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Human Resource Management 11th Edition Chapter 2 BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY
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2. HRM in Action: Going Strategic with Corporate Social Responsibility
HR professionals have helped their careers by doing work that impacts the bottom line and focusing their efforts on corporate social responsibility
HR professionals that are leaders of CSR activities place themselves in spotlight for top management to see
Approximately 2/3 of U.S. HR professionals are directly involved in CSR activities
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Ethics
Discipline of dealing with what is good and bad, or right and wrong, or with moral duty and obligation
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CEO Must Be Involved
67% of investors said they would move their account if they discovered the company was involved in unethical behavior
Jeff Immelt GE’s CEO begins and ends each annual meeting of 220 officers and 600 senior managers by restating company’s fundamental integrity principles: “GE’s business success is built on our reputation with all stakeholders for lawful and ethical behavior. Commercial considerations never justify cutting corners. Upholding this standard is the specific responsibility of the leaders in the room.”
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Unethical Examples
Enron, Arthur Andersen, WorldCom, Global Crossing, Adelphia Communications, Tyco International, and others
Ruthless self-interest that motivates leaders of some large corporations has been revealed
To have served on Enron board has become a badge of shame
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Not Just Corporations
Virtually no occupation has not had its own painful ethical crisis in recent years.
Even so, business ethics scandals continue to be headline news stories. Lying on resumes, obstruction of justice, destruction of records, stock price manipulation, cutting corners to meet Wall Street’s expectations, fraud, waste, and abuse are occurring all too often when those in business go ethically wrong.
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7. Sources of ethical guidance Our beliefs about what is right or wrong
A Model of Ethics
Sources of ethical guidance
Our beliefs about what is right or wrong
Lead to
Determine
Our actions
Type I Ethics
Type II Ethics
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8. Sources of Ethical Guidance
Number of sources to determine what is right or wrong, good or bad, moral or immoral
Bible and other holy books
Conscience
Significant others
Codes of Ethics
Sources of ethical guidance should lead to our beliefs or convictions about what is right or wrong
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Type I Ethics
Strength of relationship between what individual or organization believes to be moral and correct and what available sources of guidance suggest is morally correct
Example: HR manager believes it is acceptable not to hire minorities, despite fact that almost everyone condemns this practice
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Type II Ethics
Strength of relationship between what one believes and how one behaves
Example: Manager knows it is wrong to discriminate, but does so anyway
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Legislating Ethics
Procurement Integrity Act
Federal Sentencing Guidelines for Organizations (FSGO)
Corporate and Auditing Accountability, Responsibility and Transparency Act
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12. Procurement Integrity Act of 1988
Prohibits release of source selection and contractor bid or proposal information
Restrictions on former employees
Passed after reports of military contracts for $500 toilet seats
Also $5,000 hammer
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13. Federal Sentencing Guidelines for Organizations (FSGO) of 1992
Outlined effective ethics training program
Promised softer punishments for wayward corporations that had ethics programs in place
Executives needed to be proactive
Organizations responded by creating ethics officer positions, installing ethics hotlines, and developing codes of conduct
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Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002
Known as Sarbanes-Oxley Act, primary focus to redress accounting and financial reporting abuses in light of recent corporate scandals
Criminalized many corporate acts
Whistle-blower protections
Prohibits loans to executives and directors
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Corporate and Auditing Accountability, Responsibility and Transparency Act of 2002 (Cont.)
Management may not discharge, demote, suspend, threaten, harass, or discriminate against an employee protected by the Act
Protects any employee who lawfully provides information to governmental authorities concerning conduct he or she reasonably believes constitutes mail, wire, or securities fraud; violations of any rule or regulation issued by the SEC; or violations of any other federal law relating to fraud against shareholders
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16. 2003 - Bechtel v Competitive Technologies Inc.
Supreme Court case involving wrongful termination under Sarbanes-Oxley’s whistle-blower-protection rule
Court ruled that the company violated Act by firing two employees and ordered them reinstated
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Code of Ethics
Statement of values adopted by company, its employees and directors; sets official tone of top management regarding expected behavior
Code of ethics establishes rules by which organization lives and becomes part of organization’s corporate culture
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Ethics Officer
Larger firms appoint ethics officer
Keeps code on front burner for employees
Ethics committee often established
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19. Baldrige National Quality Award
Increased emphasis on ethics in leadership
Criteria: Senior leaders should serve as role models to rest of organization
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20. Adolph Coors Company Example
Developed one of the nation’s most comprehensive ethics programs
Company offers its employees considerable resources including interactive online courses, ethics leadership training, decision map, highly detailed set of policies, and help line.
Goal of program is to step beyond rules and guidelines and teach employees how to think, clarify, and analyze situations.
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Human Resource Ethics
Application of ethical principles to HR relationships and activities
Code of Ethics – Many companies have a code of ethics
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22. Human Resource Ethics (Cont.)
Throughout your text, there are many topics where HR professionals can have a major impact on ethics (examples below)
Do you strive to create a diverse workforce?
Do you strive to recruit and select the best qualified applicant for the job?
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Ethics Training
Federal Sentencing Guidelines for Organizations Act outlined effective ethics training program
Educate employees in company’s standards and procedures through publications and training
Ethics training should be for everyone from top to bottom
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24. Professionalization of Human Resource Management
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Profession
A vocation characterized by existence of:
Common body of knowledge
Procedure for certifying members of profession
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26. HR Professional Groups
Society for Human Resource Management - Largest national professional organization for HR management individuals
Human Resource Certification Institute - Recognize HR professionals through certification program
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27. HR Professional Groups (Cont.)
American Society for Training and Development - Largest specialized professional organization in human resources
WorldatWork - Managerial and HR professionals responsible for establishment, execution, administration or application of compensation practices and policies
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28. Corporate Social Responsibility
Implied, enforced, or felt obligation of managers, acting in their official capacity, to serve or protect interests of groups other than themselves.
When corporation behaves as if it has a conscience
How company as a whole behaves toward society
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Trends & Innovations Bayer Corporation: A Quality Example of Corporate Social Responsibility
United States Bayer Corporation continues the tradition of social responsibility its parent company, Bayer AG, began many years ago
Company has more than 300 corporate social responsibility programs worldwide
Bayer’s core values involve “improving quality of life while harmonizing commercial efficiency, ecology and social commitment”
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Who Determines?
Organization’s top executives usually determine corporation’s approach to corporate social responsibility
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31. Stakeholder Analysis and Social Contract
Most organizations have large number of stakeholders
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32. Organizational Stakeholder
Individual or group whose interests are affected by organizational activities
Society is increasingly holding corporate boards of directors and management accountable for putting interest of stakeholders first
Some of the stakeholders for Crown Metal Products, a fictitious manufacturer, are identified
Only a few, identified by bold arrows, are viewed as constituencies
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33. STAKEHOLDERS OF CROWN METAL PRODUCTS
Stanley Crow (Sole stockholder)
Employees and Managers
Charitable Organizations
Unemployed Workers (Potential employees)
Neighbors
Guaranty Bank (Lender)
Customers
Crown Metal Products
Competitors
Suppliers
Other Banks in Area (Prospective lenders)
Local Government Agencies
Local Businesses
U.S. Government
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Social Contract
Set of written and unwritten rules and assumptions about acceptable interrelationships among various elements of society
Embedded in customs of society
Social contract often involves quid pro quo
Concerns relationships with individuals, government, other organizations, and society
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The Social Contract
Individuals
The Organization
Other Organizations
Government
Society
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36. Obligations to Individuals
Certain obligations to employees
Expect fair day’s pay for fair day’s work, and perhaps much more
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37. Obligations to Other Organizations
Must be concerned with relationships involving other organizations
Commercial businesses are expected to compete with one another on honorable basis
Charities such as United Way expect support from business
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38. Traditional View of Social Responsibility
Businesses best meet obligations through pursuit of their own interests
Some companies view social contract mainly in terms of the company’s interests
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39. Obligations to Government
Under auspices of government, companies have license to do business, along with patent rights, and trademarks
Expected to recognize need for order rather than anarchy
Expected to work with guidelines of governmental organizations such as Equal Employment Opportunity Commission and Office of Federal Contract Compliance Programs
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40. Obligations to Society in General
Traditional view of business responsibility has been that businesses should produce and distribute goods and services in return for profit
Businesses operate by public consent with basic purpose of satisfying needs of society
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Sir Thomas More
Said in 16th century, “If virtue were profitable, common sense would make us good and greed would make us saintly.” More knew virtue is not profitable, so people must make hard choices from time to time.
Corporate strategists are being held to a higher standard than just pursuing their own interests, or even those of stockholders; they must consider the interests of other groups too.
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Social Audit
Systematic assessment of a company’s activities in terms of its social impact
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43. Possible Types of Social Audits
Simple inventory of activities
Compilation of socially relevant expenditures
Determination of social impact
Ideal social audit would involve determining the true benefits to society of any socially-oriented business activity
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Steps for Establishing and Implementing Corporate Social Responsibility (CSR) Program
Person assigned responsibility for program; structure developed
Review of what company is presently doing regarding CSR
Shareholders’ expectations and perspectives determined
Write policy statements covering CSR areas such as environmental, social, and community issues
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CSR Steps (Cont.)
5. Develop set of corporate objectives and action plan to implement policies
Create company quantitative and qualitative targets and performance indicators over 2-5 year period, along with measurement, monitoring and auditing mechanisms
Communicate direction of CSR to stakeholders and fund managers
Determine progress of CSR program
Report progress of CSR program
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46. A Global Perspective: Multinational Whistle-Blowing
In East Asia, corporate members are viewed as family members, so it is wrong to report them
In Japan, lifetime employment and strict seniority system discourage workers from questioning management decisions, dictating, instead, that employees show unbounded loyalty to coworkers
In China, attempts to introduce corporate hotlines can remind employees of horrors of Cultural Revolution
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