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Ethics in Human Resource Management



 Ethics is considering something to be morally right or wrong?  Ethics has much to do with moral, social, family values that someone possesses.  Ethically we take care that our actions may not adversely affect others, if that s not possible we should focus on minimizing negative effect of our actions on other members of society and environment.

Business Ethics
 Business ethics is referring to the moral evaluation of the goals, policies, practices, and decisions taken within business organizations as they impact on human wellbeing, fairness, justice, humanity, and decency. Here, the term ethics is synonymous with morality which is equal in general terms.  THE BUSINESS SHOULD NOT LOOSE ITS SOUL WHILE DOING BUSINESS.

 Every business has its own ethics, a specific

ethics that draws on general moral principles but refines and develops these in the light of its own particular goals, requirements, institutions, and objectives.  Ethics are important not only in business but in all aspects of life because it is an essential part of the foundation on which of a civilized society is build. A business or society that lacks ethical principles is bound to fail sooner or later.




malpractices Improve consumer confidence. Survival of business. Protecting employees, stakeholders. Developing good relation between business & society.


 Creating good image

of business.  Smooth functioning of business.  Consumer movement.  Consumer satisfaction  Healthy competition.

An Aristotelian Take on Business Ethics

 Aristotle was the most practical and businessoriented of all philosophers who asked ethical questions. He asked some questions some 2400 years ago, Aristotle tells us that acts are not ethical if they are accidental.  He described that our actions cannot be termed ethical if there is absence of our motive. So its very much important that there should be our proper motive behind our ethical actions

Aristotelian Questions for Corporate Leaders

 Am I behaving in a right way?  How would I want to be treated if I were a member of this 


organization? What form of social contract would allow all our members to develop their full potential in order that they may each make their greatest contribution to the good of the whole? To what extent are there real opportunities for all employees to learn and to develop their talents and potential? To what extent do all employees participate in the decisions that affect their own work? To what extent do all employees participate in the financial gain resulting from their own ideas and efforts?

Example of Aristotelian Business Ethics

 In 1996, David sun and John Tu, sold Kingston Technology

to a Japanese bank for $ 1.5 billion. They continued to manage the company and reinvested 50 million in company. They distributed $ 10 million among their 523 employees, along with sharing 10% of the company s profits with employees every year.  They told in an interview that money is really not important for them, what they care all about is human beings.  They also refused to take $ 333 million due after some years, because in that year company was not in profits and they let bank to give it in comparison to company profits in installments.

 Ethics in HRM is adapting ethical practices in each and every step of the Human resource management.  It means that right from recruitment, selection, salary & wages, fringe benefits, separation etc, at every step ethical practices must be adopted.

Individual factors Organizational factors The boss s influence Ethics policies and codes The organization s culture Unethical business environments can:  De-motivate individuals  Make good employees leave the company  Attract unethical employees  Lead to the lack of trust by the employees for the company

What Shapes Ethical Behaviour at Work?


 Recruitment of kith and kin, without assessing their abilities.  Recruitment based on getting financial favours from the candidates.  Recruitment of relatives of other employees.  Recruitment based on recommendations of friend, business associates and other persons close to the leader.  Recruitment of under-qualified persons due to lack of confidence in oneself.


 Recruitment of over-qualified persons due to    

market recession reducing the number of jobs in the market. Recruitment of unethical, tainted people, who would be ready to carry out the leaders nefarious acts with impunity. Recruitment of less acceptable men, when there are better suited women for the job. Employing children, when it is officially banned by the government. Giving less than minimum wages fixed by the government.


 Arranging training for only pet employees, whether they    

deserve it or not. Getting outsiders to train when there are several inside persons qualified and ready and available to impart the training. Planning training programmes without assessing the training needs of the employees. Organizing programmes during peak seasons, which would upset the work rhythm needed for achieving the firms goals. Getting high profile outsider trainers , in the hope that they will in turn call the training manager to their organizations for imparting training there.


 Starting training programmes in an ill- prepared

manner, because of leaders pressure for showing the task as completed in the firms annual report.  Extending the training programmes to allow the trainees to have a relaxed time, despite the fact that their work would be suffering.  Supplying outmoded and old training materials rendering the training in-effective.  Experimenting with the trainees by asking them to set their own time-table for training.


 Tampering with leave record of employees (this is more   

easily possible in large firms). Playing with employees records by placing adverse remarks in some files, while not in others. Allowing absenteeism to select few employees on personal considerations. Giving promotion letters to the favorite employee before giving to the others and thus making him senior than them (more useful in public sector or government firms, where even a days seniority matters). Office supply purchase is done by administration and the manager can find a favorite supplier on grounds of personal favors.


 There is a lot of interference from the top management in the working of administration, which can be used to cover up lapses of all types, deliberate or those happening by chance.  Administration is given the responsibility of carring out social commitments of the firm and if these are neglected for monetary gains, the firm would lose its credibility and its brand equity.  Workers uniforms are part of the responsibility of the administration as it gives the firm discipline and a distinctive character and delays in this area cause hardship, bad image.  Cleaning of the firms premises is the responsibility of the administration and an unclean place robs the firms of its credibility and brand equity.


Consequences of Good Ethical HRM

Jet Airways Case

unfolded in one of Indias leading aviation companies, Jet Airways (India) Limited in Oct 2008.  More than thousand employees were laid off in two days.  It was a part of major Cost-cutting exercise to tackle Global slowdown and price hike of Aviation fuel. Some Important Issues  Employees were FIRED with no PRIOR NOTICE  The entire force of unconfirmed staff was being laid off on a 30-day compensation package.  Company took action only against lower staffs.
 The case is about the retrenchment drama that

Jet Airways Case

Ethical issues.  Where would those 1900 employees go?  Why took action only against lower grade staffs?  Senior management was very less affected.  Why did the Jet CEO enter the competitive market, instead of playing down after foreseeing risks?


 The Manesar factory workers of Maruti Suzuki felt that the Gurgaon factory union does not represent them adequately. So they formed a new union, but management refused to recognize it and FIRED some leaders of new union in June 2011. workers went on strike and with the pressure from workers, management recalled FIRED workers.  But problem Again emerged in Oct 2011 when management asked all workers to sign GOOD CONDUCT bond, workers refused to do so.


 Workers were also not happy from 7.5 mint Tea break.  Management locked down factory and workers sit on a strike outside factory gate. Management took the help of police an several cases were registered against workers.  Then after many days of mediation & due to pressure from government, finally workers were agreed to sign the bond.


Questions For management  If its not unethical to force workers for a good conduct bond?  Why didnt they pay attention to workers demand of separate union or more participation in old union?  If 7.5 mins break is ethical?  Was police or government intervention was necessary? Questions For workers..  If strike was the only option available to them?  What was their problem in signing a good conduct bond?

Some important Guidelines for Fostering an Ethical Culture

 Have a well developed policy and procedures manual  Enforce policies  Reward compliance  Recruit ethical employees  If possible Create a division to oversee ethics(ethics officer).

 In the end we can conclude that ethical practices in human resource management is very much important, it attracts more & more talented applicants towards company.  Moreover it creates a good image of the company in minds of consumers and other members of the society.  Companies like TATA are at top of ethical table in INDIA.