Ethics and HRM

K. Michele Kacmar
 Ethics, Morality and Values
 Ethics is the study of morality
 Morals are the standards used to
judge right and wrong
 Values are the degree of conviction
about the way to conduct life
 Conviction
 The degree of conviction to your
values can be described as primary,
secondary, or peripheral
• Primary – core values, unchanging
• Secondary – Important, but changeable
occasionally
• Peripheral – Values that are known but
not lived by
 How Do We Get Values?
 Parents, family and friends
 Experiences
 The environment (media, education)
 Conflict of Values
 Dramatic outcomes can occur when
individuals and groups hold
conflicting core values:
• Religious wars
• Business scandals
• Crime
 Environmental Factors
 Over the last decade, ethical
scandals in business have been on
the rise:
• Enron
• WorldCom
• Tyco
• Health South
 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
 Organizational Responses
 Codes of ethics including:
• Explicit standards of rules to be followed
• Corporate values statements
 Explicit Standards
 Explicit standards define precisely
acceptable and unacceptable conduct
such as accepting gifts and the
amount allowable
 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
 The values statement must be
focused
 HR Responses
 Conduct surveys to determine:
• What behaviors are routinely being
rewarded and reinforced
• What values and attitudes are prevalent
• How strong the pressure to engage in
misconduct is
 HR Responses Continued
 Take steps to eliminate and
discourage reasons for misbehavior
and introduce and encourage
reasons to behave ethically
 HR Responses Continued
 Develop an appraisal system that
rewards individuals for ethical
behaviors and punishes those who
act unethically
 HR Responses Continued
 HR can use its expertise to
communicate with the workforce to
get out the ethical message
 Costs of Corporate Ethics
Violations
 $7 trillion in stock market losses
 Loss of jobs and retirement savings
by employees
 Costs of Corporate Ethics
Programs
 Costs of implementing and
maintaining compliance to create an
ethical business environment
 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
Ethics Effectiveness Quick-Test
 Ethics Effectiveness Quick-Test asks
eight questions about twelve
different areas that can help to
increase the ethical effectiveness in
an organization
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