Ethics in Human Resources: An Exercise Involving New Employees

Wendy S. Becker
Shippensburg University

ABSTRACT This situation-based exercise introduces the concept of an ethical dilemma a situation in which two or more values are in conflict. Ethical dilemmas in business concern four major areas: human resources, customer confidence, conflicts of interest, and the use of corporate resources (Trevio & Nelson, 2010). Ethical dilemmas are most difficult to identify when they combine several different areas. New employees are especially vulnerable because they are often overwhelmed with information and have not yet been socialized into the companys organizational and ethical culture. Human Resource Management can play a critical role fostering an ethical culture by providing orientation and training for all employees. The following case challenges students by placing them in the midst of a realistic business ethics situation. INTRODUCTION The management of human resources (HR) can involve complex ethical dilemmas. Ethical dilemmas are broadly defined as situations in which two or more values are in conflict. They concern four major business areas: human resources, customer confidence, conflicts of interest, and the use of corporate resources (Trevio & Nelson, 2010). Human resource dilemmas are the most common type of ethical issue at work and they generally involve fairness in working relationships. Examples of human resource dilemmas include ethical problems that arise when people work together, such as discrimination, favoritism, harassment, work-life balance, inconsistencies in pay or discipline, or simply how people get along. Customer confidence dilemmas concern ethical issues in customer relationships, such as confidentiality and fiduciary responsibilities. Conflicts of interest occur when objectivity is compromised, such as through bribery, kickbacks, undue influence or privileged information. Finally, the use of corporate resources concerns truthfulness in managing the financial resources and the reputation of the organization (Trevio & Nelson, 2010). Ethical dilemmas are most difficult when they combine several of these business areas. New employees are especially vulnerable because they can be overwhelmed with information and they may not yet be socialized into the companys organizational and ethical culture. Senior managers may send mixed messages or even demonstrate unethical behavior. Unethical behavior increases in organizations: 1) when employees are not sure what behavior is ethical, 2) when there are clear opportunities to engage in unethical behavior, and 3) when employees feel pressured to behave unethically (Miceli & Near, 2001).

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Human resource management (HRM) can play an important role in this regard by communicating the organizations culture and values. Ethical training is needed for all employees and it should continue throughout the employees tenure. HRM can champion a strong ethical culture in which employees feel free to openly speak about issues, question authority figures and report any concerns. Employees need to know how to handle the ethical dilemmas that they will encounter in their jobs. Employee ethical behavioral is influenced by the individuals level of cognitive moral development (Kohlberg, 2008; Trevio & Nelson, 2010). Individuals at a preconventional level obey authority figures and follow rules that are in their own interest. An employee at the preconventional level might reason that it is wrong to contradict a superior because they would be punished for their disobedience. A conventional level individual internalizes the shared norms of society and expectation of others. For example, an employee at the conventional level of cognitive moral development might reason that its wrong to contradict a superior because they would lose the social approval of others at work. Finally, the postconventional level describes individuals who have developed principled reasoning and who look beyond rules, laws, and others expectations to make decisions autonomously. An employee at the postconventional level of cognitive moral development might reason that it is okay to contradict a superior in order to act in the interest of what is right and just (Trevio & Nelson, 2010). Individual employees also vary in terms of locus of control. An individual with high internal locus of control perceives that things that happen are largely the result of his or her own efforts. For example, an employee with a high internal locus of control would be uncomfortable acting upon a request from a superior to do something unethical at work. In contrast, an individual with a high external locus of control perceives that events are largely determined by fate or luck. An employee with an external locus of control might be more likely to do whatever a superior asks, because they see their fate in the others hands (Trevio & Nelson, 2010). HRM can help all employees understand ethical dilemmas using behavioral role modeling, interactive video, ethical games, personal reflection, and moral dilemma discussions (Wells & Schminke, 2001). At least three types of training are used to develop ethical behavior in employees (Miceli & Near, 2001). First, HRM can provide employee training in how to diagnose potentially problematic situations. This type of training could explain the organizations code of ethics and provide clear definitions of wrong-doing (Wooten, 2001). Second, HRM can provide general training on how to apply ethical frameworks to resolve problems (Wiley, 2000). For example, managers could be taught how to apply universal moral principles to ethical problems at work (Schumann, 2001). Finally, HRM can provide training to managers in how to communicate and reward ethical standards. For example, managers could be taught how HRM systems such as selection or performance management can be used to promote fairness (Weaver & Trevino, 2001). At its heart, all of these approaches should communicate that the consequences of unethical behavior are negative, both for employees and the organization (Miceli & Near, 2001). In lean times managers may be tempted to look the other way in customer situations that concern new business. How far would you be willing to go to compromise your own ethics?

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What kind of organization do you want to work for? Would you have the courage to stand up to a senior manager in support of your personal values? Where would you draw the line? The following case puts you in the midst of such a business ethics dilemma. You will be evaluated on your ability to identify an ethical dilemma, analyze the situation, and discuss possible solutions, both in class and in an individual writing assignment (see Table 1). *************** BUSINESS ETHICS AND HUMAN RESOURCE MANAGEMENT: AN ETHICAL DILEMMA FOR NEW EMPLOYEES Chris Sharp is a junior consultant with Change Technology (CT), a management consulting firm. Chris joined CT six months ago, after receiving a Bachelors degree in Business Administration. With limited experience in consulting, Chris was proud to land the job and survive CTs rigorous two-month orientation and training program. Over the past few months Chris has been performing research and analysis for Sharon Spade, Managing Principle in CTs corporate home office. Chris loves the in-house experience and new corporate contacts but is most eager to get on the road with some real world customer assignments. Because Chris has worked very hard, Sharon has recommended Chris for a big assignment. Today Chris will visit Colossal Engineering, a prospective client, along with Phil Pompous, Senior Consultant. Phil is CTs biggest earner and Chris is eager to observe him in action. Chris doesnt know too much about the sales presentation. Basically Chris is going along to observe the meeting and to do Phils grunt work. Running to the airport, Chris bumps into Sharon. She holds the elevator door while Chris fumbles with all of the materials that Phil needs for the trip. Sharon congratulates Chris for landing the big assignment and for being assigned to Phils team. When Chris look puzzled, Sharon says, Oh, didnt Phil tell you that he is your new boss? Youll be assigned to him permanently! Chris mumbles that Phil sends lots of texts and voice messages, but they mainly concern tasks directly related to the sales presentation at hand. Phil did say that he would talk with Chris more during the visit to Colossal Engineering. On the plane, Chris sits back and tries to relax but the flight is crowded with tourists and Chris is unable to calmly assess his situation with Phil. At baggage claim Phil appears, freshly scrubbed and looking polished and ready for his big presentation. As Chris grabs the materials for the sales visit from the baggage cart, Phil explains the set-up for the day. There will be two hours for Phil to make the presentation. All the top players from Colossal Engineering will be present, armed with questions and pricing concerns. Its a competitive bid and CTs biggest competitor will be there too. In fact, the competitor will be on stage in the morning, Colossal will take a one hour lunch break and then Phil will make CTs presentation after lunch at 1:00 p.m. Phil asks Chris for help and gets a bright gleam in his eyes. Your main job today is to help me get set-up, run the presentation, and handle any technical glitch while Im speaking. Make sure there are plenty of handouts for the client. Try to read the audience, in fact, take notes while Im speaking. Oh -- theres one other thing
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Get a copy of our competitors proposal and pricing materials sometime during the day. These meetings are hectic and disorganized people come and go there will be an opportunity at some point while the Colossal big shots are out of the room during lunch. Just grab one of the packets and throw it in your briefcase theyll never miss it. Were going head-to-head here; I need any advantage I can get. The two arrive at the airport taxi stand. Phil edges toward the curb and is waving for the next car. Chris realizes that the new boss has just asked for something that doesnt feel quite right. Colossal Engineering headquarters is a short twenty-minute cab ride away. *************** QUESTIONS FOR REFLECTION 1. Put yourself in the shoes of Chris Sharp. What would you do? Why? 2. Is this an ethical dilemma? If so, what kind? 3. What are the risks of proceeding with Phils request? 4. Put yourself in the shoes of Chris colleagues, Sharon Spade and Phil Pompous. How might they think about the issue? 5. Imagine that you are Vice President of HR for Change Technology in charge of business ethics and employee conduct. How do you think about the issue? 6. Evaluate the case in terms of cognitive moral development and locus of control. What does this analysis tell you about your own ethical decision-making style? 7. Evaluate the case in terms of organizational culture and ethical leadership. 8. What type of training can HR provide to help new employees understand what to do if faced with this situation? IN-CLASS DISCUSSION Students should discuss the case in small groups. Each group should suggest the immediate steps that Chris should take. Groups should be prepared to present their recommendations and rationale to the class. HOMEWORK Write a memo that responds to the ethical issues for HR in this case. The memo should be written as if you are Chris Sharp. Write the memo to a specific person in the case (for example, a trusted colleague, mentor, boss, or teacher). The memo should identify and try to resolve the ethical issues which you have identified in the case. Make sure that your memo is clear, concise
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and action-oriented. Keep in mind that others will rely on your summary and analysis to formulate an action or recommendation. At minimum, you must do the following: provide a brief synopsis of the issue clearly identify the ethical dilemmas for HR explain what you would do in the short-term concerning the issue provide specific long-term recommendations for how HR should respond to and manage the issue TEACHING NOTES Summary A junior consultant is put on the spot during a visit to a potential customer. A senior manager asks the new employee to gain access to the materials of their competitor. The case involves what to do in the short-term when asked to do something that does not seem right. The case also asks students to consider long-term HR issues for ethical decision-making and training. Reflection Questions 1. What should Chris Sharp do? Surprisingly, many students argue that Chris should just do as told and steal the materials. The instructor can use class time to initiate a lively discussion on personal responsibility and ethics. The case provides a good format to discuss how to check your gut when faced with an ethical dilemma in which you do not know what to do. The instructor can discuss the power of leaders in organizations and the difficulty of disobeying a boss. The instructor can move the discussion to how HR can promote an organizational ethical culture and the vulnerability of newly hired employees. 2. Is this an ethical dilemma? If so, what kind? There are several ethical dilemmas that students may report. The case concerns conflict of interest in that Chris is asked to obtain privileged information that belongs to a competitor. It also concerns customer confidence in that the action takes place during a visit to a potential customer. The case involves use of corporate resources in that the reputation of Chris employer is at stake. The case involves human resource issues in that a more experienced employee asks a junior employee to act in an unethical way to obtain new business. Students may realize that the case is more complex because it combines several types of ethical dilemmas. Further, students may express that they feel obligated to obey the boss, even when the boss is wrong, especially when newly employed. Students may identify the competitive pressures of winning a new business project at any cost, no matter how (the end justifies the means).
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Students may communicate their perception that performance in an organization depends on compliance. Students may recognize the issue of company reputation and truth telling. For example, is it right to win a competitive bid using privileged information that was improperly obtained? Students may discuss their own personal code of honesty and reputation versus that of a work colleague. On the other hand, students may argue that the incident is not really an ethical dilemma because stealing is wrong, period. 3. What is the risk of proceeding with Phils request? It is likely that Chris could get caught stealing the materials. This would put CTs proposal in jeopardy with its client. If Chris steals the materials and gets away with it Phil may expect Chris to do it again, or even escalate his requests. If CT wins the project and the competitor recognizes that its proprietary information was used to obtain the account, CTs reputation in the industry may be in jeopardy. 4. Put yourself in the shoes of your colleagues, Sharon Spade and Phil Pompous. How might they think about the issue? Sharon Spade may not be aware that Phil uses such tactics to be the biggest earner at CT. If Chris confides in Sharon she is obligated to do something about Phils behavior. Sharon may recognize that CTs orientation and training is inadequate for newcomers and more seasoned employees alike. Phil may feel that he must maintain his lead sales position through any means necessary. Other senior managers at CT may be aware of Phils methods but look the other way. 5. Imagine that you are the corporate vice president of HR in charge of business ethics and employee conduct for Change Technology. How do you think about the issue? Clearly, CT needs to revisit its corporate policy and procedures and communicate a concern for ethical business practices. Over the short-term, the VP of HR may discuss Phils behavior with senior management. Over the long-term, the VP can identify business ethics training for all CT employees. Training could include new employee orientation, the recognition of ethical dilemmas, the use of ethical frameworks, the organizations code of ethics, universal moral principles and philosophy, and criteria for ethical standards in the traditional functions of HR, such as selection, performance management, etc. In addition, CT needs to revisit its performance management and incentive system because it appears that senior employees (such as Phil) are seen as successful even though they are using unethical business practices. 6. Evaluate the case in terms of cognitive moral development and locus of control. What does this evaluation tell you about your own ethical decision-making style? Preconventional thinking would argue for obedience to authority, that is, Chris should steal the materials because that is what the boss wants. Chris may feel that obeying Phil is instrumental to gaining his approval and will result in a promotion and a bonus. Conventional thinkers may argue that stealing the materials is what is expected at CT to win the contract. As a conventional thinker, Chris may feel obligated to conform to Phils request because it is not right to contradict the boss. Postconventional thinkers may look to ethical principles such as fairness,
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justice and honesty for guidance. Chris might argue that it is right to contradict the boss because stealing is wrong and obtaining personal or company gain based on dishonesty is not right in the long run. Locus of control refers to an individuals perception of how much control he or she exerts over life events. An individual with an internal locus of control believes that events are the result of his or her own efforts. An employee with an internal locus of control will be uncomfortable with the inappropriate request and will be more likely to resist the bosss demand. An individual with an external locus of control believes that life events are determined primarily by fate, luck or powerful others. An employee with an external locus of control is more likely to simply do what the boss asks because they may feel that their fate is in the boss hands. 7. Evaluate the case in terms of organizational culture and leadership style. What does this evaluation tell you about CT? About the organization you work in? Leaders are highly influential in creating organizational culture. New employees are especially vulnerable to both the formal and informal actions and behaviors of senior leaders. Many top managers may not be strong ethical leaders. In a highly competitive business environment, silence from senior management sends the message that the organization just does not care about how business goals are being met. 8. What type of training can HR provide to new CT consultants to help with this dilemma? New employees need to learn the organizations values and ways of doing business through early socialization in orientation programs and through ongoing training. Employees need guidance regarding the specific ethical issues likely to arise in their jobs. Role-play is especially helpful in this regard. The company can sponsor focus groups, after-action reviews and discussions regarding ethical issues related to interactions with customers on key project deliverables. Many firms provide ethics training during new employee orientation. Training can be updated on an annual basis, each year of employment. Ethical culture is also reinforced through performance management systems -- the formal process of communicating employee goals. Incentives need to reinforce the positive values that the organization subscribes to in its business practices. Informal ethical culture systems such as company norms, rituals, heroes and myths are also very powerful, such as the perception that Phil is a top sales performer. HR must act to reinforce the companys ethics code and provide appropriate guidelines and training for conducting business in competitive situations. _______________ Wendy S. Becker is an associate professor of management, Shippensburg University, and visiting professor at the Management Law Center, Innsbruck, Austria. Beckers research interests are in applied psychology, team processes, and social responsibility. She earned her Ph.D. in industrial-organizational psychology from Penn State. Previously, she served as editor of The Industrial-Organizational Psychologist (TIP). Contact: wsbecker@ship.edu

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Table 1. Evaluating Critical Thinking Skills

Does Not Meet Expectations

Meets Expectations Identifies some aspects of ethical dilemma and conflict, and recognizes some content areas.

Exceeds Expectations Identifies ethical dilemmas and conflict, analyzes questions and provides insight, critiques content, and examines inconsistencies. Uses reasonable judgment, discriminates rationally, synthesizes information, views information critically and draws a conclusion.

Interpretation

Fails to identify an ethical dilemma or conflict, and misses major content areas.

Analysis and Evaluation

Fails to draw conclusions, fails to see arguments, overlooks differences, and omits important information.

Identifies some conclusions, makes some arguments, identifies some differences, is able to paraphrase information, and evaluate the validity of some information.

Discussion

Omits argument, misrepresents issues, excludes information, draws faulty conclusions, or shows intellectual dishonesty.

Generally provides some argument, uncovers some issues, cites some sources, presents some options, and identifies some information.

Argues succinctly, discusses issues thoroughly, shows intellectual honesty, justifies decisions, and assimilates information.

REFERENCES Kohlberg, L. (2008). The development of childrens orientations toward a moral order. Human Development, 51, 8-20. Miceli, M. P., & Near, J. P. (2001). Ethical issues in the management of human resources. Human Resource Management Review, 11 (1/2), 1-9. Schumann, P. (2001). A moral principles framework for human resource management ethics. Human Resource Management Review, 11 (1/2), 93-111. Trevio, L. K., & Nelson, K. A. (2010). Managing Business Ethics: Straight Talk about how to do it Right. Hoboken, NJ: John Wiley & Sons.

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Weaver, G., & Trevio, L. K. (2001). The role of human resources in ethics/compliance management: A fairness perspective. Human Resource Management Review, 11(1/2), 113-134. Wells, D., & Schminke, M. (2001). Ethical development and human resources training: An integrative framework. Human Resource Management Review, 11 (1/2), 135-158. Wiley, C. (2000). Ethical standards for human resource management professionals: A comparative analysis of five major codes. Journal of Business Ethics, 25 (2), 93-114. Wooten, K. C. (2001). Ethical dilemmas in human resource management: An application of a multidimensional framework, a unifying taxonomy, and applicable codes. Human Resource Management Review, 11 (1/2), 159-175. Additional Reading Recommendations Bartels, K. K., Harrick, E., Martell, K. & Strickland, D. (1998). The relationship between ethical climate and ethical problems within human resource management. Journal of Business Ethics, 17 (7), 799-804, Buckley, M. R., Beu, D. S., Frink, D. D., Howard, J. L., Berkson, H., Mobbs, T. A., & Ferris, G. R. (2001). Ethical issues in human resource systems. Human Resource Management Review, 11 (1/2), 11-29. Collins, C., & Clark, K. (2003). Strategic human resource practices, top management team social networks, and firm performance: The role of human resource practices in creating organizational competitive advantage. Academy of Management Journal, 46 (6), 746751. Miceli, M. P., & Near, J. P. (1992). Blowing the Whistle: The Organizational and Legal Implications for Companies and Employees. New York: Lexington. Vickers, M. (2005). Business ethics and the HR role: Past, present, and future. Human Resource Planning, 28 (1), 26-32.

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