Fundamentals of Management

The Importance of Ethics in Organisations

The ethics in organisation are the policies and procedures of performing right things during the times of difficult and controversial situations in an organisation. The concept of ethics in any organisation is not only limited to fiduciary issues, discrimination and social responsibility. In current times, social media would readily expose ethics issues that might have been overlooked in previous generations. Thus, the way an organisation practices ethics have become more important than ever (McDonald, 2000).

If an organisation is contributing its efforts and resources in order to develop policies and procedures that would encourage the ethical actions, it is building a positive corporate culture. The morale of team members also improves as they feel themselves protected against any retaliation for their beliefs. The various policies under this are open door policies, equal opportunities for growth and anti discriminatory rules. The overall environment of the organisation becomes positive when the workers or employees in the organisation feel good and motivated. This helps to further build organisational loyalty as well as productivity (Greenwood, 2013).

It is very much possible that an organisation can lose the consumer confidence in a very less time due to some bad online reviews. It is very essential to practice ethics from the beginning, that is, honest and fair advertising and throughout the entire sales process. For example, amazon and google are scrutinised for protecting the privacy and security of customers. There is a chance that an organisation loses consumer confidence if it cannot deal with complaints and do not honor guarantees (Koh and El'Fred, 2004). Consistent training of employees and polices are required in this direction. Ethics in an organisation differ from industry to industry. It is industry-specific. The organisations that deal with production of energy are scrutinised for their treatment of environment. An organisation is better able to set its value statements as well as protocols in order to meet higher ethical standards if it is able to identify its target market and consumers.

The financial liabilities of an organisation are reduced if it develops policies on ethical standards. One of the financial liability is decrease in sales. For example, a real estate development organisation would lose its sales if it decreases the area of animal sanctuary. The other financial liability could happen with potential lawsuits. There is no organisation that is exempted form an employee or a customer who claims any type of discrimination. Various politicians, CEOs and celebrities are being penalised for sexual discrimination in the workplace. It is costing their livelihood as they are not dealing with the accusation claims. Thus, every organisations must maintain policies that address different kinds of discrimination and harassment. Also, it is essential to be consistent in the execution of policies that involves accusations. This could decrease the frivolous lawsuits (Cludts, 1999).

Ethical Aspects that HRM Should Focus On

In simple words, HRM could be defined as the effective and productive utilisation of people in order to achieve the strategic business objectives of the organisation. Also, it has to ensure satisfaction of individual needs of all employees. The nature and extent of HRM varies depending on the “use" of people. It could be hard or soft or the combination of two (De Gama et al., 2012). It is the duty of this department to not treat the people as resources as it could mean placing human in the very same category of office furniture. A number of ethical issues could arise. Thus, there is an alarming need to consider the ethical dimensions of HRM to examine these issues (Van Buren et al., 2011).

A number of gaps exist in the ethical analysis of HRM. The assumptions of ethical analyses are mode explicit. In order to apply ethical stances to HRM, it is essential to make some significant assumptions such as, the purpose of the organisation, the different roles and responsibilities of different managers and the rights and obligations of workers/ employees. It is observed that the ethical analysis of HRM is only limited to be at micro level, such as ethical implications of recruiting and downsizing. However, the macro analysis of HRM is to be looked on. This macro analysis involves the ethical implication of the role and responsibility of HR in the company as well as society. The last issue which needs to be paid attention is the stakeholder theory. There is a significant debate on this stakeholder theory that is related to business ethics and have connections to HRM.

In recent years, there is development seen in the ethical perspective of HRM. It is both employee centred as well as explicitly normative. The progress in the development of ethical perspective in the department of HRM is distinct from the dominant and critical views of HRM. There are traditional theories that comprises of rights or justice theories, deontology and consequentialism. The reliance on this threesome traditional theories has limited to micro level issues. The ethical analysis of HRM is opened to pluralism and pragmatism if one understands the relationship of employment as a relationship of stakeholder. This would address the broader requirement of HRM. Thus, it could offer a holistic account of humanity as well as the pre requisite for HRM, that is, to treat workers as moral persons with “names and faces".

The two forms that the ethical analysis of HRM has taken are:

  • The application Kantian and utilitarian ethical theories
  • Application of theories of justice and fairness.

The concerns related to ethics are used as a basis to build certain specific standards against which the HRM, in its different practice, could be assessed (Van Buren and Greenwood, 2013).

Ways HRM Promotes Ethics in Organisations

Needless to say, HRM deals directly with people employed in an organisation. Thus, it deals with a variety of ethical challenges. HR consists of different ethical pitfalls which have the capability to damage the reputation of an organisation or the financial stability if it is not used in a proper manner. It is essential to understand the importance of ethics in human resources irrespective of the type of organisation (Costea et al., 2012).

To trust the employees in the organisation that they would do the right thing, it is crucial to build an ethical workplace. A positive culture has to be maintained in an organisation. If the culture is such that where misconduct is tolerated or encouraged then it would lead to bad reputation of the company, low productivity and fall in the morale of employees. Studies have shown that an organisation where the HR promotes ethics or where there is maintained ethical culture are more financially successful and also the workers in the organisation are highly productive with high morale (Ryan, 2006).

The professional of HR have a great role to play as they deal with the people. They are both the guardians as well as champions of the ethical culture. The position of these HR professional are unique as they hold the responsibility to create an ethical workplace as they deal with recruiting, hiring and training of the employees. Thus, they get an ample amount of opportunities to influence the employees and this could further impact the organisation. They, as guardian, have the role of protecting the employees, customers or clients from unethical conduct. They, as champions, also build trust and promote ethical values that could help to flourish the organisation.

Some determinants of an Ethics and Compliance program are:

  • Training should be provided on standards
  • There should be performance evaluations of ethical misconduct
  • There should be written standards of ethical misconduct in workplace
  • A process should be there to inform potential violations confidentially
  • Systems to discipline violators.

According to a survey, it is observed that before the financial crisis of 2008, companies use to determine its reputation by its financial success (Lloyd and Mey, 2010). However after 2008, companies are giving more value to its employees and are keeping customers ahead of the profits. The HR professionals initially define the workplace ethical culture so that there is no doubt left for its effectiveness. The HRM is responsible for modelling ethical behaviour and enforcing rules in a fair way. There is a tendency to override ethical concerns if the HR does not share those concerns. The HR lays out the expectations for employees in the organisation. This is done through written standards of ethical workplace conduct. The HR should equip the managers so that they reinforce the values of a company through their actions. The HR also conducts training for the employees so that they make sure that the employees are well aware of the expectations.

References for The Role of HRM in Promoting Ethics in Organisations

Costea, B., Amiridis, K., & Crump, N. (2012). Graduate employability and the principle of potentiality: An aspect of the ethics of HRM. Journal of business ethics111(1), 25-36.

De Gama, N., McKenna, S., & Peticca-Harris, A. (2012). Ethics and HRM: Theoretical and conceptual analysis. Journal of Business Ethics111(1), 97-108.

Greenwood, M. (2013). Ethical analyses of HRM: A review and research agenda. Journal of Business Ethics114(2), 355-366.

Koh, H. C., & El'fred, H. Y. (2004). Organisational ethics and employee satisfaction and commitment. Management Decision.

Lloyd, H. R., & Mey, M. R. (2010). An ethics model to develop an ethical organisation. SA Journal of Human Resource Management8(1), 1-12.

McDonald, G. (2000). Business ethics: Practical proposals for organisations. Journal of Business Ethics25(2), 169-184.

Ryan, L. V. (2006). Current ethical issues in Polish HRM. Journal of Business Ethics66(2-3), 273-290.

Van Buren III, H. J., Greenwood, M., & Sheehan, C. (2011). Strategic human resource management and the decline of employee focus. Human Resource Management Review21(3), 209-219.

Van Buren, H. J., & Greenwood, M. (2013). Ethics and HRM education. Journal of Academic Ethics11(1), 1-15.

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