Ethics in Human
Resources
Module 1
Ethics and HR Management
 Firms with High Ethical Standards
 Are more likely to reach strategic goals.
 Are viewed more positively by stakeholders
 Are better able to attract and retain human resources.
 Ethics and Global Differences
 Different legal, political, and cultural factors in other
countries can lead to ethical conflicts for global
managers.
 Foreign Corrupt Practices Act (FCPA)
 Prohibits U.S. firms from engaging in bribery and other
practices in other countries.
Leaders are Readers
• The Smartest Guys in the Room (2004)
• McLean and Elkind
• “The tale of Enron is a story of human weakness,
of hubris and greed and rampant self-delusion;
of ambition run amok; of a grand experiment in
the deregulated world; of a business model that
didn’t’ work; and of smart people who believed
their next gamble could cover up their last
disaster—and who couldn’t admit they were
wrong”.
Business Ethics and HR Management Consequences
Ethical Behavior and Organizational
Culture
Ethics Program
Elements
Written code
of ethics and
standards of
conduct
Employee
training on
ethical
behaviors
Advice to
employees
on ethical
situations
Confidential
reporting of
ethical
problems
HR’s Role in Organizational Ethics
Legal Question
Ethical Question
• Does the behavior or
result meet all
applicable laws,
regulations, and
government codes?
• Does the behavior or
result meet both
organizational standards
and professional
standards of ethical
behavior?
Examples of HR-Related Ethical Misconduct Activities
Culture, Favoritism and Loyalty
HR Ethics and Sarbanes-Oxley
(SOX)
• Reduce the likelihood of illegal and unethical
behaviors by:
– Having a written code of ethics and conduct
standards
– Providing ethical behavior training and advice
– Establishing confidential reporting systems for
ethical misconduct
– Providing whistle-blower protection
– Supporting HR’s role as “keeper and voice” of
organizational ethics
Ethical Behavior and
Organizational Culture
• Classic Management Article
– “The perpetuation of unethical practices in
organizations”
• Socialization
• Attrition
• Justification from small to large