Gary Taylor looks at some of the practical areas of business in which HR can play an important role in safeguarding ethical practices.
Perhaps we should start with a clarification. We really mean Business Ethics here. Pure Ethics could be defined as principles or beliefs about what is right or wrong, whereas Business Ethics concern the principles and standards that determine acceptable conduct in business organizations. This is a narrower focus, but must still be much more than just avoiding breaches of the law.
The topic has been around for some while, but mostly focused on the damage to individual reputation, or possibly corporate reputation. If a Bernie Madoff sets up a ponzi scheme, he is (rightly) vilified and prosecuted. However, it was the disregard for ethics which allowed corporations to bring down national economies in the global financial crisis, and the perpetrators mostly still have their jobs and their yachts.
So, where do we stand now? In recent study of Business Ethics among 3000 HR professionals, research showed that:
- 23% of companies do not have an Ethics program
- 50% had no means of seeking advice on Ethics
- 57% said that Ethics played no part in performance evaluation
- 19% felt pressure to compromise ethical standards
- 83% said HR was the prime source for information on Ethics
The Society for Human Resources Management (SHRM) lists 6 core principles in their Code of Ethics and Professional Standards for the HR professional, which are worth considering. They include: professional responsibility, professional development, ethical leadership, fairness & justice, conflicts of interest, and the use of information. Let's have a look at some of the practical areas of business in which HR can play an important role, so as to safeguard ethical practices:
1. the onboarding process sets the first example to new employees, and provides a great opportunity for HR to show how to do things right.
2. leadership training is where future managers get their grounding, and where HR can ensure the topic can be explored in a "safe" environment.
3. shaping values & culture allows for the instilling of ethical principles in documentation as well as behaviour.
4. the selection process should actively screen for ethical traits which are compatible with the organisation.
5. the performance appraisal system design should incorporate ethical standards into the evaluation and feedback to staff.
6. our reward systems send signals to others, and we should caution against incentivising at-any-cost behaviour.
7. preparing policy advice and interpreting law and policy should concentrate on substance over "will we get away with it?"
8. assessing the impact of globalisation is a useful contribution of HR given the diverse standards of ethics prevailing in different regions.
9. evaluating the risk of ethical lapses is important in helping the organization to recover and learn.
10. communicating ethical decisions will help keep ethics alive within the organisational conscience.
At this point, I would like to suggest that HR is not the ideal department to drive or police corporate ethics. This might sound like treachery to die-hard HR professionals, but it is HR judgment calls and practices which are arguably more open to ethical compromise than other departments in the organisation. Sure, we have a critical role to play in promoting business ethics, but give the facilitation and watchdog role to the Company Secretary or an Ombudsman.
In Managing Risks for Corporate Integrity authors Brewer, Chandler & Ferrell list 7 components of an Ethics program, which are helpful guidelines:
establish the responsibility of the governing authority for ethical leadership in your company
assess you firm's ethical and legal risks
implement operational oversight through an Equity Officer
develop a Code of Ethics
communicate values, standards, culture & expectations
enforce standards with reward & censure in support of organisational culture
To make Ethics really live in your organisation, you need to have regular and robust conversations about how ethics plays out in your company. An interesting test for ethical behaviour is to ask the question: would we do it differently if everybody found out?
Trust me, I'm in HR.
About the author
Gary Taylor is a Master HR Practitioner with the South African Board of People Practice. He has worked in multi-national organisations on 2 continents, and has contributed articles to journals in Australia, South Africa and the UK.