HRM focuses on planning the workforce and the development of employees within an organisation. Ethics is of prime importance in such an environment because the people areas such as recruiting, training, promotions, pay, OH&S and a myriad of other areas.
HR has an important function in reporting back to management and providing measurements of the effectiveness of the strategies and plans in achieving the objectives of the organisation. HR has many costs that it oversees including salaries, benefits, bonuses, and training which are quite easy to measure because of the direct nature of the costs. Other areas can be more difficult, not only to measure in terms of cost but also in terms of the ROI. Things such as job design, career development and training outcomes in terms of development present challenges for HR.
Most importantly, making sure that the organisation is running high-quality reporting software to collect all the necessary data will allow HR to provide accurate and timely information to employees as well as management. This is essential to maintain transparency and organisational trust.
Key Theoretical Approaches
- Deontological or non-consequential theory (Kantianism) – a theory that places special emphasis on the decision made without regard to the consequences of that decision.
- Teleological (Utilitarianism [Bentham (1784-1832) and Mill (1806-1873)] and consequentialism) reflects on the consequences of the decision in determining the ethical value.
- Virtue Ethics – looks at the individual who makes the decisions and whether or not the decisions involve good character traits such as honesty, impartiality, courage etc.
- Justice Ethics – Simply based on the concept of treating everyone equitably and without favour. One of the most important theories in the business world where employees are not always treated equally.
- Ethical Relativism – This theory argues that there is no single ethical truth but what is morally right or wrong and that this will vary from person to person. What one person regards as ethical behaviour may be different to someone else.
- Stakeholder Theory – is based on the concept that a business has an ethical responsibility to create value for all its stakeholders including the business, customers, shareholders, employees and even the communities in which they operate.
- Ethical Pluralism – argues that there may be more than one valid decision and the correctness of a decision will depend on the decision maker’s moral views.
Analysing the ethical implications of HR issues and solutions
When it comes to organisational ethics, it appears that the dominant theory is the Stakeholder Theory. For the purposes of this discussion, employees are stakeholders as is management. It is essential that HR be involved in appropriate behaviour when it comes to ethical actions in the organisation. This applies to such issues as theft, sexual harassment and breaches of privacy. Although several aspects of behaviour are covered by the law, ethics themselves are above the law. They are the moral compass of what is right and wrong. Sometimes the rightness or wrongness of an issue can be arguable, but there are many that are not. It depends on your point of view or truth.
It has been suggested in the notes that the impact of unethical behaviour can be more damaging for a small business than for a multinational. The latter have deep pockets to run advertising campaigns in an effort to redeem themselves. The small business in a small town can be irrevocably damaged.
So ethics permeates every single aspect of HR and the employment relationship. The notes recommend that HR professionals adopt a notion of the “ethics of care” where the needs of individual employees are taken into account.
Evaluating HR’s return on investment
It’s interesting that because HR deals with people issues that there isn’t the quantifiable data to demonstrate a return on investment. But there are many ways that HR can provide such information, or is available through secondary data. For example, rebuilding organisational trust in an organisation and creating happier workspaces should demonstrate an increase in productivity. This is measurable. Covid in particular has created enormous shifts in workplace arrangements and productivity measurements are vital to an organisation. Looking at employee satisfaction values, retention and productivity can provide valuable information to the organisation.
In order to calculate ROI for HR, it uses metrics to demonstrate:-
1. What HRM does
2. How efficiently it does it
3. How effectively it is done
4. How this relates to organisational performance and accomplishing strategic objectives 
It needs to be borne in mind that the evaluation of HR can be complex and requires the extraction of detailed and accurate information from a reliable HR Management System .
An HR Audit formally reviews HR’s policies, procedures and practices, strategies, methods and any programs . The object of the audit is to evaluate the strengths and weaknesses of the department. HR audits also ensure all policies and procedures etc are in keeping with current legislation for the jurisdiction in which the organisations operate.
Some of the common HR areas that need auditing include:-
- statutory compliance
- remuneration, compensation and benefits
- employee relations
- performance appraisal
- employee handbook policies and procedures
- occupational health & safety (OH&S) .
Qualitative data is also available from HR metrics that can assist organisations to improve the quality of services provided by the HR department. Data collected by way of employee surveys, performance review interviews and exit interviews can gather valuable information about trends amongst employees in the organisation. Information of this nature can assist HR and the organisation to take preventative and remedial action on the identification of any adverse trends. It can also assist the organisation to support and promote healthy trends.
Attitude Surveys of employees can be designed and organised through the HR department. However, external consultants can often be used also to maintain confidentiality and ensure there is no bias in the process. The object of such surveys is to collect as much data as possible on every aspect of HR programs and the workplace in general. The more information collected, the better the opportunity for organisations to adapt to the responses of employees. Of course, this is contingent on acting on the data and not just letting it gather dust. Commitment is required by the organisation if it is to undertake such surveys or if they are just a waste of money and resources.
The notes suggest that an HR professional should conduct exit interviews and not the employee’s immediate supervisor. Such independence can remove any bias and encourage open and frank discussions that can be analysed and acted upon where appropriate.
The second assignment for this subject was particularly challenging. It was based on a case study in a fictional US company that was littered with HR problems, several of a serious nature. Not knowing US labour laws and social norms made it difficult to comment on some of the treatment of employees, much of which would be either illegal or not tolerated in Australia. I ended up taking a very “balcony” approach to the assignment and approached it from a singular basis almost. My thoughts were that there had been a considerable breakdown in organisational trust. A restoration of this trust should go a long way in having a simultaneous curative effect on some of the other issues facing the company. The assignment has now been lodged for marking so I shall await the result.
This was the last week for Strategic Human Resource Management. Much of the theory behind it was very interesting but the main takeaway is the intrinsic linkage between HR and all other departments or areas. No doubt that is because there are people employed across organisations so there will be a necessity for HR policies and procedures for recruitment, retention, performance, training and development for the organisation to work effectively.References
- Course: 8003SHRM Strategic Human Resource Management 2022 Term 3, Topic: Week 7: Managing Ethics and HR Evolution 2022, aib.edu.au, viewed 17 June 2022, <https://learning.aib.edu.au/course/view.php?id=1212§ion=9>.
- Bowie, NE 2002, The Blackwell guide to business ethics, Blackwell, Malden, Mass.
- The Blackwell Guide to Business Ethics.pdf 2014, Scribd, viewed 17 June 2022, <https://www.scribd.com/doc/214750364/The-Blackwell-Guide-to-Business-Ethics-pdf>
- Galanaki, E & Lazazzara, A 2020, ‘HR metrics’, in T Bondarouk & S Fisher (eds), Encyclopedia of electronic HRM, De Gruyter Oldenbourg, Munich.
- Nankervis, A, Baird, M, Coffey, J & Shields, J 2020, Human Resource Management : strategy and practice, Cengage, South Melbourne, Vic.
- Australian HR Institute [AHRI] 2022d, What is a HR audit?, February, viewed 4 April 2022, https://www.ahri.com.au/ahri-assist/hr-audit-compliance-and-reporting/what-is-a-hr-audit.