HRM Case

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Chapter 13: Organizational Ethics, Sustainability, and Social Responsibility

Ethical Organizations

Unethical behavior by companies risks loss of public trust and threatens integrity of business.

Ethical business practices need to be reinforced on a global scale to offset continuing decline in business ethics.

Ethical Organizations

Ethics

Application of values and principles to make right choice(s)

Trust

Core of ethical business practices

Contributing Factors to Unethical Behavior

Personality Traits and Attitudes

Such as integrity, honesty, sincerity

Moral Development

Ability to distinguish right from wrong

Preconventional level

Conventional level

Postconventional level

Contributing Factors to Unethical Behavior

The Situation

Unethical behavior is often found in organizations with no formal ethics policies or when unethical behavior goes unpunished.

Justification of Unethical Behavior

People respond to incentives and can be manipulated to behave ethically or unethically, depending on incentive.

Ethical Approaches

Golden Rule

Four-Way Test

Stakeholders’ Approach to Ethics

Discernment and Advice

Research indicates that making decisions without using ethical guides leads to less ethical choices.

Research shows companies having trust of employees experience lower turnover, higher revenue, profitability, and shareholder returns.

Codes of Ethics

Values

Principles

Management Support

If senior managers pay no attention to code of ethics, subordinate managers and employees will follow suit.

Personal Responsibility

Compliance

Identify applicable laws or industry regulations that must be adhered to as part of a code of ethics.

Exhibit 13-1: Berkshire Hathaway Code of Business Conduct and Ethics30

Creating and Maintaining Ethical Organizations

Authority

The right to give orders, enforce obedience, make decisions, and commit resources toward completing organizational goals

Responsibility

The obligation to answer for something/someone

The duty to carry out an assignment to a satisfactory conclusion

Accountability

Lies and cover-ups, not the initial unethical behavior, usually escalate problems to unmanageable proportions.

Managers Face Ethical Questions on a Daily Basis

Bribery

Payments made to encourage favorable decisions that may benefit a person or an organization while causing harm to other organizations or stakeholders

Corrupt Payments to Government Officials

Payments made to allow companies to avoid regulatory scrutiny by government agencies

Managers Face Ethical Questions on a Daily Basis

Employment and Personal Issues

Managerial decisions that determine who to hire or fire; decisions affect productivity, absenteeism, and turnover

Marketing Practices

Dishonest and predatory marketing practices can devastate a company’s image in the marketplace.

Managers Face Ethical Questions on a Daily Basis

Impact on Economy and Environment

Disregard for health and safety in use and abuse of hazardous materials has damaging effects on a company’s reputation.

Employee and Customer Privacy

Technological ability to gather and maintain sensitive business and customer data creates an obligation to use data only for legitimate purposes.

Corporate Social Responsibility (CSR)

CSR is belief that organizations have a duty to all societal stakeholders to operate in a manner that takes each of their needs into consideration.

Social responsibility goes beyond legal and economic obligations to make sound decisions by acting in ways that benefit society.

Corporate Social Responsibility (CSR)

Companies should strive to improve quality of life without destroying environment.

Companies should compete fairly with competitors and work with suppliers in a cooperative manner while abiding by laws and regulations imposed by government.

Stakeholders and CSR

Corporate compliance laws at state and federal levels dictate adherence to ethical standards.

Laws protecting older workers

Female executives and the “glass ceiling”

LGBT employees

Diversity management

Increasing Diversity

The birthrate of Caucasian children is now less than 50% of the total birthrate.

In 10 states, white children are a minority, and in 23 states, minorities now make up more than 40% of the child population.

One in 12 children (8%) born in America are offspring of illegal immigrants, and those children are U.S. citizens.

Exhibit 13-2: Levels of CSR

Sustainability

Sustainability is the state of physical and psychological wellness in the workforce; refers to meeting needs without compromising the corporation’s ability to meet future needs.

Sustainability Training

Organizations with sustainability programs tend to gain trust of customers and surrounding communities.

Sustainability

HR and Organizational Sustainability

Green companies act to minimize damage to environment.

Nearly all of the world’s top 150 companies have a sustainability officer who serves at rank of vice president or higher.

The Sustainable 21st Century Organization

Benefits of Sustainability

6% of companies indicate sustainability initiatives are necessary to remain competitive in world markets.

Sustainability-Based Benefits

Reward workers for taking public transportation and reducing carbon footprints to support sustainability movement

Exhibit 13-3: Resources for Corporate Sustainability (see p. 343)

World Business Council for Sustainable Development (WBCSD)

International Organization for Standardization (ISO)

International Institute for Sustainable Development (IISD)

United Nations Global Compact

International Organization for Sustainable Development (IOSD)

World Economic Forum (WEF)

National Association of Environmental Managers (NAEM)

Corporate Social Responsibility Newswire (CSRwire)

Trends and Issues in HRM

Sustainability-Based Benefits

A number of companies are looking at options for providing benefits to their employees that assist with improving environmental stability and sustainability over the long term.

Does Diversity Training Work?

Organizations must create a cultural change in order for diversity training to be successful.