CHAPTER - FIVE

ETHICAL ISSUES IN
HUMAN RESOURCE
MANAGEMENT
 Chapter-5

CHAPTER-5
ETHICAL ISSUES IN HUMAN RESOURCE
MANAGEMENT
SYNOPSIS

No. Particulars Page

No.
1 The Overture 149

2 Ethics : What Does it Purport? 149

3 Why ethics in HRD? 152

4 The ethical issues in HRD 155

4.1 Job Design, Restructuring and Layoffs 155

4.2 Human Resource Planning 158

4.3 Recruitment 159

4.4 Selection 161

4.5 Performance Appraisal 162

4.6 Dealing with Trade Unions 164

4.7 Training and Development 164

4.8 Career Planning and Development 167

4.9 Promotion 168

4.10 Transfer 169

4.11 Absenteeism 169

4.12 Employee Tumover 170

4.13 Wage and Salary Administration 171

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1. THE OVERTURE:
‘Ethics’ is a fine word to listen about. But it is a hard
nut to crack when comes to practicing it. Whether it be an
individual, business, society, nation, government or a
professional, ethics has its own significance. It is immortal,
universal and significant in all walks of life. Business or
corporate world cannot be an exception to this.
A corporate mission, vision, goal or motto is based on
ethics. The administrative approach to goal fulfilment of
modem organisations depends on adequate contribution by
every department of the organisation, whether, it is
marketing, production, human resource or finance.
The researcher intends to cover the implication of
ethics associated with some issues in HRM of business
organisation. An attempt is made here to clarify the concept
of ethics, to understand and analyse the situation due to
which, the development of concern with such a delicate
matter has become more relevant to day.

2. ETHICS : WHAT DOES IT PURPORT ?

As per the Webster’s dictionary., ethics is the study of
standards and conduct of moral judgment. It is a moral
philosophy and the system of code of morals of a particular
philosopher, religion, group or profession.

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3 Why Ethics in HRD?:

Ethics is not a cosmetic of life. It has to be an
inherent quality of an individual, whether in business or
society for various reasons described below. Ethics is
important to business in general and HR manager in
particular.

( 1 ) Ethics is a need : To be ethical all through life is a wish

of everyone. This is a fundamental need of a human being
after the satisfaction of physiological needs. He lives to be
ethical at home and also at the place of work. He endorses
the fact that the decision taken by him, as a part of his duty,
might affect number of people. Over and above this, he, as
an HR manager wants to be a proud employee of that
organisation which is highly respected and adored in the
business world. Then why not adorn that organisation by his
ethical acts. This feeling, far and wide, forces organisations
to go ethical.

( 2 ) Public image : Organisation with quality products and

services, enjoy superlative position compared to their
competitors. An organisation which is perceived by public as
honest, considerate and ethically responsive receives greater
patronage from public. To attain this status, organisations
prefer to follow set norms.

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( 3 ) Values: the cementing force : Values are symbols of

acknowledgement. When employees feel and accept that
management is value-driven and value-oriented, they start
respecting it. The credibility of management is raised to a
highest degree. The employees understand management’s
desire and whole heartedly cooperate in creating common
goals, values and language. The lacuna between
management and employees is shortened to minimum.

( 4 ) Facilitates decision making : Adoption of values and

ethics in management helps , a great deal in making better
decision. While taking any decision, because of being value-
driven, management will take care of every aspect and
impact. It will become a normal practice of taking decisions
which are in the interest of employees, customers, share
holders and the company itself.

( 5 ) Ethics and profits walk hand in hand : Value

motivated companies are most likely to lose money initially.
But, having passed through a certain stage, such companies
turn successful in long run. Such companies will be accepted
as torch-bearers and model companies.

( 6 ) Low limits, Ethics enthuse : Ethics is that thread

which keeps and binds society together. Law and law maker
or government cannot protect society. Government cannot

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regulate undesirable and harmful activities. Management

which is proactive can take steps to save environment
through preventing pollution and thereby protect worker’s
health even before enactment in that respect.

( 7 ) Contribution to human welfare : Every business is an

important unit of larger economic system which aims at
enhancing human welfare in the society.

( 8 ) Protection of social interest : By guaranteeing and

maximising economic interests and well being of people, the
social interest is protected by business.

(9) Recognition of neighbors and competitions : This is

possible for a company which endorses due cognizance to its
ancillaries and competitors. It stems out of the principle of
co-existence and united functioning.

(10) Respect to Employees : An Ethics-driven HR manager

would accept and recognise the role of employees in
business operations. They form an integral part of the
business system.

( 11 ) Balancing all stake holders interests : Regardless of

any department, people employed therein can make
difference. They as a team, can help through the HR

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manager, the management of company to strike a balance

among the interests of share holders, customers, employees,
suppliers, competitors, financial institutions, government
authorities and public. In short, it is like drawing a
demarcation line between the economic interests of the
organisation and social interests of the country.

4. THE ETHICAL ISSUES IN HRD :

4.1 Job Design, Restructuring and Lay offs :
Job design as a regular course of action, does not
involve any ethical issue as such. The redesign of job, as a
part of restructuring of an organisation, sometimes includes
laying off employees and downsizing of the staff. It is
relevant also because of inferior administration and
unemployabaility of particular employee/s.
The job design alternatives encompass job
redefinition, job simplification, job change, job enlargement,
job enrichment, job autonomy, flex time, core teams,
employee empowerment and de-jobbing. Below is the scant
narration of each of these.

( I ) Job Redefinition : On account of change in

management style or adoption of new technology the need
for redefining job arises. It affects integrity of some
employees.

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(II ) Job Simplification : As a result of new technological

innovations and extensive use of computers and electronic
gadget the work of an employee gets over-simplified. This
gives birth to boredom and develops tendencies among
employees to commit errors while working. They think of
leaving their jobs. The unethical part of the story is over
simplification of job itself.
(III) Job Change : Job change is a kind of job rotation.
Sometimes, employees feel it disgusting. The unethical issue
here is that chances of improvement of jobs are diminished.
The employees experience dejection and alienation.

(IV) Job Enlargement: It is presumed that job enlargement

is a source of motivation to an employee. But more often
than not, it turns fatiguing also to him. This is an ethical
issue.

(V) Job Enrichment: This appears to be reasonably ethical

because it instigates employees and increases the level of
zeal and zest of an employee. It however, might hurt the
feelings of those who are deprived of job enrichment
because of one reason or the other.

(VI) Job Autonomy : This is an ethical option, provided it

is not resorted to by manager to shirk his own responsibility.
Job autonomy will result into these work teams which can

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freely participate in decision making, planning, coordinating

and controlling their activities.

(VII) Flex Time : This is a sort of freedom endowed to

employees to use their time at work flexibly. This also
includes time-in and time - out. This is an ethical
consideration.
(VIII) Core Teams : These are high performance teams.
They are given complete freedom asto their duties and
responsibilities. It encourages team members to become
more punctual, efficient, effective, creative and innovative.

(IX) Employee Empowerment : This act of management

involves taking steps to develop employee through helping
him acquire skill and knowledge of an area in which he has
aptitude. This is in addition to his regular job.

(X) De-jobbing : Organisation under the changed liberalised

business environment, have to be more competitive and
sharp-edge cutting. De-jobbing is cutting down overstaffing
and at the same time concentrating on development of more
committed employees.

The job design options which exhibit potential to

benefit both organisation and the employees are considered
ethical.

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4.2 Human Resource Planning :

In a simple language, human resource planning is an
HRM process of moving from current manpower position to
the desired manpower position of an organisation. It is in a
way, an act of making sure that the organisation is not placed
in the state of either overstaffing or understaffing. Both
situations are trouble making.
According to Leon C.Megginson, human resource
planning is “an integrated approach to performing the
planning aspects of the personnel function in order to have a
sufficient supply of adequately developed and motivated
people to perform the duties and tasks required to meet
organisational objectives and satisfy the individual needs and
goals of the organisational members.”9
Thus, the purpose of human resource planning is to
ensure sufficient and timely supply of well trained and
developed employees with adequate level of motivation to
fulfil both organisational and individual goals. At prima
face, no ethical issue looks to have been involved in case of
human resource planning. Albeit, it can also put organisation
at sea if not done correctly and thereby raise ethical issues.
Morally, it is ethical to plan human resource for the future
benefits of an organisation. But, if some mistake is
committed intentionally or otherwise, it can sink the ship,
e.g. A company while executing merger and acquisition,
firmly holds a policy of making no change in the manpower.

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Situationally, most of the employees of both the companies

merged, had 20 per cent of the staff exceeding 50 years of
age. Eventually, 10 years later or so, this company will badly
face the problem of shortage of skilled and experienced
workforce.
4.3 Recruitment:
Recruitment is an act on the part of an organisation to
look for prospective employees and stimulate them to apply
for the post falling vacant. The purpose of recruitment is to
increase the number of candidates per job opening.
The recruitment sources are mainly two, (a) Internal
sources, and (b) External sources. Internal sources include
present and past employees, dependents of retired, deceased,
and disabled employees. The incidence of heavily depending
on internal sources for filling job vacancies in organisations
is gradually decreasing. Traditionally, it was justified
because of such advantages as, employee buoyancy,
commitment, ease and simplicity, good industrial relations,
organisational acquaintance, good terms with trade unions
and humanitarian considerations. Employees recruited
through such sources were also easily controllable because
of previous linkages.
Notwithstanding, owing to the gush of globalisation
and lead of liberalisation the world-wide competition has
engrossed business and industry. This situation has changed
the recruitment outlook altogether. It demands for highly

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qualified, skilled, talented and competent personnel. Due to

such shortcomings of internal sources as traditionalism,
pragmatism, inbreeding etc., the flow of flash blood is
restrained which could hamper the organisational growth and
development. The organisations, therefore, have started
recruiting people from external sources.
External sources principally include floor recruitment
directly from universities, academic institutions, professional
and technical institutes, both private and public employment
agencies, walk-in interviews and tele recruitment.
The ethical considerations to be made at this juncture
are mainly two:

( a ) To what extent is it just and fair to replace internal

employees , since they were working for many years with
the company.

( b ) Is it moral to man the position by external recruitee by

depriving and at the cost of promotion of those who had
welded with the company and have been working since
long? Is it not going to attack on their right of career
planning? Who is responsible for this? They themselves or
the company? These and many other questions shoot up.
On the other hand, the demand for highly competent
and skilled workers is on upsurge. If this is not taken care of
systematically, it will hammer on future of the organisation.

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The quality of products and services and the image of the

organisation will be in danger. This is an ethical dilemma on
the part of HR manager.

The settlement of this issue lies in the fact that all

endevours should be made to look for employees with
potential for changed job descriptions from within and they
should be trained, oriented and developed for promotion. In
case if it doesn’t work, then it should think of recruiting
employees from outside. At the same time, recruiting
unsuitable candidates with poor performance record is
unethical from organisational interest point of view. Thus
game plan for organisation should be” “Don’t discharge your
responsibilities towards your employees, if you could not
discharge responsibilities towards yourself.” It is of course,
ethical.
4.4 Selection:
This is a corollary of recruitment. Selection is an act
on the part of a candidate to get an offer for appointment. At
the same time, the HR manger also has to do lot of home
work to make it meaningful. Selection succeeds recruitment.
It is a multi-layer process of matching job description and
specifications with candidate’s specifications, skills,
knowledge and qualifications. In short, it is a process of
choosing the best and thereby dropping the rest.

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The important issues involved in selection procedure

may be stated as under.
(a) Matching a job with person or vice-versa
(b) Role of out side pressures in selection of wrong ones
(c) Selecting more than required number of people
The cardinal principle of HRD is matching an
employee with his job and vice- versa. This indeed is a
difficult proposition. There lies the role of HRD manger.
Selecting a candidate to the job is a common acceptable
practice. But turning it around is considered to be an
unethical practice. This is very common in Indian polity.
Likewise, sometimes, candidates who do not possess
requisite qualification, have to be selected because of
pressures exerted by bureaucrats and politicians from outside
in case of public undertakings and from industrial strong
holders in private sector as well. Such pressures exist in the
same organisation also. This is purely unethical..
Selecting more than required number of people is also
unscrupulous in that, it will be a burden on organisational
resources. In India such vintage and peculiarities are
common, leading to national wastage. Many organisations
pre-select candidates even before the actual selection
exercise.
4.5 Performance Appraisal:
In a common parlance, performance appraisal is a
process of evaluating the performance of an employee in

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relation to set standards and norms. It is assessing the worth

of an employee to an organisation. This is an area where
there is a great deal of likelihood of existence of ethical
dilemmas. Normally, an employee’s performance is
examined through observation and judgment. The ‘what’ and
‘how’ of his performance are checked. This means both his
output and behavior are scrutinised in performance
evaluation.
Since the rater and ratee both are human beings,
chances of errors are many. Knowingly or otherwise, an
injustice is made to candidate. This is an ethical dilemma.
Entry of human element makes the process questionable.
Ethics therefore, should be the mainspring of performance
appraisal. The primal objective of appraisal should be to
arrive at the most honest, sincere and trustworthy assessment
of performance of employees. Central tendency, halo effect,
mirror personality etc. will lead to unethical tendencies, e.g.
underrating a man who belongs to a particular race, religion,
village, community or a group is unethical.
Superfluous reporting of his traits to employee is also
unfair and unjust. This will impede his personal growth and
organisational development. Making a choice of right
method of appraisal is equally essential when it comes to
ethics.

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4.6 Dealing with Trade Unions :

Trade unions have their representation in
organisations through employee membership. They work for
justice to their member workers. They disregard anomalies
in wages, welfare and promotions. The HR manager, to
solicit active union support in industrial operations, have to
develop friendly relations with union leadership. Hitherto,
such interrelatedness of union and factory management is a
common phenomenon.
4.7 Training and Development:
Training is a process of enhancing employee’s
knowledge about his job. It is different from education,
learning and development. Training is a process of learning a
sequence of programmed behavior. It is application of
knowledge. It gives people an awareness of the rules and
procedure to guide their behavior. It attempts to improve
their performance on the current job or prepare them for an
intended job.
More precisely, training is imparted with a view to
developing skills of workers in their respective jobs.
Training is concerned with skill development. It answers
‘how’ i.e. how to carry out a particular task is the function of
training. Etymologically, education answers ‘what’, i.e. it
gives knowledge about a particular subject or discipline. It is
more formal. It clarifies concepts and throws light on
fundamentals. It is normally catered in schools and colleges.

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Development is an on going process. It is the result of

education, learning and training. It is a life-long and river
ending process. Learning is more generic in nature. What
begins in cradle and ends in crematorium, is learning.
Management development is an organised and
programmed process. Managers and executives are helped to
develop their managerial skill and ability through
management development programmes. Management
development helps achieve the objectives of individual
development of managers and consequently ensure over all
organisational development.
Employee training and development are a must for
modem industries which are working in the environment of
market economies, complex technology, redesigned
organisational stmctures and personal aspiration of
employees.
The training ritual begins with identifying training
needs on such bases as customer complaints, lower output,
poor quality, supervisors readings and observations,
increased wastage and scrap, increase in number of
accidents, poor state of industrial relations, indifferent
behavior of employees and adoption of new technology with
a plan for expansion and diversification.
The HR manager has to plan accordingly for training
and chalk out training programme to administer the desired
training to a particular group of personnel. All this is ethical.

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Even in the sphere of training and development, we

can notice a variety of circumstances where an HR manager
encounters ethical dilemmas. They are listed below:
(i) When training programme is implemented as a
routine training requirement by HR Manager.
(ii) When training need of employee is identified on
the basis of a single or nebulous factor.
(iii) When there is absence of relativity between
training purposes and training output.
(iv) When the trainees consider attending training
programmes merely as a change and a medium of
gaining pleasure.
(v) When there is absence of feedback on training
(vi) When training is considered as an instrument of
individual growth by employees.
(vii) When training programme has been ‘finished’ and
not ‘completed’.
(viii) When training infrastructure is not fully utilised.
(ix) When a trainer comes unprepared and completes
his task in a hampy campy manner.
(x) When trainers are selected for training programme
under pressure of favoritism or nepotism.
(xi) When the feedback about the training programme
is featured as ‘dull’ ‘monotonous’ and ‘useless’.
These and several other circumstances will stamp the
training and development of organisation as has been

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influenced by ethical dilemmas, because here also, the

ultimate responsibility is that of an HR manager.
4.8 Career Planning and Development:
In HRD and organisational context, organisation
stands to serve people and not the people do stand to serve
organisation. It is but true that none without the other is
satisfactorily accomplished. This highlights the role of
organisation in planning, facilitating and building the career
of its employees.
Career planning is a process by which an individual or
organisation determines career goal for oneself or employees
with the path or route to reach those goals. Human resource
is considered as an asset of organisation.
When an individual joins an organisation he has in his
mind the goals to improve his prospects, through promotions
and positions of higher responsibilities and greater
challenges. He has dreams of reaching the top in his
particular line of activity. Here stems the responsibility of
organisation with which he has been serving for many years.
Organisation has to provide opportunity for career planning
and play the role of a facilitator to help him walk up the
ladder and fulfil his goal. Neither of them can become
complacent about growth. If this so happens, and an
employee feels suffocated for the want of elevation in
hierarchy, the HR manager is said to have been facing
ethical dilemma.

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If an employee disregards such opportunity and turns

down better career, he is doing injustice with himself.
4.9 Promotion:
Promotion is a vertical upward placement of an
employee with increased responsibilities, improved status
and quite often higher pay. There are two popular bases for
promotion, viz. (1) Merit and (2) Seniority. The basis of
merit is preferred by management because only skillful,
worthy and meritorious employee can shoulder higher level
responsibility after being promoted. The employees who are
capable and competent also like merit as a basis for
promotion. However, unions advocate basis of seniority in
the interest of workers. But this is obviously at the cost of
both organisational interest and the interest of skilled
employees who are more competent than the senior ones.
Whereas, in government and public organisations the
basis of promotion is seniority, the private sector
organisations endorse merit as a ground for promotion. If the
organisation practices the policy of seniority as a basis, it is
ethical on the part of a company to promote someone that
way. Sometimes a compromise is made by adopting merit -
cum - seniority basis. But it cannot completely match
employee skills with the job descriptions.
Ethical dilemma is involved when, under the cover of
merit, some one is promoted at higher level at the fancy of a
manger.

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4.10 Transfer:
Transfer is a lateral or horizontal movement of an
employee from one position to another without involving
any major change in his duties, responsibilities, assignments,
status and pay. It is adopted frequently in the wake of the
organisation’s policy. Transfer appears to be of three types,
viz. employee requested transfers, company initiated
transfers and public demanded transfers.
The employee requested transfers take place on
request made by employee due to some personal reasons.
The company initiated transfers are done as a part of
routinical job and organisational requirements. The public
demanded transfers occur in the light of public opinion
especially in public enterprises and utility concerns.
If the transfer is resorted to, in pursuit of
organisational policy, without fervor or favor, it is ethical.
But if it is handled as a punitive action prejudicially, it is
unethical. Sometimes, transfer is made on the basis of
favoritism or nepotism.
4.11 Absenteeism :
Absenteeism is an act of abstaining from work on a
regular basis by an employee. It is a habitual practice of such
an employee to stay away from work. Absenteeism may be
classified as authorised absenteeism, unauthorised
absenteeism, intentional absenteeism and circumstantianal
absenteeism. Of these authorised absenteeism is ethical and

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lawful. The rest are unethical because they are ultra vires the
interest of either the absentee or the organisation. If the
absenteeism is based on some excuses or the authorised
person is involved in giving undue favor to the accused, such
absenteeism is of course, unethical.

4.12 Employee Turnover:

Previously, the organisations viz-a-vis employees
believed in the philosophy of developing ‘family culture’.
This means they were serious about longevity of
tenure of employees for many many years. This belief was
based on the principle of ‘reciprocity of interests’. It was
held that the permanency of employee’s tenure would
increase his skill, knowledge, experience and commitment
and that will ultimately pay rich dividends to the
organisation. It was also beneficial to the organisations for
they had spent and invested sizeable amount of money for
their training, development and welfare.
But with the passage of time, the picture has changed.
The change in technology, systems, structures and people’s
attitude at a faster rate has been phenomenal at present. The
present generation of employees has a quest for faster
growth. They have an inclination to change their jobs and
shift from one organisation to another. Their goal is a
prosperous career. Organisations also offer handsome pay
packages to such employees and never mind some one

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quitting them. The information technology and software

industry are noticing this, across the world. Whether, this
creates any ethical dilemma is a matter of delebrations.
4.13 Wage and Salary Administration :
This is a very important area of concern from our
point of view. It is equally important to both an employee as
well as employer. Wage or salary paid to an employee is a
principal source of satisfaction of his basic and higher order
needs. Over and above livelihood for the self and family, it
provides recognition, sense of accomplishment and social
status.
The ethical issues associated with salary and wage
administration are mentioned below.
(i) Paying same remuneration to one who is serious,
sincere and hardworking and also to one whose
contribution is least.
(ii) Loss suffering company being expected to declare
bonus.
(iii) Paying at different rate to man and a woman doing
the same kind of work.
(iv) Getting an employee signed on full pay and
actually paying him less than that.
The ethical issues discussed above are not exhaustive
but illustrative. The HR manager may be dabbled in other
real life situations as well. As an employee of some

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organisation, he has to apply his discretion and get out of

ethical syndrome.
The National institute of Personnel Management has
carved code of ethics for its members which is given in
Q

Appendix -1.

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REFERENCES:
1. George A.Steiner and John F.Steiner, Business,
Government and Society, McGraw Hill, 1997,p.l80.
2. Frederick, Post and Davis, Business and Society,
McGraw Hill, 1992, p.53.
3. Baumhart, R., Ethics in Business, Holt, Rinehart and
Winston, New York, 1968,p.7
4. Garrett Thomas M., Business Ethics, The Times of
India Press, Bombay, 1970, p.4
5. Ibid
6. J.L.Komaki, T.Coombs, and S.Schepman,
“Motivational Implications of Reinforcement
Theory.” In Motivation and Work Behaviour,
McGraw Hill, New York, 1996,p 16-23.
7. Subbarao, P., HRM in the new Millennium, Himalaya
Publishing House, Mumbai, 2000. p.49.
8. Mamoria, C.B., Gankar, S.V., Personnel Management,
Himalaya Publishing House, Mumbai, 2002, pp 81-
82.1

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