Ethical Issues in Human Resource Management

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Ethical Issues in Human Resource Management
By Burton H. Patterson, Southlake, TX

A large area of human relations management is concerned with various ethical issues, both on the part of upper–level management in its business decisions and lower–level management in the treatment of individual employees. Philosophic decisions on the relocation of areas of production or entire plants can have a major impact on the company but also can be devastating to individual employees and the communities in which they live. Management decisions must be made honestly taking all factors into consideration, including social responsibility as well as stockholder concerns. On a lower level, supervisors must, if they are to retain any sprit de corps within their unit of the organization, treat those they supervise fairly in matters of promotion and compensation.

Below are three situations that illustrate a few of the ethical challenges that may arise in human resource management. Each is analyzed as to the appropriate ethical response to each situation, including suggested methods of approach that would be appropriate for the Christian businessperson.

Initially it is appropriate to define the term "ethics" as used in this paper. The American Heritage Dictionary defines "ethics" as: (1) A set of principles of right conduct. A theory or a system of moral values. (2) The study of the general nature of morals and of the specific moral choices to be made by a person; moral philosophy. (3) The rules or standards governing the conduct of a person or the members of a profession.[1]

In secular human resource management, generally ethics is treated as being relative, i.e. whether an action is moral or immoral, or right or wrong depends on the prevailing view of the particular individual human resource manager. Such view is certainly molded by the culture. A human resource manager may well consider decisions to be ethical if all consequences are considered in the light of business needs balanced with consequences to all concerned, including the employees.

In making decisions the human resource manager should consider alternative solutions to the needs of the business as well as the effects the decisions will have on the lives of the employees. Frequently a human resource manager will be given instructions from higher level management to take action which will be oppressive to the employees and the manager must either present arguments to higher management for alternate solutions which will have less impact on the employee morale or determine the best method for implementing the instructions which have been given.

Is not "ethics" a set of principles ordained by God for the governance of the affairs of his creation? If so should not that set of principles be applicable to business affairs the same as to all other human affairs.[2] This is the position reached by Dr. Leon McBeth in a message in which after he quoted from the 1963 version of the Baptist Faith and Message: "Every Christian should seek to bring industry, government, and society as a whole under the sway of the principles of righteousness, truth and brotherly love." He concludes that Christian ethics are relevant to the workaday world.[3]

A similar comment was made by Dr. Joe Coleman: "Jesus Christ came into this kind of world and when he came, he came to penetrate society. . . . We are to permeate and penetrate society. This says to me this morning that the ethical approach to my profession is that I as a child of God must penetrate the society in which I live and enlighten it. . . ."[4]

The Bible is the basis for determining a Christian way of life. A Christian must walk with the ethical conduct taught in scripture. Jesus taught honesty. Thus a Christian businessperson must be honest. Honesty is not the best policy-it is the only policy-there are no options. Jesus taught his followers how to handle conflict with truthfulness and integrity. Following his example, the Christian businessperson must love even those who would take advantage or even sabotage a business.

Business ought to conform to the best ethical practices, not just for a religious reason or for principles of human dignity, but also to keep from violating federal laws. Though the laws may not be known, they would not be violated if the business were operated by ethical principles. Experience has shown that in the long term business profits will be greater for businesses that practice good ethical behavior than those which do not.[5]

As an interesting contrast, at least one leading cleric does not believe the flip side to be true. Eric Kemp, Bishop of Chichester at Canterbury, noted that while ethical management in the business world was not necessarily alien to the world of the church, it really did not work in a church setting. His reasoning was that secular business viewed humans in terms of their market value and treated them ethically solely for business purposes which was too ruthless for church management.[6]

One of the most challenging aspects of human relations management is to maintain objectivity in hiring, promotion, and compensation. For example, a male supervisor must refrain from promoting or increasing the compensation of an attractive woman who pays undue attention to him, but who consistently is late in arriving for her job and whose work is second rate.

It is both reasonable and logical to assume that compensation should track performance and that ethical considerations would not be a factor in performance analysis. Sometimes it is difficult for a supervisor, who rationally accepts this premise, to follow it, and sometimes it is difficult to persuade an employee of its rationality. The supervisor who either recommends or has the authority to adjust compensation may be persuaded by other factors to downplay the performance of an employee`s production. Likewise, an employee who will be negatively impacted by measuring employee output may have a hard time understanding why lower production should produce lower income when the hours spent on the job are the same as others with higher production and higher income.

Employee evaluation generally will consist of multiple factors including such items as punctuality, attitude, appropriate apparel, personal grooming (particularly in a position where clients are involved), language, neatness, congeniality, and performance output, among other things. The evaluation process will be considerably different between service and production personnel and between general employees and professional employees. The ethical challenge arises when, after all the factors have been considered, the decision is made on a factor or factors other than those by which all the employees have been evaluated.

Three actual cases from my experiences over a quarter of a century illustrate ethics in the workplace. Biblical principals will be applied to determine the appropriate ethical conduct by management. A Christian human relations manager might well find himself in the position of Dr. David Allen, the first African-American on the Harvard Medical School faculty who, when mediating some racial tensions, said under his breath, "I wish Jesus were here today because he could resolve this problem." and a still small voice inside him said, "I am here, only now I live in you."[7]

Case Number One:

After many years of teaching in a school of business, managing several businesses, and being the senior partner in a tax law firm, I accepted representation of a large corporation in an ad valorem tax litigation against the taxing authority of a Western state. In the representation the company furnished an office and a secretary in their executive office building. All of their records were immediately available in that building and it made more sense to work there. The secretary who was assigned was an exceptionally attractive blond. If you lined her up with any ten secretaries in the company, you would think that she was hired because of her looks rather than her skills. However, she turned out to be an absolutely top quality secretary. Her typing skills were marvelous. She typed over sixty words per minute taking dictation from a dictaphone. Her spelling was perfect. Her work product was immaculate. It would have been difficult to find any fault with her production as a secretary.

Looking at her other work habits, however, revealed substantial flaws. As a single woman she liked to frequent bars every evening, drink until late at night, and often arrived at the office one to two hours late with a slight hangover. Her appearance was generally mediocre, but her good looks overcame her lack of skill in dress and make–up. She was surly with other employees and had a general bad attitude about doing anything requested of her other than the secretarial functions in her job description. Her work ethic was poor; when she completed her work she would read a novel rather than see if there was additional work in the office that she could do.

What do you do with such a secretary? Even when she arrived at 10:00 a.m., she was able to complete by 3:00 p.m. all of the work assigned to her for the day, and the work was done so well that there was little room for criticism.

The ethical considerations for the human relations manager in dealing with an employee like this one are enormous. The human relations manager is faced with the challenge of an employee who by any number of factors should be reprimanded or terminated, but who was one of those rare individuals who could accomplish in five hours what few other secretaries could do in eight hours.

As her immediate supervisor I was asked to prepare periodic job reviews and make recommendations on retention, advancement, and compensation. Both in my law office and in my major business, flex time had been used to permit employees to arrive and depart when they wanted to so long as they put in their eight hours, or if they accomplished their assigned tasks to management`s satisfaction.

Of more importance than punctuality was this secretary`s general attitude toward other employees and about her work. Great looks alone do not make up for a churlish attitude, but frankly I did not particularly want to lose a secretary whose work was so excellent.

In preparing to write this article I interviewed five individuals whose opinion I highly respected and got their opinions on the three cases. Very frankly I was surprised by their comments.

The first interview was with a former seminary professor and a former pastor of several large Southern Baptist churches. He looked at the situation from the institutional side and what was best for the business before giving consideration to the human side-what the action would mean in the life of the individual. During the interview he related a situation at the seminary when he was teaching there. The President, when dealing with a difficult situation, had prayer with the errant faculty member, and then fired him.

A second interview with a former pastor of several large Southern Baptist churches and former president of a Baptist seminary produced similar results. He considered the three cases from the viewpoint of the institution and not the individual.

An interview with two former Deans from Southern Baptist theological seminaries yielded unanticipated results when one of the men flatly stated that in making the tough decisions required to keep an institution functioning smoothly, it was nearly impossible to apply ethical considerations, i.e. the functioning of the school outweighed any attempt at reclamation of the individual. The other former dean was less harsh and in the first case suggested doing everything possible to salvage the individual in counseling and aiding her in relocation, but like his cohort would put the organization`s overall good above that of the individual. One conclusion from these interviews was that these men "had been there and done that" and spoke from their practical experience.

The finally interview was with a retired president of a Baptist seminary in another country, who earned a PhD in Ethics from Baylor. He used a slightly different ethical approach and recognized that being honest in employee treatment, with the business owners in mind, could conflict with what might be best for the employee. However, like the others interviewed, ultimately he would put the best interests of the business ahead of the best interests of the employee.

These interviews can be contrasted with the view of Henry Krabbendam, who suggests ethical businessmen "must meet the requirements of a biblical motivation, a biblical standard, a biblical goal, a biblical decision-making process and a biblical prospect."[8] He sets the standard as Christian love that impacted greatly on how employees should be treated. He also suggested motivation, when thought of in terms of service and self–sacrifice, as a key factor in impacting employee relations. In the decision making process he looked to the book of James and stated "To make decisions and settle issues, therefore, that are ethical in nature, James invites us to assess a situation and search out possible implications with sanctified sense, determine how it looks in the light of the law of love, and apply the Decalogue thus formulating in a sense a brand-new case law."[9]

In the first case should the human relations manager attempt to salvage a person that was headed in a direction that ultimately would lead to her ruin? Phrased in such a way the obvious answer is "yes".

As a secondary challenge, would it be ethically proper for the human relations manager to ask a lawyer, engaged solely to handle specific litigation, to utilize his time (which the company was compensating at $150 per hour) for what easily could prove to be countless hours of counseling? Leaving aside the lawyer`s ethical challenge of charging the company for work that was unassigned and not within the scope of the engagement, what ethical obligations should a company owe to society, in consideration of doing business in society, to provide growth and on occasion rehabilitation for one of society`s members?

Should the basic principal of Christian ethics, to imitate God,[10] be applicable to the business world?[11] Certainly every businessperson is not going to accept "ethical behavior" as necessarily originating out of a religious context, and it is difficult for Christian ethicists to ignore ethical systems that are not based on the Christian religion. The moral teachings of the Decalogue,[12] excluding those pertaining to God, to a great extent are found in the Hammurabi Code[13] and a number of other preserved ancient laws[14]. Can it be said, in twenty–first century America, that religion and ethics are inseparable? In other words, are ethics exclusively theocentric? For many human relations managers the answer would be no, but since the presupposition of this article is yes, then the question must be asked, "How should this potential executive secretary be treated?" Guidance from the Old Testament indicates that workers (slaves) were to be treated with generosity.[15] Application of this principle to the secretary in question would require something in addition to a reprimand or termination.

Should Christian ethical teachings extend into economic relations only as far as they are workable? This is the view of one author who he states the presumption that "every human being is made in the image of God and therefore possesses incalculable worth and dignity."[16] Thus every individual is a repository of certain inalienable rights. It is the belief that the supreme purpose of human existence is neither to accumulate money, nor to provide goods and services for society, but to glorify God.

The same author states "the vast structures of industry and commerce are means to the end of enabling people to live for God`s glory."[17] However, Chewing has an interesting twist in application for he concludes that the ethical manager must consider the profits for which the owners operate the business. If the profit side of the business is ignored the business possibly can fail, which hurts both the investors and the employees. After noting the Christian businessman is confronted with the inescapable conflict between his responsibility to the investors of the business and in the implementation of biblical principles, he gives a scriptural solution: "If any of you lacks wisdom, he should ask God who gives generously to all."[18]

The human relations director in the first case has several avenues of approach. Initially a decision must be made whether the employee is marginal and should be terminated or alternatively effort should be made to salvage the individual as an employee. Assuming the decision is to retain the employee, if possible, the first and most obvious initial approach would be counseling. Since she nearly always completed her work before the end of the workday, there would be time to counsel with her without interfering with her production.

The counseling could cover the challenges she presented to the company, the potential she could have with the company, and the errors of her ways, indicate the ultimate results both in her private life and in her employment for a continuation of her lifestyle. If counseling failed to have the desire effect the next step probably would be to issue a written warning in accordance with the company`s policy as printed in the procedures manual and furnish her with a copy of the procedure so she would be fully informed about the next step and then give her ample opportunity for correction. Ultimately, however, if her attitude and work ethic did not change, for the good of the business she most probably should be terminated.

If termination is justified, is it the ethical thing to do? And if she is terminated, what Christian ethical obligations does the employer have toward her? How far should the Christian employer go in trying to salvage a young lady? Does the morale of her fellow employees justify her termination? Certainly her work product was as good, if not better than her fellow employees. The interviews with the five individuals cited above, together with the textual material from Vernon Grounds would answer yes-it is ethical, within the Christian framework, to terminate after appropriate counseling and opportunity for change. But at the very least an offer should be made to provide counseling about her life goals and her employment goals, as well as help in locating new employment.

Case Number Two:

Our company was low bidder for the remediation of biomedical waste at a large county hospital forty miles from the home office. This necessitated putting in a medical waste transfer facility and assigning five employees to work in it three days a week. The five employees drove to the location in one automobile and the company compensated the driver for mileage. Three of the employees were male and two were female.

One of the female employees made an oral complaint to a human relations specialist, claiming sexual harassment. All five employees had been with the company very long, and our company knew very little about any of them. From a legal standpoint the company`s action was clear. Company policy dictated that an independent firm that investigated sexual harassment complaints be engaged immediately, and the employee making the accusation be transferred to another work area. An investigation and report indicated the accuser`s charges were not corroborated by any of the other four employees. The investigator`s opinion was that the charges were an attempt to get the company to pay the accuser mileage to drive her car to work.

Obviously under these circumstances it would be inappropriate to terminate the accused. What action, however, should be taken against the accuser, whose charges had cost the company several thousand dollars in investigator`s fees? Texas is an "at will" employment state in which an employer can terminate an employee at any time without reason or cause.

Even in the face of the report, the accuser held to her story that she had been sexually harassed. The investigator`s fees came from the company`s human relations department budget. The director of the department was furious and desired to terminate the accuser immediately. He was unhappy about having to scale back other planned activities to stay within budget and was concerned that this employee could find other areas in which to be disruptive.

From the beginning the company was owned and directed by Christians. It had been their policy to hire, for executive positions and supervisors, only practicing Christians. The human relations director (also an active church member) desired to terminate the accuser.

The initial reaction from the owners was that the money for the investigator had been spent and firing the employee would not bring it back. They were not so much concerned for the accuser as they were for the morale of other employees. Could the five of them still work together after what had happened? Would the accused attempt any type of retaliation if the accuser was transferred back to her old position? While worrying about these issues, the management team seemed to miss a valuable opportunity.

T. B. Maston, the renowned Baptist ethicist, suggested that morals are the basis of ethics and biblical teachings, particularly the Ten Commandments, comprise moral authority dictated by God.[19] Maston states that judgment and punishment are part of the moral law; justice does not offend the law, and thus does not offend human ethical behavior. Using this reasoning the owners certainly should have supported the desire of the human relations director to terminate the accuser.

However, Dr. Maston went further. He put great emphasis on the principle to "love your neighbor as yourself" and the new commandment of Jesus, "that you love one another."[20] An ethical conclusion might be that the ethical employer would not take action that would unnecessarily harm employees. This principle applies to many areas of the workplace, including a safe work environment, never asking an employee to do anything illegal, providing a living wage with medical benefits, and other similar considerations. What is the employer to do, however, when the reverse situation is thrust upon him? In this second case the employee caused harm to the employer through added worry and a substantial expenditure of time and expense.

Two authors posed several cases that were somewhat analogous with Case Two. Their work was considerably more philosophy than practical, but in discussing the the moral behavior of the employee, they stated:

In fact, rules belong to the `surface` of morality; the essence of morality consists of deeper values, such as the intrinsic worth and dignity of all human beings and rights and justice. If a person accepts those deeper values then that person demonstrates respect for moral rules. This management means that the person recognizes a good reason is needed to justify breaking a moral rule. Achieving ethical improvement in the workplace requires, among needed changes, increasing respect for moral rules.[21]

Their approach would suggest informing an employee that his or her conduct was not acceptable and then sanction the employee as an example to others.

In regard to this second case, the business owners strongly suggested to the human relations director that he give appropriate counsel to the accuser and if satisfied with her response to the counseling, to retain her as an employee. This appears to be a just and ethical way to deal with this case.

Case Three.

The company employed about thirty drivers for its "front–end" loader trucks (trucks with forks on the front that lift dumpsters over the truck cab and empty them into a hopper behind the driver`s head). The trucks have internal compactors and when full will weigh close to thirty tons. The fuel cost for pushing an empty front–end loader down the street is about one-fifth of the cost of pushing a full one down the street. Thus routes are designed to begin at the furthest point from the landfill and work toward the landfill. Part of the driver`s duty is to make certain that the fewest miles are driven when fully loaded.

For years the drivers, like all other employees in the refuse division, were paid on an hourly basis,. The hourly rate was quite high, intentionally set to combat a specific challenge. It is difficult to maneuver a large truck in a congested apartment complex parking lot without doing damage. The solution was to double their pay, with the absolute warning that they would be terminated if they had even one accident. The accidents ceased overnight. The drivers became very careful because they liked the higher pay.

A new Chief Operations Officer, who had an MBA and many new ideas, made a study of the comparative costs for each dumpster lift. He discovered that some of the drivers were on the clock for over ten hours, while other drivers (due to various skills), could run their route in six hours. Thus the company was paying a premium to inefficient drivers.

The proposed solution was to put the drivers back on minimum wage and provide them additional compensation for each dumpster they picked up. The slow drivers rebelled and the speedy drivers thought it was a great idea. The end result was that the faster drivers requested additional dumpsters be added to their routes, which reduced the number of routes by 20%. Since front–end loader garbage trucks each cost about $150,000, the reduction in the number of needed trucks resulted in a significant savings.

What was the ethical challenge here? Most of the slower drivers were older and had relied on their overtime income to keep children in college, make payments on a home, or meet other basic needs. By moving them to a different pay schedule, which management felt was fair to the company, the driver`s were impacted significantly.

One corporate ethics text described the owners` ethical dilemma: "To separate from `personal ethics` any autonomous area of `business life` where God does not rule would be unthinkable in biblical theology." [22] The authors of this text offered corporate management some basic principles: 1. God`s law demands justice and truth; 2. There is an interrelatedness of all things-nothing is isolated from its effects on others; and 3. A believer must inject biblical ethics into corporate decision-making.

Case three happened at a point in the company history when it was not struggling financially. If the situation had occurred early in the company history, when it was burdened by significant debt payments, there probably would have been little sympathy for the older drivers and their loss of income.

Christian ethical principles that apply to the ethical treatment of the older drivers are found in Stephen Mott`s biblical ethics textbook:[23]

Our ethical behavior is to correspond to what God has enabled us to be by adoption and grace based on God`s historical, once–for–all act in Christ`s death and resurrection. Be (imperative) what you are (indicative) in Christ; thus we are given an `indicative and imperative` ethical appeal. We could call it `grace and ethics.` (24).

One basic plank of Christian ethics is that Love transcends Justice. Justice can be an instrument of love. Justice functions to ensure that in our common life we are for our fellow human beings, which is, indeed, the meaning of love. (54).

Wherever there is basic human need, we are obliged to help to the extent of our ability and opportunity. (77).

We are not faced with a dualistic ethic: there is not one ethical standard for private and intimate life and a different one for commercial and political life. The same criteria of judgment apply to both situations, but the latter is more complex. (184).

Case three presents a classic case of conflict between doing what is best for the company, which would reduce the pay of the older drivers in accordance with their production, or doing what is best for the drivers by permitting them to maintain the same income for the same work they had been doing for years. An analysis of the problem might indicate different outcomes, depending on the person having to make the decision.

A supervisor with a duty to the company most probably would have to make a different decision than an owner of the company, whose bottom line was going to be reduced by the decision. Ethical choices in business are complex and difficult.

A large part of human resource management of necessity deals with many competing ethical values-fairness, honesty, industry, profitability, and social responsibility. A business organization committed to ethical leadership will show moral responsibility in all of these areas.

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[1]American Heritage Talking Dictionary (Electronic Edition, The Learning Company, Inc., 1997).

[2] George W. Forell and William H. Lazareth, Corporate Ethics (Philadelphia: Fortress Press, 1973), 37. "To separate from `personal ethics` any autonomous area of `business life` where God does not rule would be unthinkable in biblical theology.".

[3] Leon McBeth, Christianity and the Workaday World: Messages from the Tenth Annual Christian Life Workshop (Fort Worth: Baptist General Convention of Texas, 1966), 9.

[4] Ibid,, 56.

[5] Donald G. Jones, Doing Ethics in Business: New Ventures in Management Development (Cambridge: Oeleschlager, Gunn & Hain, 1982).

[6] Robin Gill, Moral Leadership in a Postmodern Age (Edinburgh: T & T Clark, 1997), 110.

[7] Robert Wuthnow, God and Mammon in America (New York: MacMillian, 1994), 100.

[8] Richard C. Chewing, ed. Biblical Principles and Business (Colorado Springs, Navpress, 1989), 105–106.

[9] Ibid, 113.

[10] J. Douglas, New Bible Dictionary, 2nd ed. 1982.

[11] An equivalent statement appears in Stephen Charles Mott, Biblical Ethics and Social Change (New York: Oxford University Press, 1982), 23. "Every system of ethics must have some ultimate basis of goodness and obligation; God is the basis of Christian ethics."

[12] James Muilenburg, Biblical Faith and Ethics (New York: Harper, 1961), 15.

[13] James B. Pritchard, ed. Ancient Near Eastern Texts (Princeton: Princeton University Press, 1955), 163–180.

[14] Ibid, 159-222.

[15] See Deutoronomy 15:12 ff.

[16] Chewing, 119.

[17] Ibid. 126.

[18] James 1:5 paraphrased.

[19][19] T. B. Maston, Biblical Ethics (Waco, TX: Word Books, 1979), 19–20.

[20] John 13:34, KJV.

[21] Ralph W. Clark and Alice Darnell Lattal, Work Place Ethics: Winning the Integrity Revolution (Lanham, Mass.: Littlefield Adams Publishers, 1993), 32.

[22] George W. Forell & William H. Lazareth, Corporate Ethics (Philadelphia: Fortress Press, 1973), 37.

[23] Stephen Charles Mott, Biblical Ethics and Social Change.