What is the key role of HR in creating an ethical and trusting work climate?

The term ethics is derived from the Greek word ethos, which means character, habit, customs, and ways of behavior. Therefore, ethics is also called moral philosophy. The word moral comes from the Latin word mores, which signifies customs, characters, and behavior. Put simply, ethics refers to what ought to be done to achieve what is good and what should not be done in order to avoid evil.

The history of business ethics goes back to the origin of business — broadly speaking to the beginnings of commercial exchange and, later, to the rise of economic systems. Many traditions and religions have sacred texts that have guided people’s actions in the business realm for centuries, and the concern for ethics in business continues today.

Kenneth Lay of Enron, Bernard Ebbers of WorldCom, Dennis Kozlowski of Tyco, Conrad Black of Hollinger Inc, and many more names have been famously associated with ethical violations in the workplace.

Due to its role in the organization, the human resource management (HRM) department is at the frontlines of ethical problems concerning employees and employers.

HRM practitioners engage in multiple roles, creating the opportunity for ethical dilemmas to occur. It is the professional duty of HR managers to promote ethical business practices and contribute to the organization’s ethical success.

With this in mind, we will reflect upon ethics in the HR department, and the ethical dilemmas managers often confront while fulfilling ethical obligations.

Due to globalization, there has been a steady increase in the workplace diversity in terms of religion, gender, ethnicity, and background. HR Managers must be able to work with individuals of all ages and gender identities, religions, and ethnicities and with any sorts of health conditions, and they must encourage all employees to get along.

There are ethical issues pertaining to salaries, executive perks, annual incentives, etc. There is increasing pressure upon HR to pay out more incentives to the top management, with the justification being the need to retain talent.

Discrimination in the recruitment and selection process is often the result of specific circumstances and the type of job, characteristics of the recruiter, perceived fit between job types, and demographic characteristics of applicants.

When HR managers use anything other than talent, skills, and ability as evaluators for hiring, they help perpetuate stereotypes instead of building a workforce that reflects real life.

A practical problem with evaluating performance is that most managers don’t like giving negative feedback to their employees. It’s such a problem that in an online survey conducted by Harris Poll of 2,058 US adults, “the majority of the managers said that they’re often uncomfortable communicating with employees.”

Terminations and layoffs are, by nature, unpleasant. It’s crucial to consider the implications of layoffs not only on those losing their jobs but also on coworkers since they can display reactions such as low morale and mistrust.

Unethical behavior constitutes a business risk and can be costly at the organizational level. The costs of unethical behavior include but are not limited to:

• Legal sanctions such as fines, confiscations, and even imprisonment
• Termination of business partnerships with stakeholders or suppliers
• Damage to brand reputation, customer retention, and loyalty as customers do not like to be associated with a brand with low ethical standards
• Low levels of employee satisfaction and retention and higher levels of absenteeism
• Increased unethical employee behavior that directly harms the company, such as improper use of employee time and resources
• Negative brand image in the community in which the company operates

On the other hand, ethical business practices can bring tangible advantages such as an improved brand image, customer loyalty, and increased attractiveness among talented employees.