LEARNING OBJECTIVES
1. Explain the inducements-contributions balance.
2. Describe the role of HR in an organization with regard to ethics.
3. Describe situations that would be considered a conflict of interest.
4. Explain the requirements of the Sarbanes-Oxley Act.
5. Explain the importance of an organizational code of ethics.
6. Describe an effective ethics training program.
7. Explain how to use systems and policies to encourage ethical behavior.
8. 5.2Defining Morality
9. Although morality is a complex concept, it can be simply defined in terms of both means
and ends—by the consequences of those processes.
10. Moral actions are basically just and fair; they respect the autonomy and dignity of
people, and they are perceived by rational people as being right and proper. If a process
is dishonest or unfair, it is immoral. But fair does not mean equal. Compensation, for
example, can be distributed unequally and still be fair if it is based on reasonable
criteria, such as performance or seniority. This definition of morality, called deontology,
is based on the fundamental fairness of an action or the means used to achieve the result.
11. In terms of consequences, morality is defined as that which helps people and makes their
lives better. Actions are moral if they contribute to the social, emotional, and intellectual
development of people. Actions are immoral if they unnecessarily harm people.
Behavior that hurts people, behavior that contributes to mental, emotional, or physical
distress, and behavior that disrupts the general welfare is immoral (unless it contributes
to an important higher good as determined by a higher-level moral analysis). This
definition of morality, called teleology, focuses on the end state or consequences of an
action.
12. Role Morality
13. The foundation for deciding whether human resource practices are fair and just is based
on an examination of the relationship between the person and the organization. Human
resource management serves both the organization and the individual. The organization
is expected to treat people morally, while employees have duties of loyalty, obedience,
and confidentiality, which are called "role morality." 1
, 14. Employment Exchange
15. When people decide to work for an organization, they enter into a voluntary agreement
called an employment exchange: they agree to work in exchange for the wages,
benefits, and other rewards the employer provides. The voluntary nature of this
employment exchange and the expectations of each party serve as the foundation for
evaluating the morality of human resource activities and other management actions.
16. Inducements-Contributions Balance
17. An employment exchange occurs when individuals are willing to trade their labor for
rewards and when an organization is willing to exchange rewards for labor. In this
employment exchange, called an inducements-contributions balance, the inducements
individuals receive for working must be balanced with the contributions they make to
the organization.2 Inducements are the rewards people receive from working, especially
wages, salaries, and benefits. Contributions are the things individuals offer the
organization, such as effort, skill, knowledge, and ideas. A state of equilibrium, or
balance, is achieved if the inducements are essentially equal to the contributions.
5.3Ethical Issues
Ethical Issues (00:50)
Ethical Issues (Transcript)
Download Material
Human resource managers are expected to monitor the ethical practices in their companies and
protect the interests of employees. Many organizational practices can harm employees, such as
divulging personal information, conflicts of interest, payoffs, and bribes. HR managers often
play a central role in creating a code of ethics and ethics centers to protect employees.
Privacy in the Workplace
The prevalence of technology allows employers to monitor the performance of employees and
collect extensive performance data. Some companies monitor the telephone calls with
customers to determine the quality of customer service provided by employees and then use
this information to implement incentive programs to motivate employees. Monitoring through
, video display terminals (VDTs) enables employers to know how many tasks are completed by
each employee, the amount of time spent on each task, the time spent between tasks, and the
time each employee spent away from the terminal.
Some groups, including some labor unions and labor associations, are opposed to electronic
monitoring. They claim that monitoring violates the employees’ rights of privacy and creates
stressful working conditions that can lead to health problems. Human resource managers and
executives defend the practice of monitoring because it helps to ensure that employees are
doing an adequate job and the information provides valuable performance data. Groups
opposed to monitoring have asked Congress to pass regulations to protect employees, such as
requiring an audible beep whenever a call is being monitored. 1
The central ethical issue is not whether electronic monitors should be used to measure
performance, but how the information will be used. Excessive pressure in the form of sizable
rewards or punishments that are tied to performance measures could be physically and mentally
harmful to workers whose performance is closely monitored. But it could be beneficial if it is
used informally to coach and encourage workers.
Personnel testing has also been criticized as a wanton invasion of an individual’s private
thoughts. Some personality tests have been challenged in court because they contain items that
ask extremely sensitive questions about religious beliefs or sexual orientations. In one case,
applicants for a job as store security officer won a court injunction against these tests because
they were an invasion of privacy and not job related. 2 Interviews and application blanks also
threaten the privacy of the individual when they request information about an applicant's
private life.
Throughout the employment process, both the applicant and the interviewer are engaged in a
process of mutual assessment, and therefore, the possibility of an invasion of privacy is always
present. However, there is a general rule governing this situation: it is a clear invasion of
privacy for an applicant to be asked to reveal details of thought or emotion that are not relevant
to performance on the job. Ethically, personnel tests and interviews should not be used to
satisfy the curiosity of a personnel specialist; they should only be used to make predictions
about future performance. Embarrassing questions and personal inquiries into a person’s
private life that are not relevant to job performance should not be included in interviews or on
personnel tests.
Conflicts of Interest
, A conflict of interest is defined as a situation where a person who has a responsibility to act in
the best interests of a company may receive direct personal benefit from his or her actions at
the expense of or to the detriment of the company. The following are examples of conflict of
interest situations.
Engaging, during one's working hours, in non-company business activities that are
not part of one's assigned duties. However, consulting and other professional
activities may be appropriate in some organizations, such as universities and research
institutes, when they are properly approved.
Using company personnel or company-owned facilities, equipment, supplies, or
vehicles for personal financial gain.
Using one’s employment status with a company to inappropriately further a personal
interest.
Divulging improper information or interfering with the contracting, bidding, or
negotiating process being conducted by vendors or company employees.
Exerting influence on, or being a part of, any business transaction involving the
company from which a relative or family member could receive benefit or gain of
any kind.
Forming business relationships or obligations that compromise one’s objectivity
when performing assigned duties.
Traveling at vendor expense or accepting gifts, services, or favors from those doing
business with the company. Accepting items of nominal value may be appropriate
when reasonable conditions dictate, such as accepting refreshments during a break on
a vendor’s premises.
Conflict of interest situations are inherent in every organization–employee relationship, except
possibly for those who operate their own companies. Some conflict situations are customary
and acceptable when they are not excessive, such as receiving phone calls from family
members during work hours. Other conflicts of interest are serious and should be totally
avoided or tolerated only with full disclosure and impartial monitoring. 3
To prevent conflict of interest problems, companies require employees to read and sign
disclosure statements. An effective disclosure policy helps to prevent situations where
employees become involved in activities that could compromise, or appear to compromise,
their ability to perform their duties or to make decisions that are in the best interests of the
company. In some situations, however, disclosures are not adequate. When the conflict of
interest involves a subtle interpersonal relationship, such as the case of a realtor helping a buyer
1. Explain the inducements-contributions balance.
2. Describe the role of HR in an organization with regard to ethics.
3. Describe situations that would be considered a conflict of interest.
4. Explain the requirements of the Sarbanes-Oxley Act.
5. Explain the importance of an organizational code of ethics.
6. Describe an effective ethics training program.
7. Explain how to use systems and policies to encourage ethical behavior.
8. 5.2Defining Morality
9. Although morality is a complex concept, it can be simply defined in terms of both means
and ends—by the consequences of those processes.
10. Moral actions are basically just and fair; they respect the autonomy and dignity of
people, and they are perceived by rational people as being right and proper. If a process
is dishonest or unfair, it is immoral. But fair does not mean equal. Compensation, for
example, can be distributed unequally and still be fair if it is based on reasonable
criteria, such as performance or seniority. This definition of morality, called deontology,
is based on the fundamental fairness of an action or the means used to achieve the result.
11. In terms of consequences, morality is defined as that which helps people and makes their
lives better. Actions are moral if they contribute to the social, emotional, and intellectual
development of people. Actions are immoral if they unnecessarily harm people.
Behavior that hurts people, behavior that contributes to mental, emotional, or physical
distress, and behavior that disrupts the general welfare is immoral (unless it contributes
to an important higher good as determined by a higher-level moral analysis). This
definition of morality, called teleology, focuses on the end state or consequences of an
action.
12. Role Morality
13. The foundation for deciding whether human resource practices are fair and just is based
on an examination of the relationship between the person and the organization. Human
resource management serves both the organization and the individual. The organization
is expected to treat people morally, while employees have duties of loyalty, obedience,
and confidentiality, which are called "role morality." 1
, 14. Employment Exchange
15. When people decide to work for an organization, they enter into a voluntary agreement
called an employment exchange: they agree to work in exchange for the wages,
benefits, and other rewards the employer provides. The voluntary nature of this
employment exchange and the expectations of each party serve as the foundation for
evaluating the morality of human resource activities and other management actions.
16. Inducements-Contributions Balance
17. An employment exchange occurs when individuals are willing to trade their labor for
rewards and when an organization is willing to exchange rewards for labor. In this
employment exchange, called an inducements-contributions balance, the inducements
individuals receive for working must be balanced with the contributions they make to
the organization.2 Inducements are the rewards people receive from working, especially
wages, salaries, and benefits. Contributions are the things individuals offer the
organization, such as effort, skill, knowledge, and ideas. A state of equilibrium, or
balance, is achieved if the inducements are essentially equal to the contributions.
5.3Ethical Issues
Ethical Issues (00:50)
Ethical Issues (Transcript)
Download Material
Human resource managers are expected to monitor the ethical practices in their companies and
protect the interests of employees. Many organizational practices can harm employees, such as
divulging personal information, conflicts of interest, payoffs, and bribes. HR managers often
play a central role in creating a code of ethics and ethics centers to protect employees.
Privacy in the Workplace
The prevalence of technology allows employers to monitor the performance of employees and
collect extensive performance data. Some companies monitor the telephone calls with
customers to determine the quality of customer service provided by employees and then use
this information to implement incentive programs to motivate employees. Monitoring through
, video display terminals (VDTs) enables employers to know how many tasks are completed by
each employee, the amount of time spent on each task, the time spent between tasks, and the
time each employee spent away from the terminal.
Some groups, including some labor unions and labor associations, are opposed to electronic
monitoring. They claim that monitoring violates the employees’ rights of privacy and creates
stressful working conditions that can lead to health problems. Human resource managers and
executives defend the practice of monitoring because it helps to ensure that employees are
doing an adequate job and the information provides valuable performance data. Groups
opposed to monitoring have asked Congress to pass regulations to protect employees, such as
requiring an audible beep whenever a call is being monitored. 1
The central ethical issue is not whether electronic monitors should be used to measure
performance, but how the information will be used. Excessive pressure in the form of sizable
rewards or punishments that are tied to performance measures could be physically and mentally
harmful to workers whose performance is closely monitored. But it could be beneficial if it is
used informally to coach and encourage workers.
Personnel testing has also been criticized as a wanton invasion of an individual’s private
thoughts. Some personality tests have been challenged in court because they contain items that
ask extremely sensitive questions about religious beliefs or sexual orientations. In one case,
applicants for a job as store security officer won a court injunction against these tests because
they were an invasion of privacy and not job related. 2 Interviews and application blanks also
threaten the privacy of the individual when they request information about an applicant's
private life.
Throughout the employment process, both the applicant and the interviewer are engaged in a
process of mutual assessment, and therefore, the possibility of an invasion of privacy is always
present. However, there is a general rule governing this situation: it is a clear invasion of
privacy for an applicant to be asked to reveal details of thought or emotion that are not relevant
to performance on the job. Ethically, personnel tests and interviews should not be used to
satisfy the curiosity of a personnel specialist; they should only be used to make predictions
about future performance. Embarrassing questions and personal inquiries into a person’s
private life that are not relevant to job performance should not be included in interviews or on
personnel tests.
Conflicts of Interest
, A conflict of interest is defined as a situation where a person who has a responsibility to act in
the best interests of a company may receive direct personal benefit from his or her actions at
the expense of or to the detriment of the company. The following are examples of conflict of
interest situations.
Engaging, during one's working hours, in non-company business activities that are
not part of one's assigned duties. However, consulting and other professional
activities may be appropriate in some organizations, such as universities and research
institutes, when they are properly approved.
Using company personnel or company-owned facilities, equipment, supplies, or
vehicles for personal financial gain.
Using one’s employment status with a company to inappropriately further a personal
interest.
Divulging improper information or interfering with the contracting, bidding, or
negotiating process being conducted by vendors or company employees.
Exerting influence on, or being a part of, any business transaction involving the
company from which a relative or family member could receive benefit or gain of
any kind.
Forming business relationships or obligations that compromise one’s objectivity
when performing assigned duties.
Traveling at vendor expense or accepting gifts, services, or favors from those doing
business with the company. Accepting items of nominal value may be appropriate
when reasonable conditions dictate, such as accepting refreshments during a break on
a vendor’s premises.
Conflict of interest situations are inherent in every organization–employee relationship, except
possibly for those who operate their own companies. Some conflict situations are customary
and acceptable when they are not excessive, such as receiving phone calls from family
members during work hours. Other conflicts of interest are serious and should be totally
avoided or tolerated only with full disclosure and impartial monitoring. 3
To prevent conflict of interest problems, companies require employees to read and sign
disclosure statements. An effective disclosure policy helps to prevent situations where
employees become involved in activities that could compromise, or appear to compromise,
their ability to perform their duties or to make decisions that are in the best interests of the
company. In some situations, however, disclosures are not adequate. When the conflict of
interest involves a subtle interpersonal relationship, such as the case of a realtor helping a buyer
