1. Michelle Matheis
Week 3
MGMT 698
Professor Hays
Top Five Ethical Issues in Human Resources
1. Introduction
Business ethics may sound like oxymoron because some may contest if business
had any ethics. It is an academic discipline that is relatively recent and hasn’t been
embedded as much as the standard business school curriculum of analytics, methods of
financial engineering, and an ideology that is deeply hostile to business ethics. Business
schools often perpetuate four misconceptions: 1) Markets are perfect or at least
inefficient; 2) Human beings are always self-interested; 3) Economic models and
reasoning can explain most of what is interesting about business; and 4) Ethics is about
altruism. What the business schools ought to teach are the following ideologies: 1)
Business is primarily about purpose. Money and profits follow; 2) Any business creates
or sometimes destroys value for shareholders, as well as for customers, employees,
suppliers and communities; 3) Capitalism works because we are complex creatures with
many needs and desires, and we can cooperate to create value for each other; and 4) Most
people tell the truth and keep their promises, and act responsibly most of the time.
Business ethicists can broaden their role in educating business students by
undertaking four key actions: 1) Emphasize competence as much as character; 2) Engage
contemporary issues; 3) Incorporate systems thinking; and 4) Champion an enterprise
approach to ethics (Freeman, Stewart & Moriarty, 2009, p. 37-41). It is important that
business schools harness the importance of ethics in business with their students because
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2. students need a good foundation of moral and ethical compass before entering the
workforce.
Ethical issues are complex and they are both a corporate and societal issues.
Business ethical violations happen because people cross a thin line of ethical ignorance,
they self serve their interests, and/or companies do not have a solid value-based culture
starting from the top to the bottom. When this happens, HR usually get involved with
issues such as sexual harassment toleration, knowingly hiring immigrants, violation of
privacy, biased performance reviews, wage and hour violations, terminating whistle-
blowers, age discrimination, nepotism or favoritism and retaliation (Smedley, 2008, pp.
2-3).
There are numerous ethical issues within Human Resources, but the paper calls
for the top five based on the author’s reasoning. After doing some research, the author’s
top five ethical issues in Human Resources are: 1) Retaliation; 2) Age discrimination; 3)
Nepotism and/or favoritism; 4) Violation of privacy; and 5) Hiring illegal immigrants.
2. Retaliation
By definition, retaliation “is the limitation or denial of employment opportunity as
a means of discouraging or punishing people who seek to obtain their rights under
antidiscrimination laws or to assist others in doing so” (Walsh, 2010, p. 681). Retaliation
claims has been on the rise since 2006. The total number of charge filings with the
EEOC increased to 82,792 in 2007 from 75, 768 in 2006 (Calsavina, Calsavina &
Calsavina, 2009, p. 29). By EEOC regulations, “retaliation occurs when an employer,
employment agency, or labor organization takes an adverse action against a covered
individual because he or she engaged in a protected activity” (Calvasina, Calsavina, &
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3. Calsavina, 2009, p. 30). Adverse action is an action taken to try to keep someone from
opposing a discriminatory practice such as: termination, refusal to hire, denial of
promotion, threats, unjustified negative evaluations, unjustified negative reference, and/or
increased surveillance.
The author thinks that of all of the ethical issues in HR, retaliation ranks the first
because if there is no democracy in the organization or a way to correct any wrongdoing,
then the employees will always be the victims of unethical issues at work. In addition, if
HR does not listen and take measures to correct the complaints of its workers, the
company will be liable to numerous lawsuits, demoralize its workers, will have a bad
reputation and eventually lose its customers. If the organization self-correct their
wrongdoings, the employees have no need to notify outsiders about the problems, saving
the firm’s reputation and sparing legal costs to the firm. When employees are heard at
work, they become more committed and satisfied. It is important to: 1) Identify steps that
managers can take to avoid negative effects of unreported wrongdoing and external
whistle-blowing; and 2) Discuss the points that potential whistle-blowers should consider
before taking action (Miceli, Near & Dworkin, 2009, p. 380).
The following are the steps management can take in handling complaints:
Before concerns are expressed:
a. Encourage the development of moral identity and moral agency;
b. Create a tough anti-retaliation policy that permits disciplining or dismissing
employees who retaliate against whistleblowers;
c. Disseminate the policy through the intranet, in orientation materials and
elsewhere;
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4. d. Search for and select employees who possess attributes associated with
observation of wrongdoing, and whistle-blowing;
e. Orient and train employees about what the organization considers wrongful,
and what to do if wrongdoing is observed;
f. Consider building incentives for valid internal whistle-blowing into the
reward structure;
g. Monitor the success of the programs and make changes when needed.
Once concerns are expressed:
a. Focus on the wrongdoing alleged in the complaint and not on the complainant;
b. Investigate reports fully and fairly
c. Take swift corrective action when the complaint is well-founded;
d. Provide feedback so that management gets credit for taking action; and
e. Provide multiple communication channels so that employees can choose to
report to someone with whom they are comfortable legislation (Miceli, Near
& Dworkin, 2009, p. 383).
Prospective whistle-blowers should consider whether the conditions associated
with justification are present. Whistle-blowing is warranted if he or she believes that the
wrongdoing has implications for public policy, if he or she acted after a careful analysis
of the danger: how serious is the moral violation, how immediate is the moral violation
and is the moral violation one that can be specified. A whistle-blower who appears to be
motivated to solve an important problem will likely to viewed more favorably. He or she
must also have sound evidence and following good practices legislation (Miceli, Near &
Dworkin, 2009, p. 390).
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5. 3. Age Discrimination
Age discrimination is a discrimination on certain applicants and employees 40
years of age and older on the basis of age in hiring, promotion, discharge, compensation,
or terms, conditions or privileges of employment (U.S. Department of Labor, 2010, p. 1).
The EEOC saw age discrimination claims filed jump from 16,548 in 2006 to 19,103 in
2007 (Calvasina, Calvasina, & Calvasina, 2009, p. 32).
Age discrimination is also referred to as Ageism, which is a process of systematic
stereotyping and discrimination against people because they are too old or too young.
Studies of performance appraisal report that older workers receive lower performance
ratings that their younger counterparts. Evidence also suggests that older workers are
more likely to experience discrimination in access to training and development
opportunities, which result to being passed over for promotion. Older workers are also
likely to be selected for redundancy based on the last-in-first-out system. Young workers
also face gaining employment without the required experience and skills. They are also
seen as untrustworthy and are given less responsibility and opportunity for promotion
(Snape & Redman, 2003, p. 78).
There are consequences of age discrimination. Those who have suffered unfair
treatment because of their age may be expected to adjust their attitudes to the firm and
their attachment to it. It leads to feelings of being under-rewarded in terms of pay and
status. Individuals may suffer feelings of relative deprivation, which could lead to
negative affective and calculative responses. The perceived experience of age
discrimination will be associated with: 1) lower levels of affective commitment to the
firm; 2) higher levels of continuance commitment to the firm; and 3) a higher intention to
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6. retire. Older workers who suffer age discrimination will also less likely show high levels
of organizational citizenship behavior and productivity (Snape & Redman, 2003, p. 90).
Age discrimination is more evident in the IT industry. Many IT managers justify
discriminatory recruitment or promotion by suggesting that older workers interfere with
good team dynamics in which young workers dominate. Managers claim that older
workers are over qualified and have inflated salary demands, and that older workers are
bogged down with outdated technology and unable to keep up with the changes (Phipps,
2006, p. 522).
Perceived discrimination is costly and time consuming. Claims of employee
discrimination can also harm public relations, future recruiting efforts, and workforce
morale. Such negative publicity can damage a firm’s ability to recruit and achieve
workforce diversity and have labor shortages. Traditionally, companies have targeted the
higher-paid and often older workers for downsizing, rather than developing a plan that
leaves them with the best workforce (Williams, Slonaker, & Wendt. 2003, pp. 49-56).
The author ranks age discrimination second as an ethical issue because the author
believes that this problem will result in additional shortage of skilled laborers, unequal
and unfair treatment of hardworking people since they are usually the ones that are let go
when there are layoffs, and also because some companies are forcing older people to
retire when they are not ready to. Forced early retirement is not healthy for older workers
who want to remain to work because they feel that they are not contributing their talents,
feel depressed from the lack of social contact with workers, and may not be able to afford
to retire. It is unfair for older workers to be let go because of age discrimination, because
it is harder for older workers to look for a new job because often times companies think
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7. that they are over qualified or that they cannot afford to pay their salary requirements.
The following are suggestion to eliminate age discrimination at work:
a. Remove ageist language in adverts, phrases like “applicants should be 25-35
years of age,” “young graduates,” “mature person” are discriminatory;
b. Ensure that job descriptions focus on job needs only. Unnecessary standards
for experience, personal qualities or qualification should be removed;
c. The interviewing process should be streamlined so that interviewers only ask
job-related questions and mark candidates against selection criteria;
d. A mixed-age interview panel may be used for interviews to reduce the
possibility of age bias;
e. Managers and supervisors don’t introduce age “cut offs” related to training or
development;
f. There’s no minimum or maximum cutoff age for promotion;
g. The retirement policy gives employees the right to request working beyond 65
and flexible working, creating greater choice for individuals;
h. The loss to the company of skills and abilities of older workers will need to be
replenished;
i. Training needs for personal development are available to all ages;
j. Incentives for voluntary redundancy should not be age-biased;
k. Job related criteria that are used, rather than age-related criteria
l. Management should educate workers about diversity and create a culture of
free of discrimination of all kinds (Webb, 2006, pp. 8-10).
4. Nepotism and/or favoritism
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8. Nepotism is the employer’s preference for hiring family members and other
relatives of current employees (Walsh, 2010, p. 677). Favoritism is a display of
partiality toward a favored person or group. Nepotism is a form of favoritism, where
certain individuals get special treatment in hiring, promotions, getting inflated
performance appraisals, special training, bonuses, benefits or higher pay compared to
other applicants or workers who are more qualified to receive such treatments.
Nepotism influences workers’ motivation because they find it very difficult to be
promoted when they compete with one who has a family member, relative or friends in
the organization. It can also affect the level of satisfaction of employees making them
quit, participate in gossips, lower their productivity, absenteeism and increase in overall
turnover (Arasli, Bavik, & Bavik, 2006, pp. 295-298).
Another form of favoritism is sexual favoritism and it exists where a person who
is in a position of authority rewards only those who respond to his or her sexual
advances, while other deserving employees who do not submit themselves to sexual
advances are denied promotion, merit rating or salary increases. An employee becomes a
victim of sexual favoritism when he or she loses out in comparison with another who
enters into sexual relations with their supervisors. Under the law in the US, employees
who are disadvantaged by sexual favoritism will be denied any recourse to the law on the
basis that this situation is gender neutral, which means, it discriminates against both sexes
equally. Another troubling fact is that EEOC stated that “not all types of sexual
favoritism violate Title VII…Title VI does not prohibit preferential treatment based upon
consensual romantic relationships…it does not discriminate against women or men in
violation of the Title VII, since both are disadvantaged for reasons other than their
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9. gender.” This policy has been revised so that the serial perpetrator of sexual favoritism
will create a hostile working environment, leading to sexual harassment under Title VII.
Victims of sexual favoritism have a right of action where they can show that the effect on
them is so severe or pervasive that it alters their conditions of employment (Middlemiss,
2008, pp. 7-15).
In order to reduce favoritism at work, the author recommends the following:
a. Create an atmosphere of trust and open communication;
b. Have clear, objective and consistent enforced policies that cover how
promotions, project work, hiring decisions and decisions on benefits are made;
c. Make sure the policies include a method for review by senior management
and human resources;
d. Educate all staff on the policies and make sure employees are following them
(Fiester, Lee, & Martin, 2010, pp. 17).
In crafting an anti-nepotism policy, the author recommends the following:
a. Policy should be in writing and she be applied fairly and consistently across
the board;
b. Policy should be gender neutral to avoid charges of discrimination;
c. Policy should prohibit relatives from being supervised by one another;
d. Policy should list all relationships covered by the policy;
e. Policy should state that it will be applied in accordance with applicable state
and federal law;
f. Policy should state that violators will be subjected to discipline;
g. Policy should describe the proper avenue for employees to complain either
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10. about possible violations or its applications;
h. Policy should state that if employees who may become related by marriage
may continue their employment if they do not work in a direct supervision of
a relative, otherwise it will present problems in supervision, safety, security
and morale;
i. Problems should be reported to the HR director. The company will
investigate and will then attempt to reassign one or both employees to an
available position for which they are qualified, to eliminate the problem. If no
position is available, one of the employees will be asked to leave the company
(Young & Chevalier, 1996, pp. 75-77).
The author ranks nepotism and favoritism third in the list because she thinks that
the existence of this practice in the workplace creates conflicts of interest, unfair
treatment, hostile environment and detrimental to the firm’s goals of creating a healthy
corporate culture of diversity and equal opportunity. HR needs to implement policies and
monitor the overall workplace follows the policies in order to avoid turnover, lawsuits,
lower morale, and decrease in productivity.
5. Violation of Privacy
Invasion of privacy “is the intrusion into the personal life of another, without just
cause, which can give the person whose privacy has been invaded a right to bring a
lawsuit for damages against the person or entity that intruded. It includes workplace
monitoring, Internet privacy, data collection, and other means of disseminating private
information” (US Legal, 2010, p. 1).
The debate about privacy in employment has intensified in recent years because
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11. privacy has been threatened by certain organization practices. Organizations are
gathering large amounts of information about job applicants and current employees to
facilitate decision-making. In an effort to attract highly skilled workers, firms conduct
background checks to get information about applicants’ education, family, background,
personality, credit and medical history. Other firms have used polygraph, medical
examinations and honesty tests, in which critics contend that it compromises the
applicants’ privacy. Organizations also gather information about their current employees
in guiding them with promotions, disciplinary actions, and terminations. The rapid
advance of technology has helped organizations capture information such as employee
databases, human resource information systems, and networked environments. Another
implication of technology on privacy is with the use of electronic monitoring and
surveillance. As much as 75% of large companies electronically monitor their workers.
There are advantages of Internet monitoring to companies, such as discouraging
productivity loss due to recreational use, avoid sexual harassment suits, eliminate the
download of pirate software, and preserve bandwidth (Alder, Schminke, & Noel, 2007,
pp. 202-203).
As companies have suffered through the impact of drugs in the workplace,
companies have implemented drug testing, drug free workplace policies, employee
education, and employee assistance programs. The rise of drug testing has been
criticized by others, and claimed that such tests are an invasion of privacy and a violation
of employee’s rights because it surpasses the employer’s legitimate sphere of control by
dictating the behavior of employees on their own time and in the privacy of their own
homes. Clearly there is a conflict because individuals value their privacy and yet
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12. organizations need information to make decisions that will ensure its profitability.
Studies show that workers indicate that polygraphs, drug tests, medical examinations,
background checks and honesty tests are the more invasive of privacy, whereas a blank
application, interview and work sample are viewed less invasive (Alder, Schminke, &
Noel, 2007, p. 204).
Privacy issues are complex because employers have a legal responsibility to
protect employees, customers and assets, and yet at the same time, employers must also
respect employee privacy. Firms can prepare themselves with workplace privacy by: 1)
Establishing clear policies on workplace privacy; 2) Keeping employee medical
information confidential, and 3) Staying out of employees’ personal lives (Halcrow,
2002, p. 45).
A strong privacy policy should be clear in stating that the company has the right
to inspect, search, test, and check for illegal substances and objects, illegal activity and
the improper use of company equipments. The policy must explicitly address the ban on
the use of email and use of the Internet in an offensive and disruptive way. It should be
stated in the employee handbook, in the job application forms, contracts, and other
documents that define employment relationship. It is key to have all employees
acknowledge the policy in writing. There should be an ongoing training so that
employees would not be surprised if they are investigated. There must be a good reason
for searches such as having strong evidence that: an employee is stealing, is using the
company equipment improperly, is engaged in illegal activity, and/or an employee’s
safety is at risk (Halcrow, 2002, pp. 46-49).
Employers must keep medical information confidential at all times. Health
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13. Insurance Portability and Accounting Act took effect in April 2001 specifically to protect
the privacy of health information. Employers are prohibited from receiving protected
health information except in relation to providing and paying for health care. Staff who
are managing health care plans and those making decisions about employment should
have a wall between them and information must never be exchanged for that is illegal. It
is criminal to divulge health information and penalties could range from $100 to
$250,000 and jail time for serious offenses. The ADA permits disclosure of medical
information in just these three scenarios: 1) When supervisors and managers need to be
informed regarding necessary restrictions and accommodation on an employee’s work or
duty; 2) When first aid and safety personnel need to know about a disability that might
require emergency care; and 3) When government officials investigating ADA
compliance request access to medical records or information. To protect employee
privacy, the author recommends the following:
a. Track personal health information to figure out who has access to it, why it is
being released, and who is receiving it;
b. Train employees on the appropriate uses and disclosures of personal health
information;
c. Never share any medical data you get as a result of company-ordered
procedures, such as pre-employment physicals or drug tests; and
d. Consider configuring information systems so that employees with access to
health information have access only to data they need to do their jobs
(Halcrow, 2002, pp. 49-52).
Last but not the least, employers should stay out of employees’ personal lives. To
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14. protect the firm from complaints and lawsuits, the author recommends:
a. Establish procedures for responding to requests for information about
employees. Whenever possible, direct inquiries to a single contact;
b. In writing, prohibit employees, including supervisors, from providing any
personal information about employees;
c. Require that all inquiries be in writing; and
d. Limit your responses to dates of employment and job classification (Halcrow,
2002, p. 51).
The author ranks invasion of privacy fourth in the list because she thinks that
protecting individuals’ privacy is important as well as balancing employer’s rights to
gathering information in order to protect their workers, customers and its assets. Aside
from being unethical to share personal information about someone, it is also a criminal
act to do, so it’s important for firms to recognize where to draw the line in terms of
gathering and using sensitive information in order to avoid costly fines and penalties.
6. Hiring illegal immigrants
There is an estimated nine to 11 million undocumented workers in the United
Sates, and it grows half a million each year according to the US Citizenship and INS (US
Citizenship and IS, 2010, p. 1). Employment of undocumented workers is a serious
problem for human resource professionals. HR has a legal obligation to follow specific
rules when verifying employment status during the hiring process, and when necessary,
firing unauthorized workers. Employers who are protecting undocumented workers are
actually exploiting them and avoiding paying taxes. In addition to this, undocumented
workers find a way to use false or fraudulent documents. The majority of employers
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15. encounter problems with ICE and SSA by accepting false documents form newly hired
employees in good faith. They simply do not know that they have hired unauthorized
workers. There is no ethical dilemma in this case, but what about employers who
knowingly hire undocumented workers? (Krell, 2007, pp. 49-53).
With nearly 25 million Americans unemployed, illegal aliens hold 8.5 million
U.S. jobs. Some employers are taking advantage by cutting down wages with the
knowledge that desperate Americans will have to accept of what is being offered, and if
they don’t like what is being offered, they simply give it to illegal aliens. When there’s
an immigration raid, you will find white, black and legal immigrants lining up for these
jobs that they supposedly do not want to do. Illegal aliens are taking jobs Americans not
only will do, but Americans are doing (Buchanan, 2009, p. 21).
HR professional must recognize that by hiring illegal workers, they are not being
sympathetic to a marginalized group, but that they are robbing millions of Americans of
their right to work in their native country. The author thinks that hiring illegal worker is
unethical because the company is primarily thinking of their bottom line regardless of it
being illegal and wrong. In order to end hiring of illegal aliens, employers must be fined
enormously. State, local and federal agencies should perform annual company checks to
review all employer paperwork and follow through on all fines. Proof of citizenship must
be shown each time workers apply for a job and all companies must use E-Verify to
check ID’s and other information (Wittenberg, 2010, p. 8A).
7. Conclusion
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16. The ethical position to take is to try to stop any wrongdoing before it happens, or
if after the fact, to respond fully and quickly by investigating complaints and taking
corrective action if needed. When companies self-correct their wrongdoing, employees
have no need to notify outsiders of problems, saving the firm’s reputation and also
sparing legal costs incurred in the firm’s defense. At the same time, employees will be
more satisfied and feel more committed to the company where wrongdoings are quickly
corrected (Miceli, Near & Dworkin, 2009, p. 380).
The author firmly believes that all of these ethical dilemmas could be lessened if
managers and policy makers encourage reporting of wrongdoing and promoting a
corporate culture of diversity, equal opportunity, free of retaliation, and social
responsibility implemented well with written policies, disciplinary actions, ongoing
training, mentoring and constant monitoring of such activities. It is also important that
top management follow these policies and set a good example for the rest of the
workforce. When ethical dilemmas are present in a company, there are low morale, low
productivity, gossiping, absenteeism, high turnover rate, lawsuits and complaints waiting
to happen. It is not enough for businesses to be highly competitive to be sustainable in
this economy. They need to be socially responsible in every possible way in order to
retain top talent, have a good company brand, and provide a community where people
would like to work for.
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