ETHICS AND

STAKEHOLDER
(DCE5635 ETHICS IN
HRD)
GROUP 2:
1.Deeneswary a/p Kanasin (GS52512)
2.Mariana Yahya (GS55202)
3.Norhazlina Mohamad (GS56227)
4.Noor Hafida Mohammad
Sohami (GS55197)
5.Nurulhuda Ismail (GS56252)
6.Okosun Precious Ose (GS54433)
 Content of Presentation
ETHICS IN HUMAN RESOURCE MANAGEMENT

ETHICS WITH CUSTOMERS, COMMUNITY AND ENVIRONMENT

Customer vs Consumer, Customers/consumers as Stakeholder, Definition
of Customer’s Ethics , Customer Service Code of Ethics, Company’s
Responsibilities, Consumer’s Responsibilities, UN Guidelines on Consumer
Protection 1985
Ethic in Community, Ethical Community Practice, 4P's of Ethical Busines-
ethics in Crisis Management, Ethics and Environment, Ethical Practices
ETHICS AND STAKEHOLDER towards Environment
The Relationship, Ethics in Human Resource ETHICAL DILEMMAS BY STAKEHOLDE
Management; Ethics in Human Resource What is ethical dilemma, A Study on Ethical
Development, Dilemma, Situation of Ethical dilemma in
stakeholders

INTRODUCTION
What and Who is
CONCLUSION
Stakeholders? The How Corporates Can Observe
Stakeholder’s Theory AND The Ethics to Reduce Dilemma?, How
Importance of Ethics in To Create An ethical Environment?,
Stakeholders How To Resolve Ethical Issue?,
Overall Conclusion
 WHO ARE STAKEHOLDERS?
• These are member of groups without whose support the organization would
cease (stop) to exist. They are individuals linked to an organization for its
growth and success.
• Stakeholders are individuals or groups who have an interest or some aspect of
right in an organization’s project, can contribute in form of knowledge or
support, or can impact or be impacted by the project (Bourne, 2005).
• People or small groups with the power to respond to, negotiate with, and
change the strategic future of an organization (Eden and Ackermann, 1998).
• They are any individual, group, or party that has an interest in an organization
and the outcomes of its actions.
• Any action or decision taken by these set of individuals concerning an
organization is very vital and can lead to either its increase or decrease.
 TYPES OF STAKEHOLDERS

01 There are three(3) types of stakeholders and they are as follows;

Primary Stakeholders: These are internal stakeholders, they engage in economic
transactions with the business. Examples of this type of stakeholders are,
stockholders, employees, suppliers, creditors and customers.

02 Secondary Stakeholders: They are usually external stakeholders, this simply

means they do not engage in direct economic transaction with the business.
These individuals are also affected by or can affect the actions of an organization.
Examples are, general public, communities, media, etc.
Excluded Stakeholders: Involves children or disinterested public, they have no
03 economical influence on the business. These people are connected to an
organization one way or another.
STAKEHOLDER THEORY
•The Stakeholder Theory was first
described by Dr. F. Edward Freeman in
his landmark book, “Strategic
Management”.
•This is a theory of organizational
management and business ethics that
accounts for multiple constituencies.
•The Stakeholder Theory implies that all
stakeholders (individuals) must be
treated equally regardless of what they
bring to the table.
•It addresses morals and values in
managing an organization and everything
linked to it.
THE IMPORTANCE OF ETHICS IN STAKEHOLDERS

• Better Interaction

• Effective Teamwork

• Credibility

• Improving Decision Making

• Uniting People and Leadership

• Long Term Gains

 WHAT IS ETHICS?

ETHICS It derives ETHICS IN

Are those values, which philosophica HRM & HRD
l aspect as
imbedded within an
individual that helps to 02 basis for ETHICAL
04 Indicates the
treatment of
distinguish between moral TREATMENT employees
right and wrong and to obligations With ordinary decency
act accordingly and duty or reinforced or in the
distributive justice
AREAS OF HRM ETHICS
•Basic human rights
•Safety in workplace
Derived
RESOURCES OF •Privacy
from Greek STAKEHOLD •Justifiable treatment to
01 words ethos
means
ETHICS
Religion, organizational
03
ER employees (equity and equal
culture, legal obligation, In HRM & opportunity)
character education environment or HRD •Respect, fairness and honesty
even from personal Employees based process in the workplace
experience. are the
stakeholders
 DIFFERENCES
HRM AND HRD
HRM
The process of managing
human talents to achieve
organization’s objectives.
It is mainly a maintenance
system that aims to improve the
HRD
efficiency of the employees
• The integrated use of training
and development, career and
organizational development to
improve individual and
organizational effectiveness.
• a series of activities that
support behavioral change and
learning opportunities for
employees
HRM
• Critical distinction with HRD
part of management concerned with
people at work and their relationship
within an enterprise.
• The role is to plan, develop and
administer policies, programs and
making quick use of an
organization’s HR
HRD
It is the framework for helping
employees develop their personal and
organizational skills, knowledge and
abilities
BASIS OF DIFFERENTIATION
Can be observed in the following slide
 The affirmative moral obligations of
the employer towards employees to
maintain equality and equity justice
Do not treat employees
simply as mean for
The definition of HRM clearly says organization purposes
that organizational interest cannot be without their full and free
compromised while doing justice to consent
employees and vice versa

HRM
STAKEHOLDER THEORY & HRM ETHICS HARD AND SOFT HRM
ETHICS
Hard HRM where employees are
The corporation and its managers are
viewed as means to achieve
responsible to the effects of their actions
organizational goals
on others
SOFT HRM where employees are
AND
viewed as subject-in-themselves –
The corporation should be managed for
promote employees’ rights,
the benefit of the stakeholders
empowerment, participation
THE DIFFERENCES
OF HRM AND HRD
BY RICHMAN (2015)
 Organizational
stakeholders
is significance POWE
concept R
Power is importance
Definitions within to understand
organization within stakeholder

ETHICS &
Employees as claimants, depiction of a moral
and the organizations employment relationship
owes perfect/imperfect Power used and can be
duties – which later seen as
moral duties STAKEHOLDERS abused

Ơ The nature of Ơ Code of business

relationships; conduct;
Ơ The practical point Ơ Case organizations
of view,
Ơ The implications of
being unethical to
every parties;
HRD Professional holds
on several ethical
principles (Byrd, Hughes &
Claretha (2015)
ETHICS OF RIGHTS
Basic rights: freedom of speech, freedom of religion
ETHICS OF UTILITY
grounded in the moral duty to make decisions that
benefit the greatest number of those involved and
minimize harm for all others
ETHICS OF VIRTUE, (ARISTOTLE)
grounded in the character and/or dispositions of the
individual taking action in a matter or an event
ETHICS OF JUSTICE, and
fundamental principle of distributive justice (Rawls
2005) people have a moral duty to ensure equity,
fairness, and impartiality in their associations with
others
ETHICS OF CARE
moral duty to transcend self and seek the value of
relationships.
 THE RELATIONSHIP OF STAKEHOLDERS
Employees have
Stakeholder Theory SIGNIFICANT
DOES NOT INFLUENCE on the firm
SEPARATE the and therefore can be
business ‘logic’ form identified
ethics and making AS HIGH POWER
analysis as ‘value “INFLUENCER”
free’ stakeholders Employees are
Ethical in HRM & greatly affected by
HRD is either the success/
occurred at failure of the firm
Stakeholder Theory
MICRO/MACRO DEFINES BUSINESS MODELS
LEVEL EMPLOYEE
ENGAGEMENT
especially on how
Stakeholders in practices are a
organization makes
organizations are significant feature
customers, achieving vision
HUMAN BEING of many
and mission, makes
organizational
suppliers, employees,
approach
communities and financiers
better off
MODEL OF CONCEPTUALIZING EMPLOYEE
ENGAGEMENT & ETHICAL HRM

Greenword, M. & Freeman E. R. (2011)

Ethics and HRM: The Contribution of Stakeholder
Theory
 A MODEL OF EMPLOYEE ENGAGEMENT AND ETHICAL

EMPLOYMENT AT WILL PATERNALISM

The organization not be seen as
object of loyalty or having any
moral status and profit is main goal
of its existence.
E.g.: HARD HRM
The implication where the
organization would have no moral
obligations distinct from its legal
obligations to the employee
Employment relationship when
employers provided for the welfare of
their employees.
It restricts the freedom of individuals by
imposing well-intended regulations and it
midway between treating employees as
commodity / as resource

Unethical HRM: There is likelihood organizations will engage employees NOT WITH the purpose of
furthering the interests of the employee group BUT RATHER with the intention of furthering the interests of
another group, that of the SHAREHOLDERS.
So, given THE POWER BASE & SOPHISTICATED RESOURCES – stakeholder engagement practices are usually &
actively controlled and being manipulated
 • The applications continue to be rights theory.
THE • Employees have the rights to meaningful work
APPLICATIONS OF • SUPPOSEDLY The view of ethical HRM implies NOT
ETHICS IN ONLY ON THE RIGHTS, interests and the intent to
HRM/HRD furthering the interest of the employees BUT ALSO involving
employees in decision making
ETHICS
WITH
Customer
Customers/Consumers as Stakeholder
• Customers/consumers are key stakeholders that help establish
the company's reputation and identification.
• The relationship between a customer/consumer and a company
exists because of mutual expectations built on trust, good faith,
and fair dealing in their interaction.
• Principles of business ethics:
Rule of publicity − explain the people clearly
Rule of equivalent price − customer should get proper value for
their money.
Rule of conscience in business − must have conscience while
doing business, i.e. a morale sense of judging what is right and
what is wrong.
Rule of spirit of service − must give importance to the service
motive.
Definition of Customer’s Ethics
 A set of ethics that service providers follow to ensure that they treat
their customers with respect.

 Customer is treated with respect and fair regardless of her age, religious or cultural
background, race, sexual orientation, socioeconomic class or history with the
company.
 Customer confidence and spending will determine the success of the business.
 Company should prioritize customers interest and produce reliable products which
beneficial to customers.
 When customers believe that the company is ethical, the inducements and
special treatments received are seen in a positive light and
can help develop loyalty.
 Studies have indicated a strong relationship between salesperson’s ethics and
customer trust and satisfaction with service (Lagace et al., 1991; Roman and Ruiz,
2005).
 A drive to solve Honesty
problems

Responsiveness

Loyalty
Customer Service
Codes of Ethics

Value
Transparency

Respect
Company’s Responsibilities

4. The duty to take

“due care” to
prevent any
foreseeable injuries

3. The duty not to

force or take
undue
or mishaps

advantage
2. The duty not to
misrepresent
or withhold

1. The duty to
inform
information
Consumer’s Responsibilities

Action Environmental Awareness

Critical Social Concerns Solidarity

Awareness
UN Guidelines on Consumer Protection 1985

The right to satisfaction of basic needs

To have access to basic, essential goods and services: adequate food, clothing, shelter, health care,
education, public utilities, water and sanitation

The right to safety

To be protected against products, production processes and services that are hazardous to health or life

The right to be informed

To be given the facts needed to make an informed choice, and to be protected against dishonest or
misleading advertising and labeling

The right to choose

To be able to select from a range of products and services, offered at competitive prices with an
assurance of satisfactory quality.

The right to be heard

To have consumer interests represented in the making and execution of government policy, and in the
development of products and services

The right to redress

To receive a fair settlement of just claims, including compensation for misrepresentation, shoddy goods or
unsatisfactory services
The right to consumer education
To acquire knowledge and skills needed to make informed, confident choices about goods and services, while
being aware of basic consumer rights and responsibilities and how to act on them.

The right to a healthy environment

To live and work in an environment that is non-threatening to the well-being of present and future generations
 Ethical
or
unethical?
 COMMUNITY
AND
ENVIRONMENT
 ETHICS - COMMUNITY
 Community also known as society
at large; area that can be BENEFICIAL
influenced by the company or Obligations and responsibilities
to create something beneficial
interacted with to achieve mutual to the surrounding
goal community including its
 Business and community need employees, customers, the
community and the
each other to survive that create environment as well as the
an interdependent relationship. interests of the company.

DECISION MAKING
Ethics toward community also
CORPORATE CITIZENSHIP/CORPORATE can be regard as an
obligations that must be
RESPONSIBILITY exercised in decision making
 concept whereby business organizations consider the in order to safeguard the
interests of society.
interest of society by taking responsibility for the impact
of their activities on customers, suppliers, employees,
shareholders, communities and other stakeholders as
BALANCE
well as their environment. This obligation shows that the Business shows commitment
to ethical behavior by
organizations have to comply with legislation and voluntarily
balancing stakeholder’s
take initiatives to improve the well-being of their employees needs and the needs of the
and their families as well as for the local community and community and protecting
society at large. CSR simply refers to strategies the environment in the
corporations or firms conduct their business in a way surrounding area.
that is ethical and society friendly.
 ETHICAL COMMUNITY PRACTICE
Support and promote Socially responsible
Respect laws, rights and companies are more
economic, physical,
values of people and cultures
social, health and human concern about the impact of
development their business in society
than financial matters and
not focus on the shareholder
wealth maximization (single
objective function of
business) where profits
more than social
responsibility
“Is wealth production really the
goal of business, as some
economists say, or is wealth a
by-product, an incentive en
route to other ends? When a
corporate mission statement
contains only one goal – to
create shareholder value – has
an essential ingredient been
lost?”(Kanter, 1991, p. 10)
“Money should never be
separated from mission. It is an
instrument, not an end.
Detached from values, it may
indeed be the root of all evil.
Linked effectively to social
purpose, it can be the root of
opportunity”(Kanter, 1991, p. 10)
 4 P’S OF ETHICAL BUSINESS

PURPOSE
A create environmental and B PRINCIPLES C PRACTICE D
PERFORMANCE
social as well as financial honesty, fairness, reflects the application MESUREMENT
wealth occurs most explicitly caring, courage of purpose and demand to report on
in those businesses that
principles and most their performance;
respond to the challenge, for
business to identify and challenging part, ethical accounting and
respond to environmental choose carefully which ethical scorecard
and social needs by to focus
transforming these problems
into opportunities. (Drucker,
1984)
 ETHICS IN CRISIS MANAGEMENT
 A crisis interrupts the normal flow of business and requires immediate attention from the management,
because it might cause major damage to the organization.
 A crisis can create threats to public safety, financial loss and reputation loss, and these threats are
interrelated.
“the perception of an unpredictable event that threatens important expectancies of
stakeholders and can seriously impact an organization’s performance and
generate negative outcomes.”
• Crisis management is designed to protect an organization and its stakeholders from threats and/or reduce the
impact of the threats.
• Crisis communication - dialog between the organization and its public(s) prior to, during, and after the
negative occurrence. The dialog details strategies and tactics designed to minimize damage to the image of
the organization.”  
 ETHICS and ENVIRONMENT
 Company’s policies and intention to reduce the environmental impact of
company’s and its value stream to levels that are healthy for the
company and for the environment now and in the future.
 Transparent for reporting data – data includes company’s environmental
reporting performance, adherence to environmental reporting
standards, compliance with investor, regulatory and stakeholder
requests for transparency.
 It is vital to measure company’s effectiveness addressing climate change
through policies and strategy, energy efficient operations, development of
renewable energy and other environmental technology (Greenhouse Gas
Emissions (GHG).
 Four main aspect; protect and respect, improve and sustain, prevent
waste and promote natural growth
 COMPATIBLE PREVENT COST
take into
activities prevent account the
compatible with destruction to environmental
ecosystem or the costs due to
environmentally environment products /
friendly services

ETHICAL PRACTICE
TOWARDS ENVIRONMENT

reduce
use efficient ecological
avoid using
resources and footprint, use of
toxic
recycling raw materials
substances
practices and and non
minimize renewable
materials
waste AVOID
EFFICIENT REDUCE
 ETHICS and ENVIRONMENT
Most significant environmental problems result from
unethical practice:
Disposal of waste - toxic air and water pollution
Ozone depletion
Greenhouse effect and global warming
Deforestation
Loss of biodiversity

Innovative trend in new ecology:

Green marketing
Environmental justice
Industrial ecology
 WHAT’S WRONG????? ETHICS IS
BEYOND LAWS AND REGULATIONS
 ETHICAL DILEMMAS IN
STAKEHOLDERS

 Ethical dilemmas are defined rather more narrowly, as

situations in which, on moral grounds, persons ought both to
do and not to do something (Braunack-Mayer, 2001).

 Ethical dilemma is a situation in which two moral principles

conflict with one another. Fictional or hypothetical dilemmas
of this kind are often used to assess the moral beliefs or
moral reasoning skills of individuals. Also called moral
dilemma (APA Dictionary of Psychology)

 Ethical dilemmas within work organizations often reflect

ethical dilemmas about society as a whole and the role and
organization of government in society. (H Pinnington, Rob,
& Campbell, 2007)
ETHICAL DILEMMAS IN
STAKEHOLDERS

Right or Wrong

Do or Do not
ETHICAL DILEMMAS IN
STAKEHOLDERS

(Perry, Moore, Barry, Clayton, & Carrico, 2009)

 Conducting Personal ETHICAL DILEMMAS IN
Business on Company Time STAKEHOLDERS
(eg: personal calls,
facebook, instragram, Employment issues
shoppe)
(pressure to hire friend
Taking Credit for Others' Work (eg: and relatives?)
bosses?, partner’s work, staff’s work)
 Remuneration, cash and Incentive Plans
Inappropriate and Harassing Behavior (to (how do we justify who should have salary
report or not, just mind our own increment or incentive? How do we
business?) choose who deserve for performance
appraisal or promotion)
Stealing on the Job (amend quotation?,
 Classified information (evaluation marks
upfront payment from supplier?)
of employee; performance report (LNPT),
EMPLOYEES (IN GENERAL)
personal data; properties, debt, discipline
cases)

 Safety and Health (when the justice is

denied to the victims by the organisation)

 Restructuring and layoffs (who would you

choose to stay)

HRD PROFESSIONALS
  Incorrect change by
ETHICAL DILEMMAS
cashier (should we  Resources (beds; IN STAKEHOLDERS
return them?) choosing between
patients, patients vs
Wrong price tag/same products
administrative work)
have two price (should you insist to  Rules versus praxis (difficult to act
pay for a lower price?) according to guidelines, voluntarily
breaking the rules, forced to act according
Returning broken products (you to regulations, justifying breaking the rules
accidentally break the product you – sometimes in emergency time, they need
just bought, would you return them to do what is right/what it takes to save the
or buy a new one?) patient’s life)

CUSTOMERS  Conflicts of interest (patient’s integrity,

professional secrecy)

 Work, myself or family? (front liners that

deal with Covid-19 viruses have to work
more hours, is it fair to family?)

 Determining when death occurs (when

should I stop the ventilatory machine?)

 Medical experiments (lab rat, testing

vaccines or toxic chemicals on animals)
HEALTH PROFESSIONALS
 Overprice and ETHICAL DILEMMAS
overclaim for a IN STAKEHOLDERS
product (norwex
microfiber cloth?, Right or wrong decision
slimming products, for an organisation (are
health products) they going to lose or gain
Using false or manipulating profit with that decision)
data in advertising (just put any
number to gain confidence in Conflict of interest (sells stock before the
customer) or unethical manner
rest of the public has a chance to know
to advertise (nasi lemak janda,
what's going on with the company, hire
lain janda lain rasa, what do you
relatives to sit in a certain position in a
think?)
company even though they are not
qualified)
Mark up price before a sale
BUSINESS (SHAREHOLDERS)
then reduce it to it’s original
price or just a bit lower (70 to
90% discount)

Use an influencer to promote

the products yet the influencer
does not even use the product
at all (nursajat?).

BUSINESS (MARKETING)
QUESTIONS? Friends, as students what ethical
dilemmas that you are facing now?
Students and lecturers are
stakeholders to education
organizations
What are lecturers ethical
dilemmas?
HOW CORPORATES CAN OBSERVE ETHICS
TO REDUCE DILEMMA?
HOW TO CREATE AN ETHICAL ENVIRONMENT?
Fernando (2012) suggests that to resolve an ethical question that creates
dilemma:

Utility Right Justice

Continue…
 OVERALL CONCLUSION
• Ethical solutions to business problems may have more than one right
solution or sometimes no right answer at all. So all stakeholders should act
rationally and responsibly to nature ethical business operations.
• An organization is ethical if it is recognized on basis of its corporate
excellence and good relationship with its stakeholders.
• Organizations should understand the ethical dimensions, reason and act
ethically and economically and incorporate ethical issues in all activities.
• Ethical leaders and individuals should consider long term consequences,
drawbacks and benefits of their decisions.
• Organizational and societal pressures, and a number situational factors
make it difficult for people to realize their own ethical aspirations, but we
must all try to be ethical in all our undertaking as individuals or corporates
because there is evidence of long term personal and corporate gains. .
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