Ethics and Employee Rights and Discipline 14 Ethics and Employee Rights and Discipline In this chapter we will explore issues, policies, and problems related to ethics, fair treatment, discipline, and the termination of employees. With the recent events at Enron, WorldCom, and other firms, ethics has become a major issue in today’s world. Let’s spend some time discussing what has changed to make this an issue. Is there more unethical behavior, have standards changed, or is it simply that today’s media and communications shed more light on perpetual problems? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Learning Objectives Explain what is meant by ethical behavior at work. Discuss important factors that shape ethical behavior at work. Describe at least four specific ways in which HR management can influence ethical behavior at work. Employ fair disciplinary practices. List at least four important factors in managing dismissals effectively. At the conclusion of this chapter, you will be able to: Explain what is meant by ethical behavior at work. Discuss important factors that shape ethical behavior at work. Describe at least four specific ways in which HR management can influence ethical behavior at work. Employ fair disciplinary practices. List at least four important factors in managing dismissals effectively. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Explain what is meant by ethical behavior at work. Ethics and morality are basically the same but differ in their application. An ethic is a set of guiding principles (virtues) while morality is the degree of conformity to such a set of principles. Interestingly, the term "morality" relates to mores or customs. So, one can rightfully ask the probing question, "Whose customs or principles do we adopt?" Let’s discuss. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Ethics and Fair Treatment at Work The principles of conduct governing an individual or a group; specifically, the standards you use to decide what your conduct should be. Ethical behavior depends on the person’s frame of reference. Ethics refers to “the principles of conduct governing an individual or a group.” Ethical decisions also involve morals, which are society’s accepted standards of behavior. The law is not the best guide about what is ethical because something may be legal but not right, and something may be right but not legal. Ethics means making decisions that represent what you stand for not just what is legal. With respect to the workplace, experts generally define organizational justice in terms of distributive justice and procedural justice. Distributive justice refers to the fairness and justice of the decision’s result. Procedural justice refers to the fairness of the process itself. While law can provide guidelines for future behaviors and actions of an organization, ethical procedures depend on the standards we aspire to in our culture and society. Societies don’t rely on employers’ ethics or sense of fairness or morality to ensure that they do what’s right. Societies also institute various laws and procedures for enforcing these laws. These laws lay out what employers can and cannot do. Laws also carve out explicit rights for employees but not all rights derive from laws. For example, the first 10 amendments to the U.S. Constitution we call the Bill of Rights. Most laws therefore also reflect public policy. In other words, governments enact laws so as to further their public policy aims. Public policy “consists of political decisions for implementing programs to achieve societal goals”. Protecting employee rights is therefore part and parcel of all the employment laws we discuss. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Ethics and Fair Treatment at Work What is ethics? Ethics and the law Ethics, justice, and fair treatment Ethics, public policy, and employee rights Public policy Employment rights The law is not the best guide about what is ethical because something may be legal but not right, and something may be right but not legal. Ethics means making decisions that represent what you stand for not just what is legal. With respect to the workplace, experts generally define organizational justice in terms of distributive justice and procedural justice. Distributive justice refers to the fairness and justice of the decision’s result. Procedural justice refers to the fairness of the process itself. While law can provide guidelines for future behaviors and actions of an organization, ethical procedures depend on the standards we aspire to in our culture and society. Societies don’t rely on employers’ ethics or sense of fairness or morality to ensure that they do what’s right. Societies also institute various laws and procedures for enforcing these laws. These laws lay out what employers can and cannot do. Laws also carve out explicit rights for employees but not all rights derive from laws. For example, the first 10 amendments to the U.S. Constitution we call the Bill of Rights. Most laws therefore also reflect public policy. In other words, governments enact laws so as to further their public policy aims. Public policy “consists of political decisions for implementing programs to achieve societal goals”. Protecting employee rights is therefore part and parcel of all the employment laws we discuss. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Factors affecting ethical decisions Normative judgments Judging something as good or bad, right or wrong, better or worse. Moral standards (Morality) Society’s accepted standards for behaviors that have serious consequences to its well-being. Behaviors that cannot be established or changed by decisions of authoritative bodies.

Ethics and Fair Treatment at Work (cont’d) Ethics and the law An behavior may be legal but unethical. An behavior may be illegal but ethical. An behavior may be both legal and ethical. An behavior may be both illegal and unethical.

Ethics, Fair Treatment, and Justice Distributive justice The fairness and justice of a decision’s result. Procedural justice The fairness of the process by which the decision was reached. Interactional (interpersonal) justice The manner in which managers conduct their interpersonal dealings with employees.

Perceptions of Fair Interpersonal Treatment Scale Figure 14–2

The Wall Street Journal Workplace-Ethics Quiz Source: Wall Street Journal, October 21, 1999, pp. B1–B4; Ethics Officer Association, Belmont, MA; Ethics Leadership Group, Wilmette, IL; surveys sampled a cross-section of workers at large companies and nationwide. Figure 14–1

BUSINESS ETHICS Ethics is defined as «the standards of right and wrong within the society.» Business ethics is concerned with what is right or wrong, truth and justice in business. It has a variety of aspects such as the expectations of society, fair, competition, advertising, public relations, social responsibilities, consumers.

How Organizations Shape Ethical Conduct

Improving Ethical Behavior in Business Ethical decisions in an organizations are influenced by three key factors 2-13

SOCIAL RESPONSIBILITY OF BUSINESS The principal goals of the organizations are to get high productivity and improve the welfare of its stakeholders. If we consider all businesses in society, we may easily understand that they influence the social and economic life and the welfare of the society.

SOCIAL RESPONSIBILITY OF BUSINESS In that sense, management’s considerations of the social and economic effects that might be caused by its decisions describes social responsibility. The managers with social responsibility should think about the overall effects of their decisions.

Nature of Social Responsibility 4 Dimensions Economic Legal Ethical Voluntary (philanthropic) 2-16

Carroll’s Pyramid of Social Responsibility 2-17

Discuss important factors that shape ethical behavior at work. Whether a person acts ethically at work is usually not a consequence of any one thing. Let’s look at what the important factors are. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

What Shapes Ethical Behavior at Work? Individual factors Organizational factors The boss’s influence Ethics policies and codes The organization’s culture

What Shapes Ethical Behavior at Work? The person Situations (bad cases) Outside forces (bad barrels) Pressures Ethics policies and codes Organizational culture Whether a person acts ethically at work is usually not a consequence of any one thing. Because people bring to their jobs their own ideas of what is morally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes. Three factors combine to determine the ethical choices a person makes. No single “smoking gun” determines ethical behavior. The first factor may be called “bad apples” or individuals who make unethical choices. We may call the second factor “bad cases” or ethical situations ripe for unethical choices. The third may be called “bad barrels” or environments which foster unethical choices. Individual characteristics: Who are the bad apples? Some people are just more inclined to make unethical choices. Which ethical situations make for bad (ethically dangerous) cases or situations? Some ethical dilemmas are more likely to prompt unethical choices. Finally, what are the “bad barrels”? What outside factors mold ethical choices? Some people are just more principled than others. One study suggests older workers generally have stricter interpretations of ethical standards and make more ethical decisions than younger ones. We also know that outside pressures weaken one’s ethical compass. Common pressures include “meeting schedule pressures,” “meeting overly aggressive financial or business objectives,” and “helping the company survive.” It’s also hard to resist even subtle pressure, let alone coercion, from your boss. An ethics policy and code is a good way to signal that the firm is serious about ethics. However, codifying the rules without enforcing them is futile. As one study noted, “…strong statements by managers may reduce the risk of legal and ethical violations by their work forces, but enforcement of standards has the greatest impact.” Finally, employees take their signals about what’s acceptable not just from what managers say, but from what they do. Those signals then mold the company’s organizational culture, the “characteristic values, traditions, and behaviors a company’s employees share.” Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Employees and Ethical Dilemmas Questions employees should ask when faced with ethical dilemmas: Is the action legal? Is it right? Who will be affected? Does it fit the company’s values? How will it “feel” afterwards? How will it look in the newspaper? Will it reflect poorly on the company?

What Is Organizational Culture? Organization culture The characteristic values, traditions, and behaviors a company’s employees share. How is culture is revealed? Ceremonial events Written rules and spoken commands. Office layout Organizational structure Dress codes Cultural symbols and behaviors Figureheads

The Manager’s Role in Creating Culture Clarify expectations for values to be followed. Use signs and symbols to signal the importance of values. Provide physical (the firm’s rewards) support for values. Use stories to illustrate values. Organize rites and ceremonies reinforcing values © 2005 Prentice Hall Inc. All rights reserved.

Describe at least four specific ways in which HR management can influence ethical behavior at work. Managers can use personnel activities to support the employer’s ethics goals. We’ll consider examples. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

HR’s Role in Fostering Ethics and Fair Treatment Why treat employees fairly? “They’re not employees, they’re people” Management guru Peter Drucker Enhanced employee commitment Enhanced satisfaction with the organization, with jobs, and with leaders Increased organizational citizenship behaviors

Using HR Management Methods to Promote Ethics and Fair Treatment Selection Ethics training Performance appraisal Reward and disciplinary systems Managing ethics compliance Screening out undesirables actually can start before the applicant applies. This is more likely if the HR department creates recruiting materials containing explicit references to the company’s emphasis on integrity and ethics. Interviewing using questions about ethical behavior and managing other aspects of the selection process sends signals about the company’s ethical values and culture. Ethics training typically plays a big role in helping employers nurture a culture of ethics and fair play. Such training usually includes showing employees how to recognize ethical dilemmas. It also includes how to use ethical frameworks to resolve problems, and how to use HR functions in ethical ways. The firm’s performance appraisal processes provide another opportunity to emphasize a commitment to ethics and fairness. The appraisal can actually measure employees’ adherence to high ethical standards. Managers and organizations need to reward ethical behavior and penalize unethical behavior. However, care must be taken in rewarding ethical behavior so as not to undermine the intrinsic value of behaving in an ethical manner. Passage of the Sarbanes-Oxley Act of 2002 made ethics compliance mandatory. The act requires that CEOs and CFOs of publicly traded companies personally attest to the accuracy of their companies’ financial statements. Record-keeping in the post-Enron era has become intense so smaller companies face challenges in adhering to the Sarbanes-Oxley Act. As a result, some companies have been taken private to avoid the duties required of the company officers. Nonetheless, privately held or smaller companies should be willing to attest to the validity of the published statements and internal practices. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

HR Ethics Activities Staffing and selection Training Fostering the perception of fairness in the processes of recruitment and hiring of people. Formal procedures Interpersonal treatment Providing explanation Training How to recognize ethical dilemmas. How to use ethical frameworks (such as codes of conduct) to resolve problems. How to use HR functions (such as interviews and disciplinary practices) in ethical ways. © 2005 Prentice Hall Inc. All rights reserved.

HR Ethics Activities (cont’d) Performance appraisal Appraisals that make it clear the company adheres to high ethical standards by measuring and rewarding employees who follow those standards. Reward and disciplinary systems The organization swiftly and harshly punishes unethical conduct. Workplace aggression and violence Taking care that HR actions do not foster perceptions of inequities that translate into dysfunctional behaviors by employees.

Employ fair disciplinary practices. The purpose of discipline is to encourage employees to behave sensibly at work (where sensible means adhering to rules and regulations). Discipline is necessary when an employee violates a rule. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Managing Employee Discipline and Privacy Fairness in disciplining Bullying and victimization What causes unfair behavior? The purpose of discipline is to encourage employees to behave sensibly at work. In an organization, rules and regulations serve purposes similar to what laws do in society. Discipline is called for when one of these rules or regulations is violated. A fair and just discipline process is based on three pillars: clear rules and regulations, a system of progressive penalties, and an appeals process. Bullying and victimization is becoming a serious problem in the workplace. Such behavior usually involves an imbalance of power, an intent to cause harm, and repeating the same behavior with the same person or group. One study suggests three supervisory actions influence perceived fairness. The first is to involve employees in the decisions that affect them. Second, ensure that everyone involved and affected understands why final decisions are made. Finally, make sure everyone knows up front by what standards you will judge him or her. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Building Two-Way Communications Perceptions of fair treatment depend on: Engagement—involving individuals in the decisions that affect them by asking for their input and allowing them to refute the merits of others’ ideas and assumptions Explanation—ensuring that everyone involved and affected understands why final decisions are made and the thinking that underlies the decisions Expectation clarity—making sure everyone knows up front by what standards they will be judged and the penalties for failure.

Employee Discipline and Privacy Basis for a fair and just discipline process Clear rules and regulations Define workplace issues Inform employees A system of progressive penalties The range and severity of the penalty is a function of the offense and number of occurrences. An appeals process The right of the employee to grieve the decision helps to ensure that supervisors mete out discipline fairly and equitably.

Discipline without Punishment Oral reminder Formal written reminder Decision-making leave Purge suspension from file Discipline should be perceived and fair and its purpose understood to correct inappropriate behavior. The goal is not to fix the blame; the goal is to fix the problem. Typical steps include: Issue an oral reminder. Should another incident arise within 6 weeks, issue a formal written reminder, a copy of which is placed in the employee’s personnel file. Give a paid, one-day “decision-making leave.” If no further incidents occur in the next year or so, purge the one-day paid suspension from the person’s file. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Managing Employee Discipline and Privacy Employee privacy Employee monitoring Restrictions The four main types of employee privacy violations upheld by courts are: intrusion (locker room and bathroom surveillance); publication of private matters; disclosure of medical records; and appropriation of an employee’s name or likeness for commercial purposes. Employers monitor employees’ electronic activities mostly to improve productivity and to protect themselves from computer viruses, leaks of confidential information, and harassment suits. There are two main restrictions on workplace monitoring: the Electronic Communications Privacy Act (ECPA) and common-law protections against invasion of privacy. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Employee Privacy What do employers monitor about employees: E-mail activity Internet use Telephone calls Employers monitor employees to: Improve productivity. Protect from computer viruses Detect leaks of confidential information Guard against liability for illegal acts and harassment suits caused by employee misuse

List at least four important factors in managing dismissals effectively. Dismissal is the most drastic disciplinary step the manager can take. Because of this, special care is required to ensure that sufficient cause exists for it. Let’s spend some time discussing this important, yet sensitive, area in HR. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Managing Dismissals Termination at will and wrongful discharge Grounds for dismissal Unsatisfactory performance Misconduct Lack of qualifications for the job Changed requirements Termination at will means that without a contract, either the employer or the employee could terminate the employment relationship at any time for any reason with no advance notice. Most states are employment at will states. Wrongful discharge is a dismissal that violates the law or that fails to comply with contractual arrangements, either stated or implied. There are four bases for dismissal. In dismissing an employee, the employer should take care to ensure that all keys and company properties are returned, Internet passwords disabled, and employee accounts deactivated. Unsatisfactory performance occurs when there is persistent failure to perform assigned duties or to meet prescribed job standards. Misconduct is a deliberate and willful violation of the employer’s rules. Lack of qualifications for the job results from an employee’s inability to do the work assigned even when he or she is diligent. Changed requirements (or elimination) of the job results from an employee’s inability to do the job after the employer changed the nature of the job. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Managing Dismissals Other issues in dismissals Insubordination Fairness Security measures Insubordination is a form of misconduct that refers to rebelliousness or disobedience. While things like stealing, chronic tardiness, and poor-quality work are easily understood grounds for dismissal, insubordination is sometimes harder to translate into words. However, some acts are usually clearly insubordinate. These include, for instance: Direct disobedience of, or refusal to obey, the boss’s orders, particularly in front of others Deliberate defiance of clearly stated company policies, rules, regulations, and procedures Public criticism of the boss Contemptuous display of disrespect Dismissals are never pleasant. However, there are three things to do to make them fair. First, provide full explanations of why and how termination decisions were made. Second, institute a formal multistep procedure (including warning) and a neutral appeal process. Third, who actually does the dismissing is important. People who are dismissed face-to-face by their managers tend to accept the circumstances more readily. Finally, use a checklist to ensure that dismissed employees return all keys and company property, and (sometimes) accompanying them out of their offices and out of the building. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Managing Dismissals Avoiding wrongful discharge suits Personal supervisory liability The termination interview Outplacement counseling Exit interview Wrongful discharge occurs when an employee’s dismissal does not comply with the law or with the contractual arrangement. Avoiding wrongful discharge suits requires a two-pronged approach. First, set up employment policies and dispute resolution procedures that make employees feel they are treated fairly. Second, do the preparatory work by paying particular attention to the employee handbook and other company policies and procedures. Courts sometimes hold managers personally liable for their supervisory actions. Managers should be fully familiar with applicable federal, state, and local statutes and know how to uphold their requirements. Guidelines for the termination interview include: 1) plan the interview carefully, 2) get to the point, 3) describe the situation and explain that the decision is final and irrevocable, 4) listen, 5) review all elements of the severance package, and 6) identify the next steps. Outplacement counseling is a systematic process by which a terminated worker is trained and counseled in the techniques of conducting a self-appraisal and securing a new job appropriate to his or her needs and talents. This employee benefit is not required but is a good idea on a human and a public relations level. Many employers conduct exit interviews with employees who are leaving the firm. They aim to elicit information about the job or related matters that might give the employer a better insight into what is right—or wrong—about the company. Unfortunately, many terminated employees prefer to not “rock the boat” for their future jobs by providing extensive insights into the firm they are leaving. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall

Interviewing Departing Employees Exit Interview Its aim is to elicit information about the job or related matters that might give the employer a better insight into what is right—or wrong—about the company. The assumption is that because the employee is leaving, he or she will be candid. The quality of information gained from exit interviews is questionable.

Exit Interview Questions How were you recruited? Why did you join the company? Was the job presented correctly and honestly? Were your expectations met? What was the workplace environment like? What was your supervisor’s management style like? What did you like most/least about the company? Were there any special problem areas? Why did you decide to leave, and how was the departure handled?

Adjusting to Downsizings and Mergers Guideline for implementing a reduction in force: Identify objectives and constraints. Form a downsizing team. Address legal issues. Plan post-reduction actions. Address security concerns.

Adjusting to Downsizings and Mergers (cont’d) Guidelines for treatment of departing employees during a merger: Avoid the appearance of power and domination. Avoid win–lose behavior. Remain businesslike and professional. Maintain a positive feeling about the acquired company. Remember that how the organization treats the acquired group will affect those who remain.