Ethical issues in the management of human resources

Editorial

Ethical issues in the management of human resources

This introduction provides an overview of the articles appearing in this special issue. We

attempt to synthesize the issues raised and addressed into a general framework, by

summarizing authors' arguments about causes and consequences of ethical issues in the

management of human resources.

The management of human resources (HR) in organizations raises many complex ethical

issues. For example, the low unemployment rate in many markets in the US has led many

employers to provide additional employee benefits at considerable cost; Marriott International

offers 24 h on-call social workers to help with personal problems, and Mirage Hotels pays a

substantial portion of day care costs (Grimsley, 1997). But to what extent do employers have

an ethical obligation to support employees in balancing work and life demands? Where labor

markets are flush with qualified workers, is this obligation lessened, since prospective and

current employees may be more willing to forego personal time in order to keep a job?

As another example, what is the best approach to the design of training programs intended

to enhance the ethical decision-making and behavior of employees (Cropanzano & Byrne,

2001; O'Leary-Kelly & Bowes-Sperry, 2001)? Can and should training focus on fostering the

enhancement of moral reasoning? Or do some employees change behavior only when they

understand the legal or other adverse consequences of not doing so? Organizations spend

billions of dollars on training, with varying success (e.g., Morrow, Jarrett, & Rupinski, 1997);

thus the consequences of training program design have implications not only for enhancing

the ethical behavior of organizations and their members, but also for profitability and

organizational effectiveness.

Resolution of these questions creates unique problems and opportunities for organizations.

For example, the organization's process of downsizing in order to become more productive

may reduce organizational commitment among survivors, thereby further reducing organiza-

tional productivity (Buckley et al., 2001). Paradoxically, the management of HR has in this

case reduced performance, not enhanced it.

Thus, improving the identification of and resolution of ethical issues can benefit

organizations, their HR managers, and line managers who engage in HR activities such as

recruitment, selection, coaching, training, performance appraisal, and merit pay increases.

This process can be informed by a review of existing research pertinent to these ethical issues

and the further development of theory to guide future research. The contributors to this

volume have thus identified some difficult ethical issues and proposed means for addressing

these issues. Thus, the purpose of this essay is to provide an overview and synthesis of the

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Human Resource Management Review

11 (2001) 1±9

contributions to this volume. We propose a general framework by which ethical considera-

tions in HR practices and outcomes can be identified.

The papers in this volume address a wide variety of issues. Readers may see some conflicts

among authors' perspectives and approaches, which illustrates the complexity of the ethical

problems raised in HR. For example, some authors propose that selecting people who adhere

to firms' or cultures' ethical values may reduce sexual harassment or other wrongful behavior

(O'Leary-Kelly & Bowes-Sperry, 2001), but from other authors' perspectives, selection based

on values may also reduce desired cultural diversity (Buckley et al., 2001). As another

example, some authors call for greater consideration of procedures and in some cases more

consistency (Buckley et al., 2001), while others suggest that in many organizations, this has

gone too far (Cropanzano & Byrne, 2001). We will leave it to readers to form their own

conclusions Ð but also to note where conflicts still exist because of an empirical void,

requiring future research to resolve important issues. Our contributors summarized some of

what is known about ethical practice, but they intended also to provoke more thought and

stimulate more research to help resolve issues. Thus, it is our hope that this essay and the

other papers in this volume will stimulate both further research and more ethical HR practices

in organizations.

1. Why ethical problems arise in HR management

Ethical questions arise in every type of traditional HR management activity. In some cases,

these involve questions of what constitutes wrongdoing, why it occurs, and appropriate

responses to it. In other cases, these may involve questions of choosing between two or more

courses of action that each can be considered right in some ways (Badaracco, 1997).

We focus on unethical behavior, which encompasses behavior deviant from societal

standards, rather than exclusively upon behavior that is seen as deviant from the perspective

of others in the organization within which one is operating (Miceli & Near, 1997). Deviant

behavior by societal standards has been widely studied by sociologists since the 1950s

(Merton, 1957). In contrast, workplace or employee deviance is `̀ voluntary behavior that

violates significant organizational norms and in so doing threatens the well-being of an

organization, its members or both'' (Robinson & Bennett, 1995, p. 556). Robinson and

Bennett distinguished (workplace) deviant behavior from (un)ethical behavior, because in the

latter the employee relies on societal rather than organizational standards to define wrong-

doing (Robinson & Bennett, 1995). Therefore, insofar as societal and organization norms

may conflict, unethical behavior is not always deviant from the organization's perspective.

For example, Robinson and Bennett (1995, pp. 556±557) noted that `̀ dumping toxic waste in

a river is not deviant if it conforms with the policies of one's organization. However, most

people would probably agree that this act is unethical. Conversely, reporting this dumping to

authorities may be an ethical act, but it would also be a deviant act in this particular example

if it violated organizational norms.''

Researchers on unethical behavior (as defined by societal standards) have suggested three

classic reasons why wrongdoing occurs: (a) the norms for what behavior constitutes

wrongdoing are unclear, (b) an opportunity arises for the perpetrator to commit wrongdoing,

Editorial / Human Resource Management Review 11 (2001) 1±92

(c) pressures, whether real or perceived, force the perpetrator to engage in wrongdoing.

Studies of corporate wrongdoing, for example, have concluded that all three variables may

explain corporate wrongdoing (Baucus & Baucus, 1997; Baucus & Near, 1991). In addition,

personal or social±psychological variables (e.g., likelihood to sexually harass, Pryor, Lavite,

& Stroller, 1993; moral judgment development, Rest, 1979) play important roles with respect

to certain actions (Miceli & Near, 1992).

Likewise, in studies of organizational wrongdoing that arises in the context of HRM, we

see evidence of unclear norms, opportunity for wrongdoing and pressure for wrongdoing

(Miceli & Near, 1992). Authors in this issue have considered possibilities of wrongdoing in

selection (Buckley et al., 2001; Weaver & TrevinÄo, 2001); and compensation and reward

systems (Buckley et al., 2001; Wells & Schminke, 2001). They have also investigated

downsizing decisions (Buckley et al., 2001); training and development (Weaver & TrevinÄo,

2001; Wells & Schminke, 2001); and the day-to-day work routines and interactions among

people within the organization (Cropanzano & Byrne, 2001).

Although these activities are treated separately in these articles to enable focus and depth,

ideally, all HR activities should be viewed as part of a system (Gerhart, Trevor, & Graham,

1996). For example, as shown in prior research (e.g., Rynes & Rosen, 1995), training and

development will have temporary effects if not accompanied and supported by `̀ ongoing

modeling, support, and reinforcement'' (Wells & Schminke, 2001, p. 147).

In all of these HR activities, the possibility of unethical actions increases when the

manager or employee is not sure what stance is an ethical one (because normative standards

are unclear), when he or she has a clear opportunity to engage in unethical actions, and when

she or he experiences pressure to behave unethically. For example, an HR manager might not

be sure whether a particular selection tool constitutes a fair and appropriate test. Or HR

managers might see the selection process as an opportunity to select employees who hold

values similar to their own but contrary to values of the organization, standards of ethical

conduct, or the law. Finally, their CEOs may force them to use unethical selection methods or

suffer sanctions.

These possibilities are depicted graphically in Fig. 1, along with a broad classification of

articles appearing in this issue (identified by authors' names). Several of the articles cut across

several categories in this figure, but to simplify the classification, we attempted to judge the

primary focus of the article in terms of our classification and to place it in only one cell.

Further, Fig. 1 deals only with organizational causes of ethical behavior. As noted earlier and

by a number of the authors in their articles (O'Leary-Kelly & Bowes-Sperry, 2001), personal

variables and person-by-situation interactions are also hypothesized (and in some prior

research, shown) to be important. Such individual differences are particularly important in the

selection function, obviously.

These articles describe opportunities for wrongdoing and/or pressures to commit wrong-

doing that seem to be endemic to organizations. Further, the authors describe the consequences

of ambiguous situations or norms against wrongdoing. For example, `̀ individuals who do not

recognize their decision or situation as involving a moral issue are less likely to engage ethics

schemata and to behave in ethical ways'' (O'Leary-Kelly & Bowes-Sperry, 2001, p. 76).

In short, the norms must be known before unethical actions can be recognized. In `̀ role

episodes'' where role conflict, role ambiguity, and role multiplicity create confusion for HR

Editorial / Human Resource Management Review 11 (2001) 1±9 3

professionals, the standards for ethical action may be ambiguous (Wooten, this issue).

Further, although policies may have been implemented to increase efficiency or promote

fairness (e.g., in treating similar situations consistently), for many reasons they can be

overdeveloped to the point of undermining these intentions (Cropanzano & Byrne, 2001).

Ironically, policies meant to protect the employee may have the unintended consequence of

providing the opportunity for wrongdoing or pressure to engage in wrongdoing.

In another article, these issues are placed in a cross-cultural and international context

(Grossman & Schoenfeldt, 2001), particularly for multinational organizations. Drawing from

the work of Hofstede (1980, 1991) and Hofstede and Bond (1988), the authors develop the

notion of `̀ ethical distance'' between the parent organization's ethical values and those of the

host nation. They propose that ethical distance interacts with the extent to which international

HR management activities are ethnocentric, polycentric, or regiocentric to influence the

organization's performance and other variables.

We begin by addressing some general definitional and taxonomic issues. More specific

issues are addressed by each article.

2. The consequences of ethical problems in HR management

All of the articles here examine the consequence of ethical problems in HR management,

in some form. Where such ethical issues arise, their consequences are diverse. Among those

negative consequences noted by authors in this issue are individual-level (employee)

responses, group or team effects, and organizational-level effects.

Fig. 1. A classification of articles appearing in this special issue.


2.1. Individual effects

Employees may react negatively to ethical problems through their attitudes and

behaviors. Some attitudinal reactions include increased disillusionment (Buckley et al.,

2001), reduced organizational commitment (Buckley et al., 2001), and poor acceptance of

ethical standards (Weaver & TrevinÄo, 2001). Behavioral responses could include workplace

violence (Buckley et al., 2001), external whistle-blowing rather than use of internal channels

to report wrongdoing (Weaver & TrevinÄo, 2001), low levels of Organization Citizenship

Behaviors (OCBs) (Weaver & TrevinÄo, 2001), a dysfunctionally high number of grievances

(Cropanzano & Byrne, 2001), increased propensity to unionize (Cropanzano & Byrne,

2001), underutilization of targets of harassment (O'Leary-Kelly & Bowes-Sperry, 2001),

and poor use of time on the job, leading to lower overall productivity (Cropanzano &

Byrne, 2001).

2.2. Group effects

Negative consequences of unethical actions can be seen when group members sacrifice the

good of the group to protect the rights of one individual (Cropanzano & Byrne, 2001). An

example of this situation might be where one group member engages in unethical behavior

(e.g., reporting inflated work expenses) and other members collude to hide the unethical

behavior from authorities, because of loyalty to the group (Miceli & Near, 1992).

2.3. Organization effects

Effects at the organization level tend to be more amorphous and difficult to specify (or

quantify). For example, if the organization selects only members with similar ethical views,

decreased cultural diversity may result (Buckley et al., 2001). If managers engage in

behavior perceived to be unethical, lower trust among employees may result (Cropanzano

& Byrne, 2001). The organization may ignore its accountability to society at large (Buckley

et al., 2001), be viewed as unacceptable by society at large (Grossman & Schoenfedlt,

2001), experience decreased firm valuation (Buckley et al., 2001), or lowered firm success

(defined as effectiveness or profitability) which may reduce long-term organizational

survival (Cropanzano & Byrne, 2001; Grossman & Schoenfeldt, 2001). All of these

consequences tend to be interrelated and often one ethical lapse can cause several of them

to occur simultaneously.

3. Recommendations for future research and practice

Authors in this issue have offered interesting propositions for future empirical testing.

Since the propositions for research are and should remain specific to the topics, we won't

attempt to integrate them here. However, there are some common themes across the

suggestions for practitioners.


Ideally, `̀ best practices,'' or recommended solutions, should be derived from research and

analyses of problems, rather than from a polling of organizational leaders concerning their

perceptions of their practices. The fact that organizations, even market leaders, may engage in

certain practices more often than others, is useful information. For example, it suggests that at

least one approach to a problem is feasible in some organizations, and provides an excellent

starting point to identify ethical practices that could be implemented in one's own organiza-

tion. From another perspective, it offers a hypothesis to be tested. But by no means does

widespread use of a practice indicate that it is ethical, efficient, or likely to enhance profits.

For example, many readers of this special issue will recall when sex-segregated help-wanted

advertising was very common.

As an alternative strategy, propositions about ethics can be derived from theory. Many of

the contributors to this volume have provided evidence that theory can be helpful in

identifying ethical practices that may also have positive economic outcomes for organiza-

tions and/or their members. Empirical research can then confirm or suggest ways of

modifying the proposed `̀ best practices.'' For example, theory and empirical research

suggest that unethical behavior such as sexual harassment may arise from `̀ emotion-based

motives (e.g., a desire to release negative emotion) and cognition-based motives (e.g., a

desire to obtain some valued outcome)'' (O'Leary-Kelly & Bowes-Sperry, 2001). If so, then

solutions that deal only with cognition-based motives will be highly effective in some

instances, but fall short in other instances.

The contributors to this volume have suggested many possible solutions intended to reflect

both the complexity of the issues examined and the current state of empirical research. They

have focused recommendations on enhancing ethical HR practice through the selection of

ethical employees, training to develop ethical behavior, and the development of control

policies that encourage ethical behavior.

3.1. Selection of ethical employees

Organizations may create an ethical workforce by recruiting and selecting individuals who

have dispositions or work histories that suggest they are less likely to engage in workplace

wrongdoing because of their ability to recognize ethical dilemmas, such as a low likelihood to

sexually harass (O'Leary-Kelly & Bowes-Sperry, 2001), who cite the works of Pryor (1987)

and Pryor et al. (1993). Unfortunately, selection criteria for identifying such individuals seem

to be murky.

3.2. Training to develop ethical behavior

Three types of training were identified: training to recognize ethical dilemmas, training to

know how to use ethical frameworks to resolve problems, and training to implement HR

functions in an ethical way. Training to recognize ethical dilemmas would ideally enhance

employees' and managers' abilities to diagnose or recognize problem, that is, situations and

decisions that involve moral issues which will lead to their behaving more ethically (O'Leary-

Kelly & Bowes-Sperry, 2001). Such training might focus on explaining the organization's

codes of ethics (Wooten, 2001) and providing clearer definitions of wrongdoing (O'Leary-


Kelly & Bowes-Sperry, 2001, pp. 88±89). It should emphasize ethical perspectives rather

than mere legal compliance to encourage people to reason at their highest possible levels of

moral development (O'Leary-Kelly & Bowes-Sperry, 2001, pp. 88±89; Wells & Schminke,

2001). One way to approach this sort of training would be to help employees understand the

consequences of their potential wrongful behavior for others, through taking the other's

perspective or what sociologists would term `̀ assuming the role of the other,'' a solution

implied by O'Leary-Kelly and Bowes-Sperry (2001).

Training could also be used to enhance employees' and managers' knowledge of and

ability to use or apply ethical frameworks in resolving problems. For example, managers can

be trained in how to apply the organization's codes of ethics (Wooten, 2001) to resolve

problems that have actually occurred or are likely to occur in that organization. Managers can

be taught to understand the philosophy behind the procedures so that they can use them

properly rather than engaging in blind adherence (Cropanzano & Byrne, 2001). Managers

might be taught how to use universal moral principles, rather than relativistic standards that

provide little guidance (Schumann, 2001).

Finally, managers should be trained to communicate and reward the application of ethical

standards in implementing the traditional functions of HR. First, they should learn to use

`̀ real'' ethical standards, not bogus standards (Buckley et al., 2001). For example, in the case

of multinationals, the probability of `̀ ethical breaches'' can be reduced by managers' taking

into account the ethical values of the host culture. Consider the fact that, in collectivist

cultures, pay systems that reward individual outcomes will be viewed as less ethical than

those that reward group outcomes (Grossman & Schoenfeldt, 2001). Thus, HR managers who

attempt to impose individually based pay systems are unlikely to be successful in their

implementation. Second, through their implementation of the traditional HR functions,

managers should learn to promote fairness (Weaver & TrevinÄo, 2001). For example,

managers should effectively implement employee involvement, evaluating and revising

policies in some cases or simplifying them to encourage the assumption of greater personal

responsibility by employees (Cropanzano & Byrne, 2001).

3.3. Maintaining ethical behavior through control policies

Policies aimed at either encouraging wrongdoing or discouraging wrongdoing may be

reflected in the overall culture of the organization (Buckley et al., 2001), or in the culture of

the larger society of which it is part of (Grossman & Schoenfeldt, 2001). Formal policies can

also act directly to encourage or discourage wrongdoing, but they may hinder organizational

functioning if they are overdeveloped (Cropanzano & Byrne, 2001). Policies have these

effects regardless of their content: whether they are directed to performance appraisal,

compensation and reward systems, or downsizing, they can create role conflict or ambiguity

in individuals that is experienced as pressure to commit wrongdoing, or conversely, pressure

to avoid wrongdoing (Wooten, 2001). In the absence of policies sanctioning wrongdoing,

however, greater opportunity for committing wrongdoing may be presented to employees.

Thus, policies may be used to control employee behavior and reduce wrongdoing or they may

be used to control employee behavior and increase wrongdoing.


4. Conclusions

The articles published in this issue suggest an overarching theme: The manifestations of

possible organizational wrongdoing are diverse but resolution of ethical conflicts can be

advanced through additional research. Despite the differences among the authors' approaches,

we believe that we may draw three overall conclusions.

First, unethical behavior in organizations is more likely when employees have the

opportunity to engage in such behavior, when they feel forced to do so, or when they are

not sure what the normative standards are that define unethical behavior. The articles collected

here make these factors abundantly clear, as they discuss different forms of unethical behavior,

and assess potential causes.

Second, the consequences of unethical behavior are hugely negative, apart from their actual

dollar costs to organizations. In other words, there are the quantifiable costs that may be

assessed (e.g., of lawsuits from complainants about the wrongdoing), and there are non-

quantifiable costs that are much more difficult to assess. For example, in whistle-blowing cases,

organizations may experience the costs of legal battles with whistle-blowers or the costs of

remedying the product defects or workplace hazard that were the source of the complaint. A

cost, which is often underestimated, is the reduced job satisfaction among employees who

observe wrongdoing, regardless of whether they report it to anyone else (Micele & Near, 1992).

Third, further research is needed to understand the causes and consequences of unethical

behavior in organizations in a much more systematic way. Most of the authors published here

borrowed theory from related disciplines to describe unethical behavior. Empirical study of

ethical behavior is needed before refined theory development can be attempted. Thus, we

concur with the many authors here who noted that more empirical research is needed before

we can fully understand the causes and consequences of unethical behavior in the workplace,

particularly in the management of the HR of the organization.

Acknowledgments

We would like to thank all authors who submitted manuscripts for review to this special

issue; we appreciate the work of Brad Alge and John Sample in reviewing manuscripts. We

thank the editors of Human Resource Management Review for their assistance and support.

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Marcia P. Miceli

The McDonough School of Business

Georgetown University

Washington, DC 20057, USA

Tel.: +1-202-687-7811; fax: +1-202-687-4031

E-mail address: [email protected]

Janet P. Near

Indiana University

Bloomington, IN, USA


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Ethical issues in the management of human resources