Building an Ethical Culture The role of HRM Professor Pauline Stanton School of Management

Do we have a problem?

How do we respond? Blame, name and shame…….and jail? ……..regulate, regulate regulate ……………………..more codes of conduct and compliance ………………………... more policies and procedures ………we undermine trust and create risk averse organisational cultures

Developing Codes of Conduct, disciplinary procedures Role of HRM Designing and implementing best practice recruitment and selection, promotion, performance and reward Developing Codes of Conduct, disciplinary procedures Role of Leadership ‘The tone from the top’ ‘Walking their talk’ Graycar and Kelly 2014

Signalling theory: the strength of the HRM system Distinctiveness: the features of the HRM system that capture the attention of staff and arouse interest in the goals: visibility, understandability, legitimacy of authority, relevance Consistency: how the HRM message is encoded and interpreted: instrumentality, validity, consistent HRM messages Consensus: agreement amongst employees on the perception of cause and effect relationship: agreement amongst principle decision makers, fairness (distributive, procedural and interactional) Bowen D and Ostroff C (2004) Understanding HRM-firm performance linkages: The role of the ‘strength’ of the HRM system” Academy of Management Review 29(2): 203-221

Distinctiveness People know what is expected, why it is important and that the policies and processes are relevant and meaningful – otherwise they ignore them If there are no policies and line managers hire and fire – Wild West as managers do their own thing – led to inconsistency ‘its not fair’ If there are too many policies and processes – policy overload – managers do their own thing – work arounds

Consistency The policies are integrated and pull in the same direction People are rewarded for the right behaviours not the wrong ones People see the value of HRM systems and processes to help them do what they need to do

Consensus Agreement – engagement with staff Shared decision making Organisational Justice Procedural Distributive Interpersonal

Leadership at all Levels: ethical challenges facing line managers We might have to deal with large scale theft or fraud But often it is more about Difficult behaviours – bullying, unprofessional emails, moonlighting and misuse of company time or resources, the old mates/family network Such difficult behaviours if left unchallenged lead to a toxic culture – staff don’t like it – mistrust, undermines team spirit

What don’t line managers challenge difficult unethical behaviours? It’s too hard I won’t get support from above I have no real evidence only hearsay The union will get involved It will take too much of my time I don’t know what to do and how to do it It will go away

What can HRM practitioners do? Not just focus on training…… Instead work with the line managers to identify and advise – build relationships with line managers – be at their side – brainstorm possible outcomes and pitfalls Make sure that they have sensible, practical support Don’t always be the expert – find help from the right people Work with the leadership team to provide the tone from the top

An ethical culture is about openness and transparency It is also about trust Leadership at all levels as managers walk their talk

Questions and Comments?