CHAPTER-FOUR

BUSINESS ETHICS AND HUMAN RESOURCE MANAGEMENT

4.1. Introduction

A business entity necessarily calls for a human capital. Human resource is the most important
and vital asset of an organization. It is then imperative to evaluate the ethics of employment
or human resource Ethics. Employment ethics is concerned with the right type of conduct
employees and employers must engage in their relation. By employing moral theories it
evaluates the corporation work place behaviors with the intention of creating a morally right
healthy work environment. In short employment ethics explains the right and wrong in
employment relationship. The higher bargaining force employers have on their employees
call for a critical evaluations of the acts of corporations and their leaders to balance of any
wrong that may harm parties in workplace. Yet work ethics apply for both the employees and
employers.

An employment ethics discussion raises or covers issues beyond the ones created by the
employment contract. Respecting terms of contract being considered as one part of ethics,
work ethics try to cover issues which the employment contract may have skipped to notice or
rather a contract plus issues. Employment ethics is then in brief an effort of overcoming
amoral and immoral management with Moral management.

4.2. Ethical Decisions in Human Resource Management Functions

Human resource management is a business function that deals with the management of
relationships between groups of people in their capacity as employees, employers and
managers. Inevitably, this process can raise questions about what are the responsibilities and
rights of each party in this regard, as well as what constitutes a correct attitude. Human
resource management has an ethical basis and deals with the practical consequences of human
behavior. In this section we will briefly discuss some of the critical ethical issues in human
resource management decisions.

1. Ethics in Job Design

An understanding of job/work design can help executives to design and redesign job in such a
way that it positively affects employee motivation and business or organizational success.
Most frequently used job design approaches can includes work simplification, job rotation,
job enlargement, job enrichment, job sharing, independent work teams, de-jobbing and
empowering the workforce.

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a. Job Rotation: Job rotation takes place when any employee suffers from over reutilization
of his work. Then the employee is rotated to another job, at the same level that has similar
skill requirements but sometimes we find some unethical issues like rotating the worker
in the kinds of jobs where no innovative perspectives are present and the periodic shifts of
workers may be the outcome of some conflicts among workers and employees who are
involved in job design.

b. Work Simplification: Means simplifying the work of the employee, so that they can
understand it easily and perform to full of their skills. The unethical issue comes when the
work is over simplified that leads to boredom, more mistakes, less interests and tendering
resignations.

c. Job Enlargement: Job enlargement is the horizontal expansion of jobs. It increases the
number and variety of tasks that an individual has to perform. Though motivational
impacts are there of job enlargement, yet it may sometimes result in much more boring
tasks.

d. Job Enrichment: Job enrichment is the vertical expansion of job. In an enriched job, an
employee would do the work with complete activities, more freedom and increased
responsibility. The only thing which should be handled carefully is to take care while
selecting the employee whose job should be enriched.

e. Job Sharing: Is the practice of having two or more people split a job. So people find it as
an opportunity to get an experience of two heads. The unethical issue involve here is to
intentionally involve two person to do single job who do not successfully coordinate.

f. Empowerment: In this option employees go for requiring skills and additional

knowledge to do the job in which they have their interest and aptitude.

2. Ethics in Recruitment and Selections

Recruitment: Is concerned with the process of attracting a sufficient number of individuals

with the right profile in terms of qualifications, experience, skills and other relevant attributes
to indicate their interest in working for the organization. It is considered as a positive activity
that requires employers to sell themselves in the relevant labor markets so as to maximize the
pool of well-qualified candidates from which future employees can be chosen.

Selection is the process of choosing the individual or individuals who best meet the job-
related criteria.

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While recruitment is a positive activity, by contrast selection is viewed as a negative process
or activity as it involves picking out the best of the bunch and turning down the rest . The
following are unethical practices in recruitment and selection process.

a. Discrimination: Discrimination includes any exclusion or preferences made on the basis

of race, sex, age, religion, national origin, pregnancy/child birth, familial/marital status
disability, sexual orientation, HIV/AIDS, prior arrest/conviction record to mention a few
which has the effect of impairing equality at work. Discrimination based on these factors
is unethical practices in the recruitment and selection process.

b. Sexual Harassment: Sexual harassment refers an unwelcome sexual advances, request

for sexual favors, and other verbal or physical conduct of a sexual nature. Forms of
sexual harassment include: physical assault (ranging from touching to serious assault);
verbal and/or written harassment (jokes, offensive language, gossip); visual display
(posters, graffiti, obscene gestures); coercion (pressure for sexual favors); intrusion
(pestering, spying, following). Sexual harassment occurs at work when submission to
such conduct is made either explicitly or implicitly a term or condition of an individual's
employment or when submission to or rejection of such conduct by an individual is used
as the basis for employment decisions affecting such individual or such conduct has the
purpose or effect of substantially interfering with an individual's work performance or
creating intimidating, hostile or offensive working environment.

c. Unfair Recruitment and Selection Practices: Such as nepotism, favoritism, quota

system, asking for bribes prior to and after recruitment and selection exercise are
considered as unfair practices. lack of realistic job preview as well as non- disclosure of
the positive as well as the negative characteristics of the job to applicants at the point of
entry into the organization which could lead to undue expectations and could cause
frustration and eventual turnover. Giving preference to job candidates on the basis of the
university attended is unfair practice.

d. Negligent Hiring: Employing prospective candidates without proper and adequate

background checks or reference.

e. Unethical selection process: In any organization so many selection devices have been
used like interviews written tests, performance simulation tests etc. There are also some
practical ethical questions arise like

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 Ometimes the organizations select unsuitable employees due to pressure from top level,
some internal politics etc.
 Election of a candidate as he/she suits the job is ethical but when people make some
adjustment in job specification according to the suitability of the candidate just because of
any corrupt activity,
 The practice of taking more employees than what is needed is also a common unethical
practice in selection procedure.
 If such unethical practice happen in selection process, it directly leads towards
inefficiency and then has impact on organization growth and productivity.

4. Ethics in Training and Development

Competent employees don’t remain competent forever as competency or skills deteriorate

and can become obsolete. So organizations spend a good amount of money on training and
development. Training is an organized procedure by which people learn knowledge/skill for
a definite purpose. Sometimes unethical practices make training ineffective. The following
are some unethical training and development practices:

 Training for training's sake without a demonstrated need,

 Improper evaluation of training and development,
 Paying lip service to training and development,
 Negative training and development philosophy,
 Training based in favoritism and nepotism,
 Training program viewed by trainees as a form of holiday from work,
 Training based on discrimination on the grounds of sex, age, ethnicity or closeness to
ones boss.

5. Ethics in Performance Evaluation

Performance evolution is needed for so many purposes compensation, performance feedback,

training promotion and Research etc. The main objective of performance evaluation is to
access accurately an individual’s performance contribution as a basis for making reward
allocation decisions. As it is always beneficial to the organization as well as to the employee
but sometimes people do not take performance evaluation, as it should be. Unethical
performance appraisal practices can include:

⎬ Halo effect: Giving the employee impressive (high) rating on one factor and then using
this to influence positively rating on all other factors. That is first impression is the last
impression.

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⎬ Horns effect: This is the opposite of the halo effect. This is a rating error that occurs
when the rater responds to one negative aspect by rating the employee low in other
aspects.

⎬ Strictness error: This is a rating error committed when the rater consistently gives
employees very low ratings.

⎬ Leniency error: Some raters are by nature too liberal, while others tend to be lenient in
their rating of employees.

⎬ Recency error: This is a tendency of many evaluators to give much more weight to the
recent behaviors of the employees than past behavior.

⎬ Central tendency: It is the most commonly found error. It is the tendency of most raters
to give average ratings to all employees. This may be due to the fact that the rater lacks
sufficient knowledge about the employee's job performance.

⎬ Errors of variable standards: This results from the use of different standards of
performance in the course of rating employees performance.

⎬ Miscellaneous biases: For instance, biases may be based on the grounds of race, sex,
appearance, religion, country of origin, favoritism and nepotism.

Thus, for appraisal to be effective and ethically-based, the above errors should be avoided by
raters. More so, appraisal system should be open and not confidential so that employees can
have feedback on their performance ratings as well as their strengths and weaknesses.

6. Ethics in Compensation and Reward Management

This is a very important part of any company’s human resource practices. But a number of
questions arise regarding the Compensation and Reward Management ethical issues. Most
conflicts at work could be explained by poor pay and other pay- related issues. The outcome
of pay dissatisfaction may include lower job performance, increase grievance, absenteeism as
well as labor turnover. On the other hand, excessive compensation costs can reduce an
organization's competiveness and its ability to provide jobs. Sound compensation policy
should create a balance between satisfaction and competiveness.

Pay is a contractual phenomenon, as the payment of salaries and wages is an indication of a

relationship and transaction between the employees and employers. Staff remuneration
otherwise called compensation refers to the totality of both the financial and non-financial
rewards that an employee receives in return for his/her services to an employer or
organization.

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But the problem of compensation inequity may lead to job dissatisfaction. Worker/employees
in any organization want equitable returns for their contribution to the organization (fair deal,
fair pay for fair day's job). The extent of pay equity, fairness and regularity are all ethical
issues in compensation management. Therefore, organizations should ensure equal pay for
work of equal value. Pay should not be based on age or age related criteria but should reflect
the degree to which an individual meets the required standards of satisfactory job
performance and the value of their contribution to the overall objectives of the organization.

7. Ethical issues in Promotion, Transfer and Separation

Promotion refers to a shift from a level of lesser responsibilities to that of higher

responsibilities, often with increase in pay. There can of course be dry promotion where an
employee is moved to a higher level job without increase in pay. Transfer refers to lateral /
horizontal internal mobility. Transfer is viewed as a change in assignment in which workers
move from one job to another at the same level of the hierarchy, requiring similar skills,
involving approximately same level of responsibility, same status and same level of pay.
Separation refers cessation of service with an organization with different reasons. However:

Promotion based on favoritism as against competence is unethical, Transfer based on

favoritism and god fatherism as opposed to objectivity is unethical, Promotion and transfer
based on discrimination on the grounds of sex or others characteristics of employees is
unethical, Terminating employees without due process in the disciplinary procedure is
unethical.

8. Ethical Issues in Health and Safety at Work

Health and safety policies and programs are concerned with protecting employees and other
people affected by what the company produces and does against the hazards arising from
employment or their links with the company. Safety programs deal with the prevention of
accidents and minimizing the resulting loss and damage to people and property. Occupational
health programs are designed to minimize the impact of work related illness arising from
work. Particular attention needs to be exercised on the control of noise, fatigue and stress.
The elimination of hazards is the responsibility of everyone employed in an organization, as
well as those working there under contract. The following are unethical practices in health
and safety at work

 Non-compliance with safety regulations at work

 Non- provision of safety gadgets at the work premises
 Lack of health and safety inspections
 Lack of health and safety training and manuals

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 Lack of first- aid- box and medical facilities at work
 Invasion of employees‟ privacy at work: disclosure of medical records
 Discrimination against HIV/AIDS victims at work

9. Ethical Issues in Communication at Work

In all human endeavors communication plays pivotal roles. Miscommunication or

misunderstanding can have deadly consequences. Thus, no group or organization can exist
without communication. The word communication is derived or originated from the Latin
word "communis" meaning common. Communication is the process of transmitting
information and meaning from one person to another with the message being understood by
the recipient. Communication involves the act of imparting a common idea or understanding
to another person. In the world of business or work, communication refers to the process by
which employers and employees or managers and employees interact and transmit
information to one another for the effective performance of their duties and to further the
basic purpose of the organization. The following ethical issues in communication should be
observed by HR professionals:

Avoid over reliance on rumor mills and grapevines as sources of official information, Convey
true information as against falsifying certain information, One may be acting unethical if one
disposing confidential information of the organization to its competitors or outsiders, Do not
intentionally promise what you cannot deliver, Do not stretch the truth or mislead others, Do
not withhold information someone else needs,

10. Ethical Issues in Labor/Management Relations

Labor–management relations connotes a relationship between worker, not as individuals but

in their collective identity, and the employer. The concept, labor relations is narrower in
scope than industrial relations, because, it concerns the internal arrangement between
employers and the unions in a bi-partite relationship. Their activities would seem to exclude
the possible intervention of the government as intermediary in the employment relations
regulations. When such intervention by the government as a third party occurs, the
relationship becomes more involved and is known as industrial relations. Industrial relations
is regarded to be wider than labor relations.

Labor relations, as distinct from industrial relations, can be defined as the day to day
relationship between union members and manager in the workplace, with particular emphasis
on the implementation and enforcement of the collective agreement. Unethical practices in
labor- management relations include:

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 Unfair labor practices by both the employers and the unions on behalf of their members
e.g. engaging in sweetheart agreements.
 Non-implementation of collective agreements or renewal of expired agreements.
 Invasion of employees' privacy at work: restroom and office surveillance, workplace
searches and monitoring off-duty conduct and lifestyles.
 Management's violation of employees' rights at work with impunity.
 Exclusion of employees from decision making processes affecting their work.
 Subjecting employees to longer working hours as opposed to the normal hours of work as
well as victimization of union officials because of their involvement in strike actions.

Here are the list of basic employee rights ethics viewed proper to respect.

 The right not to be terminated without just cause- freedom from employment at will,
equal opportunity, participation in job related decisions.
 The right to due process- includes the right to public hearing, peer evaluation, external
arbitration, open and mutually agreed grievance procedures
 The right to privacy- includes freedom from intrusion of personal spaces like bath rooms,
secrecy of medical records, confidentiality of personal records.
 The right to know- nature and extent of risk of job or job in general.
 The right to workplace health and safety
 The right to organize and strike
 Rights regarding plant closing- proper compensation when firm is liquidated or bankrupt.

11. Sexual Harassment

The most dominant work place discrimination directed towards women is sexual harassment.
According to the US Equal Employment Opportunity Commission (1980) sexual harassment
refers an unwelcome sexual advances and requests for sexual favor and other verbal or
physical conduct of a sexual nature constitute sexual harassment when:

 Submission to such conduct is made either explicitly or implicitly a term or condition of

an individual’s employment,
 Submission to or rejection of such conduct by an individual is used as the basis for
employment decisions affecting such an individual, or
 Such conduct has the purpose or effect of unreasonably interfering with an individual’s
work performance or creating an intimidating, hostile, or offensive working environment.

Remarks, looks, touching, jokes, attitudes, sexual comments, coercion, recurring requests for
dates, use of sexual explicit language have been found to constitute harassment within the
scope of the aforementioned definition.

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It is unethical to force one self or ones interest on a fellow employee against the free consent
and will of the other party. The rights approach to ethics will find sexual harassment
unethical in this regard. Same can be said of Justice theory where in a hostile work
environment is created and unfair conditions laid on a party are considered wrong.

12. Combating Unethical HR Practices

To combat unethical HR practices in the workplace, the HR professionals in line with top
management could put in place:

⎬ Ethical Policies and Codes: This is a document that spells out the standards the
organization expects its employees and management to adhere to. Although, having a
code does not guarantee ethical behavior. In general, ethical codes do have a positive
impact on employees' and management ethical behavior. This code should incorporate the
required standards and values in all HR practices in the organization.

⎬ Ethical Training: Organizations should encourage ethical training of their employees and
management team. This is imperative to constantly remind them of management
expectations as well as cultural values expected of them. Families, religious bodies and
professional institutes are expected to play significant roles in this respect.

⎬ Whistle blowing Policy: Organizations should put in place whistle blowing policy.
Whistle blowing can help reduce the occurrence of unethical behavior on the part of
employers. Whistle blowers are individuals usually employees who use procedural or
legal channels to report incidents of unethical behavior to the public or legal authorities.

4.3. Ethics, Organizational Democracy and Socio-moral Climate

A great deal of attention has been devoted recently to the study of the ethical context in
organizations. One is the concept of socio-moral climate (SCM) and its impact on
organizational socialization towards ethics-related behavioral orientations. It examines the
relationship between structurally anchored organizational democracy, SMC and employees’
attitudes pertaining to work behaviors, solidarity at work, democratic engagement orientation
and organizational commitment. Controlling for pre-occupational socialization experiences,
the results provide evidence for a substantial socialization potential linked to structurally
anchored organizational democracy and a favorable work environment in terms of SMC.

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The concept of SMC represents a sub-domain of organizational climate referring to ‘specific
criteria of organizational structure and organizational practices, in particular specific
principles of communication, teamwork, collective problem-solving, decision making as well
as leadership which form a field of socialization for democratic and moral orientations.
According to Kohlberg and other scholar in the area, the following five factor components or
issues constitute a socio-moral climate (SMC) for integration of moral issues into
organizational communication and collaboration:

1. Open confrontation of the employees with conflicts: This component of SMC

encompasses the extent to which members of a particular organization are involved in
constructive conflict and confrontation. This is characterized by not only openly facing
conflicts and disagreements, but also facing up to them respectfully and honestly.
2. Reliable and constant appreciation, care and support by supervisors and colleagues:
This factor refers to the degree of mutual respect, empathy and genuine care for the
members of an organization
3. Open communication and participative cooperation: Open communication and
participative cooperation are practically interwoven and form the third component of
SMC. Open and free communication refers to the extent in which employees are
encouraged to question and form independent judgments about organizational norms,
rules and principles.
4. Trust-based assignment and allocation of responsibility corresponding to the
respective employees’ capabilities: trust based assignment of responsibility implies the
granting of adequate confidence and accountability instead of either distrustful strict
control or uncontrolled laissez-faire.
5. Organizational concern for the individual: This component refers to the willingness of
representatives (e.g. supervisors) of a particular organization to put themselves in the shoes
of individual members within an organization and to act accordingly. Thus, the main focus
is on mutual perspective which includes serious concern for the legitimate needs of all
organizational members.

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