Ethics and HRM

Prithwiraj Deb

Ethics, Morality and HRM
Ethics is the study of morality Morals are the standards used to judge right

and wrong Human resource management (HRM) is

the strategic and coherent approach to the management of an organization's most valued assets - the people working there

Costs of Corporate Ethics Violations
$7 trillion in stock market losses Loss of jobs and retirement savings of

employees

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

Over the last decade, ethical scandals in

business have been on the rise:
Enron WorldCom Tyco Big tobacco Satyam

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

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 top with the CEO being Must come from the
directly involved in its development Top management must actively disseminate the values statement and then live by it

HR Responses
Take steps to eliminate and discourage

reasons for misbehavior and introduce and encourage reasons to behave ethically Develop an appraisal system that rewards individuals for ethical behaviors and punishes those who act unethically HR can use its expertise to communicate with the workforce to get out the ethical message

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

Thank You

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