers, customers and suppliers. You spoke to him about this polish and since then his
behavior escalated. What will be your reaction to solve this problem?

3) Esther is one of your well performing colleagues. She is not only dedicated but also talented. She
has given birth to the second child. After this it is difficult for Esther to stay in the office for any day
after 5 pm. Your office has all meetings only in the afternoons. Its difficult for Esther to be in these
meetings which are crucial in terms of market expansion, performance review and strategy
formulation. The other colleagues of Esther do not like this practice of going home every day by 5 pm.
You do not want to cause problems for Esther. Suggest a way out for this problem.

3) Effective communication
Managers should communicate their expectations both publicly and privately. Managers should be
ethical in their commitments. Personal example is the best communication for management. The
managers should follow the attitude of "tell me everything". They should know not only the good news
but also the bad news. Without communication it is not possible to encourage ethical behavior. If
managers don’t communicate with employees, they will not communicate with the managers. The
managers will not be kept in darkness. The managers should be able to communicate with as much
employees as possible. That is why in modern days management "by-walking around" and "open-door
policies" are popular. Face to face communication brings satisfaction to the employees with their work
life. According to many research findings, employee satisfaction is directly connected with the
managers communication related to job performance feedback, complaints, appraisals, compensation
and career objectives. Communication creates bridges and enhances the team spirit. In this way,
communication becomes an ethical act. In the case of all the written reports going from the managers,
the manager must have a thorough knowledge about the contents of all reports. Lack of time and busy
otherwise are unethical practices on the part of any manager.

Managing for ethical conduct in modern times:

Modern managers need simple and practical tools for managing ethical conduct. Ethics has to be
practiced in concrete terms. Ethical behavior should be given top priority. The unethical behavior has
to be discouraged. For example, the sales force can talk about the features of the product and the ability
to deliver these products within a date. False promises and assurances are to be discouraged.

In general, people want to be rewarded and want to avoid punishment. Naturally people behave in such
way that they want to get rewards and avoid punishment. People want information about rewards and
punishments. A good rewards system has to be established. The goals have to be established in such a
way that ethical practices have to be followed in achieving the targets.

Unachievable goals may tempt the unethical practices. Ethical conduct accompanied by performance
can be called the ethical Pygmalion effect. For example, a salesperson follows honesty and achieves the
sales target is said to have reached ethical Pygmalion effect. A combination of high ethical behavior
and good performance can be achieved through ethical Pygmalion effect.

The social learning theory is also influencing the ethical conduct in an organization. In terms of social
learning theory, people learn from observing the rewards and punishments of others. If good behavior
is rewarded, people want to practice it. If bad behavior like

cheating or stealing are rewarding and go unnoticed, people are tempted to follow these unethicals
activities.