Human Resource Management Ethics

By Author: Henry Ford
Total Articles: 189
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Since the second half of the 20th century, human resource management has risen to become one of the most important areas of focus in organizational management. A growing number of studies have emphasized the importance of appropriate human resource management practices that ensure that employees are well motivated to enhance organizational performance. In deed, there is not doubt that organizations that have well motivated and highly trained employees have a competitive edge that many competing organizations may fail to replicate. However, effective human resource management is embroiled in management practices and corporate governance of the organization. Management is one of the most important practices in business entities since it plays vital functions of planning, organizing, directing, and controlling the organization. This means that organization becomes what the management wants. However, management cannot accomplish all these functions without the support of employees in the organization. In the recent past, business ethics especially in human resource management has become an important factor influencing the overall ...
... performance of a given organization. As caretaker of the organization, management has obligation towards all stakeholders including employees, shareholders, customers, communities, and the environment. Balancing between the interests of all stakeholders is a tricky affair and most organizations tend to serve the interest of shareholders alone. The case of Enron is one of the cases that can illustrate failure by management to serve the interest of all stakeholders and instead focus on short term profitability that enriched few individuals. Enron remains one of the biggest corporate scandals in United States history. This paper will use the case of Enron to look into how management sometimes fails to adhere to business ethics especially on issues of human resource management.
Business ethics in Human resource management
The role of business in the society is one of the highly contested fields as it attracts divergent views. There are arguments that it is difficult for business to practice ethics since business is amoral or moral neutral. This means that business should be taken as a private entity that need not adhere to any rules and regulations. Arguing on this approach, ethics in business should therefore be seen quite different from ethics related to human activity (Mirza, 2003). This implies that business ethics would be immoral if applied in any other area. However, business is closely tied to private life of the owners and therefore it is a part of moral community.
To understand this argument well, it is important to look at how business operates. The aim of setting up any business is to make profit. However, making profit should be viewed as just one of the obligations that businesses fulfill in society. A business will provide the needed goods and services and therefore sustain life in the society (Barrett, 1999). A business will also provide employment to individual in the society therefore raising the standard of living of the society members. This implies that a business is a part and parcel of the society.
A business is a community (Erl, 2001). Taking an example of a business owned by different shareholders, it can be taken as a communally owned entity. Shareholders trust the daily operation of the business to management which acts as oversight body to see that the business meets its obligation to all stakeholders. As a communal entity it has different stakeholders. Shareholders aim at reaping maximum profits from their investment. There are customers who look toward getting quality goods or services from the business. There are employees who look towards getting good salary for their labor. There are also surrounding communities and the environment that have to benefit from corporate social responsibility of the business (Barrett, 1999). This shows that there is no way that a business can be taken as a private entity even when it is a sole proprietor business because there are different stakeholders that rely on the business.
According to Friedman, business have only one social responsibility in that they have to use their resources and engage in different activities that maximize their profit as long as they follow the stipulated rules of the game without any incidence of fraud and deception. In this statement, Friedman acknowledges that the main reason why many people start business is to make profit. However, his conditionality is that they must operate within the legal framework that has been set up for businesses. A business has to fulfill its primary obligation to shareholders who contribute capital. However, the interest of the shareholders must not in any way override the interest of the rest of stakeholders. For example it is wrong for any business to pay employees peanuts in order to maximize profit for shareholders (Erl, 2001). This would be morally and ethically wrong.
The above review is a clear illustration that business and ethics run concurrently. Business cannot be separated from ethics. There is little doubt that in their operations, businesses must be moral in order to meet their obligation to all stakeholders. This fact has been reinforced by the importance that has been attached to the concept of corporate social responsibility (Mirza, 2003). Corporate social responsibility has been used as yardstick to assess the compliance of business organizations to ethical standards. Ethical practices in business extend not only to the shareholders but to other stakeholders and the environment as well. For international businesses, their ethical responsibility is not only to their home markets to other countries where they operation (Renwick, 2002). Business ethics ensure that the business balances its obligations to all the stakeholders.
According to Barrett (1999) employees comprise one of the most important stakeholders in any business entity. The management cannot actualize their plan for increased profit to shareholders without the employees. The first ethical responsibility that management has is towards the employees rather than the shareholders. Although shareholders contribute capital, they don’t contribute to the daily operation of the organization and without employees their capital would be dead investment (Boxall and Sparrow, 2001). Ethical practices in human resource management should therefore see management attach more importance of the development of employees instead of profit. As has been proved in a number of studies, organizations that have well motivated and satisfied employees show positive balance sheets (Erl, 2001). This is a clear indication that satisfaction of employees is a prerequisite for increased profitability of the organization.
Although the long and short term goal of any business is to make more profit and perhaps expand its operations, we have just seen that there are obligations that any business has to meet towards its stakeholders. Literature share the same view that management drive that favors long term profits for a business entity leads to an imperative urges to treat its employees in a just manner since they are important to reach there (Cropanzano, 2003). In strategic planning, management should first consider the capability of the employees and how they can be motivated in order to help the business achieve the set goals and objectives.

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