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					MASTER OF INTERNATIONAL
     BUSINESS (MIB)
  HUMAN RESOURCE MANAGEMENT (TPM516M)
             Topic 9
        Ethical Issues and
    Human Resource Management
       Ethical Issues and Human
        Resource Management
I) ETHICS IN ORGANISATIONS
II) CATEGORIES OF ETHICAL CONCERN
III) KOHLBERG’S MODEL OF MORAL REASONING
IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM
V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE
VI) ETHICAL DECISION MAKING FRAMEWORKS
VII) THE EMERGING ROLE OF HR PROFESSIONALS IN THE
OPERATIONALISATION OF CORPORATE ETHICS PROGRAMMES




                                                     2
        I) ETHICS IN ORGANISATIONS

A. INTRODUCTION
   – Ethical issues in HRM can be seen as multifaceted involving personal,
     professional and organizational considerations.
   – Promulgate an ethical culture in that ethics pervade selection and
     staffing, performance appraisal, compensation and employee retention.
B. DEFINITION
   – Ethics is defined as concerns with moral judgement and standards of
     conduct.
C. WHAT IS ETHICS
   – Ethics focuses on shared value systems that serve to guide, channel,
     shape and direct the behaviour of individuals in organizations.
   – Ethics serve the same general function as laws and accountability
     systems in society.
   – Ethics is about what is right.




                                                                            3
  I) ETHICS IN ORGANISATIONS (cont.)

D. ETHICS AND HRM
   – Ethics is the formal responsibility of people in the HRM function.
   – HR Practitioners must sustain ethical leadership through its training and
     development function.
   – Ethics is promoted through mission statements, ethical audits and
     codes of conduct.
   – Employees are required to think about and act on ethical issues that
     are supported by an organizational culture that encourages ethical
     awareness and debate.
E. ETHICAL DIFFICULTIES
   – Ethical difficulties are, inter alia, experienced when companies opt for
     overly aggressive financial objectives.
   – E.g. overly aggressive profit making can be as bad as too little;
     therefore get the appropriate balance between the two extremes.
   – Another example is bringing about immediate product loyalty by adding
     a highly addictive substance to your coffee.


                                                                                4
II) CATEGORIES OF ETHICAL CONCERN

A.       Perceptions of ethical issues
     –     When managers are faced with an ethical issue they seek to
           categorise it as a particular kind of issue.
     –     People need to be able to place events into categories to deal
           with the overwhelming mass of information.
     –     Categorisation is a tool for thinking that helps us deal with
           complex moral issues.
     –     How people think about ethical issues is effected by how they
           categorise issues.
     –     Categories of ethical concern define how a person reacts to a
           moral issue.
     –     Something might be ethical to one but at the same time
           unethical to another.


                                                                            5
 II) CATEGORIES OF ETHICAL CONCERN (cont.)

B.        Eight (8) categories of ethical concern are discussed below.
     1)         Ethical neutrality
            •       Person refuses to accept that there is a moral dimension to an issue.
            •       The issue doesn‟t bother his / her conscience.
            •       E.g. values that are seen by public officials as a source of irritation and
                    consequently they try to avoid them.
     2)         Ethical awareness and action
            •       Person feels uncomfortable because an issue at hand offends against
                    their own values.
     3)         Ethical Convention
            •       In this case an ethical issue is best resolved by applying conventional
                    rules and norms such as organizational policies or professional codes of
                    ethics.
            •       The person wants to know what is the policy or procedure to deal with an
                    issue such as redundancy.
            •       E.g. last in, first out may be a conventional rule to apply whenever you
                    deal with employee redundancy.



                                                                                                  6
 II) CATEGORIES OF ETHICAL CONCERN (cont.)

B.        Eight (8) categories of ethical concern are discussed below (cont.)
     4)         Ethical Puzzle
            •       Person seeks to obtain a technically correct or best answer to an issue.
            •       It involves much hard work and thought but there is little argument about the values
                    appropriate to resolving a particular issue.
            •       E.g. calling community meetings to finance medical priorities, without recourse to
                    political arguments.
     5)         Ethical Problems
            •       In this case a person may take action on a problem, but the action will not resolve
                    the difficulty – the problem may be ameliorated or modified, but it is unlikely to be
                    abolished.
            •       An issue is a problem when it involves many different values and principles which,
                    when taken in isolation make perfect sense, but which when taken together fall into
                    conflict.
            •       E.g. the need for downsizing and empowerment of staff.
     6)         Ethical Dilemma
            •       Person has to make a difficult or unpleasant choice between conventions (social
                    constructs).
            •       Person decides to act according to one set of conventional rules / norms, and at the
                    same time breaks another set of expectations.
            •       E.g. choosing to support one group, by accepting their rules and values, but
                    annoying another by offending against theirs.

                                                                                                            7
 II) CATEGORIES OF ETHICAL CONCERN (cont.)

B.    Eight (8) categories of ethical concern are discussed below (cont.)
     7) Ethical cynicism
          •      Person believes that all ethical issues will be resolved in ways that
                 primarily meet the private and personal interests of those involved.
          •      Person thinks it would be better to leave matters to capricious chance
                 than to try and improve things.
          •      Person puts blame on those who are trying to deal with an issue.
          •      E.g. tell the chairman you have nothing to say when asked to give your
                 opinion. After the meeting, tell everyone how things should be done.
     8)       Ethical negotiation
          •      Person searches for consensus or compromise between differing ethical
                 positions.
          •      It is not concerned with the rightness of a decision but with the
                 correctness of the process used to arrive at that decision.
          •      E.g. in the case of redundancy decisions, persons take great care to find
                 the views of all the parties and assess their capacity to create problems
                 for themselves. They will then do what those with the greatest weight
                 require them to do while keeping their own views private.



                                                                                             8
III) KOHLBERG’S MODEL OF MORAL REASONING

• Kohlberg argues that a person can develop
  robust ways of thinking about moral issues, but
  can also (on occasion) regress to earlier and
  cruder forms of thought.
• This model helps people to understand the
  varieties of moral reasoning available to them.
• The model has three (3) broad stages, pre-
  conventional, conventional and post-
  conventional. Each one of them has got 2
  substages.

                                                    9
III) KOHLBERG’S MODEL OF MORAL REASONING (cont.)


A. Pre-conventional
  1)    Punishment avoidance form of moral reasoning
       a.   Person avoids punishment and retribution from those more
            powerful themselves.
       b.   Person does what the boss wants him / her to do out of
            fear to upset the boss.
       c.   This form of reasoning relates to the category of ethical
            negotiation.
  2)    Psychological egotism form of moral reasoning
       a.   Person thinks about his / her own immediate self-interest,
            and is not concerned about others or about the long-term.
       b.   This form of thinking relates to the category of ethical
            neutrality.

                                                                     10
III) KOHLBERG’S MODEL OF MORAL REASONING (cont.)


B. Conventional
  1)       Social Affiliation form of moral reasoning
       •     Person considers the expectations placed on him /her by
             friends, family, colleagues and neighbours.
       •     E.g. attending church on a Sunday morning because that
             is what is expected in your neighbourhood.
       •     This form of thinking relates to the category of ethical
             awareness and action.
  2)       Institutional form of moral reasoning
       •     Person adheres to the rules, regulations and laws of the
             society, associations and institutions of which he / she is a
             member.
       •     Ethical issues are resolved by following the rules.
       •     This form of reasoning relates to the category of ethical
             convention.
                                                                         11
III) KOHLBERG’S MODEL OF MORAL REASONING (cont.)


C.    Post-conventional
     1)       Principled form of moral reasoning
          •      The person thinks through and determines for him- / herself a set
                 of principles that will guide his / her actions.
          •      These principles are set within a social context and often take the
                 form of an implied social contract.
          •      This form of thinking relates to the category of ethical puzzles,
                 because the person determines which value from a set of
                 competing values should be chosen to use as basis for solving a
                 problem.
     2)       Philosophical form of moral reasoning
          •      Person develops universal principles based on notions of justice.
          •      Person may challenge conventional rules that break the higher
                 requirements of justice.
          •      This form of reasoning relates to the category of ethical
                 problems.


                                                                                  12
 IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM



• The transformation of HRM from a
  traditional welfare, administrative and
  service role to a more strategic role
  presents dual loyalties to the field.
• HR professionals have to balance their
  dual membership in terms of their role of
  (i) fair and efficient management of
  people, and (ii) focussing on the economic
  rationalism of a company.

                                                      13
 IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM (cont.)



A. Problem of Dual Loyalties
• HR professionals see conflict between their
   role as (i) friends of the workers, and (ii)
   management‟s instruments of competitive
   advantage.
• Unitarist / managerialist view of HR – The
   interests of employees and their employers are
   the same; therefore a proper employee-
   employer relationship is one of partnership.
• Pluralist view of HR – Recognises the
   possibility of diverse interest groups and
   sources of loyalty.
                                                              14
  IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM (cont.)


B. HR Professional Codes of Conduct
   – A Professional Code of Conduct for HR practitioners in a given country
     can help with alternative courses of action when these practitioners are
     confronted with conflicts of dual loyalties.
   – It embodies the professions values, serves as moral anchors and helps
     to establish an ethical climate.‟
   – Professional Codes of Conduct provide stakeholders (the public,
     employees, managers and shareholders) with a benchmark by which to
     evaluate the ethical performance of a profession.
   – The South African Board for Personnel Practice (SABPP) is a
     professional body for managers, practitioners, consultants, academics
     and students in the field of HRM, but does not directly recognise the
     problem of conflicting dual loyalties.
   – The Australian Human Resources Institute‟s (AHRI‟s) Charter of
     Professional Standards addresses the primary responsibility of HR
     professionals (i.e. the employer, although there are obligations toward
     the employee, socially, legally and otherwise).


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  IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM (cont.)


B. HR Professional Codes of Conduct (cont.)
   –   The Society for Human Resource Management‟s (SHRM –
       representing HR professionals and students) Code of Ethics gives
       primacy to the fair and equal treatment of employees and the public
       interest.
   –   Many professional codes generally recognise that loyalty is owed to
       affected stakeholders in the following order of priority: the public
       (including employees and consumers), the profession, the client /
       employer, and the individual professional.
   –   There are a variety of codes in existence for different professions, e.g.
       accountants, architects, engineers, journalists, medical practitioners,
       etc.
   –   Professional Codes of Conduct are important vehicles for providing
       direction and counsel to the HR profession as it addresses local and
       global contemporary challenges and the demands of a strategic HRM
       paradigm.



                                                                               16
  IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM (cont.)


C. An integrity-orientated approach to a strategic business
   partnership
   – The current practice by HR professionals in workplace ethical issues is
     that of monitoring for policy and legal compliance, whilst the least
     dominant are the roles of educator and questioning the ethical
     dimensions of managerial decisions.
   – Ethics involves more than minimum legal compliance, although the
     latter is also important.
   – The emphasis on just legal compliance frustrates the transformation of
     the HR function from an administrative-service role to a strategic
     dimension.
   – A strategic HRM paradigm calls for HR professionals to be trained and
     educated on, and show an understanding of ethical principles.
   – HR executives should integrate ethics into strategic decision making –
     i.e., they should also embrace the role of integrity-based business
     partners.



                                                                           17
 IV) ETHICAL DIMENSIONS OF A STRATEGIC HRM PARADIGM (cont.)



C. An integrity-orientated approach to a strategic
   business partnership (cont.)
   – Integrity-based business partners call for qualities such as
     ethical consciousness, competency, and commitment.
   – That means, they must have the ability to perceive ethical
     issues; the ability to engage principled reasoning and problem-
     solving strategies; and a personal resolve to act ethically.
   – Also, integrity-based business partners must develop the roles
     of questioner and educator in ethical matters.
   – For instance, they would question the exploitation of workers in
     any strategic plan which suggests the payment of below-
     subsistence wages.
   – “Without an integrity-orientated approach to business
     partnership, there is the danger that HR professionals may
     continue in the administrative-service role under the guise of
     being a strategic player” (p.254).

                                                                    18
 V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE


A. HRM POLICIES AND PROCEDURES
   – HRM polices and procedures have moral relevance as they structure employee
     relationships with the organisation.
   – Enterprises have responsibilities beyond economic and legal ones for the
     following reasons:
   – Business enterprises not only function within an economic system, but also
     serve human and societal needs.
   – The economic element is not critical for the public and voluntary sectors.
   – Enterprises that act ethically towards customers, suppliers, communities and
     employees, will reap the benefits of improved loyalty and motivation from these
     stakeholder groups.
   – There are ethical issues that arise within the traditional activities of employee
     selection, compensation, performance management, promotion and termination.
   – It is through the fair implementation of these HR activities that enterprises are
     able to attract and retain a superior workforce for sustained competitive
     advantage.
   – HRM cannot be strategic unless it is ethical.




                                                                                    19
 V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE (cont.)



A. HRM POLICIES AND PROCEDURES (cont.)
  1) SELECTION
     •   Effective and fair selection practices for the strategic
         deployment of highly motivated and competent employees
         are an important vehicle for enterprises to gain a
         competitive advantage (p. 257).
     •   When selecting employees, HR Practitioners must ensure
         that all job applicants are treated fairly.
     •   Selection includes strategic tools supporting the business
         strategy such as screening, the employment interview and
         psychometric testing.
     •   A successful screening process is one that ensures there is
         a pool of suitable candidates who have all been treated
         fairly with regard to their right to equal employment
         opportunity.

                                                                  20
 V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE (cont.)



A. HRM POLICIES AND PROCEDURES (cont.)
  1) SELECTION (cont.)
     •   Screening must be done on the basis of inherent job requirements
         (job description / specifications) to protect individuals against
         discrimination.
     •   Structured interviews are considered to be fair since each
         candidate has the same opportunity and interviewer bias is
         minimised.
     •   Job competency interviewing is essential for HR Practitioners who
         seek to interview ethically.
     •   When conducting psychometric testing, HR professionals must
         safeguard the interests of enterprises and candidates by upholding
         the rights of those tested.
     •   In Sweden employee representatives are present when
         psychologists‟ reports are considered, candidates are informed of
         their results before they are made available to the hiring
         organisation and candidates can have their results destroyed
         should they wish to withdraw their application (p258).

                                                                         21
 V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE (cont.)



A. HRM POLICIES AND PROCEDURES (cont.)
   2) COMPENSATION
     • Procedural and distributive justice and the
       absence of economic and psychological harm are
       critical factors for compensation strategies to be
       considered fair, equitable and ethical.
     • Compensation strategies that are perceived to be
       fair, equitable and ethical are central to employee
       motivation and self-esteem.



                                                             22
    V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE (cont.)



A. HRM POLICIES AND PROCEDURES (cont.)
  3) PERFORMANCE MANAGEMENT
     Performance Management systems are
      ethically sound if they reflect the
      principles of respect for the individual,
      procedural fairness and transparency of
      decision-making.


                                                                23
 V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE (cont.)



A. HRM POLICIES AND PROCEDURES (cont.)
  4) PROMOTION
         – Fairness is a key ethical issue in managing the
           promotion of employees.
         – Promotion should be based on job-related criteria,
           especially performance, and employees should not be
           discriminated against on the basis of inappropriate
           criteria such as gender, race and religion.




                                                                 24
     V) ETHICAL ISSUES AND CHALLENGES IN THE WORKPLACE (cont.)


A.        HRM POLICIES AND PROCEDURES (cont.)
      5)    DISCIPLINE AND DISMISSAL
      –     The principles of Just Cause and Due Process are important
            ethical factors in matters of discipline and dismissal.
      –     Just Cause requires that reasons for discipline or dismissal be
            directly related to job performance.
      –     Just cause or fair dismissal includes issues of wrongdoing such
            as theft, bribery, criminal behaviour, inadequate performance
            following training and support, etc.
      –     Due process is related to the concept of ‘procedural justice’ as
            they refer to the fairness of the procedures an enterprise uses to
            discipline employees, e.g., impartial hearings and grievance
            procedures.
      –     In cases where there is good cause for the dismissal of
            employees, companies are morally obliged to do so in ways that
            minimise the economic and psychological effects of dismissal
            on employees and their families.


                                                                            25
   VI) ETHICAL DECISION MAKING FRAMEWORKS


• In this section we attend to ethical
  competency, which is the ability to engage
  in ethical reasoning to explore and resolve
  issues and dilemmas.
• Two widely accepted normative theories of
  ethics, namely teleology and deontology,
  can be used by HR Practitioners to
  engage in ethical reasoning.

                                            26
VI) ETHICAL DECISION MAKING FRAMEWORKS (cont.)

A. Teleology (Consequentialism)
   – Teleological theory stresses the consequences which result from an action – it is
     concerned with understanding the consequences of our actions for the common
     good of all involved (p.263).
   – The most widely accepted form of consequentialist reasoning is utilitarianism i.e.,
     to decide right and wrong on the basis of the consequences of an action.
   – Utilitarianism means the right thing to do is that which maximises the greatest
     good for the greatest number of people.
   – The greatest good is determined by weighing all the good consequences against
     all the bad consequences for all those affected by the action directly or indirectly.
   – Utilitarianism must be distinguished from egoism although both are forms of
     consequentialism.
   – Egoism has to do with the right action which is about that which maximises self -
     interest, e.g. an enterprise appealing only to its need to cut costs.
   – Utilitarianism requires HR Practitioners to implement policies and practices which
     produce the greatest benefit for society and not those which produce only the
     greatest benefit to the enterprise, i.e., it requires consideration of collective as
     well as individual interests.



                                                                                        27
VI) ETHICAL DECISION MAKING FRAMEWORKS (cont.)


B. Deontology
• Deontology stresses an individual‟s duty toward
   others, rather than consequences – it
   challenges management to treat everyone with
   respect and integrity rather than viewing them
   instrumentally for the collective good (p.265).
• The concepts of „justice‟ and „human rights‟ are
   based on deontology.


                                                28
VI) ETHICAL DECISION MAKING FRAMEWORKS (cont.)

B. Deontology (cont.)
   1) Justice
       • The notion of justice is often expressed in terms of fairness and equality,
         while issues involving questions of justice are divided into four categories:
         distributive, procedural, retributive, and compensatory.
       • Distributive justice (focussing on outcomes) is concerned with the fair
         distribution of society‟s benefits and burdens through its major institutions
         which include business and government institutions, e.g., use of cheap
         labour.
       • Procedural justice looks at the processes used to make decisions and
         implement workplace controls, e.g. in relation to selection, compensation,
         promotion (written performance appraisal standards), dismissal and dispute
         resolution.
       • Retributive justice is concerned with the imposition of penalties and
         punishment upon individuals and enterprises, i.e., the punishment must fit
         the crime, e.g., misappropriation of bank funds vis-à-vis taking home office
         supplies for personal use.
       • Compensatory justice involves compensating people for any harm or loss
         they have suffered, e.g. affirmative action programmes that attempt to
         remedy past injustices.

                                                                                    29
VI) ETHICAL DECISION MAKING FRAMEWORKS (cont.)


B. Deontology (cont.)
  2)       Individual rights
       •      To claim a right is to claim that one is entitled to something
              – employee rights in the workplace include:
             –   The right   to a fair wage;
             –   The right   not to be dismissed without just cause;
             –   The right   to due process;
             –   The right   to privacy;
             –   The right   to a safe workplace;
             –   The right   to be informed of risks and harm;
             –   The right   to organise and strike;
             –   The right   to free speech; and
             –   The right   to equal employment opportunity.
       •      Although some of these rights are non-negotiable, some of
              them need to be balanced against the rights of employers.

                                                                          30
  VII) THE EMERGING ROLE OF HR PROFESSIONALS IN THE

OPERATIONALISATION OF CORPORATE ETHICS PROGRAMMES


• HR has a special role to play in the
  formulation, communication, monitoring
  and enforcement of an enterprise‟s ethics
  programme – however, responsibility for
  ethical leadership should cut across all
  functions and managerial levels.



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