What does organizational ethics mean?
Regarding organizational ethics, HR specialists have a special perspective. Given the nature of their work, HR is frequently the first to identify and resolve possible problems, making them a crucial component of any company’s ethical culture.
By putting in place procedures and guidelines that support the organization’s goals and objectives, people teams can have a significant impact on the ethical culture of a business.
Let’s discuss what you need know about HR and organizational ethics.
Organizational ethics, sometimes referred to as business ethics, are the rules, values, and guidelines that direct the behavior of individuals as well as groups inside an organization.
The purpose of business ethics is to proactively prevent harmful behavior by managing and guiding activities and business conditions. They are frequently outlined in a code of conduct, which lays out the moral and ethical standards that members of the organization’s staff are expected to uphold.
Why HR Matters for Putting Organizational Ethics Into Practice
An organization may not always be completely free from unethical activity, even if it has an ethical code of conduct in place. For instance, in September 2013, an employee at Wells Fargo tried to report unethical sales operations he had been told to carry out by calling the company’s ethics hotline. He lost his job just eight days after sending the email.
Even when the business made steps to integrate organizational ethics throughout the entire company, it was still evident that this was not ingrained in the Wells Fargo corporate culture. This case shows how HR must be a key player in promoting and executing ethical behavior.
There are other reasons why Human Resources has to play an essential role, such as:
- Handling evolving expectations from employees
Instead of turning to governments, employees—and more and more candidates—look to employers for their position on socioeconomic issues.
Roe v. Wade in the United States, the conflict in Ukraine, and the cost of living problem are a few examples. Employee perceptions of the company they work for are strongly impacted by how businesses, and HR departments in particular, respond to these situations.
- HR’s growing strategic importance
In a constantly evolving business environment, people teams are entrusted with new business needs. These commercial requirements present new difficulties that must be handled, such as enhancing workplace equity, diversity, and conduct, as well as developing moral procedures and policies.
Attracting talent, retaining employees, productivity, and engagement can all be directly impacted by an organization’s ethics standards and behavior. According to one survey, for example, 79 percent of American workers said they would not accept a higher-paying position from a business that has not taken appropriate action in situations of sexual harassment.
- Handling organizational reform
Employees’ capacity to uphold the company’s ethics is impacted by their ever-changing working circumstances (such as remote or hybrid work) and mounting pressure from a competitive labor market.
Thirty percent of the 3,320 US employees polled for the Ethics & Compliance Initiative’s 2021 Global Business Ethics Survey Report said they felt under pressure to compromise on workplace ethics. This is fourteen percentage points more than in the poll conducted by the group in 2017.
- Addressing typical ethical issues
Organizations deal with a broad range of moral conundrums. Here are a few instances of ethical issues that HR may have to deal with:
- Discrimination occurs when an individual or group of individuals receives unfair or unequal treatment because of factors such as age, sex, race, or religion.
- Hazardous work environment: Different people and organizations have different ideas about what constitutes a toxic workplace. In general, a toxic workplace is one in which bullying, hostility, and/or hostility are ingrained in the company’s fundamental values.
- Compensation: Probably the most recognized example of compensation is the gender pay disparity, which refers to the reality that women are frequently paid less than men while providing the same or even more value.
- Recruiting and selecting candidates: Bias might also be difficult to address in this situation. Unconscious prejudice, ageism, and sexism still influence employment decisions despite efforts made by businesses to prevent bias from entering their hiring procedures and people’s best interests being overlooked.
- Performance evaluations: Many (bad) things can be said about the customary yearly performance review. The fact that input is frequently limited to the employee’s line manager is a significant disadvantage of the “old” method of performing performance management. Because of this, removing prejudice and personal preference from the process is next to impossible. Agile performance management is being adopted by forward-thinking companies to assess workers from various angles and foster their development.
- Confidentiality and privacy: This is a broad and highly relevant subject, so let’s concentrate on employee listening to better explain this. An increasing number of businesses are creating and putting into practice employee listening strategies. With the help of this tactic, HR is better able to understand the desires, worries, and priorities of its employees, allowing the company to take appropriate action based on that knowledge. Thus, the organization is able to fulfill its mission and accomplish its objectives. However, there is a fine line between “big brother watching” and employee listening, and a business might exploit this information against its staff.
What Human Resources can do to promote organizational ethics
As we’ve covered, business ethics permeate every HR objective, including hiring and selection as well as performance reviews, pay, DEIB, and other areas.
What part, therefore, can People Teams play in fostering an ethical workplace culture for workers?
- Establish a moral culture
Since your organization’s ethics are a reflection of its standards, beliefs, and principles, they should be an essential component of your corporate culture.
It’s not as difficult as it may seem to establish an ethical culture. It is only a setting where individuals often think about the consequences of their choices and are united by a shared goal. Doing the right thing for the organization, their coworkers, their clients, and the towns and cities in which they operate is a constant goal for leadership and employees.
Walmart is an excellent illustration of a business that has made ethics a fundamental part of its corporate culture.
Walmart highlights its four core values using visuals as well:
- Honor each customer’s unique needs
- Respect the person
- Pursue excellence
- Behave honestly
Businesses should make an effort to incorporate ethics into every facet of their operations, and HR is a key component in fostering an inclusive workplace culture and encouraging this ethical culture.
Some tips
Here’s how HR can help create an ethical work culture:
Evaluate and measure the ethical culture’s current state. Identify the material elements that influence ethical culture and create new methods for precisely gauging the cultural health of your company.
Link culture measures to operational results. To show how culture affects business outcomes, teams from across the organization must work together. To gain insight into the crucial elements of culture, it is helpful to correlate culture metrics with outcome measures like Net Promoter Scores or customer satisfaction.
Establish an inclusive culture that gives everyone a chance to succeed. The People Team is now in charge of promoting equality and inclusion as well as monitoring employees’ feelings of inclusion throughout the entire company.
Equip all staff members to think ethically while making decisions — People Teams can assess instructional materials proactively, especially in ethics and compliance modules.
Establish a speaking-up culture: Leaders need to show that they are dedicated to fostering an atmosphere that is free from barriers to communication. They should always encourage staff members to raise issues or ask inquiries. This means that for People Teams, staff members should be encouraged to talk with their leaders rather than about them.
- Establish a code of behavior
If the previous phase is successful, a code of conduct is not required. When making decisions, your staff members already take ethics into account and don’t hesitate to voice their concerns.
To be honest, though, that could only be true in a perfect world.
Your company will gain from developing a code of conduct, and HR can help with the creation of a code of ethics. This is frequently done in conjunction with the ethics department in major corporations. Each organization will have a different code of conduct. Uber’s code of ethics spans 33 pages and includes a framework to assist its employees in making ethical decisions. In contrast, Walmart’s code of ethics was rather brief.
Some tips
When it comes to actually establishing a code of ethics, there are a few things to remember:
- Give readability first priority
- Include backing from the leadership
- Present data in an engaging manner
- Provide options for accessibility
Naturally, the process doesn’t finish with the creation of the code. Educating new hires about the company’s code of ethics is one of HR’s most important responsibilities, especially during the onboarding process.
- Create a team of moral leaders
The People Function is the engine that propels the creation of an ethical workplace; yet, in order to push implementation throughout the firm, they will still require the backing and endorsement of leadership.
Positively, as corporate executives become more aware of the value of creating an ethical workplace, HR may also witness a rise in interest and support.
In a survey of 750 worldwide business executives, 97% said they felt it was their personal duty to make sure their organization was acting morally. Simultaneously, according to 96% of business executives, doing the right thing entails abiding by the rules and regulations as well as the values and ideals of their organization.
Some tips
Think about helping leaders and managers with the following tasks:
- Questions for an ethical interview
- Teaching supervisors about worst-case situations
- Developing a strategy with leaders to put ethical behavior into practice and serve as an example
- Integrate ethics into all HR procedures and systems
Businesses should make an effort to integrate ethics into every aspect of the company, including the HR systems and procedures. HR should establish the benchmark for ethical company practices and apply them to all procedures, such as:
- Pay
- Recruitment
- Retention
- Engagement of Employees
- DEIB
Because this is unique to each company’s distinct culture, how this will actually work will differ. In the Walmart case study, trust was crucial to the organization.
In the end, you want the members of your organization to make choices that align with the ethics of your business. Are they consistently asking themselves, “Is this decision or conduct in line with our organization’s values?”
- Make sure moral conduct permeates the entire company
Assess whether moral behavior is spreading throughout the company by measuring and monitoring it. Since ethics needs to saturate your organization’s culture, assessing your culture is the most effective approach for evaluating morality.
Some tips
Here are some techniques to think about:
- Survey employees
- Use third-party instruments for measuring culture (and ethics).
- Set up focus groups
- Perform questionnaires upon departure
- Make use of the Organizational Culture Assessment Instrument
Analyze the information to see whether ethics are ingrained in your company culture or if further steps are required.
To sum up
The creation and use of a set of norms that will serve as the foundation for all choices, actions, procedures, and systems is heavily influenced by HR professionals. More significantly, though, People Teams play a key role in fostering organizational ethics for the company and its staff.
