Business Ethics for HR Professionals

Prepared by the SHRM Ethics Special Expertise Panel

©SHRM2012

“Ethics is learned by modeling, not by reading a bunch of books over the weekend.”

-- John Bruhn

Former Provost

Penn State University - Harrisburg

Ethical Issues in Human Resources

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• What is ethics?

• The Business Case

• The HR Professional’s Role

Agenda

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The rules of conduct or moral principles

guiding individual or group behavior

Definition of Ethics

Part I: What is Ethics

Source: www.shrm.org©SHRM2012

Moral Principles

What are the rules of conduct or moral principles?

• No single, universal standards or rules • Individual or cultural self-interests,

customs, and religious principles• Serves one’s self interests and needs

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Moral Decisions

Where does one learn to make moral decisions?

• In the home• In their social community• From the media• In the workplace

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Values

• What are your personal values? What matters most to you?

• What are your organization’s values? What matters most to the organization?

• What happens when your values and your organization’s values do not match?

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Ethical Principles

Ethical Principles in the Workplace

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Ethical Decision-making Principles

• Judged on consequences • Net benefits over costs are

greatest for the majority• The greatest good for the

greatest number

Utilitarianism

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Ethical Decision-making Principles

• The means justify the ends• Intention of an act treats all

persons with respect• Everyone should act this way

Universalism

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Ethical Decision-making Principles

• Entitlement• Individual rights guaranteed to all

Rights

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Ethical Decision-making Principles

• Fairness and equality• Opportunity, wealth, and burden

are fairly distributed

Justice

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Situational Opportunit

y

Pressure or

Motive

Rationalizatio

n

Improper Behavior

Source: Choosing Ethical Excellence 2006©SHRM2012

Part II

The Business Case

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Definition of Business Ethics

The art and discipline of applying ethical principles to examine and solve complex moral dilemmas.

Source: Business Ethics: A Managerial, Stakeholder Approach 1994

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Culture

Ethical Leadership

Ethical Conduct

Corp Social Responsibility

Legal

Com

pliance

Business Ethics

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“What executives do and value is minutely watched throughout the whole organization. And nothing is noticed more quickly – and considered more significant – than a discrepancy between what executives preach and what they expect their associates to practice.”

-- Peter Drucker

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The 4 Rs

Does an ethical organization have a competitive advantage?

Risk

Recruiting

Reputation

Raking in the dough

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• Discipline for employees who violate their organization’s ethics standards

• Formal ethics program including written standards

• A means for anonymous reporting of ethics standards violations

• Written non-retaliation policy for employees who report perceived violations

Source: The Ethics Landscape in American Business 2008

Top Ethics/Standards Practices

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• Intended to foster truthful communication between company officers and shareholders

• Code of ethics required• Requires training• Protects Whistleblowers

Sarbanes-Oxley Act of 2002

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Old and New Company Ethics

Old Ethic New Ethic

Do the minimum required by law Do the right thing

Keep a low profile Show you are doing the right thing

Downplay public concerns Seek to indentify and address public concerns

Reply to shareholders inquires when necessary

Be responsible to stakeholders

Communicate on a need-to-know basis

Communicate openly

Make decisions on the bottom line & laws only

Integrate all of the above into decision-making

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• Position ethics as the #1 value and consideration for the organization

• Don’t pigeon hole employees by their demographic

• Need check and balance for how results are achieved to ensure ethical practices were followed in the process

How to nurture employees to make ethical decisions

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Business commitment and contribution to the quality of life of..> Employees> Employee’s families> Local community> Overall society

..to support sustainable economic development

Corporate Social Responsibility

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The HR Professional’s Role

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Role of HR Professionals in Organizational Ethics

• The HR department is a primary resource for ethics-related issues in the organization – 83%

• HR is involved in formulating ethics policies for their organization – 72%

Source: The Ethics Landscape in American Business 2008

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Role of HR Professionals in Organizational Ethics

• HR is held to a higher standard• You are the guardians of organizational

culture• HR determines and facilitates training

needs for the organization• HR employs reward and punishment

systems to reinforce what kind of behavior is valued

• HR uses information gleaned from exit interviews to support and improve the ethical environment©SHRM2012

The PLUS Rule:Framework for Ethical Decision-

Making

• P - Policies and Professional Standards• L - Laws and Regulations• U - Universal/Organizational Values• S - Self/Personal Values or Standards

Source: www.ethics.org©SHRM2012

The CLICK Rule:Framework for Ethical Decision-

Making

• What are the CONSEQUENCES if I do this? Who will benefit? Who will suffer?

• Is it LEGAL?• Would I like to see this as my IMAGE on the

front page of the newspaper? Would I like to tell this to my kids?

• Does this decision support or damage our corporate CULTURE and values?

• Does it cause a KNOT in my stomach?Source: Developed for Florida Power Corp by Lee Gardenswartz, Anita Rowe, and Patricia Digh

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Six Essential Elements of an Ethics Program

1. Written standards of conduct 2. Training on ethics 3. Mechanisms to seek ethics advice or

information4. Means to report misconduct anonymously5. Discipline of employees who violate ethical

standards6. Evaluation of employees performance

based on ethical conduct  

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Resources

• www.shrm.org - > The Ethics Landscape in American

Business> Business Ethics: The Role of Culture

and Values for an Ethical Workplace> Ethics and Generational Differences:

Interplay between Values and ethical business decisions

• www.ethics.org - Ethics Resource Center> Choosing Ethical Excellence Alan V.

Funk> Business Ethics: A Managerial,

Stakeholder Approach Joseph W. Weiss ©SHRM2012

SHRM Special Expertise Panel - Ethics

This training product would not be possible without the creative work and contributions of the following Members of the SHRM Ethics Special Expertise Panel:

• Marty Val Hill, SPHR, Live your Legacy• Linda Magyar, SPHR, Pillsbury Winthrop Shaw Pittman

LLP • Cathie Bishop, SPHR, Great West Casualty Co. • Nancy Volpe, SPHR GPHR, Center for People Solutions

LLC• Michael J. Colledge, SPHR, CCP, Brigham Young

University• Joyce LeMay, SPHR, Bethel University• Bonnie Turner, SPHR, Ph.D., MBCI

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