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Chapter 28

Ethical Issues in Human Resource Management

After reading this chapter, you should be able to:

Understand the meaning of ethics and the need for ethical policies and codes. Enumerate the factors influencing ethical behaviour at work.

After reading this chapter, you should be able to (contd.):

Explain the role of human resource management in promoting ethical values. Present an overview of international business ethics.

Ethics: meaning
Ethics refers to the ethical principles which determine the behaviour of an individual or a group.

Types of ethics

Descriptive ethics Normative ethics Interpersonal ethics

Descriptive ethics

Descriptive ethics is mostly concerned with the justice and fairness of the process. It involves an empirical inquiry into the actual rules or standards of a particular group. A study of the ethical standards of business executives in India can be an example of descriptive ethics.

Normative ethics

Normative ethics is primarily concerned with the fairness of the end result of any decision-making process. It cares about what one really ought to do and it is determined by reasoning and moral argument. It shows whether something is good or bad, right or wrong.

Interpersonal ethics

It is mainly concerned with the fairness of the interpersonal relationship between the superior and the subordinates. It refers to the style of the managers in carrying out their day-to-day interactions with their subordinates.

Approaches to ethical issues in organizations

Utilitarian approach Approach based on rights Approach based on justice

Utilitarian approach

In this approach, the HR policy is based on the philosophy of the greatest good for the greatest number of people. Based on this approach, decisions like lay-offs in a difficult situation for the organization are justified on the grounds that they benefit the majority of the employees.

Approach based on rights

This approach is based on the principle that an organization should respect an individuals dignity and rights. Each employee is entitled to be treated with due respect and his or her privacy and integrity should be respected by the organization.

Approach based on justice

The focus of this approach is on equal treatment, adoption of due procedure and consistency in the application of policies and rules. This approach puts emphasis on the fairness in ensuring a balance between the benefits and the burdens of the job, like compensation and performance, compensation and job attendance.

Factors influencing ethical behaviour at work

Factors influencing ethical behaviour at work (contd.)

Individual factors Organizational factors Supervisors behaviour Organizational culture Code of ethics

Role of HRM in the development of ethical behaviour


Ethical behaviour can be developed through Recruitment and selection Training and development Performance appraisal Compensation Discipline and disciplinary procedure

Recruitment and ethical behaviour


Two-pronged approach in recruitment Recruiting more ethical people for the organization. Discouraging unethical people from applying for the job in the organization.

Selection and ethical practices

Selection tools can be used to inform applicants about the ethical practices of a company. Ethical values of the organization can be reinforced by adopting selection tools that are normally viewed by the employees or others as unbiased.

Training and development and ethical behaviour

Ethics training programmes can be organised for employees to train them on matters like the code of ethics and ethical decision-making process.

Training and development and ethical behaviour (contd.)

Training programmes can also be conducted to enable employees to recognize the situations posing ethical dilemmas and make a judicious use of the code of ethics to solve such problems.

Performance appraisal and ethical behaviour

While evaluating performance, organizations should follow ethical principles such as respect for the individual, mutual respect, procedural fairness and transparency.

Performance appraisal and ethical behaviour (contd.)

Since performance appraisal is prone to ethical slippages, the management should therefore ensure transparency in the assessment of the employee performance against standards.

Compensation and ethical behaviour

While framing compensation policies, the HR managers must make adequate provisions for recognizing and rewarding those employees who exhibit high ethical values like honesty and integrity.

Compensation and ethical behaviour (contd.)

The compensation policies should discriminate and discourage those employees who display unethical behaviour. While deciding compensation packages for employees, organizations can depend more on scientific tools like job analysis and work measurement to avoid ethical conflicts.

Discipline and disciplinary procedure

Disciplinary procedure of the organization should guarantee fair treatment to all its erring members while dealing with matters involving indiscipline. Organizations must have wellwritten ethical codes to enable the employees to evaluate their own ethical behaviour.

Guidelines for international business organizations on ethical issues


The guidelines for global organizations on ethical issues are Human rights obligation Welfare obligation Justice obligation