BJ6067

ETHICS IN HUMAN CAPITAL MANAGEMENT

GROUP ASSIGNMENT 1

PREPARED FOR

DR. SHARIFAH RAHAMA BINTI AMIRUL

PREPARED BY

NAME MATRIC NO.

CHE MOHAMAD AZAM BIN CHE IDRIS MB2112114T
MOHD AIMAN BIN MOHD NAJIB MB2112001T
PRELLNANTHY PETER MB2112011T
SITI HASNAHWATI BINTI ASSAN MB2122279T
ETHICS OF SELF-INTEREST

What is ethics? Human life today is said to be based on the cycle of time. The high
circulation factor of this era has become a challenge for humans to meet the needs of their
respective lives. Modern life has become more complex in which, apart from the need for
money and material interests have become the stakes of life. Humans are never satisfied with
what is there, so they are able to risk ethics solely to pursue dreams and enjoy a materialistic
life, which is the priority of life today. We often hear the quote "ethics" that is so popular
among students in schools, organizations, or workplaces and parents who are tasked with
teaching the teachings of an ethical life to their children. What does "ethics" really have to do
with it? According to Wikipedia, "ethics," which is also known as "moral philosophy," is a
branch of philosophy that involves establishing, defending, and advocating right and wrong
behavior. It refers to human moral behaviour and how to act in certain circumstances. The
Ethics of Self-Interest: As humans, self-interest is a natural attitude, and the element of self-
interest itself involves both negative and positive things. Sometimes we need to think about
ourselves first so that the side effects do not harm us and the people around us. For example,
in the workplace, self-interest is necessary for certain situations, for example, instructions
from superiors who are unprofessional and have a negative agenda that can impact our career.
We have the right to refuse such instructions for logical reasons. Ethics is related to
someone's morals, but as strong as a person's principles can be, they can be affected by
several factors, such as Influence from friends is a factor that can influence a person's ethics.
The influence of this friend can be seen at the school level or at work. An individual's ethics
are usually influenced by the behaviour of their friends, either in a good or bad way. If
colleagues have good moral values such as being honest, responsible, and hardworking, then
it will help to form good ethics. There is a possibility of negative actions if a person has a
friend who is always absent, lazy to complete assigned tasks, and involved in bad activities,
maybe we will be like them.

In human Capital management (HCMI), Individual Integrity is the Ethics of Self-

Interest. Individual integrity is the harmony between what an individual says and what he
practices; between his actions and moral, ethical, and legal principles; and between self-
interest and the public interest. A person is said to have integrity when he acts or behaves
consistently in various ways. Individual Integrity is the Ethics of Self-Interest. Individual
integrity is the harmony between what an individual says and what he practices; between his
actions and moral, ethical, and legal principles; and between self-interest and the public

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interest. A person is said to have integrity when he acts or behaves consistently in various
ways. The Value Ethics of Self-Interest is Balance-Self-Interest: "Seek results that have the
greatest potential for good impact for oneself and one's organization, all without infringing on
the rights of others."

Therefore, this type of ethics can be seen. At the individual level, integrity is the
alignment between actions with moral, ethical, and legal principles and the alignment
between self-interest and the public interest. While at the organisational level, it has been
enshrined in the implementation of ethical codes, customer charters, work systems and
processes as well as compliance with best practices. The code of ethics is emphasized,
repeated, and lived by the members of the organisation until it becomes a habit and
eventually becomes the culture of the organisation (corporate culture). Ideally, integrity,
whether at the individual or organisational level, means a code of behavior. Individual
Integrity is the Ethics of Self-Interest. Individual integrity is the harmony between what an
individual says and what he practices; between his actions and moral, ethical, and legal
principles; and between self-interest and the public interest. A person is said to have integrity
when he acts or behaves consistently in various ways. The Velue Ethics of Self-Interest is
Balance-Self-Interest: "Seek results that have the greatest potential for good impact for
oneself and one's organization, all without infringing on the rights of others."

An example that can be seen in the ethics of self-interest is the police. This
government agency is exposed to corruption issues. How the police survive and protect their
careers is with the ethics of self-interest. They need to defend their integrity as much as
possible from getting caught up in corruption that can tarnish the reputation of themselves
and the organization. An example that can be seen in the ethics of self-interest is the police.
This government agency is exposed to corruption issues. How the police survive and protect
their careers is with the ethics of self-interest. They need to defend their integrity as much as
possible to avoid getting caught up in corruption that can tarnish the reputation of themselves
and the organization. The conclusions is, ethics of self-interest are required in a person,
particularly in defending personal integrity and moral values from being tainted by bad things
such as breach of trust, corruption, and so on.

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VIRTUE ETHICS

With its roots in Ancient Greece, virtue ethics is arguably the most ancient ethical
theory in existence. It defines morally upright behaviour as exhibiting virtues like bravery,
loyalty, or wisdom. A disposition to act, think and feel a certain way is a virtue in and of
itself. It is best to approach virtue ethics by examining the main components of what I will
refer to as the classical version of the tradition. Its theoretical structure is first clearly stated
by Aristotle, but it is wrong to think of it as peculiarly Aristotelian, since it underlies all of
the ancient ethical theories (Annas, 1993, 1999). The opposite is demonstrated by bad
behaviour, which is motivated by vices like cowardice, treachery, and ignorance. Ethics was
a crucial component of human flourishing in Aristotle's view because it taught people how to
distinguish between virtues and vices.

Virtue ethicists consider broad moral questions, such as “How should I live?” and
“What is the good life?” (Athanassoulis, 2017). By promoting inquiry, more people could
lead lives devoted to cultivating virtues. One of the three main schools of normative ethics at
the moment is virtue ethics. It may initially be recognised as the approach that places more
emphasis on moral character or virtues in contrast to deontology or approaches that place
more emphasis on the results of actions (consequentialism). Let's say it is clear that a person
in need needs to be helped.

A utilitarian will argue that doing so will maximise well-being, a deontologist that the
agent will be acting in accordance with a moral principle like "Do unto others as you would
have done unto you," and a virtue ethicist that helping the person would be kind or
benevolent. This does not imply that only virtue ethicists focus on virtues, any more than it
implies that only consequentialists or deontologists focus on outcomes or rules, respectively.
The virtues, consequences, and rules can all be incorporated into the aforementioned
strategies. Any tenable theory of normative ethics will, in fact, have something to say about
each of the three. What distinguishes virtue ethics from consequentialism or deontology is the
centrality of virtue within the theory (Watson 1990; Kawall 2009).

In particular, the idea that developing moral character is an ongoing process in which
people change and form behavioural patterns within a society fits well with the idea of
business as an ongoing concern aimed at achieving excellence. Numerous stakeholders
witness the numerous decisions that business leaders make. These choices result from a

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leader's ethical principles, and they also help the leader's followers develop an ethical
mindset.

Aristotle’s Ethical Framework

Aristotle's view of ethics differs from that of his forebears because he thought that,
rather than following the law or performing one's duty, the essence of moral behaviour lay
within the individual. He asserts that happiness and well-being are the main objectives of
human existence in his book Nicomachean Ethics (Pakaluk 2005). According to Aristotle,
people will ultimately find happiness in their lives if they lead moral lives. Virtuosity is
acquired through repetition and habit. Over time, we come to "internalise" these virtues.
Instead of being forced by rules or laws, we can behave morally appropriately because it is
the "right thing to do." The moral philosophy of Aristotle is founded on reason or common
sense. Aristotle essentially held the view that morally upright people develop the ability to act
morally and rationally.

Aristotle's philosophy is based on the idea that habits help people acquire virtues.
People are therefore neither born "virtuous" nor "vicious." Instead, we have a great capacity
for learning and practising virtues, which eventually help to shape who we are as people. The
"doctrine of the mean" is another essential component of Aristotle's theory of moral
behaviour. According to this idea, righteous deeds fall between two extreme "vice" states and
are in the middle. There is no precise or absolute level of behaviour that can be considered
"virtuous" in all circumstances. Instead, "virtuous" action must be assessed in light of the
current situation the actor (Pakaluk 2005). For instance, the quality of courage lies
somewhere between an excess of rashness and an absence of cowardice. The courageous
person strikes the right balance between spinelessness, trepidation, and meekness by avoiding
actions that are hasty, careless, and foolish (rashness) (cowardice). In the case of a charging
bull, the person might flee quickly. However, if one is unarmed and confronted by an armed
robber, it might be best to give up one's wallet and avoid conflict in order to appear
submissive and meek. Aristotle takes a common-sense approach, so the wise person can
choose the "moderate" path when given a choice.

In the context of work life and human capital management (HCM) practises, these
two aspects of Aristotle's approach to virtue ethics—that they are formed through habit and
moderation is ideal—are particularly relevant. Organizations can implement HCM practises
that can aid in the development of employees' moral character by understanding that virtue

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comes from repetition and habit. An emphasis on moderation may result in HCM practises
and decisions that strike a balance between extremes, particularly with regard to the goals of
different stakeholders.

The Evolving HCM Function

The demands placed on the human capital management (HCM) profession have
changed as evidence of how HCM practises can affect organisations' bottom lines grows. The
evolved HCM professional now performs a number of mission-critical roles to facilitate
positive organisational outcomes, rather than acting primarily as administrative guru and
policy creator and enforcer offering little value added. Effective HCM practices have been
shown to lead to higher profitability, sales growth, productivity, quality, and better employee
retention (Jian et al. 2012; Hanks 2013). Such results depend on HCM professionals who can
function outside the constraints of the conventional compliance role that involves shuffling
paper. According to Ulrich (1998), the field of human resources must change in a way that
benefits the organisation in order to remain relevant and additive.

To better adapt to the shifting competitive landscape, executives and line managers—
who are ultimately responsible for organisational outcomes—must refocus the HCM practise.
The HCM department is responsible for handling personnel matters in businesses. To that
end, since the impact of HCM practises will affect employees' quality of work life, every
HCM practise can be viewed as an "ethical" issue. Although this portrayal of the connection
between HCM and ethics may seem overly general, it is actually quite close to the truth. No
other department in a contemporary organisation puts such a strong emphasis on the personal
and professional wellbeing of employees. Furthermore, if Aristotle's fundamental thesis—that
people seek happiness or well-being—is accurate, then promoting well-being at work creates
a shared goal between the individual and the organization. People can pursue happiness
through their work. Therefore, organisations that provide the virtuous path to happiness will
be well regarded by their employees (Guest and Woodrow 2012).

HCM as Ethical Leader and Compass

Regardless of where they sit in the formal hierarchy, HCM professionals act as
leaders within their organizations. The HCM professional directs numerous initiatives and
efforts within the organization by creating and implementing a wide range of HCM practices
and policies. HCM professionals can direct and guide manager and employee behavior in
accordance with ethical standards in their role as leaders. Several leadership traits that show

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up in the HCM function can strengthen HCM function as an ethical compass (Caldwell et al.
2010). Principle-centered leaders adhere to moral standards that are respected, are committed
to the welfare of all stakeholders, and follow accepted principles of effectiveness (Covey
1992, 2005).

Principle-centered leadership is an "inside job" in which leaders internalize the

fundamental moral precepts and act in accordance with their convictions. They are moral
people first and foremost, not people who follow rules or policies that have been established.
Therefore, principle-centered leaders would take the high moral ground and act in a naturally
ethical manner in the face of circumstances for which there are no policies. HCM
professionals frequently encounter problems that need to be solved but for which there is no
precedent or policy. Insofar as the HCM professional approaches these circumstances from
an ethically motivated perspective, that person acts as an ethical compass, steering
organisational momentum in a moral direction.

HCM specialists frequently take on the role of servant leaders, those who inspire
others by serving others and fostering trust (Parris and Peachey 2013). Protecting the welfare
of followers (i.e., employees) while also carrying out duties for the organisation as a whole is
a key concern for servant leaders. HCM specialists play a significant part in making sure that
workers are respected and treated well. HCM professionals can implement moral procedures
that will protect the lives and rights of employees and support their pursuit of happiness at
work by using a servant leadership approach. Last but not least, the idea of authentic
leadership may help to clarify the HCM role in terms of ethical leadership. The "true" self of
the leader, as determined by a self-aware person with a strong connection to moral virtue,
informs authentic leadership.

Ethical HCM Decisions

Today's organisations must take into account a variety of stakeholders and their
conflicting interests when making many decisions. According to the stakeholder theory,
successful businesses cultivate relationships with their stakeholders that are built on trust and
cooperation (Jones 1995; Cragg 2002). The following examples are provided to more clearly
illustrate the ethical implications of specific HCM decisions and practises while keeping in
mind the wide range of constituencies that may be impacted by organisational decisions.
They offer some insight into how HR leaders can think about the right decision when faced
with organisational decisions, though they are obviously not exhaustive. Making decisions

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about how to handle a labour surplus in the organisation is a common strategic HCM-related
issue.

The emergence of the labour surplus may be attributed to general economic

conditions or to a more specific event within the company, such as the loss of a significant
contract or increased market competition. When faced with an excess of labour, organisation
leaders have a variety of options. From the point of view of the shareholder (i.e., owners), the
most desirable resolution is the quickest, most effective reduction of labour costs, often
achieved through a layoff or reduction in force. From the point of view of the employees, the
most desirable resolution might be finding a way to retain the majority of employees over the
long run. From the perspective of the consumer, a constant supply of products with affordable
prices and high quality is ideal. Human Capital Management can put procedures in place to
make sure that the company does not fall prey to the shortcut approach to making the right
employment decisions. HCM professionals can set a good example by refusing to use social
media data unrelated to the job when making hiring decisions. This will allow them to
balance the need to gather information on applicants with the rights of the applicant to
privacy and fair treatment. They may also set policies forbidding social media investigations
and deter other organisation members from doing so. The right ethical tone for the
organisation must be set in part through manager training. HCM can ensure that hiring is
done properly and legally by acting in the best interests of the company.

Creating the Virtuous Organization

Individuals and their environments interact iteratively and reciprocally. Virtuous
people who are in an unvirtuous environment have three options for responding: changing the
environment, changing their behaviour, or leaving the place. The same thing may happen
when non-virtuous people are present in virtuous environments. Both individuals and their
environments will have an impact on one another. As a result, developing a virtue-based
organisation is a continuous process. The environment must be watched over and maintained
once it has been created, and new members must be brought up to speed on proper conduct.
Iterative and reciprocal interactions occur between people and their surroundings. Virtuous
individuals who find themselves in an unvirtuous setting have three options for action:
changing the setting, altering their behaviour, or leaving the location. The same thing might
occur when unvirtuous individuals are present in virtuous settings. There will be an
interaction between people and their environments. The process of creating a virtue-based

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organisation is therefore ongoing. Once the environment has been established, it needs to be
watched over and kept up, and new members need to be trained in appropriate behaviour.

As conclusion, organizations and their members can act morally and develop true
"virtue" with the help of HCM professionals and HCM practises. HCM can set an example,
act morally, and encourage others to follow suit. HCM procedures have the power to
motivate workers in ways that produce positive results. No other discipline or function within
a contemporary organisation is better suited to play the role of an ethical compass than
human resources. From the moment an employee applies for a job until they retire, HR is a
constant presence and a guiding force in all facets of the employee's working life. All
organisation members can be led to the shores of virtue by HCM, which serves as a beacon

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ETHICS OF DEONTOLOGICAL

Deontological ethics are ethical theories in philosophy that place a focus on the
connection between duty and the morality of human deeds. Deontology derives from the
Greek words deon, which means "duty," and logos, which means "science." Deontological
ethics holds that an action is morally good not because the result of the action is good but
rather because of some aspect of the action itself. Base on deontological ethics, at least some
actions are morally required regardless of how they will affect the welfare of people.
Expressions like "Duty for duty's sake," "Virtue is its own reward," and "Let justice be done
though the heavens fall" describe such ethics. According to the deontological ethical theory,
what is right or wrong must follow certain rules. The theory, as developed by Kant (1785),
assumes that moral behaviour is governed by general moral laws, such as the prohibitions
against lying, stealing, and cheating. This theory is the easiest to apply because it only calls
for people to follow principles when performing their duties (Weaver, 1999).

The basic tenets of deontology align well with our natural instincts about what is and
is not moral. Deontology does not rely on an analysis of cost and benefits weighting, which
helps deontologists avoid subjectivity since they only adhere to the rules, in contrast to
consequentialism, which evaluates actions by their societal effects (Van Gerwen, 1996).
Good intentions are the foundation of deontology because they imply that we uphold moral
principles as long as they are present. Employees' deontological choices have an impact on
the workplace environment, which also shapes their behaviour through organisational culture
and management choices. Not every employee decision is the result of an intentional
assessment; some are even in opposition to their customary ethical behaviour.

Every employee working in any sector of the economy has encountered a

deontological conundrum at some point. The deontological dilemma is a situation in which a
person must choose between the obligations their duty imposes and the hedonistic goal of
every man's happiness. Deontological conundrums are typically resolved through ethical
decision-making, which entails a cognitive process, the balancing of knowledge, prior

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experience, and even the accumulation of new experience. Regardless of organisational
culture, cultural specificity, the nature of economic activity, or ideology, the construct can be
seen in any organisational setting.

Deontological reflex manifestations can have a positive or negative impact on the

workplace environment. Every employee has a unique perception that directs how he
performs his duties in the organisation, which is what causes this. The culture of the
organisation must value ethical decision-making for the organisational environment to be
focused on ethics. Organizational culture is both a product of and an abstraction from
behaviour at the same time (Quin, 1988). The degree of autonomy and the management style
both play a significant part in the development of the deontological ethics. Therefore,
participatory organisations will foster a culture of unfettered speech and much happier staff,
which will manifest as a manifestation of the deontological reflex aimed at defending the
organisation.

Regarding the external environment, the deontological reflex geared toward

maintaining the integrity of the organisation is manifested by the refusal to accept bribe or to
discuss confidential information about it. Simple manifestations of the deontological reflex
involving sales staff, workers, front desk personnel, and other groups that come in direct
contact with clients and suppliers must be incorporated into the creation of a strong
organisational environment built around a well defined spectrum of variables.

Understanding the source and nature of such manifestations is crucial for managers
who catch unethical behaviours. A response made in the wake of an ethical choice might be
the outcome of a mistake in reasoning or the neglect of certain factors. Deontological reflex-
driven responses better characterise an employee. Additionally, it is much more difficult to
teach and change the manifestation of a particular deontological reflex than the propensity for
a particular set of ethical judgments.

The factors influencing the deontological reflex must be taken into account in the
recruiting strategies. There are many past experiences that a recruit may have had that could
have contributed to their propensity for deontological reflexes. The human resources
managers can examine past events, get in touch with former employers, find out if there were
any conflicts and how they were resolved, and most importantly, they can comprehend the
circumstance that gave rise to the deontological reflex. The human resources managers may
also disagree with decisions made in the organization's best interests based on a deontological

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reflex. People who show this kind of attachment to an organisation are extremely valuable
resources because they will serve as role models for behaviour.

The deontological reflex construct and its manifestation will be better understood by
human resources managers, who can then use this knowledge to develop new training
programmes, best practises manuals, and hiring strategies. The emphasis of the training
programmes and manuals must be on developing a natural bond between employees and the
workplace culture. This emotion will be strongly linked to a sense of patriotism. To better
understand the situation and be able to make the best decisions for the employees, managers
of all ranks must examine the employee manifestations while taking the possibility of a
deontological reflex into account. In order to guard against disruptions and continuously
improve the organisational environment, managers must also be aware of the effects that a
deontological reflex has on that environment.

As the conclusion, the deontological ethic may reflex can have positive or negative
effects on the environment of the workplace. Just as every person has their own unique
perspective on good and evil, every employee has their own unique sense of duty within the
context of the organisation. No matter the impact on the organisational environment—
positive or negative—the deontological reflex must be taken into consideration, especially by
managers. Managers must make decisions to build a deontological reflex oriented towards the
development of the organisational environment after having a thorough understanding of the
influencing factors. Recruits' prior experiences must also be taken into account and analysed
by human resources managers in order to form a general opinion on the kind of deontological
reflex that may be displayed.

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ETHIC OF LAW & REGULATION

Put simply, the definition of the law can be understood as a systematised set of
universally recognised rules and regulations created by an appropriate authority such as a
government, which can be regional, national, international, etc. It is used to govern the
actions and behaviour of members, and it can be enforced by imposing penalties. The law is
described as the set of rules and regulations created by the government to govern the whole
society. The law is universally accepted, recognized, and enforced. It is created with the
purpose of maintaining social order, peace, and justice in society and to provide protection to
the general public and safeguard their interests. It is made after considering ethical principles
and moral values. The law is made by the judicial system of the country. Every person in the
country is bound to follow the law. It clearly defines what a person must or must not do. As a
result, a violation of the law may result in punishment, penalty, or both. An organisation also
has their own laws that can make administrative management run smoothly. Every employee
needs to comply with existing rules so as not to affect their performance at work.
Organizations without a law will cause failure in achieving agency goals. For ethics We
define it as the branch of moral philosophy that instructs people about what is good and bad.
It is a collection of fundamental concepts and principles of an ideal human character. The
principles help us in making decisions regarding what is right and wrong. It informs us about
how to act in a particular situation and makes a judgement to make better choices for
ourselves. Ethics is the code of conduct agreed and adopted by the people. It sets a standard
for how a person should live and interact with other people.
While reading this definition, we can see that law and ethic are different, but both of
these aspects involve moral values in a person. How about the ethic of law and regulation in
Human Capital Management (HCM)? It’s about legal compliance. To increase the value of
moral ethics among employees, an ethics policy, code of ethics, code of conduct, or rules of
conduct, as well as core values are an important component of ethical, moral, and integrity

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education. This is because the documents in question describe the actions that are encouraged
or actions that are prohibited, and deviations from them can be subject to disciplinary action
or disciplinary action. It is also a guideline that describes the professional identity of the
employee and can increase the confidence of the client in the credibility of the organisation
and show the organization's commitment to the development and strengthening of the image
and also the reputation of the organization. Therefore, in order to facilitate the
implementation of ethical, moral, and integrity education in the organization, the organisation
must formulate an ethical policy, code of ethics, code of conduct, or rules of conduct, as well
as the core values of the organisation to be used as a guide for all members of the
organization. In addition, the organisation must also distribute the ethics policy, code of
ethics, code of conduct, or rules of conduct, and core values to all organisations and
encourage all members of the organisation to read these documents carefully. Examples of
Ethics Laws & Regulations used by an organization is "Jabatan Amanahraya Malaysia".
This agency has issued a written code of ethics entitled AMANAHRAYA CODE OF
BUSINESS ETHICS as a guide to its staff and the public.
In conclusion, ethics laws and regulations in the management of human capital are
very necessary in order to maintain the good name of the organisation and also the high value
of personal integrity. To make it successful, all parties need to cooperate in its
implementation at the personal level and then at the organisational level. 

ETHICS OF ECONOMIC EFFICIENCY

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 A business is an economic organisation that operates within a legal environment and
is established for the purpose of providing goods and services. The success of a company
depends on the efficiency of its operations. In a capitalist economic system, companies must
compete effectively in an open market to gain profits. According to western businessmen,
competition is likened to a game, where companies are allowed to get as much profit as
possible while still complying with the rules of the game that have been set by the
government. Economics and law are two things that are important in making business
decisions. Just as in a football match where both competing teams must uphold
sportsmanship, so too, in business. Those who compete must obey the rules that have been
set. In a competitive business system, where everyone is free to act as long as it is not against
ethics, Thus, the relationship of business ethics to economics and law is very complex and
not easy to describe. So that, Ethnics of Economic Efficiency is Value of efficiency in
business.
Human capital is one of the most important production factors and is defined as the
characteristics possessed by an individual that cause it to be more productive and of higher
quality. From an economic perspective, increasing human capital or human quality can be
done through the process of increasing knowledge, education, training, health, migration, and
efforts to find information that can improve a person's standard of living and ultimately
contribute to increased productivity. This process is also known as "investment in human
capital." Therefore, the development of human resources through education and training
programmes is a form of investment and a very important element in building human capital.
From a macroeconomic point of view, human capital takes into account formal education.
While, from a microeconomic point of view, it takes into account aspects of schooling,
training, work experience, migration, and health.  The role of human capital in the economic
growth of a country is very important. Especially for the sector involved in research, the role
of human capital is vital to generating new ideas or products. Therefore, countries with a high
stock of human capital tend to experience faster economic growth because they can introduce
new products at a faster rate. Many past studies have proven that the quality of labour or the
quality of human resources, through the achievement of human capital, contributes greatly to
the growth of production in a country. According to Nelson and Phelp (1966), economic
growth depends on the possession of human capital, and the contribution of this human
capital occurs through innovation in economic activities, which ultimately increases
competitiveness and leads to higher economic growth. While Lucas (1988) and Romer (1989)

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support the close relationship between human capital, knowledge, and innovation and
acknowledge the role of knowledge in economic growth, many empirical studies that show a
positive relationship between human capital and economic growth (among them: Denison,
1967; Barro, 1990; Mankiw, Romer & Weil, 1992; Lau et al., 1993; Hansen & Knowles,
1998; Fernandez & Maur)
For Examples, In Malaysia, the government is very committed to developing human
resources because it believes that human resources are an important factor that will determine
the success of the country's economic growth and competitiveness. Therefore, in RMK8, the
government has increased education and training development expenditure to RM42.4
million, compared to RM19.7 million in RMK7. This amount was further increased to
RM45.1 million through the allocation provided in RMK9. This large allocation aims to
achieve the government's desire to increase the supply of highly skilled and knowledgeable
workers to support knowledge-based economic growth. In addition, to ensure that employees
are continuously equipped with knowledge and skills, the government promotes more
actively the concept of "Latihan sepanjang hayat" which is believed to increase employee
productivity (Malaysia 2001).
The conclusion is Ethical behaviour is an important factor in the long-term success of
a business or organization. Based on the macro argument, which states the importance of
ethics in an economic system, unethical behaviour will lead to distortion of the market
system, which in turn will lead to inefficiency in the allocation of resources. While the micro
argument views the importance of ethics in companies as individuals, unethical behaviour
will lead to decreased performance in the long run. Behaviours that are in accordance with
ethics (ethical behaviour) is behaviour that is in accordance with the rules (rules) or standards
to do a job that is right or in accordance with morality (morality). Ethics can be interpreted as
a set of rules that become guidelines or standards for every person or society, whether an
action is right and wrong or good and bad.

ETHICS OF UTILITARIAN

Utilitarianism defines as a development for social political and legal that blossomed in
the first half of the nineteenth century. Utilitarian when we look as a theory of ethics it

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delivers a principle for distinguishing between right and wrong action and, by consequence,
an account of the nature of the ethical decisions that describe action as right or wrong. The
utilitarian basis can be understood by the combination of two principles: (i) the
consequentialist principle explained that determination of rightness or wrongness of an
action is by the outcome of the results that is good or bad; and (ii) the hedonist principle
rationalised that good pleasurable and bad is painful (Quinton, 1973).

West (2004) stated that utilitarianism is the ethical theory that explained the creation
of happiness and decline of discontent should be the standard by which actions are decided
right or wrong and by which the rules of policies, morality, social, public, and laws
institutions are to be analytically assessed. An action cannot be simply judge as right or
wrong just by telling the truth or lying; and the ethical rule against lying is not in itself
acceptable. Dishonest is wrong because, in general, it has bad effects. And the ethical rule
against dishonesty can be subjected to empirical study to rationalise some cases of
dishonesty, for example to avoid a catastrophic consequence in protecting someone’s life.

It was said that action produces a good outcome consider as morally right and ethical.
In the human capital management (HCM) perspective, HCM urge for organisational
performance– as a mere by-product – a positive effect that HCM can consider as ethical.
However, HCM belief that employees are anticipated to promote themselves like the “dish of
the day”, producing their best parts, which they have worked on growing (Klikauer, 2014).
Thus, the production of an HCM action that has good and therefore ethical values is
unintentional, not crucial for HCM. The idea of essentialism sees an act as essential and not
accidental but a causal part of an action. HCM’s ‘unintentional’ action that created a positive
consequence in regard to the ‘Happiness Principle’ is at best a by-product but it is not
necessary to HCM. If HCM is assessed using consequentialism, HCM is not liable to be an
ethical actor because it does not involve in actions intended to create good and moral
products. Occasionally such ethical results happen but usually as a by-product from HCM’s
action. However, the fact that they happen as by-product and side-effects makes them
accidental. The core of essentialism and consequentialism therefore concludes that HCM is
not an moral actor in the sense of both moral principles. Consequentialism have strong link in
utilitarianism result in sidetracking the drives of actions by concentrating on result. In that
sense HCM is far from utilitarianism. Just as consequentialism, utilitarianism also assess
result, not intentions and moral objectives. But HCM assess such as performance related pay,

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performance management, and the balanced scorecard cannot be interrelated with
utilitarianism’s ‘Happiness Principle’ (Klikauer, 2014).

To simply understand utilitarianism is the creation of happiness. In the organisational

perspective, we would like to optimize value or maximize happiness of employees during the
HCM processes. Recruitment is one of the process involve in HCM. It is a process of
attracting new employee to job vacancies in the organization. Ombanda & Obonyo (2019)
explained that the process of recruitment in organizations is more often hindered with
nepotism, sycophancy and cronyism. Utilitarian claim against racial and unfairness during the
recruitment process is based on the fact that employees efficiency will be boosted when they
feel that jobs are granted on the basis of expertise. Different tasks require different abilities,
talents and personality trait to function efficiently. Prejudice among job candidates based on
religion, race, ethnic group or other characteristics distinct to job productivity is unmoral in
the utilitarian principle. Greenwood (2011) as stated in Ombanda & Obonyo (2019)
mentioned management of human resource that depend on recommendation from internal
employees to select new employee tend to recruit among family members and same race and
hence objectivity can never be found, it locks out more capable candidate and that
compromises performance. During the HCM process such as selection and recruitment, it is
essential to make decision making added with best practices to make sure that unethical
practices such as discrimination and corruption are eliminated.

ETHICS OF UNIVERSAL RIGHTS

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 The United Nation created the Universal Declaration of Human Rights (UDHR) as
commitments made by all States. It was stated in UDHR that “all human beings are born free
and equal in dignity and rights”. The UDHR pledges to all the cultural, economic, civic,
political, and social rights that strengthen a life free from fear and want. The UDHR
emphasized that the human rights not a reward for good behaviour, country-specific, or
particular to a certain era or social group. The human rights are the undeniable rights of all
people, at all times, and in all places.

Why the human rights are universal? This is because they belong to all human beings
as such, exclusively in virtue of their humanity. Blumenson (2020) explained that the human
rights are universal because of the appeal of relativism. When civilization variety is more
exist than ever in one’s neighborhood, and across the media social. It’s a small move from
recognising diversities in cultural values to distinguishing justice itself as culturally created.
Secondly, human rights are universal because of the reactionto the fundamentally varied
ways of life in the world, but a simpler one: a principle that human rights universality is
implausible. Human rights demand universality. Every human being as such, not simply
those having the requisite sex, nobility, talents, caste, ethnicity or other feature made a human
rights are universal. All human rights execute co-relative responsibilities, and tautologically,
these responsibilities are also universal. Every society must respect these rights because all
human beings have the same rights. This universality is thus not to be equated with common
faith, the logic in which one might say that faith in a flat earth was once held universally.

As mentioned earlier, human rights are universal. So looking into the ethics of human
rights, it is the basic rights of every human being, independent of race, opinion, social status,
religion, political sex, or any other characteristic. John Locke (1632–1704) as cited from
Virani (N.A) stressed and explained moral ethics based on human rights. He stated that it is
not the purpose of reason to acts that is important to ethical behaviour, but an gratitude of the
equal and fair management of all people, enshrined in the distinguishing of basic human
rights. Theory of moral rights stressed that all human beings have essential rights that should
be valued in all decisions: the right to free privacy, consent, and freedom of conscience, due
process and free speech. In HCM, human rights is relevant for example in the process of
selection interviewing. The candidates have the right to confidentiality and privacy of private
information, especially it is not relevant to the job (e.g. asking candidates asked about their
marriage plans), occupational testing (e.g right to feedback), equal chances and variety
management (the right to be treated fairly) etc. Nevertheless, there are a lot of circumstances

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when Human Rights and HCM have been at cross roads. For example, how do you function
within international standards of Human Rights when you are facing with corruption in the
organization, a absence of laws and the inappropriate administration of fairness, directing to
inadequate respect for human rights?

Employee rights is the guaranteed right of all employee. The universal right
compromise of employee right so every employee in the organization have their right. HCM
need to consider this employee right in the HCM process. Employee right are the ability to
obtain fair treatment from employers. If human resource does not comprehend or accurately
manage employee rights, then employees have the right to sue the company. Human resource
should play an important role in managing employee’s right.

For example, Privacy Rights is belong to employee. In the globalization era,

technology had make employer easily monitor many aspects of employees’ jobs, although a
policy or guideline on this subject should be carefully measured before applying it. In respect
to privacy, should employer be allowed to observe an employee’s online activities such as
work e-mail, online history using company property, private online’s activity and employee
postings on external websites. An employer isn’t always needed to micro observe employees’
movements on social media and employees also need to consider about their posting in the
social media about the negativity of the organization if they do not want to lose their job.

ETHICS OF DISTRIBUTIVE JUSTICE

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 Distributive justice can be defined as the fair allocation of the profits and problems of
social support among varied people with challenging claims and needs (Chadwick, 2012).
Theory of distributive justice must clarify the political justification indicating the weight to
be allocated to difference kinds of related thoughts and offering an agreeable description of
the viewpoint from which decisions are produced. The theory must use these resources to
rationalise of a fair allocation of social goods, regulating, in the process, the urgency to be
allocated to considerations such as claims of equality,, entitlement, community, efficiency,
right, and fairness. According to Wright (2015) distributive justice indicates to the
distinguished fairness of an distribution or how people evaluate what they get.

Jasso & Törnblom & Sabbagh (2016) stated that the three key actors in distributive
justice are allocator, observer and rewardee and the four key terms are actual reward, just
reward, justice evaluation and justice consequences. The Observer produce beliefs of the Just
Reward for the Rewardee. The Allocator allocates the Actual Reward to the Rewardee. The
Observer measures the fairness or unfairness of the Actual Reward obtained by the
Rewardee, producing the Justice Evaluation. The Observer’s evaluation produces the Justice
Consequences. In a justice situation, an individual may play one, or two, or all three parts.

HCM involved in creating distribution decisions in the organizations and distributive

justice has been used to assess employee perceptions of the justice of HCM. The distributive
justice in the HCM perspective has considered the fairness human resource systems for
example pay, selection, promotions, benefits, performance evaluations, and raises. Flint &
Haley (2013) in the article of Distributive justice in human resource management: A
multisystem approach explained the relationship between perceptions of pay and distributive
justice.

Fairness in the HCM process is important as every employee deserve to be treated

fairly. Human resource play a major role in encouraging fairness in the organizatuon to
ensure that moral and ethical behaviour are implement. For example, the human resource
manager need to support employees from being misuse to protect the top management.
Human resource must ensure that every one in the organization are treated fairly and
accordingly regardless of gender, race, position, religion and etc.

HCM play an important role in making a fair judgment during decision making
process. In the recruiting process, evaluating candidates and other human resource decision it
is important to be fair because during the process human is the main decision making tool.

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For example, during the interview process, it is possible the decision made by human itself
biased or flawed because humans evaluating other human, they may favour some candidates
during the interview process without looking at the candidates skills and competency for the
job vacancy. The interviewer may look at candidates’ religion, race, ethnicity and etc.

ETHICS OF RECIPROCITY

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 Reciprocity defines as a norm of action fundamental to all social orders according to
Mauss 1990. In relation to Human Capital Management, reciprocity describes an employee's
motivation to give their best efforts when the employer makes a good faith effort to treat the
employee well. Reciprocity theory believes that individual is born to be involved in various
interactions (Nowak and Sigmund, 2005). If an individual believes that the interacting partner
is trustworthy and will be able to meet their needs, they will most likely provide some
benefits to the other interacting individual. Many studies have shown that humans behave
reciprocally within organizations and communities, which implies that the more they acquire
and benefit from their surroundings, the more they contribute to their environment. This
concept's application in business is that human resource management should assist the
organization in creating value via its workers and, in turn, assist the firm in creating value in
the lives of its employees.

How is reciprocity applied in organizations based on Human Capital Management

guidelines? According to the research, reciprocity in social exchange among employees, most
prominently in helping and co-working behavior. It is an important driver of cooperation in
organizations, as helping behavior largely depends on the degree to which employees receive
assistance from their colleagues. Rules of reciprocity are often violated by unfair actions in
general and free-riding more specifically. Observations in the organization show that a work
environment based on reciprocity results in a respectful attitude among employees because
they receive positive feedback on the positive actions they perform for others. Furthermore,
the ethics applied based on reciprocity have been proven to have a good influence on
organizations and employees in terms of increased employee trust and group cohesion
intensifies. Cooperation and understanding among employees in the organization will create
comfort and increase their productivity while working. Employers can also see stronger
bonds develop between employees and employers as generalized reciprocity unlocks hidden
resources in worker groups at regular intervals. In other words, worker feelings are lifted and
improved. Employees begin to like co-workers, directors, and the organization more, and
intrinsic heightened their motivation to fully engage in work.

Reciprocity ethics have a very wide range of potential applications in Human Capital
Management. The notion of reciprocity is founded on our strong internal sense of obligation.
When someone does something nice for us, we feel grateful and obligated to do something
pleasant for him in return. Most of us have already used an example of reciprocity ethics to
ask for help from others. Humans have a tendency to show a good and positive attitude

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before seeking assistance from others. They will use polite language, maintain a friendly
demeanor, smile, and exhibit positive body language. Human believes that by demonstrating
good ethics, others will be more willing to assist.

Another example is in the workplace, where when an employer or manager creates a good
work environment, such as providing a comfortable workspace and respecting employees,
employees are seen to respond positively by cooperating, obeying instructions, and meeting
the manager's needs in carrying out tasks. Employers who provide a conducive and
comfortable work space such as providing coffee machines, free drinks, or sometimes buying
food for employees can improve mood, motivation and improve their collaboration with
employees. Giving rewards to employees is another example of workplace reciprocity
principles. Employee contentment and motivation to accomplish jobs more sincerely and
efficiently can be increased by rewarding employees.

ETHICS OF SELF-ACTUALIZATION OR EUDAIMONISM

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 Self-actualization is the complete realization of one’s potential, and the full
development of one’s abilities and appreciation for life. Merriam-Webster has defined Self-
actualization as a process by which one can fully develop and use his/her abilities. As per the
American Dictionary “New Oxford,” Self-actualization is considered as everyone’s need or
drive for the fulfillment of their own potential and talent. According to Abraham Maslow,
Self-Actualization is the intrinsic growth of what is already in the organism, or more
accurately, of what the organism is. Self-actualization implies the attainment of the basic
needs of physiological, safety/security, love/belongingness, and self-esteem.

Eudaimonism is a moral philosophy that defines right action as that which leads to the
well-being of the individual, thus holding well-being as having essential value. The term
eudaimonia is a classical Greek word, commonly translated as "happiness", but perhaps better
described as well-being or human flourishing or good life. It simply translates as "having a
nice guardian spirit." Eudaimonia as the ultimate goal is an objective, not a subjective, state
that marks a well-lived life, regardless of the individual experiencing it. In a general context,
Eudaimonism can be defined as an ideology that places personal pleasure and the entire life
of the individual at the core of ethical concern. As a result, it is related to ethical
Individualism and Egoism. In the psyche of each individual, self-actualization and
eudaimonism have a relationship in deciding attitude, self-belief, confidence, and happiness.

According to Abraham Maslow’s principle of Self-Actualization, there are 5

important factors related to self-actualization in HCM that affect employee motivation that
needs to be emphasized to meet the needs of the organization. Eudaimonism, or "happiness,"
in an individual is affected by elements that promote self-actualization. The most important
factor is physiological needs, which increase mood, motivation, and can inspire individuals in
the workplace. As an example, Allow for lunch and rest breaks, as well as wages sufficient to
purchase the necessities of life. Employees' confidence in their level of safety and health
while working in the organization is also influenced by their safety needs. This theory defines
safety needs as providing a safe working environment, retirement benefits, and job security.
Besides, Social needs have also been mentioned by Maslow as one of the factors that are able
to create a sense of community via team-based projects and social events. The final factor is
self-actualization itself, which is accomplished by providing employees with a challenge and
the opportunity to realize their full career potential and achieve top positions in their lives.

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 Self-actualization ethics and Eudaimonism can usually be emulated by famous figures
or leaders. If you are in Malaysia, the most popular and well-known leader in the world is
Tun Dr. Mahathir Bin Mohamad. He is the best example to explain the ethics of self-
actualization in his leadership in the organization or when dealing with the community. He
possesses all of the characteristics associated with Self-Actualization Ethics. He has a strong
sense of acceptance for others and for themselves. Because of this attitude, his personality is
widely embraced by the community and he has many loyal supporters. He is also creative and
can find humor in their own problems or mistakes. During press conferences where he is
required to explain political problems, he frequently injects humor into his statements. That
way, the community will understand and be interested in what he has to say. Furthermore, he
is naturally sympathetic to others. It is demonstrated when he is constantly aware of the issue
of Zionist persecution of the Palestinian people and attracts the world's attention by
denouncing irresponsible behavior.

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