3-4 Paragraphs- Ethicss, Law, and Politics in HR

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OL 645 Module One 1

The Human Resources Glossary defines human resources as “[t]he people that staff and operate an organization.” Most people have some knowledge of this department due to their personal work experience. As employees in any organization, individuals come into contact with the key functions of human resources. These often include, but are not limited to, responsibilities that address compliance and labor laws, recruitment and training, recordkeeping, payroll and benefits, employee relations, employee performance improvement plans, and more. In this course, students will have an opportunity to explore these roles while considering the applications of law, ethics, and politics as they relate to HR operations. Human resources, typically referred to as HR, is a multifaceted function that supports, and sometimes leads, an organization’s internal and external initiatives around talent and talent management. In many cases, these initiatives are influenced by the interrelationship of legal governance, ethical practice, and the political environment.

Understanding these elements is key to the success of an HR department and its ability to support individuals within an organization. In addition, the HR function is largely responsible for playing a lead role in determining employee trust and loyalty. Success of the function is dependent upon consistent and credible communication about the organization’s workplace policies, its ethics and values, and its corporate mission. In this module, we will review general concepts related to law, ethics, and policy in HR. As a part of this overview, we will also examine the relationships among these three guideposts, as well as how to mitigate risks associated with each.

OL 645 Module One 2

HR, the Law, and Managing the Regulatory Environment in Business Law plays an important role in the HR function. One of the best resources on workplace-related regulations is The Department of Labor (DOL) (for an overview, see http://www.dol.gov/opa/aboutdol/lawsprog.htm). The DOL serves to manage and enforce more than 180 federal laws. The most common include wages and hours, workers’ compensation, employee benefit security, and union membership. The Fair Labor Standards Act (FLSA) is just one example of a critical regulation that is far-reaching in terms of its impact domestically and internationally. With so many regulations in place that influence the way most organizations conduct business, it is easy to understand why the role of HR within organizations is so important. One of the most well-known labor related regulations is the FLSA. The act serves to set basic minimum wage and overtime pay standards. The DOL’s Wage and Hour Division enforces these standards. It is important to note that certain industries with specific job types will often pay more than the minimum wage. Grocery store cashiers and IT workers with industry certificates are two examples of this. Unions, too, can negotiate set wages that are often higher than those of nonunion laborers. It is the role of HR to ensure that employers pay all of their employees, including casual and seasonal laborers, at a rate at or above the amount prescribed for the employer’s industry. HR and Ethics Overview The word ethics is derived from the Greek ethos, meaning character and morality as related to acts and behavior. The word morality or moral comes from the Latin moralis, meaning customs or manners. These concepts can be related to the workplace through managing how people behave and represent the organization by offering them a set of acceptable ethics. Most organizations outline this in their code of conduct policy. Ethics is an important part of HR, whose very creation was intended to manage behaviors to an agreed-upon or prescribed set of rules within the organization, and to laws established by the state and federal government. Ethics in business may be defined as the moral principles that guide the way a business behaves; the same principles that guide an individual’s actions also apply to the actions of a business. One can view the nature of morality and ethics through a variety of lenses, such as relativism and absolutism, the ethics of human rights, virtue ethics, and the stakeholder approach. In regards to ethics in HR and business, however, it may all boil down to cultural relativism. For instance, how we view ethics in the United States, particularly within organizations, may be different than how people in Russia, China, and Japan view ethics. Morality may vary with culture, time, and circumstances. The opposite position is that of absolutism, the notion that there are universal truths in morality that apply at all times and in all circumstances. In a global business world, this aspect becomes important to consider. The question becomes: when businesses operate globally, how far do they go to adapt organizational rules to local circumstances? In practice, running a successful and thriving business while toeing the legal and ethical line can be challenging. Think about offshore jobs, which are addressed in the final assignment and are a good starting place for thinking about the risk and opportunity involved when locating operations in other

http://www.dol.gov/opa/aboutdol/lawsprog.htm

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countries. The relationship between ethics and the law is often paramount to how organizations formulate their policies and practices both on U.S. soil and abroad. The Political Landscape: An Example of Its Impact on HR-Related Legislation Often politics influence ethical standards that apply to business. Enron became a prime example of unethical practices when the government discovered that it was mismanaging its finances. The government regulates many industries like the natural gas industry, in which Enron operated. Periodically a business will apply for deregulation, giving it the ability to self-govern. Enron applied for and was granted de-regulated status. What ensued caused one of the biggest scandals in business and government regulation in the past century. The misrepresentation of earnings reports allowed the company and its executives to continue to secure investors based on false information while embezzling funds. Ultimately, the company went bankrupt. The loss by investors was over $70 billion and cost trustees and employees upwards of $2 billion in investments and pensions, little of which was recouped. Visit http://finance.laws.com/enron-scandal-summary to read more about the Enron case. The political outcry from Enron resulted in new regulations and legislation. The most well-known example of this legislation is the Sarbanes-Oxley Act of 2002, most commonly referred to as Sarbox or SOX. SOX is a United States federal law that set new or enhanced standards for all U.S. public company boards, management, and public accounting firms. SOX required top management to individually certify the accuracy of financial information. It also made penalties for fraudulent financial activity much more severe, required the presence of independent, outside auditors to review the accuracy of corporate financial statements, and required more oversight by a company’s board of directors. These and other examples highlight the importance of having a well-educated and active HR function within organizations to partner with senior leadership to help manage laws and policy while enforcing a code of conduct. Background Information and Keeping Up In addition to the course eBook, there are many resources related to HR law and HR ethics. There are not as many resources for HR and politics; these are often found within other resources based on context. Many resources can be found in the online Shapiro Library (go to my.snhu.edu). Consider the following as useful resources and tools to build your knowledge and competence in this area. Journals

 Human Resource Management

 Human Resource Management Journal

 Public Personnel Management Popular Press Magazine

 HR Management (by SHRM.org)

http://finance.laws.com/enron-scandal-summary

http://en.wikipedia.org/wiki/United_States_federal_law

http://en.wikipedia.org/wiki/Public_company

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Websites

 Employers Group—Politics and HR http://www.employersgroup.com/Content.aspx?id=909

 SHRM.org Legal Issues—Politics and HR http://www.shrm.org/legalissues/federalresources/pages/hruspolitics.aspx

 Department of Labor - http://www.dol.gov/opa/aboutdol/lawsprog.htm