Sunday, July 24, 2011

The Key Role of HR in Organizational Ethics

What is important to discuss today is how research informs us about the pivotal role human resource professionals can and should play in ethics management. Research suggests that successful ethics management depends less on formal ethics programs and more on employees' fairness perceptions, ethical leadership at all levels, and the alignment of multiple formal and informal cultural systems to support ethical conduct. To the extent that HR systems invoke fairness evaluations, HR managers design leadership training, and HR systems help to create and maintain organizational culture, HR professionals must play a key role in ethics management.

Research has found that employees' perceptions of fairness are equally or more important than other factors in terms of their influence on ethics-related outcomes. Fair treatment is so important because employees who perceive unfair treatment will rebalance the scales of justice by harming the organization. Employees who perceive fair treatment, on the other hand, will reciprocate by going above and beyond the call of duty to help management (by reporting ethical problems, for example). To ensure that employees feel they are treated fairly, it is important to design HR systems and interventions with perceived fairness as a key goal, with an emphasis on procedural (fair decision making procedures) and interaction (fair interpersonal treatment) fairness. Employees' perceptions of fair treatment should be monitored regularly via employee surveys, and changes should be made based upon the results.

It is also important for HR managers to work with the ethics/compliance office to follow up on employees' ethics concerns because a large percentage of reported concerns are fairness and therefore HR system-related. Most employees equate ethics and fairness; for them, there is no bright line between the ethics and HR offices.

Ethical leadership is vital to creating an ethical workforce. It is a myth that employees are fully formed moral agents who can 'lead themselves' when it comes to ethics. Research indicates that most employees look outside themselves to significant others for guidance in ethical dilemma situations. If this leadership and guidance is not provided by the leader of the organization, employees will seek it elsewhere, most likely from their peers.

According to research on ethical leadership, an ethical leader is a leader who cares, listens to what employees have to say, and has the best interests of employees in mind. In addition, an ethical leader communicates an ethics and values message. When making decisions, he/she asks "what is the right thing to do?" An ethical leader also role models ethical conduct and conducts his/her personal life in an ethical manner. This role model is trusted by employees and sets an example of how to do things the right way in terms of ethics. An ethical leader holds everyone accountable, and defines success not just by results but also by the way they are obtained

It is important that HR managers design performance management, career development, and training systems that: 1. Hold leaders accountable for the ethical dimension of their leadership; 2. Identify ethical leaders and rely on them for role modeling and mentoring others; 3. Incorporate the ethical dimension of leadership into all leadership training and development programs.


HR systems are key to the development and maintenance of ethical culture. One of the steps HR managers can take is to focus on how ethics and values fit into the design of key systems such as performance management and reward systems. HR managers can integrate accountability for ethics and values into performance management systems so that implementing ethical values is weighted substantially in promotion and compensation decisions (at least as much as bottom line results). Additionally, HR managers can focus on reward systems by rewarding 'exemplary' ethical behavior. To focus on discipline, unethical conduct must be disciplined consistently and at high levels, to send a powerful signal that management means what it says about ethics. Finally, effective ethics management requires regular assessment of the ethical culture. Overall, HR and ethics managers must focus on how cultural systems fit together or align in support of ethical conduct, a common goal.


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