Framingham State University Human Resource Management & Business Ethics: An Organizational Imperative Robert J. Awkward, Ph.D. Visiting Associate Professor of HR Management & MHR Program Coordinator Framingham State University October 12, 2017

Business Ethics Defined “Business ethics comprises organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in organizational life” (Ferrell, Fraedrich, & Ferrell, 2017).

Business Ethics Defined Principles – specific and pervasive boundaries that should not be violated Values – Enduring beliefs and ideals that are socially enforced Ferrell, Fraederich, & Ferrell, 2017

Why is Business Ethics Important? Individual ethical values are not adequate to guide organizational decision making The impact of organizational decisions, e.g., product development, pricing, advertising, sales techniques, service delivery, hiring practices, and environmental impact An awareness of business ethics helps to identify ethical issues when they arise Helps to reconcile conflicts between your own personal values and those of the organization

Driving Forces for Change Timeframe Major Legal Initiatives 1960s Consumer Bill of Rights 1970s - Foreign Corrupt Practices Act - Business ethics as a field of study began 1980s Defense Industry Initiative on Business Ethics and Conduct 1990s Federal Sentencing Guidelines for Organizations 2000s - Sarbanes-Oxley Act - Dodd-Frank Wall Street Reform and Consumer Protection Act

Driving Forces for Change

A Stakeholder Orientation “A stakeholder orientation involves activities and processes within a system of social institutions that facilitate and maintain value through exchange relationships with multiple stakeholders” (Hult, Mena, Ferrell, & Ferrell, 2011).

An Evolving Perspective Adam Smith’s view - Values that a firm should adopt to produce in a more socially responsible way correlates with the needs and concerns of the stakeholders Friedman’s view - Stakeholders do not have any role in requiring businesses to demonstrate responsible and ethical behavior Stakeholder support for companies that are socially responsible enhances a firm’s profitability

A Stakeholder Orientation

Steps of Social Responsibility

Steps to Implementing a Stakeholder Perspective Assessing the corporate culture Identifying stakeholder groups and issues Assessing organizational commitment to social responsibility Identifying resources and determining urgency Gaining stakeholder feedback

The Role of Organizational Leadership

Benefits of Business Ethics Employee commitment Development of an ethical culture leads to employee retention and loyalty, which increases employee performance Investor loyalty Investors are aware of the contributions of ethical conduct in providing a foundation for efficiency, productivity, and profits in a firm

Benefits of Business Ethics Customer satisfaction Companies viewed as socially responsible gain a high amount of customer trust and satisfaction Profits Ethical culture helps a company stay ahead of its competitors, thereby gaining more profits

HRM’s Role in Creating an Ethical Culture/Climate HRM is an important participant in the senior leadership of the organization HRM leads efforts to hire, orient, train, reward & recognize performance, and the disciplinary processes HRM may be specifically assigned responsibility for organizational ethics Policy and practices Orientation and training

HR Competency Model Ulrich, Younger, Brockbank, & Ulrich (1992) Business Mastery HR Mastery Personal Credibility Change Mastery

Issues of Organizational Misconduct Issues to be addressed Misuse of company resources Abusive behavior Harassment Accounting fraud Conflicts of interest Defective products Bribery Product knockoffs Employee theft

Closing & Final Comments