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Business Ethics for the HR Manager Nov 2009

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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

©SHRM2012

• 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

©SHRM2012

Moral Decisions

Where does one learn to make moral decisions?

• In the home

• In their social community • From the media

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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?

©SHRM2012

Ethical Principles

Ethical Principles in the

Workplace

©SHRM2012

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

©SHRM2012

Ethical Decision-making Principles

• Entitlement

• Individual rights guaranteed to all

Rights

©SHRM2012

Ethical Decision-making Principles

• Fairness and equality

• Opportunity, wealth, and burden are fairly distributed

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Situational Opportunity Pressure or Motive Rationalization Improper Behavior

Source:Choosing Ethical Excellence2006

©SHRM2012

Part II

The Business Case

©SHRM2012

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 Approach1994

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Culture Ethical Leadership

Corp Social Responsibility

Business Ethics

©SHRM2012

“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

©SHRM2012

The 4 Rs

Does an ethical organization have a competitive advantage?

Risk Recruiting Reputation

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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

©SHRM2012

• Intended to foster truthful communication between company officers and shareholders

• Code of ethics required • Requires training • Protects Whistleblowers

Sarbanes-Oxley Act of 2002

©SHRM2012

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

©SHRM2012

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

©SHRM2012

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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

©SHRM2012

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

ThePLUSRule:

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

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TheCLICKRule:

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

©SHRM2012

Six Essential Elements of an Ethics Program

1. Written standards of conduct 2. Training on ethics

3. Mechanisms to seek ethics advice or information 4. Means to report misconduct anonymously 5. Discipline of employees who violate ethical

standards

6. Evaluation of employees performance based on ethical conduct

©SHRM2012

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

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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

References

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