Chapter 11
Corporate Responsibility, Ethics
and Strategic HRM
This chapter aims to:
• Explore the growing interest in ethics
and Corporate Social Responsibility
• Understand the economic and sociopolitical context of HRM
• Discuss the relevance of ethical
theories, the law and theories of rights
and justice to HRM
• Consider organisations as human organisations
and how people within them are critical to the
delivery of ethical behaviour, at all levels
• Assess the nature and use of organisational
values and ethical codes
• Assess HRM as a profession and its role in
organisational ethics and Corporate Social
Responsibility (CSR)
Corporate Social Responsibility and
Business Ethics
• What’s in a name?
• Corporate Responsibility/Social Responsibility/
CSR
• All imply taking into account range of
stakeholders in considering economic, social /
political and environmental factors
Other terms include:
• Corporate Philanthropy ‘giving to others in
need’
• Corporate Citizenship ‘acting as agents in
economic, social and political issues’
• Sustainability ‘the link between a sustainable
business and a sustainable planet’
CSR – Definitions
• ‘business decision-making linked to ethical values,
compliance with legal requirements, and respect for
people, communities, and the environment’
Originates from a US organisation that encourages
corporate social responsibility, Business for Social
Responsibility (www.bsr.org)
• ‘process by which a company manages, measures
and reports its commitment to improve its positive
impact on society and the environment’
Emphasises that ‘to be successful and sustainable’
CSR approaches ‘must be integrated into the very
heart of the business and not left as a separate
function or responsibility’ (www.bitc.org.uk)
Growing Interest and Awareness of Ethics
and CSR
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High-profile scandals and unethical behaviour
Demand for ethical behaviour
Globalisation and instant communications
Public awareness and consumer behaviour
Reputational risk
Used as a ‘competitive advantage’
Offensive and defensive marketing
Other Pressures and Influences
• Government policies and regulations
• Laws / policies / funding, e.g regeneration
• Tax supportive / punitive
• Charities and NGOs (‘civil society’)
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HRM Strategy issues
Recruitment
Retention
Corporate culture
Market Economics and Differing Views
• ‘There is one and only one social responsibility of
business – to use its resources and engage in activities
designed to increase its profits (so long as it stays within
the rules)’
Milton Friedman, The Social Responsibility of Business is to
Increase its Profits, The New York Times Magazine, 13
September 1970
• ‘A “business of business” outlook has blinded companies
to outcomes (or shifts in their implicit social contract)
which often could have been anticipated’
Ian Davis, The Biggest Contract, The Economist, 28 May 2005
A stakeholder is defined as any group or
individual who is
‘either harmed by or benefits from the
corporation; or whose rights can be violated
or have to be respected, by the corporation’
Evan and Freeman (1993)
Steps of Social Responsibility
• Philanthropic
• Ethical
• Legal
• Economic
A. Carroll, The Pyramid of Corporate Social
Responsibility (1991)
Stakeholders
Examples
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Shareholders
Customers
Employees
Suppliers
Communities – local and global
Governments
Civil society
Globalisation can be defined as:
‘the progressive eroding of the relevance of
territorial bases for social economic and political
activities, processes and relations’
(Scholte, 2000)
Strategic HRM Issues
Conflicts of interest create complexity in ethical
dilemmas in the workplace (and how to handle
them)
This can include decisions about recruitment
and training as well as approaches to reward
management and employee relations
Ethics or ‘Values in Action’
Ethical theories provide rules that can be
applied to any given situation. Most fall into
two broad groups:
1. those that base the judgement of the decision
on the outcome of the actions
2. those that do not look at the whether the
outcomes are desirable but at the underlying
principles of the motivation to act
(see downsizing example in chapter)
Virtue Ethics – ‘good actions come from good
people’
Absolutism v Relativism (important in
globalisation):
• Absolutists maintain that if an ethical principle is
valid, it must be applicable everywhere
• Relativists would say that there is no one view
of ethics and what is ethical is always related to
the social, cultural and historical context
Further theories to consider:
• Discourse Ethics (using discourse to resolve
conflict and achieve mutually acceptable
solutions)
• Feminist Ethics (emphasising care for others
and the promotion of harmonious relationships)
• Postmodern Ethics (using moral impulses and
emotions to address ethical dilemmas)
Justice
Distributive – concerned
with outcomes and equity
Procedural – concerned
with processes and
activities
Interactional – concerned
with communication,
including trust and
openness
• Trust, fairness and justice all affect the
expectations of individuals’ psychological
contracts
• Individual personal values and integrity are
important
• Kohlberg (1969) developed stages of moral
reasoning and cognitive development
• Mismatch between an individual employee’s
stage of moral reasoning and that of an
organisation (or those in positions of power
within it) can result in actions such as
‘whistleblowing’
The Nature of Organisations
• ‘Organisations are collections of people working
together in a coordinated and structured fashion
to achieve one or more goals’ (Barney and
Griffin, 1992, p2)
• It is the people within organisations (their
individual morals, values and attitudes that affect
decisions, behaviour and actions at all levels)
who are critical to the delivery of ethical
behaviour
Ethics & HRM
• Human Resource Management evolved from Personnel
Management with its roots in the welfare officer’s role in
the original philanthropic business organisations such as
Cadburys and Rowntrees in the 1900s
• HRM is seen to promote working relationships,
employee involvement, development, equal opportunities
and justice. Yet it is unitarist in its approach, minimising
the role of trade unions
• ‘The strategy of justifying its existence in accounting
terms may cede too much to the dominant accounting
culture which in turn may also achieve little security for
the HRM function’ (Armstrong, 1999)
Rights & Duties of Employees
The rights & duties include:
• freedom from discrimination
• privacy
• due process
• participation and association,
• healthy & safe working
conditions
• fair wages
• freedom of conscience &
speech
• work
The issues include:
race, gender, age, disability,
surveillance of employees,
work-life balance
disciplinary / dismissal,
promotion, grievance
trade unions, participation and
involvement
occupational health, working
conditions
pay, new forms of work,
industrial action
whistleblowing
access to employment and
opportunities
(Adapted from Crane & Matten (2007) Business Ethics, 2nd edn,
Oxford University Press)
Ethical Principles / Codes & Values
Mission or value statements
Codes of ethics
• Organisation codes
They should be aspirational and set out rules /
expectations for employees
• Professional codes
Obligations to obey the law, be competent and
character-based norms
HR’s Role in Ethics and CSR
‘CSR is an opportunity for HR to demonstrate a
strategic focus and act as a business partner.
CSR needs to be embedded in an organisation’s
culture to make a change to actions and
attitudes, and the support of the top team is
critical to success’
CIPD’s Corporate Social Responsibility fact
sheet (June 2006)
CSR Competency Framework
Understanding society
Building capacity
Questioning ‘business as usual’
Stakeholder relations
Strategic view
Harnessing diversity
There are five levels of attainment for each
characteristic.
These range from basic awareness to understanding,
application, integration and leadership
(www.bitc.org.uk)
In developing a strategy for
Corporate Responsibility, Ethics and
Strategic HRM it is important to pay
as much attention to ‘how’ such as
strategy will be implemented as to
the strategy itself
Key Principles of Implementation
1. Establish and clarifying the organisation’s
core values and principles. These are the
thread that binds all the policies and principles
together
2. Ensure that there is clear leadership
throughout the organisation in establishing the
core values and principles
3. Develop an understanding of the
organisation’s stakeholders, the nature of the
relationships and responsibilities towards them
4. Ensure that the business strategy, ethical
principles, CSR and HR practices are aligned
5. Communicate consistently and effectively to all
stakeholders
6. Provide timely and appropriate training to
reinforce values and principles
7. Review strategy, policy, procedures and
practices to ensure consistency and compliance
Challenges of this Chapter
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To understand the key strategic role that HRM
practitioners in organisations can play in
Corporate Responsibility and Ethics
• For all engaged in HRM to appreciate the
different philosophies, perspectives and cultures
in developing approaches to ethical decisionmaking
• To bring together literature from the many
different disciplines contributing to the debates
about Corporate Responsibility, Ethics and
Strategic HRM to develop theoretical
frameworks for the conduct of HRM in
organisations
• To ensure that higher education and
professional bodies follow the UN ‘Principles for
Responsible Management Education' in the
design and delivery of management education,
including HRM
• To develop reliable methodologies for exploring
the difference between the espoused and the
enacted organisational strategies and policies in
relation to corporate responsibility and ethics
• To explore models and strategies that develop
thinking and analytical skills using ethical
frameworks to promote the integration of
responsible and ethical decision-making in HRM