Role of HRM in Promoting Ethics in Organisations

Role of HRM in Promoting Ethics in Organisations

MGMT1007 Introduction to Human Resource Management
Assessment 2 : Individual Report

Length : 1500 words
Task Overview:
Your task is to examine ‘The role of HRM in promoting ethics in organisations’.
The following questions must be addressed:
1. Why is it important to promote ethics in organisations? (500 words)
2. What kind of ethical aspects should HRM be focused on? (500 words)
3. How does HRM promote ethics within organisations? (500 words)

Role of HRM in Promoting Ethics in Organisations Example

The Importance of Promoting Ethics in Organisations

Human resource managers are faced with constant ethical pressures when performing various functions, such as performance evaluation, training, and recruitment. They may straddle between the fine line between corporate interests and the individual rights of the workers. As industries downsize, merge, restructure and expand into global markets, HR managers’ roles become even more complicated. Corporate profits versus human rights have always been a challenge these professionals must tackle when making their decisions. According to Martin and Woldring (2001), HR managers are expected to play a pivotal role in the planning and introduction of strategies to foster ethics in firms. Managers can enjoy many benefits by promoting ethics in their organisations:

The first benefit is that HR managers can use ethics to build a positive corporate culture. A corporation devoting resources to identifying and implementing policies that encourage ethical actions creates a positive corporate culture. The moral of the team members improves when they feel protected against victimisation for personal beliefs. An empirical study conducted by Ruiz-Palomino, Martínez-Cañas, and Fontrodona (2013) found a direct positive relationship between ethical culture and employee commitment, job satisfaction, willingness to recommend the firm to other colleagues and intention to stay. Many scholars have documented the relationship between corporate ethics and employee response over the past decade. For example, O’Fallon and Butterfield (2005) (cited in Ruiz-Palomino, Martínez-Cañas, & Fontrodona, 2013) argued that ethical leadership is a critical aspect of ethical culture.

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Another benefit of ethics is that it boosts consumer confidence. Organisations may lose consumer confidence rapidly with a few negative reviews. HR managers must encourage ethical practices such as a fair recruitment process and honest and unbiased advertising to retain consumer loyalty (Kang & Hustvedt, 2014). One area firms can lose the confidence of their consumers is the failure to honour guarantees or unfairly dealing with consumer complaints. Employees and consumers will develop trust in the firm if proper policies are implemented to ensure ethical standards are followed. Kang and Hustvedt (2014) postulate that developing trust in a firm is a significant part of building a positive relationship with the consumers. Managers can do this by engaging in corporate social responsibility initiatives.

Finally, ethics can help firms in reducing financial liabilities and minimising potential lawsuits. According to Martin and Woldring (2001), organisations should face the question of ethics for various reasons. If anything, the number of ethical issues have increased and become more intense, with some looming in areas like the possibility of using genetic tests for potential employees to identify desirable traits. These issues can plunge the firm into legal lawsuits and financial liabilities. Firms that fail to base their policies on particular ethical requirements risk financial liability. The first liability may be in the form of a reduction in sales revenues. For instance, a real estate firm may lose customer sales and interest if it undermines the expansion of an animal sanctuary. Another area of financial liability relates to potential lawsuits. No corporation is exempt from disgruntled employees or customers who claim discrimination. As stated by Martin and Woldring (2001), with the heightened discussions regarding discrimination during recruitments, and pay inequalities between women and men, HR managers of various firms, especially in Australia, should strive to implement policies to promote equal employment opportunities for their job applicants.

The Ethical Aspects HRM Should Focus On

HRM is not a unitary mythological and managerial construct. The HRM role consists of three stands: improving the quality of work by ensuring fairness in policies and fostering harmonious association between the workers and the management, ensuring that human resource roles comply with particular legal standards, and contributing to business efficacy of the firm (Martin & Woldring, 2001). HRM plays a crucial role in the firm while tackling workplace issues. As the HRM deals with the management of human capital in the workplace, related matters must be handled with the top management (Greenwood, 2013). The most prevalent ethical aspects the HRM should focus on include privacy issues, employee compensation plans, safety issues, employment issues, disability and race, employee responsibility, and performance appraisal.

Cash and incentive plans entail fundamental issues such as executive perquisites, long term incentive plans, annual increments, and basic salaries. The HR managers are often under pressure to increase the band of basic wages (Greenwood, 2013). There is increased pressure upon the human resource function to offer more incentives to the executives, and the justification for this is put as the need to retain them. Further ethical challenges crop in the HR department when long term incentive and compensation plans are developed in consultation with the executive managers or external consultants. When deciding on the payout, there is always pressure on favouring the top management interest as compared with other workers and stakeholders.

In many enterprises till recently, workers were differentiated based on origin, gender, disability status, and race. The situation has improved with the evolution of regulatory frameworks and laws that have standardised worker behaviours toward each other. In perfect entities, the only differentiating variable is performance (Vardaman, Gondo, & Allen, 2014). Additionally, the ability to file litigations has put firms on the back foot. HR managers should be trained at avoiding discriminatory practices and aligning behaviours as no organisation can practice discriminatory policies openly concerning the selection, development, training, and appraisal of employees (Winstanley & Woodall, 2000). A demanding ethical issue arises when the HR manager is pressurised to either protect an individual or the organisation at the expense of someone belonging to a discriminated group.

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Furthermore, HR professionals are faced with more significant dilemmas related to employee hiring. One such dilemma emanates from the pressure to hire a person who has been recommended by a family member, a top executive or a friend (Vardaman, Gondo, & Allen, 2014). Another dilemma arises when the HR manager has hired some people, and they are later found to have provided fake documents. Two critical cases may arise in this situation. In the first case, the employee has been trained to fill a critical position in the firm. In the second scenario according to Vardaman, Gondo, and Allen (2014), the person has been appreciated for his or her work during the short period or has been proven to hold a blend of unique capabilities with the appropriate attitude to handle a particular task. Both scenarios are dilemmatic enough to leave even experienced HR campaigners in a fix. Similarly, some ethical issues in HR relate to, layoffs, restructuring, and employee responsibilities. There is an ongoing debate on whether such roles are ethically permitted. Layoffs, for instance, are no longer considered unethical if relevant procedures are followed to administer the process.

How HRM Promotes Ethics in Organisations

Research indicates that the corporate ethics environment is driven, to a large extent, by a mix of organisational culture, company programs, and leadership practices. Going by the findings of Lowry (2006), the role of HRM in promoting an ethics-friendly business environment can be severed into four categories. First, the professionals must help in ensuring that their firms put ethics as their top priority. In the wake of corporate scandals HR managers should take on a more significant role to monitor the culture of their firms in terms of their ethical status. Monitoring alone will, however, not suffice. HR professionals must either ensure that some qualified people promote ethics in the firm or take on the mantle as ethical champions. Such champions should be respected and highly experienced.

The second way HRM promotes ethics within organisations is by ensuring that the process of selecting and developing leaders include an ethics component. Leaders at different levels of the firm need to both communicate ethical standards to the workers and model ethical behaviour (Lowry, 2006). HR specialists can use their selection procedures to filter out individuals who despite making their numbers, tend to cut ethical corners. The leadership development process should entail not only ethical theories but real-life illustrations, especially from mentors on how HR executives have tackled ethical issues in the past. Among the most challenging aspects of promoting ethical leadership is convincing the top executives and the board members that they should also be trained on ethics. The process would, however, help HR managers in Anchoring their organisational culture on ethics.

Additionally, according to Caldwell et al. (2011), HRM promotes ethics in their organisations by ensuring that adequate ethical standards, policies, and programs are in place, keeping in mind that different governments have developed strict sentencing guidelines for ethical breaches. HR professionals should be trained to keep them abreast of the government policies regarding the government ethical and legal guidelines that control HR practices such as the recruitment and retrenchment of employees.

Apart from implementing ethical guidelines in the firm, HR professionals ensure ethical compliance in their organisations by staying abreast of emerging ethical issues. This does not imply just following legislation, which tends to be more reactive than proactive (Caldwell et al., 2011). It implies looking at the whole business and social environment and identifying various ethical challenges and conflicts of interests that may develop into major ethical scandals. A combination of approaches can help managers in accomplishing this. Obviously, employers are expected to pay close attention to concerns and questions flagged via feedback systems and employee hotlines (Caldwell et al., 2011). To understand what is happening outside the firm, HR professionals can turn to environmental appraisal techniques that help gauge how various developments ranging from global culture clashes to emerging technologies, could cause ethical challenges down the road.


Caldwell, C., Truong, D. X., Linh, P. T., & Tuan, A. (2011). Strategic human resource management as ethical stewardship. Journal of Business Ethics98(1), 171-182. https://doi.org/10.1007/s10551-010-0541-y

Greenwood, M. (2013). Ethical analyses of HRM: A review and research agenda. Journal of Business Ethics114(2), 355-366. https://doi.org/10.1007/s10551-012-1354-y

Kang, J., & Hustvedt, G. (2014). Building trust between consumers and corporations: The role of consumer perceptions of transparency and social responsibility. Journal of Business Ethics125(2), 253-265.

Lowry, D. (2006). HR managers as ethical decision‐makers: Mapping the terrain. Asia Pacific Journal of Human Resources44(2), 171-183.

Martin, G., & Woldring, K. (2001). Ready for the mantle? Australian human resource managers as stewards of ethics. International Journal of Human Resource Management12(2), 243-255.

Ruiz-Palomino, P., Martínez-Cañas, R., & Fontrodona, J. (2013). Ethical culture and employee outcomes: The mediating role of person-organisation fit. Journal of Business Ethics116(1), 173-188.

Vardaman, J. M., Gondo, M. B., & Allen, D. G. (2014). Ethical climate and pro-social rule-breaking in the workplace. Human Resource Management Review24(1), 108-118.

Winstanley, D., & Woodall, J. (2000). The ethical dimension of human resource management. Human Resource Management Journal10(2), 5.

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