Chapter 4

Business Ethics and Human Resource Management

4.1. Introduction
A business entity necessarily calls for a human capital as human
resource is the most important and vital asset of an organization.
It is then very important to evaluate the ethics of employment.
Employment ethics is concerned with the right type of conduct
employees and employers must engage in their relations.
In short employment ethics explains the right and wrong in
employment relationship.
An employment ethics discussion raises or covers issues beyond the
ones created by the employment contract.
Respecting terms of contract being considered as one part of ethics,
work ethics try to cover issues which the employment contract may
have skipped to notice or rather a contract plus issues.

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4.2. Ethical Decisions in Human Resource Management Functions
Human resource management is a business function that deals
with the management of relationships between groups of people in
their capacity as employees, employers and managers.
In this section we will briefly discuss some of the critical ethical
issues in human resource management decisions.
1.Ethics in Job Design
The objective of design and redesign of job is to positively affect
employee motivation and business or organizational success.
Most frequently used job design approaches can includes work
simplification, job rotation, job enlargement, job enrichment, job
sharing, independent work teams and empowering the workforce.
Job Rotation- when any employee suffers from over reutilization of
his work, rotated to another job, at the same level that has similar skill
requirements.
unethical issues like rotating to the jobs where no innovative
perspectives are present,
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Ethical Decisions in HRM Functions……….Cont’d
Work Simplification - simplifying the work of the employee, so that they can
understand it easily and perform to full of their skills.
The unethical issue:
when the work is over simplified that leads to boredom, more mistakes, less
interests and tendering resignations.
Job Enlargement- the horizontal expansion of jobs, increases the number and
variety of tasks that an individual has to perform.
unethical issue: may sometimes result in much more boring tasks.
 Job Enrichment- the vertical expansion of job, an employee would do the
work with complete activities, more freedom and increased responsibility.
The only thing which should be handled carefully is to take care while
selecting the employee whose job should be enriched.
Job Sharing - is the practice of having two or more people split a job so that
people find it as an opportunity to get an experience of two heads.
The unethical issue involve here is to intentionally involve two person to do
single job who do not successfully coordinate.
Empowerment- In this option employees go for requiring skills and additional
knowledge to do the job in which they have their interest and aptitude.
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2. Ethics in Recruitment and Selections
Recruitment is concerned with the process of attracting a sufficient
number of individuals with the right profile in terms of qualifications,
experience, skills and other relevant attributes to indicate their interest
in working for the organization.
Selection is the process of choosing the individual or individuals
who best meet the job-related criteria.
While recruitment is a positive activity, by contrast selection is
viewed as a negative process as it involves picking out the best and
turning down the rest.
The following are unethical practices in recruitment and selection
process:
a) Discrimination: includes any exclusion or preferences made on the basis of
race, sex, age, religion, national origin, pregnancy/child birth, familial/marital
status disability, sexual orientation, HIV/AIDS, prior arrest/conviction record to
mention a few which has the effect of impairing equality at work.
b) Sexual Harassment: refers an unwelcome sexual advances, request for sexual
favors, and other verbal or physical conduct of a sexual nature. 4
Ethical Decisions in HRM Functions……….Cont’d
Forms of sexual harassment include:
physical assault (ranging from touching to serious assault);
verbal and/or written harassment (jokes, offensive language,
gossip);
visual display (posters, graffiti, obscene gestures);
coercion (pressure for sexual favors);
c) Unfair Recruitment and Selection Practices: Such as:
nepotism, favoritism, quota system, asking for bribes prior to and
after recruitment and selection exercise
non- disclosure of the positive as well as the negative characteristics
of the job to applicants at the point of entry which could lead to
undue expectations and could cause frustration and eventual
turnover.
Giving preference to job candidates on the basis of the university
attended is unfair practice.
d) Negligent Hiring: Employing prospective candidates without
proper and adequate background checks or reference. 5
e) Unethical selection process: In any organization so
many selection devices have been used like interviews
written tests, performance simulation tests etc.
There are also some practical ethical questions arise like
select unsuitable employees due to pressure from top,
some internal politics
making some adjustments in job specification to the
suitability of the candidate just because of any corrupt
activity,
The practice of taking more employees than what is
needed is also a common unethical practice in selection
procedure.
If such unethical practice happen in selection process, it
directly leads towards inefficiency and then has impact on
organization’s success 6
4. Ethics in Training and Development
Competent employees don’t remain competent forever as
competency or skills deteriorate and can become obsolete.
So organizations spend a good amount of money on training and
development.
The following are some unethical training and development
practices:
improper evaluation of training and development,
paying lip service to training and development,
negative training and development philosophy,
training based in favoritism and nepotism,
training program viewed by trainees as a form of holiday from work,
training based on discrimination on the grounds of sex, age,
ethnicity or closeness to ones boss.

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5. Ethics in Performance Evaluation
The main objective of performance evaluation is to access
accurately an individual’s contribution as a basis for making reward
allocation decisions.
Unethical performance appraisal practices can include:
Halo effect- considering the first impression, giving high rating
Horns effect: responding to one negative aspect & giving low rating
Strictness error: when the rater consistently gives very low ratings.
Leniency error: when raters are too liberal,
Recency error: give much more weight to the recent behaviors
Central tendency: give average ratings to all employees.
Errors of variable standards: different standards for similar
performance
Miscellaneous biases: biases may be based on the grounds of race,
sex, appearance, religion, country of origin, favoritism and nepotism.
weaknesses.

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6. Ethics in Compensation and Reward Management
This is a very important part of any company’s human resource
practices.
But a number of questions arise regarding the reward management
ethical issues, as most conflicts at work could be related to poor pay
and related issues.
The outcome of compensation inequity & dissatisfaction may
include lower job performance, increase grievance, absenteeism as
well as labor turnover.
On the other hand, excessive compensation costs can reduce an
organization's competiveness and its ability to provide jobs.
Sound compensation policy should create a balance between
satisfaction and competiveness (fair deal, fair pay for fair day's job).
The extent of pay equity, fairness and regularity are all ethical issues
in compensation management.
Therefore, organizations should ensure equal pay for work of equal
value.
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7. Ethical issues in Promotion, Transfer and Separation
Promotion refers to a shift from a level of lesser responsibilities to that of
higher responsibilities, often with increase in pay.
There can of course be dry promotion where an employee is moved to a
higher level job without increase in pay.
Transfer is viewed as a change in assignment in which workers move
horizontally from one job to another at the same level of hierarchy, requiring
similar skills, approximately same level of responsibility, status and level of
pay.
Separation refers cessation of service with an organization with different
reasons.
However:
Promotion based on favoritism as against competence is unethical,
Transfer based on favoritism as opposed to objectivity is unethical,
Promotion and transfer based on discrimination on the grounds of sex or
others characteristics of employees is unethical,
Terminating employees without due process in the disciplinary procedure
is unethical.
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8. Ethical issues in Health and Safety at Work
Health and safety policies and programs are concerned with
protecting employees and other people affected against the hazards
arising from employment
The elimination of hazards is the responsibility of everyone
employed in an organization, as well as those working there under
contract.
The following are unethical practices in health and safety at work
Non-compliance with safety regulations at work
Non- provision of safety gadgets at the work premises
Lack of health and safety inspections
Lack of health and safety training and manuals
Lack of first- aid- box and medical facilities at work
Invasion of employees‟ privacy at work: disclosure of medical
records
Discrimination against HIV/AIDS victims at work

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9. Ethical issues in Communication at Work
In all human endeavors communication plays pivotal roles, and no
group or organization can exist without communication.
Miscommunication or misunderstanding can have deadly
consequences.
The following ethical issues in communication should be observed
by HR professionals:
 over reliance on rumors and grapevines as sources of
information,
 Convey true information as against falsifying certain
information,
 It is unethical if one disposing confidential information of the
organization to its competitors or outsiders,
 Do not stretch the truth or mislead others,
 Do not withhold information someone else needs,

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10. Ethical issues in Labor/Management Relations
Labor–management relations connotes a relationship between
worker, not as individuals but in their collective identity, and the
employer.
Their activities would seem to exclude the possible intervention of
the government as intermediary in the employment relations
regulations.
Unethical practices in labor- management relations include:
Unfair labor practices by both the employers and the unions on
behalf of their members e.g. engaging in sweetheart agreements.
Non-implementation of collective agreements or renewal of expired
agreements.
Invasion of employees' privacy at work: Exclusion of employees
from decision making processes affecting their work.
Subjecting employees to longer working hours opposed normal
hours as well as victimization of union officials because of their
involvement in strike actions.
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Here are the list of basic employee rights ethics viewed proper to
respect.
The right not to be terminated without just cause
The right to due
The right to privacy
The right to know- nature and extent of risk of job or job in general.
The right to workplace health and safety
The right to organize and strike
Rights regarding plant closing- proper compensation when firm is
liquidated or bankrupt.

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12. Combating Unethical HR Practices
To combat unethical HR practices in the workplace, the HR
professionals in line with top management could put in place:
Ethical Policies and Codes: This is a document that spells out the
standards the organization expects its employees and management to
adhere to.
Ethical Training: Organizations should encourage ethical training
of their employees and management team.
Whistle blowing Policy: Organizations should put in place whistle
blowing policy. Whistle blowing can help reduce the occurrence of
unethical behavior on the part of employers. Whistle blowers are
individuals usually employees who use procedural or legal channels to
report incidents of unethical behavior to the public or legal authorities

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4.3. Ethics, Organizational Democracy and Socio-moral Climate
A great deal of attention has been devoted recently to the study of
the ethical context in organizations.
One is the concept of socio-moral climate (SCM) and its impact on
organizational socialization towards ethics-related behavioral
orientations.
The concept of SMC represents a sub-domain of organizational
climate referring to ‘specific criteria of organizational structure and
organizational practices, in particular specific principles of :
communication,
teamwork,
collective problem-solving,
decision making as well as
leadership which form a field of socialization for democratic and
moral orientations.

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According to Kohlberg and other scholar in the area, the following five factor
components or issues constitute a socio-moral climate (SMC):
1.Open confrontation of the employees with conflicts: This component of SMC
encompasses the extent to which members of a particular organization are involved
in constructive conflict and confrontation. This is characterized by not only openly
facing conflicts and disagreements, but also facing up to them respectfully and
honestly.
2.Reliable and constant appreciation, care and support by supervisors and
colleagues: This factor refers to the degree of mutual respect, empathy and genuine
care for the members of an organization
3.Open communication and participative cooperation: Open communication and
participative cooperation are practically interwoven and form the third component of
SMC. Open and free communication refers to the extent in which employees are
encouraged to question and form independent judgments
4.Trust-based assignment and allocation of responsibility corresponding to the
respective employees’ capabilities: trust based assignment of responsibility implies
the granting of adequate confidence and accountability instead of either distrustful
strict control or uncontrolled laissez-faire.
5.Organizational concern for the individual: the main focus is on mutual
perspective which includes serious concern for the legitimate needs of all
organizational members. 17