Business Ethics for the HR Manager Nov 2009

Business Ethics for HR

Professionals
Prepared by the SHRM Ethics Special Expertise Panel

© SHRM2012

Ethical Issues in Human Resources

“Ethics is learned by modeling,

not by reading a bunch of
books over the weekend.”
-- John Bruhn
Former Provost
Penn State University - Harrisburg

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Agenda

• What is ethics?

• The Business Case

• The HR Professional’s Role

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Business Ethics for the HR Manager Nov 2009

Part I: What is Ethics

Definition of Ethics

The rules of conduct or moral principles

guiding individual or group behavior

Source: www.shrm.org
© SHRM2012

Moral Principles

What are the rules of conduct or moral

principles?

• No single, universal standards or rules

• Individual or cultural self-interests,
customs, and religious principles
• Serves one’s self interests and needs

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Moral Decisions

Where does one learn to make moral

decisions?

• In the home
• In their social community
• From the media
• In the workplace

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Business Ethics for the HR Manager Nov 2009

Values

• What are your personal values? What matters

most to you?

• What are your organization’s values? What

matters most to the organization?

• What happens when your values and your

organization’s values do not match?

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Ethical Principles

Ethical Principles in the

Workplace

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Ethical Decision-making Principles

Utilitarianism

• Judged on consequences
• Net benefits over costs are greatest
for the majority
• The greatest good for the greatest
number

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Business Ethics for the HR Manager Nov 2009

Ethical Decision-making Principles

Universalism

• The means justify the ends

• Intention of an act treats all persons
with respect
• Everyone should act this way

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Ethical Decision-making Principles

Rights

• Entitlement
• Individual rights guaranteed to all

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Ethical Decision-making Principles

Justice

• Fairness and equality

• Opportunity, wealth, and burden are
fairly distributed

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Business Ethics for the HR Manager Nov 2009

Situational
Opportunity
Improper Behavior

Pressure or
Rationalization
Motive

Source: Choosing Ethical Excellence 2006

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Part II

The Business Case

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Definition of Business Ethics

The art and discipline of applying

ethical principles to examine and
solve complex moral dilemmas.

Source: Business Ethics: A Managerial, Stakeholder Approach 1994

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Business Ethics for the HR Manager Nov 2009

Business Ethics

Corp Social Responsibility

Culture

Ethical
Leadership

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“What executives do and value is minutely

watched throughout the whole
organization. And nothing is noticed more
quickly – and considered more significant
– than a discrepancy between what
executives preach and what they expect
their associates to practice.”

-- Peter Drucker

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The 4 Rs

Does an ethical organization have a

competitive advantage?

Risk

Recruiting

Reputation

Raking in the dough

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Business Ethics for the HR Manager Nov 2009

Top Ethics/Standards Practices

• Discipline for employees who violate their
organization’s ethics standards
• Formal ethics program including written
standards
• A means for anonymous reporting of ethics
standards violations
• Written non-retaliation policy for
employees who report perceived violations

Source: The Ethics Landscape in American Business 2008

© SHRM2012

Sarbanes-Oxley Act of 2002

• Intended to foster truthful

communication between company
officers and shareholders
• Code of ethics required
• Requires training
• Protects Whistleblowers

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Old and New Company Ethics

Old Ethic New Ethic

Do the minimum required by law Do the right thing

Keep a low profile Show you are doing the right thing

Downplay public concerns Seek to indentify and address public

concerns
Reply to shareholders inquires when Be responsible to stakeholders
necessary
Communicate on a need-to-know Communicate openly
basis
Make decisions on the bottom line & Integrate all of the above into
laws only decision-making

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Business Ethics for the HR Manager Nov 2009

How to nurture employees to make

ethical decisions

• Position ethics as the #1 value and

consideration for the organization

• Don’t pigeon hole employees by their

demographic

• Need check and balance for how results are

achieved to ensure ethical practices were
followed in the process
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Corporate Social Responsibility

Business commitment and

contribution to the quality of life of..
> Employees
> Employee’s families
> Local community
> Overall society
..to support sustainable economic
development

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The HR Professional’s Role

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Business Ethics for the HR Manager Nov 2009

Role of HR Professionals in
Organizational Ethics

• The HR department is a primary resource for

ethics-related issues in the organization – 83%

• HR is involved in formulating ethics policies for

their organization – 72%

Source: The Ethics Landscape in American Business 2008

© SHRM2012

Role of HR Professionals in
Organizational Ethics

• HR is held to a higher standard

• You are the guardians of organizational culture
• HR determines and facilitates training needs
for the organization
• HR employs reward and punishment systems to
reinforce what kind of behavior is valued
• HR uses information gleaned from exit
interviews to support and improve the ethical
environment
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The PLUS Rule:

Framework for Ethical Decision-Making

• P - Policies and Professional Standards

• L - Laws and Regulations
• U - Universal/Organizational Values
• S - Self/Personal Values or Standards

Source: www.ethics.org
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Business Ethics for the HR Manager Nov 2009

The CLICK Rule:

Framework for Ethical Decision-Making
• What are the CONSEQUENCES if I do this? Who will
benefit? Who will suffer?
• Is it LEGAL?
• Would I like to see this as my IMAGE on the front
page of the newspaper? Would I like to tell this to
my kids?
• Does this decision support or damage our corporate
CULTURE and values?
• Does it cause a KNOT in my stomach?
Source: Developed for Florida Power Corp by Lee Gardenswartz, Anita Rowe, and Patricia Digh
© SHRM2012

Six Essential Elements of an Ethics Program

1. Written standards of conduct

2. Training on ethics
3. Mechanisms to seek ethics advice or information
4. Means to report misconduct anonymously
5. Discipline of employees who violate ethical
standards
6. Evaluation of employees performance based on
ethical conduct

© SHRM2012

Resources

• www.shrm.org -
> The Ethics Landscape in American Business
> Business Ethics: The Role of Culture and
Values for an Ethical Workplace
> Ethics and Generational Differences:
Interplay between Values and ethical
business decisions
• www.ethics.org - Ethics Resource Center
> Choosing Ethical Excellence Alan V. Funk
> Business Ethics: A Managerial, Stakeholder
Approach Joseph W. Weiss

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Business Ethics for the HR Manager Nov 2009

SHRM Special Expertise Panel - Ethics

This training product would not be possible without the

creative work and contributions of the following Members
of the SHRM Ethics Special Expertise Panel:

• Marty Val Hill, SPHR, Live your Legacy

• Linda Magyar, SPHR, Pillsbury Winthrop Shaw Pittman LLP
• Cathie Bishop, SPHR, Great West Casualty Co.
• Nancy Volpe, SPHR GPHR, Center for People Solutions LLC
• Michael J. Colledge, SPHR, CCP, Brigham Young University
• Joyce LeMay, SPHR, Bethel University
• Bonnie Turner, SPHR, Ph.D., MBCI

© SHRM2012

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