Ethics, Justice, and Fair Treatment in HR Management

Ethics, Justice, and  Fair Treatment  in HR Management

中国经济管理大学/中國經濟管理大學

ANNOTATED OUTLINE

I. Ethics and Fair Treatment at Work

A.  The Meaning of Ethics – Ethics refers to “the principles of conduct governing an individual or a group.”  Ethical decisions also involve morality, which are society’s accepted standards of behavior.  It would simplify things if it was always clear which decisions were ethical and which were not. Unfortunately, it is not.

B. Ethics and the Law – The law is not the best guide about what is ethical, because something may be legal but not right, and something may be right but not legal.  “Don’t lie, don’t cheat, don’t steal.”  We were all raised with essentially the same values. Ethics means making decisions that represent what you stand for, not just what is legal.

C. Ethics, Fair Treatment, and Justice – Experts generally define organizational justice in terms of its three components—distributive justice, procedural justice, and interpersonal or interactive justice.  Distributive justice refers to the fairness and justice of the decision’s result.  Procedural justice refers to the fairness of the process.  Interactional or interpersonal justice refers to “the manner in which managers conduct their interpersonal dealings with employees,” and in particular to the degree to which they treat employees with dignity as opposed to abuse or disrespect.

D. Employee Rights – Few societies rely solely on managers’ ethics or sense of fairness to ensure that they do what’s right by their employees. An employee may have the right to sue the employer under a number of different circumstances. 

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II. What Determines Ethical Behavior at Work?

A. Research Findings – Whether a person acts ethically at work is usually not a consequence of any one thing.  Because people bring to their jobs their own ideas of what is morally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes.

B. The Person – Because people bring to their jobs their own ideas of what is morally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes.

C. The Boss – The boss sets the tone, and by his or her actions sends signals about what is right or wrong. According to one report, for instance, “the level of misconduct at work dropped dramatically when employees said their supervisors exhibited ethical behavior.”

 D. Organization’s Culture

1. What is Organizational Culture? – Organizational culture is the characteristic values, traditions, and behaviors a company’s employees share.  A value is a basic belief about what is right or wrong, or about what you should or shouldn’t do.  To an outside observer, a company’s culture reveals itself in several ways.  You can see it in employees’ patterns of behavior, such as ceremonial events and written and spoken commands.  You can also see it in the physical manifestations of a company’s behavior, such as written rules, office layout, organizational structure, and dress codes.

2. The Manager’s Role – When it comes to creating a corporate culture, effective managers do not leave it to chance.  Things that help are:  Clarify Expectations, Walk the Talk, and Provide Physical Support.

E. The Company – People tend to alter their ethical compasses when they join an organization.  For example, managers may pressure or even reward employees for bad behavior.  

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III. How Managers use Personnel Methods to Promote Ethics and Fair Treatment

1. Selection – Screening out undesirables can actually start before the applicant even applies, if the HR department creates recruitment materials containing explicit references to the company’s emphasis on integrity and ethics.  The selection process also sends signals about what the company’s values and culture really are, in terms of ethical and fair treatment.

2. Ethics Training – Ethics training typically plays a big role in helping employers nurture a culture of ethics and fair play.  Such training usually includes showing employees how to recognize ethical dilemmas, how to use ethical frameworks to resolve problems, and how to use HR functions in ethical ways.

3. Performance Appraisal – The firm’s performance appraisal processes provide another opportunity to emphasize its commitment to ethics and fairness.  First, the appraisal can actually measure employees’ adherence to high ethical standards.

4. Managing Ethics Compliance – Passage of the Sarbanes-Oxley Act of 2002 made ethics compliance obligatory.  The act requires that the CEO and the CFO of publicly traded companies personally attest to the accuracy of their companies’ financial statements. 

5. Personnel-Related Methods for Ensuring Fair Treatment – There are concrete reasons managers should treat employees fairly.  Arbitrators and the courts will consider the fairness of the employer’s disciplinary procedures when reviewing disciplinary decisions. 

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IV. Managing Employee Discipline and Privacy

A.  Basics of a Fair and Just Disciplinary Process – The purpose of discipline is to encourage employees to behave sensibly at work.  In an organization, rules and regulations serve about the same purpose that laws do in society; discipline is called for when one of these rules or regulations is violated.  A fair and just discipline process is based on three pillars: clear rules and regulations, a system of progressive penalties, and an appeals process.

When You’re on Your Own, HR For Line Managers and Entrepreneurs:  Disciplining an Employee – Even if you’re a manager in a Fortune 500 company, you may find yourself without company guidelines when you’re thinking of disciplining or discharging an employee for violating company rules.  Guidelines are given to assist the manager who must implement disciplinary action. Supervisors traditionally apply the four points of “the hot stove rule” when applying discipline: warning, consistent, impersonal, and immediate. 

The New Workforce:  Comparing Males and Females in a Discipline Situation – A study is cited in which female employees were disciplined much more harshly for the same violations than were male employees.  The gender of the boss made no difference in the differential treatment.

B. Formal Disciplinary Appeals Processes – even companies without unions may have a very formalized appeals process. Some companies establish independent ombudsmen, neutral counselors from outside the normal chain of command to whom employees can turn for confidential advice.

C. Discipline without Punishment – aims to avoid disciplinary problems.  It does this by gaining employees’ acceptance of the rules and by reducing the punitive nature of the discipline itself.

D. Employee Privacy – The four main types of employee privacy violations upheld by courts are intrusion, publication of private matters, disclosure of medical records, and appropriation of an employee’s name or likeness for commercial purposes.  Background checks, monitoring off-duty conduct and lifestyle, drug testing, workplace searches, and monitoring of workplace activities trigger most privacy violations.

E. Employee Monitoring – More than half of employers monitor email activity, three-quarters monitor employee Internet use, and about 40% monitor phone calls. 

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V. Managing Dismissals

Dismissal is the most drastic disciplinary step the manager can take. Because of this, special care is required to ensure that sufficient cause exists for it. Without a contract, either the employee or the employer could terminate at will the employment relationship. However, EEO and other laws and court rulings increasingly limit management’s right to dismiss employees. Wrongful discharge is a dismissal that violates the law or that fails to comply with contractual arrangements, either stated or implied. Statutory, common law, and public policy exceptions to termination at will exist.

A. Grounds for Dismissal – There are four bases for dismissal. In dismissing an employee, the employer should take care to ensure that all keys and company property are returned, Internet passwords disabled, and employee accounts inactivated.

1. Unsatisfactory performance – occurs when there is persistent failure to perform assigned duties or to meet prescribed job standards.

2. Misconduct – is a deliberate and willful violation of the employer’s rules. Insubordination is a form of misconduct, referring to rebelliousness or disobedience.

3. Lack of qualifications for the job – results from an employee’s inability to do the work assigned even when he or she is diligent.

4. Changed requirements (or elimination) of the job – results from an employee’s inability to do the job after the employer changed the nature of the job. 

Know Your Employment Law:  Gross Misconduct – There are instances in which the employee’s conduct is so outrageous that it qualifies as “gross misconduct.”  A list of factors extracted from court decisions on gross or willful misconduct by employees in other contexts will aid the employer in writing its policy on gross misconduct.

B. Avoiding Wrongful Discharge Suits – Wrongful discharge occurs when an employee’s dismissal does not comply with the law or with the contractual arrangement.  Avoiding wrongful discharge suits requires a two-pronged approach.  First, set up employment policies and dispute resolution procedures that make employees feel they are treated fairly.  Second, do the preparatory work – paying particular attention to the employee handbook to avoid such suits.

C. Personal Supervisory Liability – Courts sometimes hold managers personally liable for their supervisory actions.  Managers should be fully familiar with applicable federal, state, and local statutes and know how to uphold their requirements.  

D. The Termination Interview – Guidelines include:  1) Plan the interview carefully, 2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of the severance package, 6) Identify the next step.

1. Outplacement Counseling – is a systematic process by which someone you’ve terminated is trained and counseled in the techniques of conducting a self-appraisal and securing a new job appropriate to his or her needs and talents.

2. Exit Interview – Many employers conduct exit interviews with employees who are leaving the firm. They aim to elicit information about the job or related matters that might give the employer a better insight into what is right—or wrong—about the company.

E. Layoffs and the Plant Closing Law

1. The Plant Closing Law – requires employers of 100 or more employees to give 60 days’ notice before closing a facility or starting a layoff of 50 people or more.  It simply gives employees time to seek other work or retraining by giving them advance notice of the shutdown.

2. The Layoff Process – There is a survivor mentality that exists among those who remain where there have been layoffs.

3. Bumping/Layoff Procedures – Employers who encounter frequent business slowdowns and layoffs may have procedures that let employees use their seniority to remain on the job.

4. Alternatives to Layoffs – Given the investments they have in recruiting, screening, and training employees, many employers are hesitant to lay off people at the first sign of business decline.  There are several alternatives.

F. Adjusting to Downsizings and Mergers

Firms often use downsizing—reducing, usually dramatically, the number of people the firm employs—to better their financial position.  Yet many firms discover operating earnings don’t rise after major cuts.  Low morale among those remaining may be part of the problem.  Regardless of why you’re downsizing, think through the process, both to avoid unnecessary consequences and to ensure the process is fair.  Some guidelines for implementing a reduction in force are provided.

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DISCUSSION QUESTIONS

1. Explain how you would ensure fairness in disciplining, discussing particularly the prerequisites to disciplining, disciplining guidelines, and the discipline without punishment approach.  There are many things that can be helpful:  • Make sure the evidence supports the charge of employee wrongdoing. • Ensure that the employee’s due process rights are protected. • Warn the employee of the disciplinary consequences. • The rule that was allegedly violated should be “reasonably related” to the efficient and safe operation of the particular work environment. • Fairly and adequately investigate the matter before administering discipline. • The investigation should produce substantial evidence of misconduct. • Rules, orders, or penalties should be applied evenhandedly. • The penalty should be reasonably related to the misconduct and to the employee’s past work history. • Maintain the employee’s right to counsel. • Don’t rob a subordinate of his or her dignity. • Remember that the burden of proof is on you. • Get the facts. Don’t base a decision on hearsay or on your general impression. • Don’t act while angry. • Create a formalized appeals process. • Make sure all rules and policies are communicated and clearly explained in advance.

2. Why is it important in our highly litigious society to manage dismissals properly?  If you do not follow the law, and your own policies and procedures, you are likely to have the courts rule against you.  This can be very costly and damaging to employee morale and your reputation.

3. What techniques would you use as alternatives to traditional discipline? What do such alternatives have to do with “organizational justice”? Why do you think alternatives like these are important, given industry’s need today for highly committed employees?  If you are going to attract and retain top quality employees, it is critical to have a strong sense of organizational justice.  Disciplinary techniques and methods can be related to the legal techniques and methods in our society at large.  If they work well, people believe justice is served.  If the do not work well, people feel there is injustice.

4. Provide three examples of behaviors that would probably be unethical but legal, and three that would probably be illegal but ethical. While most students think of ethical behavior, they think of rules for distinguishing between right and wrong, such as the Golden Rule ("do unto others as you would have them do unto you"), a code of professional conduct like the Hippocratic Oath ("first of all, do no harm").  But the difference between ethical/unethical and legal/illegal behavior can become blurred and often debated.  Here are several examples to help make the distinction more clear.

Unethical but legal

o Submitting the same paper for two different course assignments 

o Listing information on your resume that is incorrect in order to obtain a job which you might not otherwise be qualified

o Performing non-work-related activities when you are being paid by your employer

     Illegal but ethical

o Operating a motor vehicle while over your state’s legal limit for alcohol intoxication

o Stopping at a red light but then proceeding through the intersection before you receive the green light

o Driving over the legal speed limit

5. List 10 things your college or university does to encourage ethical behavior by students and/or faculty. Answers will vary by college, but use of multiple test forms, policies, ethics courses, software to identify plagiarism, etc. are examples common to most colleges.

6. You need to select a nanny for your or a relative’s child, and want someone ethical. Based on what you read in this chapter, what would you do to help ensure you ended up hiring someone ethical? Asking questions about values, and paying attention to both the answers and the nonverbals that accompany them, finding out how the nanny acted in past situations and clarifying expectations as fully as possible will all go a long way toward ensuring that the nanny is ethical.

7. You believe your employee is being insubordinate. How would you verify this and what would you do about it if true?  It is important to conduct a full investigation of suspicions. Asking trusted employees for feedback on performance in the unit on a regular basis often will assist in clarifying where problems exist. Once the allegations are clear, meeting with the employee to discuss the situation, and their reasons for it is crucial. Depending on the situation, the reasons and the severity of the offense, progressive discipline would be the next step.

8. Several years ago Wal-Mart instituted a new scheduling system that makes it more difficult for its employees to know for sure what hours they would be working. Basically, the store supervisor calls them at the last minute if there’s an opening for that day. Based on what you read in this chapter, is the new system ethical? Why or why not? Is it fair? What would you do if you were a Wal-Mart employee? If employees have a clear understanding of the system, and know what the rules are regarding availability, it would seem that the system is not unethical. However, asking that an employee reserve the time, and then sending them home for reasons beyond their control does not seem fair. Wal-Mart employees are likely to express their dissatisfaction  with increased turnover, which will result in higher recruiting and training costs for the store.

INDIVIDUAL AND GROUP ACTIVITIES

1. Working individually or in groups, interview managers or administrators at your employer or college in order to determine the extent to which the employer or college endeavors to build two-way communication, and the specific types of programs used.  Do the managers think they are effective?  What do the employees (or faculty members) think of the programs in use at the employer or college?  Encourage students to be precise and inquisitive in their pursuit of this information.

2. Working individually or in groups, obtain copies of the student handbook for your college and determine to what extent there is a formal process through which students can air grievances.  Based on your contacts with other students, has it been an effective grievance process?  Why or why not?  Ask what effect this has on the sense of organizational justice.

3. Working individually or in groups, determine the nature of the academic discipline process in your college.  Do you think it is effective?  Based on what you read in this chapter, would you recommend any modifications?  Encourage students to be inquisitive and insightful as they examine this critical and real issue.

4. The HRCI “Test Specifications” appendix at the end of this book lists the knowledge someone studying for the HRCI certification exam needs to have in each area of human resource management (such as in Strategic Management, Workforce Planning, and Human Resource Development).  In groups of four to five students, do four things:  (1) review that appendix now; (2) identify the material in this chapter that relates to the required knowledge the appendix lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so the students in other teams can take each others’ exam questions.  Material from this chapter that applies to the HRCI exam would include:  the meaning of ethics, ethics and the law, ethics fair treatment and justice, what shapes ethics behavior at work, ethics policies and codes, the organization’s culture, HR ethics activities, building two-way communications, formal disciplinary appeals processes, discipline without punishment, employee privacy, grounds for dismissal, avoiding wrongful discharge suits, personal supervisory liability, the termination interview, layoffs and the plant closing law, adjusting to downsizings and mergers.

5. In a recent research study at Ohio State University, a professor found that even honest people, left to their own devices, will steal from their employers.  In this study, the researchers gave financial services workers the opportunity to steal a small amount of money after participating in an after-work project for which the pay was inadequate.  Would the employees steal to make up for the underpayment?  In most cases, yes.  Employees who scored low on an honesty test stole whether or not their office had an ethics program that said stealing from the company was illegal.  Employees who scored high on the honesty test also stole, but only if their office did not have such an employee ethics program—the “honest” people didn’t steal if there was an ethics policy.  In groups of four or five students, answer these questions:  Do you think findings like these can be generalized?  In other words, would they apply across the board to employees in other types of companies and situations?  If your answer is yes, what do you think this implies about the need for and wisdom of having an ethics program?  You should receive a wide variety of responses to this question.  It is a real question of whether the employees who score high on honesty tests will, in fact, respond differently based on the existence of an ethics policy.

EXPERIENTIAL EXERCISES & CASES

Experiential Exercise: Discipline or Not?

The purpose of this exercise is to provide the student with some experience in analyzing and handling an actual disciplinary action.  Students have the opportunity to look at a disciplinary action that went to arbitration and see if they come up with the same decision that the arbitrator did.

Application Case: Enron, Ethics, and Organizational Culture

1. Based on what you read in this chapter, summarize in one page or less how you would explain Enron’s ethical meltdown.  Lax oversight by the six-person audit committee was a major contributor to the collapse of the firm.  Executives carried out a series of complex financial transactions designed to remove debt from the balance sheet and artificially inflate the revenue.

2.  It is said that when one securities analyst tried to confront Enron’s CEO about the firm’s unusual accounting statements, the CEO publicly used vulgar language to describe the analyst, and that Enron employees subsequently thought doing so was humorous.  If true, what does that say about Enron’s ethical culture?  Enron promoted a culture of reckless financial deals, avarice, and deceit.  A sense of social responsibility, ethical behavior, and respect appeared completely absent.

3. This case and chapter both had something to say about how organization culture influenced ethical behavior.  What role do you think culture played at Enron?  Give five specific examples of things Enron’s CEO could have done to create a healthy ethical culture.  Create an independent external board of directors to oversee the goals and corporate strategies, create and implement effective auditing practices, select a CEO who is responsible for the ethical behavior of the organization, remove the CEO if not effective, and encourage employees to report unethical behavior and take appropriate corrective counseling. 

Continuing Case:  Carter Cleaning Company – Guaranteeing Fair Treatment

1. What would you do if you were Jennifer, and why?  The difficulty is that even though they have always “felt strongly about not allowing employees to smoke, eat, or drink in their stores,” they had apparently never established any policies about this.  Given this, it seems appropriate to give them a strong verbal warning, including the explanation that future violations will result in more severe disciplinary action.

2. Should a disciplinary system be established at Carter’s Cleaning Centers? Definitely, a corrective coaching program should be implemented immediately.  This type of program will help employees understand why their behavior/performance is not meeting standards.  It will also help protect the organization from future litigation claims.  In this situation, the staff may not have realized the severity of their actions.

3. If so, what should it cover, and how would you suggest it deal with a situation such as the one with the errant counter people?  It should cover all behavior and performance that is expected of employees.  It would identify the steps of the process, including verbal warnings, written warnings, and dismissal.

4. How would you deal with the store manager?   The real question is whether the store manager knew about their beliefs about eating in the store.  If he or she did, then a written warning is appropriate – if not, then a strong verbal warning similar to the employees.  

Translating Strategy into HR Policies and Practice Case: The Hotel Paris 

The Hotel Paris’s New Ethics, Justice and Fair Treatment Process – The continuing case study of Hotel Paris is discussed here. In this example, Lisa Cruz, the HR manager, is developing a program to increase the degree of ethics, justice, and fair treatment in the organization.

1. List three specific steps Hotel Paris should take with respect to each individual human resource function (selection, training, and so on) to improve the level of ethics in the company.

Answers will vary. However, some possible steps would be to incorporate honesty testing in selection, to train employees using ethics cases, to discipline immediately and severely for ethics breaches on the part of any employee, etc.

2. Based on what you read in this chapter, create in outline form a strategy map showing how the Hotel’s HR function can foster employee ethics. 

A. Highlight the importance of ethics and fair treatment within the new employee orientation.

B. Provide additional training to all supervisory staff on employment legislation and the importance of building and maintaining a culture of fair treatment and equity.

C. Develop and implement a policy that stresses the importance of all staff being treated in a fair and equitable manner.  The policy should also outline why ethics in the workplace is important.

D. Implement a program where claims of discrimination or unethical treatment can be reviewed and addressed.  Appeals to the final decision should rest with senior leadership.

E. Periodic staff meetings should be conducted where the topic of ethics and fair treatment are addressed and staff has the option to ask questions and/or discuss concerns.

3. Based on what you learned in this chapter, write a short (less than one page) explanation Lisa can use to sell to top management the need to improve the hotel chain’s fairness and justice processes.

Senior leadership should be educated that claims of unfair treatment can be both expensive and expansive.  Litigation to defend a claim can be costly and result in an unpopular reflection of the organization in the media.  Also, recent cases have included personal liability on the part of senior management.  Senior management can have the most significant impact on creating and maintaining a culture of fair treatment.  

KEY TERMS

ethics The principles of conduct governing an individual or a group; specifically, the standards you use to decide what your conduct should be.

distributive justice The fairness and justice of a decision’s results.

procedural justice The fairness of the process.

organizational culture The characteristic values, traditions, and behaviors a company’s employees share.

ethics code A doctrine which memorializes the standards to which the employer expects its employees to adhere.

nonpunitive discipline Discipline without punishment.

ECPA The Electronics Communications Privacy Act is intended in part to restrict interception and monitoring of oral and wire communications.

dismissal Involuntary termination of an employee’s employment with the firm.

termination at will In the absence of a contract, either the employer or the employee can terminate at will the employment relationship.

wrongful discharge An employee dismissal that does not comply with the law or does not comply with contractual arrangements either stated or implied.

insubordination Willful disregard or disobedience of the boss’s authority or legitimate orders. 

termination interview The interview in which an employee is informed of the fact that he or she has been dismissed.

outplacement counseling A formal process by which a terminated person is trained and counseled in the techniques of self-appraisal and securing a new position.

exit interviewing Interview with employees who are leaving the firm, conducted for obtaining information about the job or related matters.

bumping/layoff procedures     Let employees use their seniority to remain on the job.

downsizing The process of reducing, usally dramatically, the number of people employed by a firm.

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