1. Ethics in Human Resource Management Myrna L. Gusdorf, MBA, SPHR 2010

2. Ethical Theories Class 1

3. Learning Objectives By the end of this module, students will: > Compare and contrast various ethical theories. > Use ethical theories in the decision-making process. > Apply ethical theories to the analysis of HR case problems. > Identify various solutions to ethical case questions. > Defend their recommended solutions using the ethical theories discussed in class. SHRM© 2010 3

4. Ethics Defined A science of human choice concerned with the basic guidelines for how one ought to live one’s life. It answers the question, “How should I live?” The study and philosophy of human conduct with an emphasis on determining right and wrong. The systematic study of general principles of right and wrong behavior. SHRM© 2010 4

5. Are Ethics and Morals the Same? > Ethics refers to the systematic study of general principles of right and wrong behavior. > Morals and morality describe specific, culturally transmitted standards of right and wrong. > Both ethics and morality involve decisions about right and wrong. Johnson, (2007). SHRM© 2010 5

6. Deciding What’s Right and Wrong: Philosophical Theories Utilitarian Theory Categorical Imperative/Principle of Rights Distributive Justice Ethics of Care Aristotle’s Virtue Ethics Ethical Relativism SHRM© 2010 6

7. Principles of Utilitarianism > The action taken is ethical if it produces the most good and the least harm for everyone affected. > Judgment is based on a cost/benefit analysis. Some costs and benefits are difficult or impossible to measure. > Focus is on the results of the action, not on how the results are achieved. Assumes the end justifies the means. SHRM© 2010 7

8. Principles of the Categorical Imperative > Sometimes called the Principle of Rights. > An action is ethical because the individual engaging in the action has a moral right to do so. > A right is an entitlement intended to protect someone’s interests. > The Golden Rule: You should engage in an action only if you agree everyone else should do it, too. What if the actions were reversed? You should be willing to have the action done to you. SHRM© 2010 8

9. Principles of the Ethics of Care > The morally correct action is one that appropriately cares for the individuals involved. > A person’s moral obligations are not to follow impartial principles but rather to care for the good of particular individuals. > This theory emphasizes special relationships. SHRM© 2010 9

10. Principles of Aristotle’s Virtue Ethics > The morally correct action is the one that displays good character virtues. > A virtue is a character trait that manifests itself in the actions of the individual. > Virtues are traits such as: Honesty. Fairness. Integrity. Loyalty. SHRM© 2010 10

11. Principles of Ethical Relativism > Relativism claims there are no universal ethical principles. Each society determines what is morally right and wrong. > Because different societies have different moral beliefs, there is no rational way to determine if an action is morally right or wrong. > Therefore, it would not make sense to criticize any standards in a society as long as its members conform to the standards. SHRM© 2010 11

12. Moral Development and Making Ethical Decisions Class 2

13. Moral Development Are individuals born with moral judgment or, like language, does it develop over time? How does moral reasoning develop? Jean Piaget’s two stages of moral development. Lawrence Kohlberg’s six stages of moral development. SHRM© 2010 13

14. Kohlberg’s Six Stages of Moral Development Stage 1: Heteronomous Morality > Obedience and punishment orientation. > Motivated by fear of punishment only. > No concern with the interests of others. > Doesn’t care if actions harm other people. Stage 2: Individualism > Egoistic. Actions based on self-interest. > Will follow the rules if it is in own self-interest. > Motivated by incentives or fear of punishment. > Right is “what’s fair” or an equal exchange. SHRM© 2010 14

15. Kohlberg’s Six Stages of Moral Development Stage 3: Conformity and Relationships > Mutual relationships, desire to be a good person. > Approval-oriented, conforms to the majority. > Living up to what is expected by people close to you. Stage 4: Social System and Conscience > Respect for authority, maintaining the social order. > Laws are to be upheld. > Values institutions and the social system as a whole. > Empathy for individuals with whom he/she interacts. SHRM© 2010 15

16. Kohlberg’s Six Stages of Moral Development Stage 5: Social Contract and Individual Rights > Acceptance of fundamental values and rights. > Willing to make personal sacrifices if sacrifice will produce benefit for others. > Unlikely to engage in unethical behavior. Stage 6: Universal Ethical Principles > Individual chooses to live life according to universal moral principles; i.e., justice, human rights, respect for individual dignity. > Unlikely to engage in unethical behavior. > Acts according to ideals regardless of the reactions of others; the whistleblower. SHRM© 2010 16

17. Kohlberg’s Critics Variables in moral development: > Culture. > Gender. SHRM© 2010 17

18. Moral Judgment and Moral Conduct What do you think? Is there a link between moral judgment and ethical behavior? Do people always behave in a way that embodies their moral judgment? SHRM© 2010 18

19. What Makes Moral People Behave Unethically? Research findings: > The desire to conform to one’s peers. Environmental pressures. > Rigid hierarchy. > Fear, insecurity. > Ambition. SHRM© 2010 19

20. What Makes Moral People Behave Unethically at Work? Because ethical action takes place in a social context, situational variables heavily influence ethical behavior. > Work characteristics. > Organizational culture. > Immediate job context. SHRM© 2010 20

21. Unethical Behavior in the Workplace What makes people engage in unethical behavior? > Insecurity, fear of job loss. Downsizing, mergers, hostile takeovers, “rank and yank” performance evaluation systems. > Psychological insecurity. Bosses who are threatening and controlling. Competitive environment. > Materialistic focus. Focus on the bottom-line concerns above values. Bonus pay systems with earnings “at risk.” Large pay disparities between levels. SHRM© 2010 21

22. Making Ethical Decisions Why are ethical decisions so difficult? > No one clear solution. > Competing interests. > Many unknowns. > Pressure. SHRM© 2010 22

23. A Process for Making Ethical Decisions Recognize an ethical issue. Get the facts. Evaluate alternative actions. Make a decision and test it. Act and reflect on the outcome. Source: Markkula Center for Applied Ethics SHRM© 2010 23

24. Using the Principles of Ethical Theories to Evaluate Your Options Utilitarian > Which option will produce the most good and do the least harm? Categorical Imperative/Rights > Which option best respects the rights of all stakeholders? Distributive Justice > Which option produces a fair distribution of benefits and costs for all stakeholders? Caring > Which option cares for people with whom you have a special relationship? Virtue > Which option leads you to act as the sort of person you want to be? SHRM© 2010 24

25. Human Resource Management and Ethical Organizations Class 4

26. Ethics Compliance Programs Written code of ethics. Written standards of conduct. Ethics training. Mechanism for employees seeking advice. Reporting network where employees can report inappropriate behavior without fear of retaliation. Ethical behavior as a part of the performance appraisal system. Discipline for violating ethical standards. SHRM© 2010 26

27. Ethics Compliance Programs “But we’ve been doing that …and ethical violations are still commonplace.” Even Enron had a code of ethics! SHRM© 2010 27

28. Creating a Culture of Ethics It’s not the compliance program–it’s the culture. Management sets the tone. > Managers must model ethical behavior. They must “walk the talk.” > Employees must trust management at all levels. > Employees learn appropriate behavior by what they see managers doing. > The importance of ethics must be communicated at all levels of the organization. > Reward ethical behavior. Assess how the job was done, not just “making the numbers.” SHRM© 2010 28

29. HR’s Role in Organizational Ethics Develop policies. Communicate with employees. Provide training. Handle inquiries. Provide assistance in resolving difficult situations. SHRM© 2010 29

30. Fostering Ethical Organizations Strategic Management > Align organizational systems to support ethics. Ethics must be an integral part of the organization’s strategy and values. > Organization leaders must champion ethics. Management sets the tone. Leaders must demonstrate and foster integrity. > Champion diversity and equity across the organization. > Ensure stakeholder balance that addresses conflicting interests. > Focus on the long-term perspective. SHRM© 2010 30

31. Fostering Ethical Organizations Staffing: Recruitment and Selection > Ensure equal opportunity practices. > Recruit ethically responsible people. > Make ethics a selection criteria. > Interview for ethical values. SHRM© 2010 31

32. Fostering Ethical Organizations HR Development Provide ethics training for all employees. Ensure equal access to development and career opportunities. Performance management and employee appraisal. > Balanced scorecard assessment. > Appraise ethical behavior as well as task accomplishment. “Hitting the numbers” is not enough. > Give employees specifics on how to improve. SHRM© 2010 32

33. Fostering Ethical Organizations Compensation and Reward Systems > Decrease pay inequities. Control executive compensation. > Reward group or organization success. > Provide incentives for cooperation. Gainsharing. > Focus on intrinsic motivation. > Continuous learning. > Quality management. SHRM© 2010 33

34. Fostering Ethical Organizations Employee Safety and Health Ensure safety goes beyond compliance. Make health and safety a priority and not just words on paper. Provide safety training and protective equipment. Incorporate policies that protect employees and the organization from risk. Encourage open dialog and communication. SHRM© 2010 34

35. Fostering Ethical Organizations Employee Relations Full compliance with all employment and labor regulations. Training for all supervisory employees. Open communication. Equity in promotion and retrenchment processes. Skip-level interviews. Employee grievance systems. Whistleblower protection. Exit interviews. SHRM© 2010 35

36. Fostering Ethical Organizations Linking HR Management and Ethical Organizations SHRM© 2010 36