Outline Role of Ethics in Business What is HRM ethics? Ethical Issues in HR Why we need ethics in HRM?

HRM? Problems and solution of ethical problems

Role of Ethics in Business:

Friedman (1970): Managers should conduct the business to make as much money as possible, while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom. Maximize profits, but actions should be both legal & ethical Why might ethical behavior be an important factor that contributes to the strategic success of the organization?

Ethical Issues in HR:

Human is the most important resource to an organization. Issues associated with human resources occur as a result of employees working together. Of all the organizational issues or problems, ethical issues are the most difficult ones to handle or deal with. Issues arise in employment, remuneration and benefits, industrial relations and health and safety. Diagrammatic representation of HR Ethical Issues

Cash and Compensation Plans

There are ethical issues pertaining to the salaries, executive perquisites and the annual incentive plans etc. The HR manager is often under pressure to raise the band of base salaries. There is increased pressure upon the HR function to pay out more incentives to the top management and the justification for the same is put as the need to retain the latter. Further ethical issues crop in HR when long term compensation and incentive plans are designed in consultation with the CEO or an external consultant. While deciding upon the payout there is pressure on favoring the interests of the top management in comparison to that of other employees and stakeholders.

Race, gender and Disability

In many organizations till recently the employees were differentiated on the basis of their race, gender, origin and their disability. Not anymore ever since the evolution of laws and a regulatory framework that has standardized employee behavior towards each other. In good organizations the only differentiating factor is performance! In addition the power of filing litigation has made put organizations on the back foot. Managers are trained for aligning behavior and avoiding discriminatory practices.

Employment Issues
The four main types of human resource employment issues are as follows: Hiring and Termination Issues Recruitment or hiring process is the first step in selecting human resource into an organization, and will significantly influence the successful performance of the organization. Ethics plays a very important role during the recruitment of new employees. Law and regulations dictate that we have to be ethical in hiring. However, ethical hiring practice goes beyond them as well. It has been widely reported by many researchers that ethical hiring practices actually result in better employees being recruited. It is therefore important that sound ethical rules are followed when hiring a new employee. It is of vital importance that candidates are to be selected based on merits. Applicants are to be hired based purely on merits such as knowledge, skills, and ability in accordance to the needs of the organization. If a company provides any special considerations, for example affirmative action, where certain groups are given special considerations, these considerations should be well stated in the company's policy statement. In any case, any preferential treatment should be one that is legally allowed. While preferential treatments to certain specific group may be allowed, there should be no discrimination to people from any other group due to race, religion, gender, marital. Consistency and objectivity during the recruitment process are very important. Criteria, including any changes in the criteria, used for evaluating candidates should be stated and explained to order to avoid unnecessary claim of biasness in the recruitment process. Objective evaluation results in the best employees being recruited while consistency ensures high morale among employees. When we recruit new employees, we should tell the applicants about the true state of the organization. We should not mislead the applicants. In particular, the applicants should be told all pertinent information, including those information that are not publicly known but that will materially affect the new employee's future employment prospect with the organization. We can learn from the case involving Phil McConkey. Phil McConkey was recruited but he was not aware that the company was in the process of being taken over by another entity. One year after joining the company he lost his job with him new company. He sued the company for with-holding important information from me during the recruitment process. He won the case and was awarded $10 million. Organization should never place misleading job advertisement in order to get applications if they are offering a job contract different from what they advertised for. For instance, if they want to engage independent contractors instead of normal salaried employment. The reason why they choose to engage independent contractors is that they do not have to be burdened with high salary cost for employees that are not competent, but they are willing to compensate employees according to performance. They should always state clearly the terms of employment. In any case, they should not be accused of any job scam.Organization has to be extra careful while recruiting employees from organizations that have material dealing with it include suppliers, customers and competitors. If they are not careful ethical issues very damaging to them can arise.

When organization employs somebody from its suppliers, the suppliers may feel that organization has unethically poached their good employee. After all, it is through the working relationship they have with the suppliers that they can, to know the quality of this employee. When organization employs somebody from its customers they can be accused of returning favor to that person. This rule applies especially when employing a former senior government employee that has an influence on the awards of contracts to an organization . It is also not very wise to employ somebody from competitors because organization can be accused of stealing trade secrets from their competitors. If that employee can pass on his previous employer's secrets unethically, what is there to sop him from passing your trade secrets to others? Even though it may not be considered as unethical by some employers, as a matter of Courtesy and good public relationship to inform an unsuccessful applicant. When an employee is asked to leave, it is also of vital importance that it is handled with fairness and care. If it is a case of poor performance or disciplines, the employee has to be given prior warning (unless it is violation of a well stated policy or is of a very serious nature) and fair hearing. In any case, do not hurt the dignity of the employee and offer to provide the necessary assistance where appropriate. Before an employee leave for any reason, provide him/her with an opportunity to provide feedback on the overall state of the organization by conducting exit interviews.

Discrimination is the unfair or preferential treatment of a person on the basis of one or more uncontrollable characteristics, including race, gender, age, color, religion, or national origin, as well as handicapped .Discrimination against others in the workplace can impair ability to perform job according to company expectations. In most countries, there are laws that protect potential and current employees from discrimination based on age, race, color, national origin, religion, and gender, as well as handicapped status.

Performance Appraisals are conducted to evaluate an employees performance over a set period of time. When evaluating subordinates, one has to remain consistent and objective. Consistency is even more important when evaluating an existing employee than a prospective employee. Consistency requires that you treat every employee's misbehaviour the same way. For example, it would be wrong to punish one employee's tardiness while leaving another employee's tardiness unchecked. In order to maintain objectivity, the companys standardized evaluation forms should be used. In this way, uniform criteria can be used for the appraisal of all employees under . Also, all employees in the company are evaluated based on the same criteria. Constant feedback and communication between employers and their subordinates is necessary to facilitate a positive and

productive working relationship. Dont wait until periodic performance evaluations to express observations and suggestions. In fact, it is unethical to base salary adjustments upon performance problems that have not been brought to the employees attention. For employees being evaluated, honesty and acceptance of responsibility for performance problems are important ethical considerations.

Disciplinary issues Disciplining employees is one of the most difficult parts of a managers job. Nevertheless, it is vital to the growth and overall success of the organization. Disciplining employees both ensures productivity and sets standards for the future. Discipline should occur immediately after a problem has occurred. It is imperative that the disciplinary actions remain consistent for all employees. A serious disciplinary issue is sexual harassment where female employees (less so for male employees) are subjected to an unwanted sexual behavior that creates an intimidating or hostile work environment. This includes unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. This conduct is not only unethical, but illegal as well.

Privacy Issues
Any person working with any organisation is an individual and has a personal side to his existence which he demands should be respected and not intruded. The employee wants the organisation to protect his/her personal life. This personal life may encompass things like his religious, political and social beliefs etc. However certain situations may arise that mandate snooping behaviours on the part of the employer. For example, mail scanning is one of the activities used to track the activities of an employee who is believed to be engaged in activities that are not in the larger benefit of the organisation. Similarly there are ethical issues in HR that pertain to health and safety, restructuring and layoffs and employee responsibilities. There is still a debate going on whether such activities are ethically permitted or not. Layoffs, for example, are no more considered as unethical as they were thought of in the past.

Unethical Practices:
Ethical issues constantly confront organizations. Price gouging, falsification of data and misleading advertising are but a few of many well publicized cases. Ethical treatment of one's employees is also emerging as an issue. It involves a variety of problem areas such as confidentiality of information, right to privacy, sexual orientating, sexual harassment, and exposure to safety and health hazards, equal employment opportunity, and employee honesty. Formulation of policies by the organization to deal with such issues is in part a mater of responding to extremal influences in the P/HR, laws and regulations. Addressing these issues directly can also help create a work environment conductive to positive impact on P/HR outcomes, particularly satisfaction and retention of employees.

Human Resources professionals are often called upon to "lead the charge" on issues relating to business ethics, within a complex business and social environment. When the organization has to make quick decisions about what is right, and what is legal and moral. Through examining contemporary issues in HRM through a rigorous critical framework, organization can prepare itself to answer the "big questions" and enhance its role as value added strategic partners in business.

Promoting ethical and responsible behaviour:

Internal policies and procedures Code of Ethics Escalation procedures and whistle blowing Insider Trading Policy and trading in Telecom shares

Internal policies and procedures

Telecom employees are responsible for ensuring that Telecom carries out its business activities in a way that maximises business opportunities, has due regard to all applicable legal and regulatory requirements and minimises Telecom's exposure to unacceptable legal and regulatory risk. Managers are responsible for making sure that Telecom people are given appropriate information and training to assist them in complying with legal, regulatory and policy compliance obligations.

Telecom has a number of core internal policies and procedures, including: Human Resources Policies, including employment, remuneration and benefits, equal opportunity, anti-harassment and discrimination Legal Compliance Policy Information Management Policy Technology Policy Delegation of Authority Frameworkss

Telecom is adopting an integrated compliance framework consistent with AS/NZ-3806 Compliance Programmes over a three-year cycle and implementation is monitored by the Audit and Risk Management Committee. In addition, an Undertakings Compliance Framework operates to drive compliance with the Operational Separation Undertakings.

Code of Ethics
Telecom expects its employees and directors to maintain the highest ethical standards. Telecom's Code of Ethics establishes the framework by which Telecom people (including the CEO and CFO) are expected to conduct their professional lives by facilitating behaviour and decision-making that meets Telecom's business goals and is also consistent with Telecom's values, policies and legal obligations. The Code of Ethics is available to all Telecom employees via Telecom's intranet site. The Code of Ethics addresses: Conflicts of interest Receipt of gifts Corporate opportunities Confidentiality Expected behaviors (including to deal fairly and honestly with Telecom's people, professional advisers, customers and suppliers) The proper use of Telecom's assets and information Compliance with laws and Telecom policies Delegated authority and Reporting issues regarding breaches of the Code of Ethics, legal obligations or other Telecom policies

Telecom also has a Directors' Code of Ethics which addresses similar topics and establishes the behavior expected of directors.

Escalation procedures and whistle blowing

Any Telecom employee (including a contractor) who becomes aware of a legal, regulatory, policy or other compliance issue has a responsibility to report it using either of Telecom's breach reporting/whistle-blowing or financial compliance escalation frameworks. In addition, Telecom has a procedure whereby accounting, auditing or internal control breaches or concerns may be reported confidentially to the Audit and Risk Management Committee.

Insider Trading Policy and trading in Telecom shares

Directors and employees are subject to restrictions under the law relating to dealing in Telecom securities and other related Telecom derivatives if they are in possession of inside information. Inside information is information that is not generally available and, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of Telecom securities.

To help ensure compliance with these legal requirements the Insider Trading Policy specifies that no director or Telecom employee may buy or sell Telecom shares while in possession of inside information. The policy also states that directors and Telecom employees in possession of inside information cannot

directly or indirectly advise or encourage any person to deal in Telecom shares. The policy sets out additional rules for directors, executives, direct reports to the executive and certain other Telecom employees. Compliance with the Insider Trading Policy is monitored through education and notification by Telecom's share registrar when any director or officer engages in trading activities. Any breach of the Insider Trading Policy would be regarded very seriously. In addition, as required by the Securities Markets Act 1988 and the Securities Markets (Disclosure of Relevant Interests by Directors and Officers) Regulations 2003, all trading by directors and officers is reported to NZX. Trading by directors is also reported to ASX and NYSE.

Ad War between Pakistani Cellular Mobile Operator

Ad war means to make ads against the competitors product. Making such ads started from countries like U.S and UK but the trend has now become famous in Pakistan as well. It looks really interesting to watch such ads as they are funny but what after affects they can have is really something we should think about. There are a lot of companies in Pakistan which make ads against their competitors but the ones made by the cellular mobile operating companies in Pakistan are what we are going to discuss here. The CMOs used to make ads which showed that their product is better than the competitor but they were indirect. Now they have started making ads against each other which directly criticize the other Mobile Operating Company. This unethical trend was started by Zong after its launch and still it continues to make such ads. Later other CMOs also adopted this advertising method of making ads against the competitors. Ufone is somehow an exception as it usually comes up with ads which are funny and based on creative ideas but it also sometimes directly criticizes the services of other cell phone operating companies in Pakistan. Even Mobilink which is the market leader and Telenor which is equipped with the most latest and updated technology use these kinds of ads to attract customers. Ads like these are really funny and interesting and they are considered to play some role in increasing the sales of the cell phone operating companies by attracting customers of other competitors but it is really something to think about that at one place they all are entering into MoU (Memorandum of Understanding) with each other for bringing more improvement in the industry and services provided to the customers whereas at another point they are making ads against each other and making fun of other networks services and packages to show that their own services and packages are better. This ad war between the cellular operating companies in Pakistan is really a major issue. This could affect the overall industry growth, customers confidence and can create serious issues among the CMOs in Pakistan. I think Pakistan Telecommunication Authority needs to take some serious action against this ad war between the CMOs in Pakistan for the benefit of the industry. Moreover, the CMOs need to understand that there are a lot of other attractive and ethical ways to capture the attention of the cell phone users in Pakistan.