PART FIVE
EMPLOYEE RELATIONS
C H A P T E R
F o u r t e e n
14
Ethics, Justice and
Fair Treatment
in HR Management
Lecture Outline
Strategic Overview
Ethics and Fair Treatment at Work
The Meaning of Ethics
Ethics and the Law
Ethics, Fair Treatment, and Justice
What Shapes Ethics Behavior at Work?
Individual Factors
Organizational Factors
The Boss’s Influence
Ethics Policies and Codes
The Organization’s Culture
The Role of HR Management in Fostering Ethics and Fair
Treatment
Why Treat Employees Fairly?
HR Ethics Activities
Building Two-Way Communications
Employee Discipline and Privacy
Formal Disciplinary Appeals Processes
Discipline Without Punishment
Employee Privacy
Managing Dismissals
Grounds for Dismissal
Avoiding Wrongful Discharge Suits
Personal Supervisory Liability
The Termination Interview
Layoffs and the Plant Closing Law
Adjusting to Downsizings and Mergers
In Brief: This chapter explores
issues, policies, and problems related
to ethics, fair treatment, discipline
and termination of employees. These
issues have become more critical in
today’s environment.
Interesting Issues: With the recent
events at Enron, WorldCom and
other scandals, ethics has become a
major issue in today’s world. It is
worth discussing what has changed to
make this an issue. Is there more
unethical behavior or have standards
changed, or is it simply that todays
media and communications shed
more light on the problems?
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AN
NO
TAT
ED
OU
TLI
NE
I.
Ethics and Fair Treatment at Work
A. The Meaning of Ethics – Ethics refers to “the principles of conduct governing an
individual or a group.” Ethical decisions also involve morality, which is society’s
accepted standards of behavior. It would simplify things if it was always clear
which decisions were ethical and which were not. Unfortunately, it is not.
B. Ethics and the Law – The law is not the best guide about what is ethical, because
something may be legal but not right, and something may be right but not legal.
“Don’t lie, don’t cheat, don’t steal. We were all raised with essentially the same
values. Ethics means making decisions that represent what you stand for, not
just what is legal.
C. Ethics, Fair Treatment, and Justice – Experts generally define organizational
justice in terms of its three components—distributive justice, procedural justice,
and interpersonal or interactive justice. Distributive justice refers to the
fairness and justice of the decision’s result. Procedural justice refers to the
fairness of the process. Interactional or interpersonal justice refers to “the
manner in which managers conduct their interpersonal dealings with employees,”
and in particular to the degree to which they treat employees with dignity as
opposed to abuse or disrespect.
The New Workplace: Employment Contracts – In Europe, most
countries require employers to give detailed information to new
employees about their employment contract. Most of these include
such things as grievance procedures.
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II.
NOTES
Educational Materials to Use
What Shapes Ethics Behavior at Work?
A. Individual Factors – Because people bring to their jobs their own ideas of what is
morally right and wrong, the individual must shoulder much of the credit (or
blame) for the ethical choices he or she makes.
B. Organizational Factors – The scary thing about unethical behavior at work is that
it’s usually not driven by personal interests. Being under the gun to meet
scheduling pressures was the number-one factor in causing ethical lapses. Most
ethical lapses occurred because employees felt pressured to do what they
thought was best to help their companies.
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C. The Boss’s Influence – The boss sets the tone, and by his or her actions sends
signals about what is right or wrong. According to one report, for instance, “the
level of misconduct at work dropped dramatically when employees said their
supervisors exhibited ethical behavior.”
D. Ethics Policies and Codes – An ethics policy and code is one signal that the firm
is serious about ethics. Sometimes ethics codes work, and sometimes they don’t.
E. The Organization’s Culture
1. What is Organizational Culture? – Organizational culture is the characteristic
values, traditions, and behaviors a company’s employees share. A value is a
basic belief about what is right or wrong, or about what you should or
shouldn’t do. To an outside observer, a company’s culture reveals itself in
several ways. You can see it in employees’ patterns of behavior, such as
ceremonial events and written and spoken commands. You can also see it
in the physical manifestations of a company’s behavior, such as written rules,
office layout, organizational structure, and dress codes.
2. The Manager’s Role – When it comes to creating a corporate culture,
effective managers do not leave it to chance. Things that help are: Clarify
Expectations, Use Signs and Symbols. Symbolism, Provide Physical
Support, Use Stories, Organize Rites and Ceremonies
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III.
NOTES
Educational Materials to Use
The Role of HR Management in Fostering Ethics and Fair Treatment
A. Why Treat Employees Fairly? – There are some practical reasons for taking care
that you treat the firm’s employees with the fairness and justice that all
employees deserve.
An increasingly litigious workforce is one reason.
Perceptions of fairness relate to enhanced employee commitment; to enhanced
satisfaction with the organization, with jobs, and with leaders; and to
organizational citizenship behaviors.
B. HR Ethics Activities
1. Staffing and Selection – Screening out undesirables can actually start before
the applicant even applies, if the HR department creates recruitment
materials containing explicit references to the company’s emphasis on
integrity and ethics. The selection process also sends signals about what the
company’s values and culture really are, in terms of ethical and fair
treatment.
2. Training – Ethics training typically plays a big role in helping employers
nurture a culture of ethics and fair play. Such training usually includes
showing employees how to recognize ethical dilemmas, how to use ethical
frameworks to resolve problems, and how to use HR functions in ethical
ways.
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3. Performance Appraisal – The firm’s performance appraisal processes
provide another opportunity to emphasize its commitment to ethics and
fairness. First, the appraisal can actually measure employees’ adherence to
high ethical standards.
4. Reward and Disciplinary Systems – ensure that the firm rewards ethical
behavior and penalizes unethical behavior
5. Workplace Aggression and Violence – workplace aggression and violence
are increasingly serious problems. Many HR actions, including layoffs, being
passed over for promotion, terminations, and discipline can prompt
perceptions of unfair treatment that translate into dysfunctional behavior.
6. Other HR Activities – Employers’ ethics committees will often include HR
professionals.
Improving Productivity Through HRIS: Complying with SarbanesOxley – Among other things, the act requires that the CEO and the
CFO of publicly traded companies personally attest to the accuracy
of their companies’ financial statements, and also to the fact that its
internal controls are adequate. With their personal credibility on the
line, the new law has focused top management’s attention on
ensuring that all the firm’s employees take ethics very seriously. The
problem is, training and following up programs like this can be very
expensive. All of one company’s employees have easy access to a
standardized ethics training program through their PCs, and they can
easily track who has taken the training and who has not.
C. Building Two-Way Communications
The opportunity for two-way communication plays an important role in our
perceptions of how fairly we’re being treated.
When You’re on Your Own, HR for Line Managers and
Entrepreneurs: Small Business Ethics – studies suggest that small
and midsize enterprises are prone to the same unethical corporate
behavior as big firms. There are several steps a small business
owner can take to establish a workable, simple ethics program.
First, size up your company’s current ethics-related activities as they
stand now. Second, create a code of conduct, and make it clear to
all employees that you take it seriously. Third, train your people.
Fourth, make it easier to solicit feedback from your employees.
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IV.
NOTES
Educational Materials to Use
Employee Discipline and Privacy
The purpose of discipline is to encourage employees to behave sensibly at work. In
an organization, rules and regulations serve about the same purpose that laws do in
society; discipline is called for when one of these rules or regulations is violated. A
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fair and just discipline process is based on three pillars: clear rules and regulations, a
system of progressive penalties, and an appeals process.
When You’re on Your Own, HR For Line Managers and
Entrepreneurs: Disciplining and Employee – Even if you’re a
manager in a Fortune 500 company, you may find yourself without
company guidelines when you’re thinking of disciplining or
discharging an employee for violating company rules. Thirteen
guidelines are given to assist the manager who must implement
disciplinary action.
The New Workplace:
Comparing Males and Females in a
Discipline Situation – A study is cited in which female employees
were disciplined much more harshly for the same violations than
were male employees. The gender of the boss made no difference
in the differential treatment.
A. Formal Disciplinary Appeals Processes – even companies without unions may
have a very formalized appeals process.
B. Discipline Without Punishment – aims to avoid disciplinary problems. It does this
by gaining employees’ acceptance of the rules and by reducing the punitive
nature of the discipline itself.
C. Employee Privacy – The four main types of employee privacy violations upheld
by courts are intrusion, publication of private matters, disclosure of medical
records, and appropriation of an employee’s name or likeness for commercial
purposes. Background checks, monitoring off-duty conduct and lifestyle, drug
testing, workplace searches, and monitoring of workplace activities trigger most
privacy violations.
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V.
NOTES
Educational Materials to Use
Managing Dismissals
Dismissal is the most drastic disciplinary step the manager can take. Because of this,
special care is required to ensure that sufficient cause exists for it.
A. Grounds for Dismissal
1. Unsatisfactory performance
2. Misconduct
3. Lack of qualifications for the job
4. Changed requirements (or elimination) of the job
Know Your Employment Law: Gross Misconduct – There are
instances in which the employee’s conduct is so outrageous that it
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qualifies as “gross misconduct.” A list of factors extracted from court
decisions on gross or willful misconduct by employees in other
contexts will aid the employer in writing its policy on gross
misconduct
B. Avoiding Wrongful Discharge Suites – Wrongful discharge occurs when an
employee’s dismissal does not comply with the law or with the contractual
arrangement.
Avoiding wrongful discharge suits requires a two-pronged
approach. First, set up employment policies and dispute resolution procedures
that make employees feel they are treated fairly. Second, do the preparatory
work – Paying particular attention to the employee handbook – that will help
avoid such suits.
C. Personal Supervisory Liability – Courts sometimes hold managers personally
liable for their supervisory actions. Managers should be fully familiar with
applicable federal, state, and local statutes and know how to uphold their
requirements.
D. The Termination Interview – Guidelines include: 1) Plan the interview carefully,
2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of
the severance package, 6) Identify the next step.
1. Outplacement Counseling – is a systematic process by which someone
you’ve terminated is trained and counseled in the techniques of conducting a
self-appraisal and securing a new job appropriate to his or her needs and
talents.
2. Exit Interview – Many employers conduct exit interviews with employees who
are leaving the firm. They aim to elicit information about the job or related
matters that might give the employer a better insight into what is right—or
wrong—about the company.
E. Layoffs and the Plant Closing Law
1. The Plan Closing Law – requires employers of 100 or more employees to
give 60 days’ notice before closing a facility or starting a layoff of 50 people
or more. It simply gives employees time to seek other work or retraining by
giving them advance notice of the shutdown.
2. Bumping/Layoff Procedures – Employers who encounter frequent business
slowdowns and layoffs may have procedures that let employees use their
seniority to remain on the job.
3. Alternatives to Layoffs – Given the investments they have in recruiting,
screening, and training employees, many employers are hesitant to lay off
people at the first sign of business decline. There are several alternatives.
F. Adjusting to Downsizings and Mergers
Firms often use downsizing—reducing, usually dramatically, the number of
people the firm employs—to better their financial position. Yet many firms
discover operating earnings don’t rise after major cuts. Low morale among those
remaining may be part of the problem. Regardless of why you’re downsizing,
think through the process, both to avoid unnecessary consequences and to
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ensure the process is fair. Some guidelines for implementing a reduction in force
are provided.
The HR Scorecard Strategy and Results: The Hotel Paris’s New
Ethics, Justice, and Fair Treatment Process: Having fair and just
procedures in place effected employee morale and behavior, and
thus company performance. supervision. Procedural justice and
satisfaction with supervision were both related to improved employee
commitment. And employee commitment was related to intention to
remain with the hotel, and therefore to reducing employee turnover.
Procedural and interpersonal justice led to improved employee
satisfaction with supervision and commitment, and thus, to improved
employee discretionary behaviors, and ultimately to higher guest
service satisfaction.

NOTES
Educational Materials to Use
DISCUSSION QUESTIONS
1. Explain how you would ensure fairness in disciplining, discussing particularly the
prerequisites to disciplining, disciplining guidelines, and the discipline without punishment
approach. There are many things that can be helpful: • Make sure the evidence supports the charge
of employee wrongdoing. • Ensure that the employee’s due process rights are protected. • Warn the
employee of the disciplinary consequences. • The rule that was allegedly violated should be
“reasonably related” to the efficient and safe operation of the particular work environment. • Fairly and
adequately investigate the matter before administering discipline. • The investigation should produce
substantial evidence of misconduct. • Rules, orders, or penalties should be applied evenhandedly. •
The penalty should be reasonably related to the misconduct and to the employee’s past work history.
• Maintain the employee’s right to counsel. • Don’t rob a subordinate of his or her dignity. • Remember
that the burden of proof is on you. • Get the facts. Don’t base a decision on hearsay or on your
general impression. • Don’t act while angry. • Create a formalized appeals process. • Make sure all
rules and policies are communicated and clearly explained in advance.
2. Why is it important in our highly litigious society to manage dismissals properly? If you do not
follow the law, and your own policies and procedures, you are likely to have the courts rule against
you. This can be very costly and damaging to employee morale and your reputation.
3. What techniques would you use as alternatives to traditional discipline? What do such
alternatives have to do with “organizational justice”? Why do you think alternatives like these
are important, given industry’s need today for highly committed employees? If you are going to
attract and retain top quality employees, it is critical to have a strong sense of organizational justice.
Disciplinary techniques and methods can be related to the legal techniques and methods in our
society at large. If they work well, people believe justice is served. If the do not work well, people
feel there is injustice.
DESSLER COMPANION WEB SITE
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We invite you to visit the Dessler homepage (http://www.prenhall.com/dessler) on the
Prentice Hall Web site for the best online business support available. This site
provides professors with a customized course Web site, including new
communication tools, one-click navigation of chapter content, and great resources,
such as Internet Resources, an HRCI Exam Prep Guide, assessment exercises, and
more.
INDIVIDUAL AND GROUP ACTIVITIES
1. Working individually or in groups, interview managers or administrators at your employer or
college in order to determine the extent to which the employer or college endeavors to build
two-way communication, and the specific types of programs used. Do the managers think
they are effective? What do the employees (or faculty members) think of the programs in use
at the employer or college? Encourage students to be precise and inquisitive in their pursuit of this
information.
2. Working individually or in groups, obtain copies of the student handbook for your college and
determine to what extent there is a formal process through which students can air grievances.
Based on your contacts with other students, has it been an effective grievance process? Why
or why not? Ask what effect this has on the sense of organizational justice.
3. Working individually or in groups, determine the nature of the academic discipline process in
your college. Do you think it is effective? Based on what you read in this chapter, would you
recommend any modifications? Encourage students to be inquisitive and insightful as they
examine this critical and real issue.
4. The HRCI “Test Specifications” appendix at the end of this book lists the knowledge someone
studying for the HRCI certification exam needs to have in each area of human resource
management (such as in Strategic Management, Workforce Planning, and Human Resource
Development). In groups of four to five students, do four things: (1) review that appendix
now; (2) identify the material in this chapter that relates to the required knowledge the
appendix lists; (3) write four multiple choice exam questions on this material that you believe
would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from
your team post your team’s questions in front of the class, so the students in other teams can
take each others’ exam questions. Material from this chapter that applies to the HRCI exam would
include: the meaning of ethics, ethics and the law, ethics fair treatment and justice, what shapes
ethics behavior at work, ethics policies and codes, the organization’s culture, HR ethics activities,
building two-way communications, formal disciplinary appeals processes, discipline without
punishment, employee privacy, grounds for dismissal, avoiding wrongful discharge suits, personal
supervisory liability, the termination interview, layoffs and the plant closing law, adjusting to
downsizings and mergers.
5. In a recent research study at Ohio State University, a professor found that even honest
people, left to their own devices, will steal from their employers. In this study, the researchers
gave financial services workers the opportunity to steal a small amount of money after
participating in an after-work project for which the pay was inadequate. Would the employees
steal to make up for the underpayment? In most cases, yes. Employees who scored low on
an honesty test stole whether or not their office had an ethics program that said stealing from
the company was illegal. Employees who scored high on the honesty test also stole, but only
if their office did not have such an employee ethics program—the “honest” people didn’t steel
if there was an ethics policy. In groups of four or five students, answer these questions: Do
you think findings like these can be generalized? In other words, would they apply across the
board to employees in other types of companies and situations? If your answer is yes, what
do you think this implies about the need for and wisdom of having an ethics program? You
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should receive a wide variety of responses to this question. It is a real question of whether the
employees who score high on honesty tests will, in fact, respond differently based on the existence of
an ethics policy.
EXPERIENTIAL EXERCISES & CASES
Experiential Exercise: Discipline or Not?
The purpose of this exercise is to provide the student with some experience in analyzing and handling an
actual disciplinary action. Students have the opportunity to look at a disciplinary action that went to
arbitration and see if they come up with the same decision that the arbitrator did.
Application Case: Fire My Best Salesperson?
1. What should you do now? The salesperson should be fired.
2. Why should you do it? Because his actions represent gross misconduct.
3. How would you do it? Guidelines in the textbook for a termination interview include: 1) Plan the
interview carefully, 2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of
the severance package, 6) Identify the next step.
Continuing Case: Carter Cleaning Company
Guaranteeing Fair Treatment
1. What you do if you were Jennifer, and why? The difficulty is that even though they have always
“felt strongly about not allowing employees to smoke, eat, or drink in their stores,” they had
apparently never established any policies about this. Given this, it seems appropriate to give them a
strong verbal warning, including the explanation that future violations will result in more severe
disciplinary action.
2. Should a disciplinary system be established at Carter’s Cleaning Centers? Definitely.
3. If so, what should it cover, and how would you suggest it deal with a situation such as the one
with the errant counter people? It should cover all behavior and performance that is expected of
employees. It would identify the steps of the process, including verbal warnings, written warnings,
and dismissal.
4. How would you deal with the store manager? The real question is whether the store manager
knew about their beliefs about eating in the store. If he or she did, then a written warning is in store, if
not, then a strong verbal warning similar to the employees.
KEY TERMS
ethics
The principles of conduct governing an individual or a group; specifically,
the standards you use to decide what your conduct should be.
distributive justice
The fairness and justice of a decision’s results.
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procedural justice
The fairness of the process.
interactional justice
The manner in which managers conduct their interpersonal dealings with
employees.
organizational culture
The characteristic values, traditions, and behaviors a company’s
employees share.
nonpunitive discipline
Discipline without punishment.
discipline without
punishment
A disciplinary process in which employees who violate policies are given
oral reminders, then a written reminder, then a one-day decision-making
leave, then dismissal.
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