CHAPTER 4

ETHICAL ISSUES IN HUMAN RESOURCE

MANAGEMENT
Chapter objectives

• Identify the dominant ethical principles that relate to HRM

• Contrast the rights and duties of employees with those of managers
• Describe the variety of workplace contexts within which
discrimination can occur
• Identify specific ethical issues during recruitment and selection,
compensation, engaging in the work environment, safety and health
and separation from an organisation
• Describe the characteristics of a ‘just’ work environment
Introduction
For most organisations, employees are their largest resource and
the most significant financial investment.

Good managers are attentive to ethical issues in relation to

human resources and have an overarching concern for fair and
proper treatment.

Ethical issues in human resource management involve not only

the rights and expectations of employees, but also the rights and
expectations of the employer.
Ethical principles in HR
• Rights of employees – the right to:
• a safe working environment
• fair compensation
• information
• consultation and to express one’s view
• fair treatment
• confidentiality and privacy
• equity and fairness.

• Respect – ensure that:

• all employees in an organisation demonstrate consideration,
esteem and deference
• staff are not subject to inequitable treatment or discrimination.
Ethical principles in HR
• Duties – of both the employees and the managers:
• occupational health and wellbeing
• expectation of honesty and integrity by all parties.
• Due process – ensuring adherence to appropriate
procedures and processes.
• Justice – ensuring equity and fairness in the
workplace.
• Environmental awareness – the pursuit of
sustainability in human resource practices.
• Confidentiality – upholding the confidence of
information and processes to protect privacy.
Ethics in recruitment, selection and promotion
• Deceptive applicant information –
providing false or deceptive information.

• Soliciting unwarranted information –

information sought from an applicant
must be related to valid criteria that
clearly relate to the job in question.

• Genetic testing –
relatively uncommon but has its origins
in 1938. Genetic screening in workplaces
was regarded as justified for public
health.
Ethics in the media: Deception in recruitment
Reporting on research from the global talent assessment
solutions firm, SHL, it appears that Australian managers are
three times more likely to lie about their qualifications than
other workers. 25% of employees surveyed embellished their
qualifications, earnings or experience on their resumes.
Ethics in recruitment, selection and promotion
• Discrimination occurs when preferential treatment is bestowed on
employees on grounds other than their qualifications or job
performance (Crane & Matten 2010).
Ethics in recruitment, selection and promotion

Forms of discrimination:
• Preferential discrimination – favouritism, cronyism, the old boys’
network and nepotism.
• Discriminatory discrimination – unjust or prejudicial treatment of
different categories of people. Discrimination can come in many forms
(e.g. on the basis of one’s age, gender, race, disability or pregnancy).
• Overt discrimination – where the criteria established for the job are
unrelated to the job, for example, all tellers working in the bank must
have blue eyes.
• Covert discrimination – where selection automatically reduces the
pool of applicants, while giving the impression of being objective (e.g.
the need to work after 6.00 p.m. or to travel extensively could prohibit
women with families).
Ethics in recruitment, selection and promotion
Nepotism (a form of preferential discrimination)
In an unfortunate circumstance which hinted at both nepotism and
an abuse of power, a Vice-Chancellor of the University of
Queensland and another senior officer at the University accepted
responsibility for a decision that, while not requested nor made by
the Vice-Chancellor, was deemed inappropriate. The person who
received favourable treatment was a student and a close relative of
the Vice-Chancellor.

The Queensland Crime and Misconduct Commission upheld the

university’s process and the outcome was the unfortunate
resignations of two very competent individuals.
Ethics in recruitment, selection and promotion
Types of discrimination
• Sex/gender
• Age
• Impairment/mental disability
• Marital/parental
• Racial
• Pregnancy
• Religious
• Sexual orientation
• Industrial activity
Ethics in recruitment, selection and promotion
• Glass ceiling
When an otherwise qualified
person reaches an invisible barrier
that prevents promotion or salary
increases, they are said to have
reached a glass ceiling.
Ethics in the media: Glass ceiling
‘Women account for 60% of new graduates in the EU and are entering
many occupations in roughly equal numbers with men. But with every
step up the ladder, more of them drop out and near the top they almost
disappear.’

‘Women in business’ 2012, The Economist, 10 March, p. 65.

Ethics in recruitment, selection and promotion
• Affirmative action programs
The premise of affirmative action is that due to power imbalances
caused by ingrained discrimination, injustices cannot be remedied
without radical intervention to support disadvantaged groups.

Reverse discrimination is where the affirmative action policies and

processes, in turn, have a discriminatory effect resulting in the
majority, or dominant group, experiencing inequity and unfairness.
Ethics in recruitment, selection and promotion
Gender equity
A New South Wales Law Society report regarding the advancement of
women in the legal profession shows that they:

• hold 60% of graduate positions at top law firms

• account for 53% of all lawyers at the same firms
• represent 19% of partners
• represent 11% of females receiving equity in commercial practice.
Ethics in the media: Gender equity
In 2011, the European Union’s Justice Commissioner, Viviane Reding,
encouraged publicly listed firms to sign a pledge to increase the
proportion of women on their boards to 30% by 2015, and 40% by
2020. These are ambitious targets.
Ethics in recruitment, selection and promotion
Diversity programs
The goal of diversity is to ensure an organisation recruits to
reflect the broad spectrum of society.

In recent years, diversity has expanded to include a broad range

of employees.
Ethics in compensation and reward

Pay equity is the biggest issue.

Meritocratic pay systems

Where superior performers receive higher raises and bonuses
than mediocre workers. Performance-related pay is linked to an
index or indices of job-related performance.

Excessive executive pay

Senior managers’ compensation packages that are deemed large
relative to compensation paid to other workers.
Ethics in the media: Executive pay
In the UK between 1998 and 2010, executives saw a 300% increase in
pay, while median workers’ wages stagnated. These trends mean that
executive pay at FTSE 100 firms jumped from 47 to 120 times average
pay in 12 years.
Ethics in the media: Excessive compensation
Virgin Australia’s Board was rebuked for what is described as a high
level of pay for its Chief Executive at the airline’s annual meeting in
October 2013, where shareholders were urged to vote against
Virgin’s remuneration report and the granting of share options.

The CEO’s statutory annual pay totalled A$3.7m – in a year in which

Virgin produced a A$98m loss. The CEO’s fixed pay was deemed to
be 70% higher than the median of his counterparts at similar sized
companies (O’Sullivan 2013).
Ethics in the media: Executive pay
Ralph Norris, Chief Executive of the Commonwealth Bank of
Australia, is corporate Australia’s highest paid boss, with a total
remuneration package of $16.2m, of which $4.98m is paid in cash
and the balance deferred based on performance hurdles (‘CBA’s
Norris tops field’ 2010).
Ethics in the media: Executive pay
After a barrage of criticism, Steven Hester, the then Chief Executive
of the Royal Bank of Scotland (RBS), waived his bonus of £963 000
(US$1.5M) in RBS shares, in acknowledgement that the bank was
bailed out in 2008 with taxpayers’ money.
Ethics in the media: Executive pay
Frank, Peter and Steven Lowy have been criticised for their big salaries
from the Westfield Group, but Frank Lowy believes that their personal
wealth, some $6.86bn, should not determine their salaries, and they
are unwilling to work for less (‘Frank Lowy’ 2013).
Ethical issues in the work environment
Unethical work practices by employees

• Misuse of company time and property

(e.g., social media blurs the boundaries)
• Concurrent employment
(e.g., two jobs at the same time)
• Employee interference
(e.g., damage)
• Misappropriation
(e.g., stealing)
• Employee fraud
Ethical issues in the work environment

Unethical work practices by employees

• Employee sabotage

• Employee surveillance
Employers have the right to monitor employees to ensure safety and
production. However, in addition to the obvious concerns of violation
of privacy, it appears that there are further negative consequences of
monitoring employee computer use, including reduced health,
increased stress and decreased morale (Miller & Weckett 2000).
Ethical issues in the work environment
Employee surveillance
Academics at the University of Warwick who
have come from outside the European Union
were asked to state their physical location on
each day. The University also planned to monitor
the location of foreign staff via an email system.

Apparently a number of universities in the

United Kingdom have adopted electronic
monitoring systems, including swipe cards,
to track their non-EU students. As yet,
these initiatives have not extended to staff
(Grove 2013).
Ethical issues in the work environment
Informed consent
For consent to be deemed true consent, the individual providing the
consent must be:

• considered – the person has fully considered all the ramifications

• consensual – consent is given on a voluntary basis
• capable – the person has the mental capacity to provide consent
• current – the consent is relatively recent.
Ethical issues in the work environment
Workplace flexibility
• Flexible work arrangements
Given the cost of office space and the increasing desire for flexibility,
teleworkers, or telecommuters as they are sometimes called, are on
the increase.

• Flexibility stigma
The backlash from engaging in flexible work arrangements.
Ethics in workplace safety and health
Ergonomics
Broadly speaking, ergonomics studies the efficiency of
individual work environments.

Stress and mental health

The Australian Bureau of Statistics (2008) indicates that Australians
have a 20% chance of experiencing mental health issues.
Ethics in the media: Workplace stress
The National Tertiary Education Union declared 21 November 2012
‘go home on time’ day, after a survey found 75% of non-academic
staff reported medium to extreme work-related stress, and 63% said
it had contributed to illness.

In the survey, 28% said that work-related stress had contributed to a

deterioration in family relationships, and the same proportion said it
had been a factor in their decision to change jobs or leave
(Rowbotham 2012).
Ethics in the media: Workplace stress
In an occupational stress survey of 14 000 university
employees in the UK, on a scale of 1–5, with 1 being the
highest stress level, university staff exhibited stress levels of
2.51. Stress levels have worsened in the 4 years since the
Health and Safety Executive’s Report.

The stress levels were attributed to workloads, management

issues, long hours culture, increasing expectations of students,
and demands for research (Grove 2012).
Ethics in workplace safety and health
Sexual harassment
is where unwelcome sexual advances are made (either verbally or
physically).
Ethics in the media: Sexual harassment
A Human Rights Commission Report shows 74% of
women and 30% of men experienced unacceptable sexual
harassment at the Australian Defence Force Academy;
ranging from being whistled at, to 2.1% of female
candidates experiencing rape.

At the ADFA many of the affected individuals had not

sought to formally complain as, in the military culture, it
was perceived as showing weakness, where toughness is
valued (Bennett 2011).
Ethics in workplace safety and health
Bullying
Workplace bullying has been defined by Victoria Legal Aid as
persistent, unwelcome behaviour, mostly using unwarranted or invalid
criticism, finding fault, exclusion or isolation.

Bullying is a significant health and safety issue, for which employers

are being held responsible.

For a self-test go to:

<www.bullyfreeatwork.com/blog/?page_id=31>.
Ethics in the media: Work place safety
A labourer in a building frames company in Sunbury alleged that he
had:
• been hit with a piece of wood about 30 cm long
• been frequently fired at with a nail gun by a supervisor
• had his pay docked for taking a colleague to hospital who had
shot himself in the leg with a nail gun
• had his pay regularly docked on other occasions for taking too long at
a task or cleaning tools
• been warned, with other staff, not to join the union (Shneiders 2010).
Ethics in the media: Karachi factory fire
Hundreds of employees were killed when a fire broke out at a
clothing factory in Karachi, Pakistan. The building had no
emergency exits, and the employees were unable to get out
through the windows, which were barred by metal screens. The
Karachi factory fire is considered one of the world’s worst (‘The
world this week’ 2012).
Ethics in the media: Factory fire
A fire at a chicken factory in Dehui, in China’s northeastern Jilin
province, killed at least 119 workers. Two of the building’s three exits
were locked at the time of the accident, probably as a precaution
against theft. Industrial accidents are common in China, but this one is
thought to be the deadliest in 13 years (‘No regard for safety 2013).
Ethics in workplace safety and health
Violence in the workplace

Going postal is a popularised term for employees who assault or kill

fellow workers.

The phrase was coined after Patrick Sherrill, a postal worker who killed
14 co-workers and then himself in August 1986 (Bell n.d.).
Ethical issues in separation
Voluntary departure
When an employee consensually leaves the company, usually for
another job with few ethical issues, one consideration is the form and
content of a letter of reference that the departing employee may
request. For a manager, the ethical issue is of honesty in their
assessment of the former employee and their willingness to
communicate this assessment.

Retirement
Follows a period of service.
Compulsory retirement at a set age does exist in some industries (e.g.
airline industry).
Ethical issues in separation
Layoffs
Occur as a result of technological, financial considerations.

Dismissal
Occurs as a result of poor performance or disciplinary action.
Consider whether the dismissal is consistent with policy, and whether
due process has been undertaken prior to dismissal.
Ethics at the movies
* The Devil Wears Prada

Starring Meryl Streep and Anne Hathaway.

A fashion magazine editor exhibits chronic bullying behaviour, as

evidenced by her unrelenting and unreasonable demands on her staff.

The Devil Wears Prada 2006, motion picture trailer, Finerman, D, <http
://www.youtube.com/watch?v=_3bNWtXhH8o>.

* Author’s pick
Image credits
• Shutterstock.com / Nataly Bannykh; Cartoonresource; Cartoonresource;
Cartoonresource; Andresr; Cartoonresource; Gordon Bell; Cartoonresource;
Asianet-Pakistan