ETHICS AND HRM

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

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