Ethical Issues in HRM

In an organisation, Human Resource Management (HRM) plays a crucial role in maximising

employee performance with an aim to accomplish organisational goals and objectives. It
involves a number of activities such as recruitment, selection, training and development,
compensation, rewards, induction and orientation.

Thus, it can be said that the HRM function is related to the management of people in an
organisation. Any unethical issue in HRM may negatively affect employee motivation and
organisational performance.

Major ethical issues in HRM include inequitable performance appraisal and discrimination
of employees on the basis of age, gender, religion or disability. Apart from this, unfair
compensation practice is another area of concern, which leads to employee dissatisfaction.

There are a number of multinational organisations that run their businesses in both
developed and developing countries. However, these organisations barely compensate people
fairly. For example, an American transferred to India might get more salary than his/her
Indian colleague for the same job.

Major Ethical issues in HRM are as follows:

1. Unfair Performance Appraisal

The performance appraisal system is the most significant factor of an employee’s work life. It
is directly related to the increment in compensation, promotion and recognition of an
employee.

On the other hand, it is indirectly related to job satisfaction, employee morale, motivation,
productivity and industrial relations. Unfair performance appraisal may adversely affect the
level of job satisfaction and motivation of employees.

2. Discrimination in Employment
It is unethical to make distinction among individuals on the basis of caste, colour, sex and
creed while selecting them for jobs. Such discrimination is generally based on personal
perceptions of the recruiter. For example, a recruiter may be more inclined to select a
candidate who belongs to the same community as that of the recruiter.

It is a serious unethical practice related to HRM as the selection should rather be done on
the basis of skills, performance, education or knowledge. Such unethical practices affect the
productivity and quality of tasks within an organisation.

3. Discrimination in Employment
It is unethical to make distinction among individuals on the basis of caste, colour, sex and
creed while selecting them for jobs. Such discrimination is generally based on personal

Dr. Simran Kaur, Assistant Professor, Department of Law, MAIMS 1

perceptions of the recruiter. For example, a recruiter may be more inclined to select a
candidate who belongs to the same community as that of the recruiter.

It is a serious unethical practice related to HRM as the selection should rather be done on
the basis of skills, performance, education or knowledge. Such unethical practices affect the
productivity and quality of tasks within an organisation.

Similarly, an organisation also has its privacy rights. It is not compulsory for an organisation
to share or disclose all crucial details to stakeholders. If an employee, without the consent of
the organisation, discloses any official record or information to any other
person/organisation, he/she can be found guilty of the breach of confidentiality and privacy
rights of the organisation.

4. Safety and Health Issues

Employees are the assets of any organisation; therefore, it is the responsibility of
organisations to provide them with a safe and healthy work environment. Any type of
intentional harm to the health and safety of employees or any person at the workplace is
unethical.

For example, Nike Shoe Plant in Vietnam was in focus for a long time for the poor safety and
health conditions, and the employees were forced to work under such conditions.

As per an inspection report given by Ernst & Young, workers at the factory near Ho Chi Minh
City were exposed to carcinogens that exceeded local legal standards by 177 times in parts
of the plant and that 77 per cent of the employees suffered from respiratory problems.
Organisations take various measures for the health and safety of employees, such as
prevention of accidents, arrangement of clean drinking water, hygienic toilet facilities, etc.

5. Unjustified and Discriminative Work Conditions

Poor employment conditions cause various ethical concerns in organisations. These
conditions may lead to stress, work pressure and adverse work practices. Some working
conditions causing ethical issues are discussed as follows:

• Cultural Diversity
It refers to the difference in culture among employees at a workplace. This restricts support
and cooperation among employees.

• Unjustified Dismissal
It refers to the termination of employment without any valid reason. This can be a forced
discharge or dismissal of an employee from his/her job.

Dr. Simran Kaur, Assistant Professor, Department of Law, MAIMS 2

 • Violation of Privacy Rights
It involves disclosure of an employee’s confidential or sensitive information, illicit access into
his/her personal accounts or property, etc.

• Unfair Compensation
It involves the payment of basic salary, bonus, incentives or any other form of due
compensation in an unfair and unjustified way.

• Layoff Discrimination
It refers to a partial and unfair approach during layoff. For example, people drawing higher
salaries are generally the first ones to be laid off.

• Glass Ceiling Practices

The term ‘glass ceiling’ was coined in 1986 by Hymowitz and Schellhardt in a Wall Street
Journal report on corporate women. The term is used to denote a concept, according to
which, women who aim to attain senior positions in various fields, such as corporate,
government, education etc. face multiple barriers as compared to men.

In other words, according to this concept, ‘glass ceiling’ acts as an invisible ceiling beyond
which women employees cannot rise in an organisation.

6. Sexual Harassment
It is one of the major unethical issues that typically affects female employees in an
organisation. Such type of harassment can force employees to work under hostile conditions
that may include the use of abusive behaviour or language. Considering the severity of such
harassment cases, the Government of India has announced a ‘zero tolerance’ policy for
violence against women.

Dr. Simran Kaur, Assistant Professor, Department of Law, MAIMS 3