Week 2 Discussion

Human Resource Management: Meeting the Ethical

Obligations of the Function

KEN SLOAN AND JOANNE H. GAVIN

ABSTRACT

Effective human resources management (HRM) is focused on the only dynamic asset of the organization, its people; and, behind every business issue ultimately lies a human issue. Thus, the ethical adequacy of responses to all business issues rests on judgments made by indi- viduals. HRM has a role to play as organizations address ethical challenges and as many strive to become ethical organizations. This article outlines three key responsi- bilities of HRM with regard to supporting an organiza- tion’s efforts to become an ethical organization: (1) to establish ethical HR practices; (2) to facilitate the change process as all functions move to ethical business prac- tices; and (3) to create cultures that build individual ethical capability and commitment to the goal of becom- ing an ethical organization.

Ken Sloan is Assistant Professor of Management at Marist College, School of Management, Poughkeepsie, NY. He is also the corresponding author for this article. E-mail: Ken.Sloan@ Marist.edu. Joanne H. Gavin is Associate Professor of Management also at Marist College, School of Management. E-mail: [email protected].

Business and Society Review 115:1 57–74

© 2010 Center for Business Ethics at Bentley University. Published by Blackwell Publishing, 350 Main Street, Malden, MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

INTRODUCTION

T he existence of business organizations as we know them today is a fairly recent phenomenon. Most business orga- nizations, from the time of the industrial revolution until

the mid-point of the twentieth century, had as their sole purpose to not only make a profit but to maximize that profit to the best of their ability. During the 1950s, society began to turn to some of the most successful organizations to move beyond the con- fines of simple profit generation and asked these organizations to become engaged in the issues and concerns of society at large (Henderson 1968). The evolution of the relationship between business and society took an even greater shift toward the end of the century as corporate ethical scandals eroded society’s trust in these organizations (Child and Rodrigues 2003). Today, corporations are faced with the daunting task of trying to regain favor by creating organizations that are not only socially respon- sible but are also ethical. The challenge is how to accomplish this overwhelming task, and, to define the obligations the human resource (HR) function has in helping companies to achieve this goal.

In order to meet legal and social demands, many corporations are striving to become “ethical organizations.” However, what defines being ethical varies greatly from organization to organiza- tion. Some organizations see compliance with the law as meeting their ethical obligations. Others truly strive to embrace the concept of an overarching ethical culture. Many others fall some- where along that continuum. In the United States, organizations that are simply striving for compliance have gotten help in recent years. With the passage of the Sarbanes–Oxley Act of 2002 and the revised organizational guidelines passed by the Sentencing Commission in May 2004, organizations have a framework for ethical compliance.

The Sarbanes–Oxley Act addresses issues of corporate gover- nance and its responsibility for disclosure (Raiborn and Schorg 2004), and, the Federal Guidelines clearly puts forth the penalties for those companies who fail to comply or engage in unethical practices (Bowman 2004). While we are not attempting to imply that compliance is easy, these recent legislations have at least provided organizations with a clearer understanding of the

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minimum level of compliance the U.S. government and society expect of them.

While simple compliance is sufficient for some companies, other organizations feel they must go beyond compliance to more fully meet the demands of society. Many believe that organizations have a responsibility to not only conduct business within the confines of the law but to move beyond the legal mandates and become contributing members of the local, national, and even world community. This social responsibility includes being responsive to the needs of a list of stakeholders, including but not limited to customers, employees, suppliers, governments, commu- nities, the environment, activist groups, and shareholders (Clark- son 1995). A willingness to operate within these social demands has proven quite profitable for many organizations (Zairi and Peters 2002). But even this level of commitment has not been enough for some companies. Some companies strive to rise above compliance with the law or even meeting societal demands. They aspire to becoming truly ethical entities.

THE ETHICAL ORGANIZATION

What makes an ethical organization? Is it that they never consider not being in compliance with the law? Is it that they try to always engage in socially acceptable practices? Or is it that engaging in these behaviors is never questioned by anyone in the company? We believe that truly ethical companies have created an environ- ment in which doing the right thing is not something that needs to be considered; it is a way of life.

Ethical organizations are ethical not because they say they are or because it has been mandated but because it is the very essence of who they are. Ethics is a part of their bloodstream, not some added value (Industrial Society 1996). Ethics is part of every policy, procedure, and practice. It is a way of being for every member of the organization. It is at the heart of their culture. However, few organizations begin this way. Most companies must become ethical and develop a culture that supports ethical behav- ior in all areas. The challenge for most organizations is to find a way to move from wanting to be an ethical organization to becom- ing an ethical organization (Collier 1998). The HR function is in a

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position to play a major role in helping an organization develop an enabling and supporting culture that will in turn facilitate inte- grating ethical practices into the fabric of the organization.

ETHICS AS AN HR ISSUE

Winstanley and Woodall (2000) point out that ethical concern took a central place in the early origins of the HR function when its focus was on employee welfare. That concern was largely to “take care” of employees in a paternalistic, protectionist approach. The function represented an interface between worker and company and sought to ensure that workers not be harmed as the organi- zation employed their labors. This could be labeled “utilitarian and consequentialist ethics” (ibid.), an ethical framework based on employers seeking to maximize beneficial outcomes as relates to workers.

As the HR function moved from the early worker welfare stage to the professional personnel stage, the ethical issues that one would most frequently see personnel departments wrestling with were largely procedural in nature. As personnel increasingly became a professional function, focused on improving efficiency in carrying out its responsibilities, it became more involved with principles of fairness and procedural justice. This focus corre- sponded to what the function was doing (Tyson 1987). Job evalu- ations carried out by the compensation department are concerned with determining the appropriate relative worth of a job in relation to the other jobs in the organization. Selection and recruitment practices are concerned with identifying and hiring the approp- riately qualified candidates. Work rules developed sought to establish clear practices and procedures, and consistent and appropriate responses should rules be violated. The emphasis on procedural justice was then strengthened and broadened to be more inclusive of distributive justice as personnel departments took on the responsibility of complying with the fair employment and civil rights legislation that emerged in the 1960s. It was the personnel department that typically took on the role of ensuring compliance by the managers across the organization of the legal rights now being afforded to people based upon race, religion, national origin, gender, age, disabilities, and other factors. This

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role as “ethical steward” of the organization’s employment prac- tices often put the HR professional in conflict with other managers when they saw their personnel decisions being questioned and at times curtailed by personnel staff members seeking to comply with the legislative and regulatory mandates imposed.

As the personnel department evolved into HR in the 1980s (Guest 1990), the function began to embrace an ethical framework that went beyond welfare and compliance to include a set of employee rights that grew logically from the legal environment. Employers began to accept that employees had the right to feed- back related to actions taken; that they had the right to fair treatment irrespective of their race, religion, or gender; that they had the right to some expectation of confidentiality on the part of the employer with respect to the information acquired on the employee. This movement toward a “rights-based” approach to ethics, as it pertained to managing the employees of the organi- zation, corresponded to a growing discussion among academics and the growing awareness among managers of the relationship between how employees are treated and their performance (McGregor 1960). Ethical behavior was becoming not just some- thing that “good people” cared about, but increasingly, ethical behavior toward employees was being seen as being good for business.

Up to this point, our discussion of the role of the HR function in ethical issues related specifically to how employees were treated. But in the 1990s, there was a growing interest in ethics as a company-wide issue. Organizations increasingly adopted value statements to articulate what they stood for. They estab- lished and communicated expectations related to ethical behavior. These expectations included not simply the ethical behavior of the company and managers toward employees, but the expectations of ethical behavior of all members of the organization toward one another, toward customers, and toward communities.

These initiatives frequently became the responsibility of an HR officer or a legal officer of the company, with one survey putting 28 percent of the programs in Fortune 500 companies assigned to HR, 28 percent of the programs assigned to legal, 16 percent to ethics or compliance departments, and 11 percent to audit or control functions (Weaver et al. 1999). In these programs, “expec- tations for ethical behavior typically are communicated to

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employees via codes and policy documents, formal training pro- grams, and messages from senior management . . . [they] . . . also often provide[d] the means for employees to communicate with management, sometimes anonymously through telephone ‘hot- lines.’ These communication devices are used for reporting both real or perceived ethical or legal problems, to solicit advice and counseling, or both” (Weaver and Trevino 2001, p. 114).

But these programs are largely activity-based, what Ulrich (1997) termed a focus on “doables.” They represent things that HR, or legal, or audit can do in the realm of ethics initiatives. But today, HR practitioners and theorists see the value of HR laying in a movement toward a more strategic perspective. It is a perspec- tive that assesses performance not on “doables” but on outcomes and results. Hence, an ethics initiative focused on compliance to policy, on communicating expectations, and training employees reflects a programmatic focus out of step with where many believe the HR function needs to be heading to add value to the firm (Dyer and Kochan 1994; Truss et al. 2002; Ulrich 1997).

That is not to say that such programs should not exist. Clearly, articulation of expectations and establishing a structural frame- work for supporting those expectations is in most organizations a necessary step. It is also not to say that it is inappropriate for such programs to be assigned to the HR function. What is sug- gested is that if this, or any project, is not seen as aligned with where and how the function can deliver value, it will not have a central focus or the best available resources of the function.

Ethics programs designed around a “tell and sell” approach, in which compliance is dependent upon external enforcement by program managers, while perhaps a necessary step along the path, are inherently inadequate to achieve the goal of becoming an ethical organization. In the 1960s and 1970s, the HR function in many U.S. organizations took on the role of ensuring compli- ance with Equal Employment Fair Employment legislation striving to ensure the employment practices were procedurally fair, and, to ensure compliance with the legal requirements for nondiscrimi- natory treatment by policing what other managers were doing. Many HR officials, and in large organizations Equal Employment Opportunity (EEO) officers, received complaints from employees or applicants of real or imagined discriminatory acts. The parallels to the described ethics programs of the 1990s are striking. Based on

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these parallels, one might expect the outcomes of such ethics programs to be similar to the experiences of the 1960s and 1970s EEO programs. Then, HR found itself doing battle with managers who believed that the new requirements were interfering with achieving their business goals. In other circumstances, HR would at times collude with line managers to meet the letter of the law, while still doing whatever action was originally sought; and at times, with an admonition that we can do this once, but next time we need to do it like it is supposed to be done. The EEO initia- tives, the EEO programs, were seen by the organization as HR programs. They were things the organization “had” to do for compliance with the new laws, and if we could comply without hurting the business, then why not? During the early stages of most EEO programs, the policies were what a manager was expected to do, but they were not based on values that many managers had adopted as the appropriate standard for behavior in all (or even most) circumstances. The EEO policies became what you had to do (at least if you got caught) but were not embraced as what they should do.

Similarly structured ethics programs will likely experience similar outcomes. Such ethics programs while perceived by man- agers and employees to be in concept a good idea will be seen as “HR’s ethics program” (or legal’s, or audit’s). Managers will approach those programs as “I will comply if it doesn’t get in the way of achieving my other more important goals,” but when conflicts arise between ethics program guidelines and business goals a manager has, adherence to the ethics program becomes dependent upon the strength of the compliance activities, and the nature of the consequences that accompany violations. For an organization to make substantial progress toward becoming an ethical organization, that goal has to become interwoven into the fabric of the organization. It must become a goal that is shared by managers, and indeed all employees. The requisite values of an ethical organization must be the values, the attitudes, and the beliefs held by managers and employees.

TOWARD AN ENABLING AND SUPPORTIVE CULTURE

Can Ethics Be Taught? (Piper et al. 1993) examined a five-year period during which Harvard Business School developed and

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implemented a program on leadership, ethics, and corporate responsibility. This program sought to bring a focus on ethics and corporate responsibility into the management education of the school. In the epilogue, Piper concludes that the “accomplish- ments of the initiative . . . have been substantial” (ibid., p. 161). But Piper notes that success, over the long term, in integrating leadership with ethics and corporate responsibility will fall to the organizations, stating:

The workplace will serve as the classroom, and managers will serve as real-world teachers. Once again, the signals and messages—intended and unintended—of the joining-up phase will be critical. Recruiters, for example, will convey to prospective managers the reality of the corporate world through the questions they don’t ask as well as through the questions they do ask. Hiring and promotion decisions will do much to define which currency really counts within a particular organization—what is valued and what is not. (Ibid., p. 167)

Piper’s comments parallel those found in a frequently cited article titled “On the Folly of Rewarding A, While Hoping for B” (Kerr 1975). Kerr notes that there are numerous examples in organizations where systems “pay off for one behavior even though the rewarder hopes dearly for another . . . systems that are fouled up in that behaviors which are rewarded are those which the rewarder is trying to discourage, while the behavior he desires is not being rewarded at all” (ibid., p. 769).

Both Piper’s and Kerr’s comments reinforce the points made earlier in this article. If an organization seriously desires to become an ethical organization, just saying that will not make it so. Ethics programs that are separate from the core processes and procedures of the organization, especially the many reward systems of the organization, will become the hoped for “B” that is not realized. Becoming an ethical organization requires that an ethical orientation become a part of the fabric of all the organi- zation does and indeed comes to define the very identity of the organization.

That means the responsibility for achieving a goal of becoming an ethical organization belongs to all the employees of the orga- nization. Accountability for ensuring that the core business

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practices are consistent with that orientation becomes the respon- sibility of the manager, the department, and the function respon- sible for those practices. But while this will move compliance from something that is externally imposed to something that is inter- nally driven, it will not be sufficient to necessarily ensure that the right actions are taken.

HR’S ROLE IN CREATING AN ETHICAL ORGANIZATION

If the CEO and/or the leadership team of the organization set a goal of becoming an ethical organization, the HR function will play a key role in enabling the organization to move toward that goal. This is a critical point. The HR function cannot create an ethical organization on its own. To become an ethical organization, the leadership team of the organization must embrace that as a goal and support actions toward that end. But when that support exists, HR is in a unique position to foster its development. To move the organization in the direction of becoming an ethical organization, the challenges faced fall into three key areas: first, the HR function will have to develop and implement HR practices and procedures that embody the core values of an ethical orga- nization; second, the HR function must develop the process to identify and then to assist other functions in implementing those changes across the organization; and third, the HR function must create a culture that supports the growth in individual ethical capability and organization commitment to the goal of becoming an ethical organization.

DEVELOPING AND IMPLEMENTING ETHICAL HR PRACTICES

Each functional area of the organization will need to develop and adopt practices that are built on the values of an ethical organi- zation and if the HR function is to assist other areas in this process, they must first set the example to be followed. Specific to HR, the first contact a prospective employee may have with the organization will be with its selection practices. One guiding rule of thumb for those involved in selecting employees is to assess the

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prospective employee in terms of “can do,” “will do,” and “fit” factors. HR has become skilled at the first two, that is, they have honed the ability to determine if the applicant has the knowledge, skills, and abilities that will enable him or her to perform the job. Similarly, they have paid attention to “will do” factors, or whether the person will be motivated to perform based upon the individu- al’s goals, aspirations, needs, and wants, and, the rewards and opportunities that the position offers. HR has also increased its focus on issues of “fit,” but that often takes the form of fit to the reporting supervisor, fit with the climate and conditions in the department they will be assigned. If the selection procedures are to embrace and integrate the goal of helping to create an ethical organization, then assessments of fit need to also include whether the applicant shares the values and goal of ethical behavior the organization seeks to achieve. Furthermore, for reasons that we will discuss later, the selection process must seek employees that are “committed to ethics” and are “comfortable talking about ethics” (Weaver and Trevino 2001). Finally, those involved in the selection process must be cognizant that they are a strong early- signaling system to prospective employees, and as Piper suggested earlier, both the questions they ask and those they do not ask convey information. Those involved in the selection process must therefore actively consider the messages they communicate about the organization’s desire to be an ethical organization. Beyond the actions of those involved directly with applicants, the process overall will convey messages, and managing those messages is also important. The prospective, possibly new employee will get his first experience with issues of fairness and respect for the individual.

One element of an organization’s performance management system is how they assess and appraise performance. These appraisals, in addition to providing performance feedback to the individual, influence many other HR practices, for example pay actions and promotion decisions. Today, many appraisal systems examine not only what is accomplished but also the way in which it is achieved. A performance appraisal system in an ethical organization would need to become a vehicle for discussing the ethics of decisions made, actions taken (or not taken), and how those move the organization toward or away from its goal of becoming an ethical organization.

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The area of compensation and the financial reward systems adopted by the organization are critical practice areas that receive significant scrutiny, both by the employees of the organization and society at large. An organization that seeks to become an ethical organization will need to adopt pay practices that it can articulate and justify in terms of equity and fairness. No area of practice has drawn more attention and criticism than the execu- tive compensation practices of many large U.S. companies. An organization striving to be perceived as an ethical organization must be prepared to engage employees and the larger public in exploring the fairness and equity in the practices it employs. This has led some companies to link changes in benefits and compen- sation as they introduced organizational ethics initiatives linking “executive pay more closely to employee pay . . . [based on the assumption that] . . . if the company is serious about its ethical standards, it must be scrupulous in fairness, because attention to ethics will heighten employee sensitivity to issues of fairness” (Weaver and Trevino 2001, p. 125).

The training function must also adopt approaches to training that embrace the values of equitable access, respect for different abilities and learning styles, and operate fully aligned to the values espoused by ethical organizations. The training function also plays a critical role in helping to create the culture that will be needed to both enable and support ethical behaviors. This will be discussed in a later section.

Defining and Facilitating Changes to Policies, Procedures, and Practices

Just as HR must undertake to make over the policies and proce- dures that govern how the HR function is managed, that process must occur across the organization. Each area of the organization will have the responsibility to identify changes needed and to develop new approaches that are aligned with the organizational goal of becoming an ethical organization. The responsibility for that rests with the management of each of the areas. However, HR must act “as a catalyst for and architect of change” (Ulrich 1998, p. 20). This role has HR as a change-process expert (Sirkin and Stalk 1998) that would work in partnership with the various functions that are the content experts, and share knowledge

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across disciplines of shared obstacles and approaches that inhibit change (Argyris 1998). When HR plays this role, they can bring the focused expertise specific to the most effective techniques to identify areas needing to be changed and the approach to imple- ment that change effectively. To be clear, this process seeks to bring established policies and procedures into alignment with the stated goals and values articulated by the organization. It is a necessary but not sufficient step as lasting change requires devel- oping and supporting an organizational culture where the prevail- ing values, attitudes, and beliefs of employees are consistent with the objective of an ethical organization.

Creating a Supportive and Enabling Culture

Truss et al. (2002) state that “the contribution of the HR function . . . lies in its ability to configure the organisation’s human resources over time, to create an environment where change and learning are embraced and diffused throughout the organization, to adopt a future focus and to develop links with the overall strategic direction of the organization” (p. 40). Creating the frame- work that enables, supports, and sustains an ethical organization is one critical area of application.

Ulrich (1998) asserts that one of the emerging roles of HR professionals is the ability to “create cultures and workplaces that build individual capability and organizational commitment” (p. 20). The training and development function plays a critical role here. In earlier “tell and sell” compliance-based ethics programs, the training function was focused on teaching employees and managers the new rules, the policies, and the reporting mecha- nism. But organizations that adopt a goal of becoming an ethical organization must commit resources to develop a broad and deep understanding of core values associated with the goal. That will include employees at all levels of the organization and it “needs to focus on the culture of the organization—its shared values and associated expectations” (ibid., p. 123). Research has also shown the value of specialized training on ethical leadership (Trevino et al. 1999), training to help individuals with the language they use to describe situations (Butterfield et al. 2000), and to increase moral judgment through training which challenge individuals’ thinking and creating cognitive conflict (Trevino 1986). By having

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employees who are able to engage in effective ethical or moral decision making, the objectives of the organization will be better met. However, having ethical employees, even those who desire to engage in ethical behaviors, is no guarantee that they will find themselves in a position to evaluate a situation properly (Badaracco 1997) or even if the choice is apparent, the strength of character to carry out the necessary behavior is also not guaran- teed (Jones and Ryan 1997).

While the ability to ethically or morally evaluate a situation properly has most often been judged through one’s moral devel- opment, it is not always a sufficient factor in predicting behaviors. The primary limitation of this concept is the discrepancy between what is the right decision and the actual follow-through behavior (Jones and Ryan 1997). Kohlberg (1976) argues that as human beings develop, they take their moral cues from a predictable and sequential set of sources from parents or caregivers to family, to peers, and finally, to social norms. When the individual grows into an autonomous adult, these referent groups become less impor- tant. Jones and Ryan (1997) argue that even those adults who attain the highest stages of Kohlberg’s model still rely on these referent groups for approval in moving their moral judgments to moral actions.

Thoma et al. (1991) found that moral development is necessary but not sufficient to determine moral action. They found that the moral action occurs only when the subject utilizes his or her level of moral reasoning. This discrepancy in level of moral develop- ment and moral action has consistently been one of the greatest criticisms of Kohlberg’s work (Jones and Ryan 1997).

Moral approbation, the desire for moral approval from oneself or others, is a possible answer to this disconnect. Since the vast majority of adults are at Kohlberg’s Level 3 or 4, and at these levels individuals are still taking their moral cures from their immediate peers (Level 3) or society at large (Level 4), considering moral approbation instead of moral development alone seems more appropriate (Jones and Ryan 1997).

Recognizing this, a key element in sustaining progress toward the goal of becoming an ethical organization will rest upon the ability of the organization to develop and encourage forums of dialogue and exchange that encourages employees to raise issues, not in the mode of “anonymously reporting violations” of former

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compliance-based programs, but with the intent of either gaining better understanding of the appropriateness of some current practice, or, highlighting an inconsistency or conflict in that prac- tice. It is not enough that managers are able to discuss issues in ethical terms and values, but the organization needs to demon- strate that it values open discussion of ethical issues, rather than muting such discussions (Bird and Waters 1989). Jeffery Immelt, CEO of General Electric (GE), has used GE’s Crotonville Learning Center in just such a manner inviting high-potential managers and executives to study corporate social responsibility. What is significant about Immelt’s approach was that while Jack Welch, the former CEO, “was relentless on the issues of integrity and compliance, he had scant interest in debating the finer points of corporate social responsibility” (Gunther 2004, p. 179). By making this a topic of discussion and debate, Immelt demonstrated that it is both acceptable and expected that managers think about, talk about, and wrestle with important issues that are complex but important.

Organizations that strive to grow into ethical organizations need to embrace a framework termed discourse ethics. Under this framework, the role of leaders, executives, and managers “is not to provide solutions to moral problems, but to provide a practical procedure in which issues can be debated. In the process through which decisions can be made, it asserts the moral requirement to include all those affected by the decision in the discourse” (Winstanley and Woodall 2000, p. 13).

While Immelt’s use of Crotonville is not an exchange among all participants, in large and complex organizations, multiple forms of discourse will need to be supported. The Crotonville discussion on corporate social responsibility engaged a cross-section of loca- tions and function, but more importantly, it signaled the accept- ability of debating GE’s social responsibility. If the organization follows that up with forums to engage other groups, the involve- ment spreads out across the organization.

Organizations committed to becoming ethical organizations need to find multiple modes of building a discourse framework into the practices of the organization. This would include training to help managers use ethical terms and to make it acceptable for employees to raise ethical questions (Bird and Waters 1989). It would include using town hall–type meetings popularized by Jack

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Welch as forums for discussing specific practices and their ethical implications. It would involve creatively using electronic forums to facilitate broad and ongoing discussions.

Research has shown that “when employees are managed with progressive HR practices they become more committed to their organization” (Wright et al. 2003, p. 33). Once employees perceive the goal of striving to become an ethical organization has sub- stantial value and benefits for both the organization and for them as individuals, their willingness to truly commit to the goal versus merely complying with programs will grow.

Employees, who through dialogue and interaction, are able to gain a better understanding of the “why” behind the “what” an organization does, and, who through discourse can have their voice heard and considered should translate to an even higher level of commitment.

SUMMARY

In the 1990s, Nike was the subject of intense focus and criticism for its labor practices. It was also the period during which Maria Eitel was hired as a vice president of the company. Her position included being senior advisor for corporate social responsibility. When asked about how all the negative publicity hurt the busi- ness, she responded: “The way it hurt our business was that it hurt our people. Individual employees at Nike started to wonder what kind of a company they were working for and what message was being sent about the people who worked there” (Williams 2002, p. 38). We began this article by noting that people are the only dynamic asset of the organization. That everything that happens in an organization happens through the actions, or inactions, of the people who make up the organization, and, that within large and complex corporations today, corporate acts “normally are brought about by several actions or omissions of many different people all cooperating together so that their linked actions and omissions jointly produce the corporate act” (Velasquez 2002, p. 51).

Thus, if an organization establishes a goal of becoming an ethical organization, achievement of that goal will hinge upon the ability of the organization to build both an understanding of, and

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commitment to, that goal among the people whose actions, or inactions, will determine if the organization moves toward attain- ing that goal. We have consistently referred to making progress toward the goal, rather than achieving the goal, since being an ethical organization is more a way of operating on an ongoing basis than a task accomplished.

We have made a case that to move toward the goal of being an ethical organization, companies must move beyond issuing oper- ating principles and value statement, no matter how well drafted or extensively communicated. While such actions might be good first steps, they are not sufficient. Similarly, ethics programs that depend upon compliance are not likely to be effective in guiding behavior where issues present themselves involving trade-offs, conflict, and ambiguity. What is needed is an approach that builds the espoused ethical values and goal into all the major business practices, policies, and procedures. Such an undertak- ing requires as a precondition the support and backing of the organization’s leadership. With that support, the HR function especially plays a critical role in bringing the goal of an ethical organization into being. However, neither HR nor any other single function should be viewed as having overall responsibilities for ensuring practices are aligned with the organizational goal.

HR has two specific roles beyond the responsibility of structur- ing ethical HR practices and modeling ethical behavior. One role is to facilitate the change process which supports managers from across the organization in changing the policies and procedures within their area to align them with the stated goal of becoming an ethical organization. The second role is to “create cultures and workplaces that build individual capability and organizational commitment” (Ulrich 1998, p. 20) and put in place the means to support that culture through ongoing discourse, dialogue, and open examination of issues that arise.

Committing to becoming an ethical organization is a major undertaking. It goes well beyond posturing for public relations gain or merely complying with the legal obligations imposed. It ultimately requires the involvement and commitment of all the people that make up the organization, the human resources of the organization. As such, the HR function must continually find ways to bring about that involvement in ways that build commitment.

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