1. Topic #1: HRM Ethical Issues
Paul L. Schumann, Ph.D.
Professor of Management
MGMT 440: Human Resource Management
© 2008 by Paul L. Schumann.
All rights reserved.

2. Outline Role of Ethics in Business Law vs. Ethics
Making Ethical Judgments Using Moral Principles
Motivating Ethical Behavior by Employees

3. Role of Ethics in Business
Friedman (1970): Managers should “… conduct the business … to make as much money as possible, while conforming to the basic rules of society, both those embodied in law and those embodied in ethical custom.”
Maximize profits, but actions should be both legal & ethical
Why might ethical behavior be an important factor that contributes to the strategic success of the organization?
Should managers consider ethics when making decisions?

4. Is there a conflict of law and ethics?
Law vs. Ethics?
Is there a conflict of law and ethics?
Ethical?
Yes No
Legal?
No conflict
Legal but unethical
Ethical but illegal

5. Conflicts of Law and Ethics
Example: Legal but unethical?
“Jim Crow” laws that required discrimination against Black Americans
Laws in Nazi Germany that contributed to the holocaust
Example: Ethical but illegal?
Provide service in violation of “Jim Crow” laws to a Black American in a restaurant
Help a holocaust victim escape from Nazi Germany

6. Is it illegal? Legal Judgment: Is the action legal or illegal?
Judgment Based on Legal Factors
Laws
Regulations
Court Decisions

7. Is it unethical? Moral Judgment: Is the action ethical or unethical?
Judgment Based on 5 Moral Principles
Utilitarian
Rights
Justice
Care
Virtue

8. Utilitarian Principle
Who are the stakeholders?
What are the alternative courses of action?
For each alternative, what are the benefits and costs (good and harm) for each stakeholder now and in the future?
Which alternative creates the most benefits and the least costs for all stakeholders considered together?
What action will do the most good and the least harm for everyone who is affected?

9. Utilitarian Principle
What would happen in a competitive market in which all stakeholders have complete and accurate information and are free to make their own choices in mutually beneficial negotiations with each other?

10. Rights Principle What action do you have the moral right to take …
… that advances the moral rights of others?
… that does not infringe on the moral rights of others, and …
What action do you have the moral right to take …

11. Rights Principle Reversibility Universalizability
Respect & free consent
What action do you have the moral right to take in the situation under consideration?

12. What moral rights do other stakeholders have?
Rights Principle
Reversibility
Universalizability
Respect & free consent
What moral rights do other stakeholders have?

13. Rights Principle
What competing interest is being protected by each conflicting right?
Which competing interest is more important?
Give precedence to the right that protects the more important interest.
Is there a conflict of moral rights? If so, decide whose rights take precedence

14. Distributive Justice Principle
What action produces a fair distribution of benefits and costs for all of the stakeholders?
What action provides all stakeholders with equal liberties and equal opportunities …
… but allows for differences in results based on differences in contributions …
… while helping those in need to the greatest extent possible?

15. Care Ethics Principle
What action appropriately cares for your own needs …
… and also appropriately cares for those people with whom you have special relationships (e.g., family, friends, coworkers, supervisors, employees, customers, suppliers, stockholders, etc.)?
Care appropriately for those with whom you have a relationship, especially those who are vulnerable and dependent on you
Nurture the ability of those with whom you have a relationship to make their own choices and live their own lives
Do not base relationships on domination, oppression, hatred, violence, disrespect, injustice, exploitation, etc.

16. Virtue Ethics Principle
Does the action display virtues such as benevolence, civility, compassion, conscientiousness, cooperativeness, courage, fairness, generosity, honesty, industriousness, loyalty, moderation, self-control, self-reliance, or tolerance?
Or does the action display vices such as cowardice, deceit, dishonesty, laziness, neglect, or selfishness?
Take the action that displays virtues, not vices.
What action displays virtuous character traits?

17. Is it unethical? Moral Judgment: Is the action ethical or unethical?
Judgment Based on 5 Moral Principles
Utilitarian
Rights
Justice
Care
Virtue

18. Conflict Among the Principles?
Do all five moral principles reach the same conclusion, or do they reach conflicting conclusions?
If they all reach the came conclusion, then that’s the moral judgment
If they reach what appear to be conflicting conclusions:
Determine if the conflict can be resolved by developing (guided by the moral principles) a previously unconsidered course of action that satisfies all 5 moral principles
If the conflict cannot be resolved with a different course of action, then examine your values to decide which principles should take precedence
Example: “the ends can’t justify the means”  the Rights Principle takes precedence over the Utilitarian Principle

19. Motivating Ethical Behavior
Stage 1: Self-interest: “The only crime is getting caught”
Make it more likely to catch bad behaviors
Anticipate possible bad behaviors
Create rules & expectations: What’s unacceptable?
Communicate rules & expectations
Monitor & enforce the rules
Increase the penalties for bad behaviors
Have formal policies that describe the escalating sanctions

20. Motivating Ethical Behavior
Stage 2: Self-interest: “What’s in it for me — I’ll scratch your back if you scratch mine”
Create incentives for good behaviors and to avoid bad behaviors
Punish bad behaviors
Withhold benefits valued by the employee for bad behaviors
Create positive incentives for good behaviors
Tie rewards to good behaviors
Watch for unintended incentives for bad behaviors

21. Motivating Ethical Behavior
Stage 3: Group norms are important: “Do your duty to those whose opinions you value”
Focus on co-workers & direct supervisors
Monitor for workgroups with bad norms
Screen applicants in hiring for the desired norms
Use formal socialization, orientation, & training sessions to teach the desired norms
Use self-managed teams & coach them to have the desired norms
Direct supervisors should formally praise good behaviors

22. Motivating Ethical Behavior
Stage 4: Social institutions are important : “Do your duty to society at large”
Help employees become good citizens, including good corporate citizens
Create organizational awards and recognitions for examples of good corporate citizenship
Publicize examples of good corporate citizenship
Company newsletter
Company website
Press releases to the media

23. Motivating Ethical Behavior
Stage 5: Protect the social contract
Use participative management techniques
Create formal impartial due process procedures to resolve conflicts & disagreements
Create opportunities for employees to participate in due process procedures

24. Motivating Ethical Behavior
Stage 6: Universal ethical principles
Create & use an ombudsoffice
Create method for employees to report illegal or unethical behavior
Ethics hotline
Ethics webpage on company website
Ombudsoffice investigates complaints, reports findings, & helps to resolve issues
Guided by independence, confidentiality, objectivity, & ethics

25. Outline Role of Ethics in Business Law vs. Ethics
Making Ethical Judgments Using Moral Principles
Motivating Ethical Behavior by Employees