This document discusses ethics, morality, values, and how human resource management can promote an ethical organizational culture. It covers how values are formed, potential conflicts between individual and group values, and factors like regulations and corporate ethics programs that can reduce unethical behavior. The document recommends HR responses like conducting surveys, aligning rewards with ethics, communicating ethical standards, and overseeing ethics compliance. It notes costs of ethics violations and programs, as well as human costs of unethical environments like decreased motivation and trust.

1. Ethics and HRM
K. Michele Kacmar

2. Ethics, Morality and Values
 Ethics is the study of morality
 Morals are the standards used to
judge right and wrong
 Values are the degree of conviction
about the way to conduct life

3. Conviction
 The degree of conviction to your
values can be described as primary,
secondary, or peripheral
• Primary – core values, unchanging
• Secondary – Important, but changeable
occasionally
• Peripheral – Values that are known but
not lived by

4. How Do We Get Values?
 Parents, family and friends
 Experiences
 The environment (media, education)

5. Conflict of Values
 Dramatic outcomes can occur when
individuals and groups hold
conflicting core values:
• Religious wars
• Business scandals
• Crime

6. Environmental Factors
 Over the last decade, ethical
scandals in business have been on
the rise:
• Enron
• WorldCom
• Tyco
• Health South

7. How To Stop Unethical Behavior
 A combination of external regulations
and compliance programs and
voluntary corporate ethics programs
is the most effective way to combat
inappropriate corporate behavior
(Trevino, Weaver, Gibson, & Toffler,
1999).

8. External Regulations
 Sarbanes-Oxley Act (SOX)
• Requires CEOs and CFOs to sign
statements making them personally
responsible for the accuracy of the
quarterly financial statements
• Knowingly misrepresenting the
financials opens them up to
punishments including fines and jail
time
• Protection for whistleblowers

9. Other External Regulations
 Other external regulations include
regulations related to:
• Minimum wage
• Overtime compensation
• Discrimination
• Health and Safety
• Privacy

10. Organizational Responses
 Codes of ethics including:
• Explicit standards of rules to be followed
• Corporate values statements

11. Explicit Standards
 Explicit standards define precisely
acceptable and unacceptable conduct
such as accepting gifts and the
amount allowable

12. Corporate Values Statements
 Describes the core values the
company wants its employees to
exhibit including:
• How employees are to treat one another
• How employees are to treat customers
and stockholders

13. Effective Values Statements
 Must come from the top with the
CEO being directly involved in its
development
 Top management must actively
disseminate the values statement
and then live by it
 The values statement must be
focused

14. HR Responses
 Conduct surveys to determine:
• What behaviors are routinely being
rewarded and reinforced
• What values and attitudes are prevalent
• How strong the pressure to engage in
misconduct is

15. HR Responses Continued
 Take steps to eliminate and
discourage reasons for misbehavior
and introduce and encourage
reasons to behave ethically

16. HR Responses Continued
 Develop an appraisal system that
rewards individuals for ethical
behaviors and punishes those who
act unethically

17. HR Responses Continued
 HR can use its expertise to
communicate with the workforce to
get out the ethical message

18. Costs of Corporate Ethics
Violations
 $7 trillion in stock market losses
 Loss of jobs and retirement savings
by employees

19. Costs of Corporate Ethics
Programs
 Costs of implementing and
maintaining compliance to create an
ethical business environment

20. Human Costs
 Unethical business environments
can:
• Demotivate individuals
• Make good employees leave the
company
• Attract unethical employees
• Lead to the lack of trust by the
employees for the company

21. Ethics Effectiveness Quick-Test
 Ethics Effectiveness Quick-Test asks
eight questions about twelve
different areas that can help to
increase the ethical effectiveness in
an organization

22. Guidelines for Fostering an Ethical
Culture
 Have a well developed policy and
procedures manual
 Enforce policies
 Reward compliance
 Recruit ethical employees
 Create a division to oversee ethics

23. Conclusion
 Whenever you are required to make
a difficult decision, especially one
that is ethically challenging, select an
option that you would be comfortable
describing to the nation on the
evening news