Global business ethics lesson 06

53
Ethics at Work Place

UNIT 1

UNIT III


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Global Business Ethics


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Ethics at Work Place

LESSON

6
ETHICS AT WORK PLACE
CONTENTS
6.0

Aims and Objectives

6.1

Introduction

6.2

Individual in the Organisation

6.3

Ethics in Human Resource Management (HRM)

6.4

6.3.1

Privacy Issues

6.3.2

Value of Privacy

6.3.3

Privacy in Socialization

6.3.4

Privacy is of such Sufficient Value that it Ought to be Protected

Parenting and Socialization
6.4.1

Education

6.4.2

Religion

6.4.3

Secondary Influences

6.5

Psychological Expectancy Model

6.6

Personal Characteristics

6.7

Ethical Implications of Variation in HRM Practices

6.8

Let us Sum up

6.9

Lesson End Activity

6.10

Keywords

6.11

Questions for Discussion

6.12

Suggested Readings

6.0 AIMS AND OBJECTIVES
After studying this lesson, you should be able to understand:
z

The ethics at workplace

z

The ethics in Human Resource Management

z

The parenting and socialisation

z

The psychological expectancy model

z

The ethical implications of variation in HRM practices

6.1 INTRODUCTION
Rules of business vary from place to place and appropriate preparation on the political
economical and social fronts can enable a company to enjoy a relatively easier entry


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into new markets. A business entities strengthen can be estimated by its ability to
sustain competitive pressures, build a strong base and adopt its systems to the changes
in the external environment. The current trend at the work place shows that the
employees are mobile in the true sense and they look for flexible work environment,
where work with fun is an accepted mode of life.

6.2 INDIVIDUAL IN THE ORGANISATION
The ethics survey conducted at work placed in UK recently revealed the following:
z

Mathew Weait in one of his articles mentioned that two out of three employees
say they lie to their boss at some time or another. Many managers say they know
this and they accept it. Unethical behaviour from pilfering pens and surfing the net
while at work to outright fraud - remains endemic even in the British work place.
It runs from the board room to the shop floor.

z

Most managers have a fundamentally ethical approach to business, a majority is
aware of dishonest conduct in the work place but accept it as inevitable. They
simply cost it into operations and don't blow the whistle on offenders.

z

More than two in three (including six out often board directors) say that everyone
lies to the boss on occasion, and less that half consider the people at the top of
their organisations to be strong ethical role models.

z

Nearly one in ten board directors say it is acceptable to massage their profit
figures as long as no money is stolen.

z

The most ethical person is likely to be a male director who is over 40 and has a
financial role in the public sector.

z

The least ethical person is likely to be a female manager, under 40, who
sales or marketing role in a service industry company.

z

35% of men said that once they knew about a fraud they reported it. For women
the figure was only 25%

z

Why would you not blow the whistle?

has a

Alienate myself from my

Men

Women

Colleagues

21%

26%

None of my business

49%

40%

Jeopardise my job

13%

18%

Everybody's doing it

30%

42%

5%

5%

It is fair game
Source: www.managementtoday.com

Some people had other reasons. Similar but competitive labour markets insure the
workers against unknown hazards (with suitable health insurance programmes).
Collect information on the health hazards that accompany a given job and make all
such information available to workers.


6.3 ETHICS IN HUMAN RESOURCE
MANAGEMENT (HRM)
6.3.1 Privacy Issues
The dictionary meaning of privacy is freedom from intrusion or public attention.
Though privacy is a relatively recent concept – public concern is clearly increasing,
primarily in response to privacy invading technologies. The problems facing
employees, consumers and internet uses are similar, so also the solutions. There is
greater agreement found in the ends than on the means. Even the ends are in dispute.
Americans always feel that they value privacy. Yet, they give up a great deal for
convenience and material gain. The technologies that threaten privacy have brought us
many benefits. Finding the right means, is a great challenge to business firms which
must meet employee and consumer expectations as they utilise new technologies.
More than many business ethics problems, protecting privacy require a coordinated
solution involving many parties. A solution is to be found. The focus of businesses
will remain on developing and implementing private policies.

6.3.2 Value of Privacy
We value privacy as so high and it ought to be protected as a right. We desire to have
a sphere of our life in which others do not possess certain information about us. The
arguments developed by philosophers and legal theorists fall into two categories:
z

Utilitarian argument that appeal to consequences.

z

Kantian argument that link privacy to being a person or having respect for
persons.

The utilitarians say that great harm is done to individuals when inaccurate or
incomplete information collected by an employer is used on the basis for making
important personnel decisions.
Definition
Definition of privacy is elusive. The difficulty is due to diverse nature of the many
different situations in which- claims of a right of privacy are made.
Warren and Brandeis hold that privacy is the right to be let alone. The aim of privacy
laws, they thought, should be to protect 'The privacy of private life' from unwanted
possibility arid their proposals all deal with reacts on the publication of information
about the private lives of individuals.
Brandeis said later on that the right of privacy is 'the right to be let alone the most
comprehensive of rights and the right most valued by civilized men. Justice Williams
J. Brennan expressed the view regarding the birth control case, is that: If the right to
privacy means anything, it is the right of the individual, married, or single, to be free
from unwarranted government invasion into matters so fundamentally affecting a
person as the decision whether to bear or beget a child.

Many critics say that the phrase 'to be let alone' is broad. Individuals have a right 'to
be let alone' in matters of religions and politics. Workers have no right to be free of
supervision. Legal restrictions on religious practices, such as snake handling or on
political activities (making of political contributions) do not involve violations of
privacy.
Alan F. Westin has defined privacy as 'It is the claim of Individuals to determine for
themselves when, how, and to what extent information about them is communicated
to others.' Here it is expressed in terms of control over information about ourselves.
This definition is too broad and too narrow.

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Richard B. Parker observes that not every loss or gain of control over information
about ourselves is a gain or loss of privacy.
W.A. Parent defines privacy as 'the condition of not having undocumented personal
knowledge about one possessed by others.' This definition of privacy holds that a
person is in a state of privacy when certain facts about that person are not known by
others. As per W.A. Parent 'personal knowledge' means that it does not mean all
information about ourselves but only those facts which most individuals in a given
society at any given time do not want widely known. Definition is to be restricted to
undocumented personal information, because some facts that individuals commonly
seek to conceal are a matter of public record and can be known without prying into
their private lives.
There is no loss of privacy when an easily observable fact like persons curly
moustache is known to others, even though the person is sometimes sensitive about it

and prefers that others not comment on it.
The harm from such practices is more likely to occur and to be repeated when
employees are unable to examine their files and challenge the information. A
drawback is that it rests on an unproved assumption that could turn out to be false.
The argument considers only the possible harmful consequences of privacy invasions.
Some people argue that privacy is of value because of the role it plays in developing
and maintaining a healthy sense of personal identity.
Two Kantain themes:
z

Autonomy

z

Respect for persons

Stanley Benn notes that utilitarian arguments for a right of privacy are not able to
show what is morally wrong when a person is secretly observed without any actual
harm being done. But respect of persons will sustain an objection even to secret
watching which may do no actual harm at all. Invading a person’s privacy violates the
principle of respect for persons and prevents a person from making a rational choice
as an autonomous being.
Hyman Gross argues that what is morally objectionable about being observed
unawares through a hidden camera or having personnel information in a data bank is
that a person loses control over how he or she appears to others.
Jeffrey H. Reiman objects that it is too strong to assert that all instances of watching a
person unawares result undeceiving a person and depriving that person of a free
choice.

6.3.3 Privacy in Socialization

Many philosophers suggest that the key to a more satisfactory theory of privacy can
be constructed by understanding the way in which individuals are socialized in our
culture. Privacy is an essential part of the complex social practice by means of which
the social group recognizes-and communications to the individual that his existence is
his own. To be a person, an individual must recognize not just his actual capacity to
shape his destiny by his choices. He must also recognize that he has an exclusive
moral right to shape his destiny.
Both utilitarian and Kantian arguments point to a key insight; privacy is important in
some way to dignity and well being.


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Ethics at Work Place

Information Issues
Access (That
employees
have)

Kind (that is
collected)

Means (used to
gain)

Use (to which it is
put)

Steps (taken to ensure
the completeness &

accuracy)

Disclosure (to
persons outside
the company)

The persons
(within a company
who have access)

Source: business Ethics, C.S.V. Murthy

Figure 6.1: Information Issues

6.3.4 Privacy is of such Sufficient Value that it Ought to be Protected
The task of justifying a right of privacy consists not only in demonstrating the value of
privacy but also in determining which intrusions into our private lives is justified and
which are not? Consider the issues that must be addressed in developing the case for a
right of privacy in employee records and in formulating a company privacy protection
plan for these records.
The notion of a justifying purpose plays a critical role in determining the exact scope
of the right of privacy in employment.
Is there any way in which the notion of a justifying purpose can be clarified so that
disagreements can be resolved? One possibility is to specify the conditions necessary
for a business to conduct normal operations.
Primary and secondary influences on values and behaviours constitute the third
element in the model.

Source: Business Ethics, C.S.V. Murthy

Figure 6.2: A Model of Culture and Ethical Behaviour among Managers


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Check Your Progress 1
What do you understand by privacy in socialization?
……………………………………………………………………………………
……………………………………………………………………………………

6.4 PARENTING AND SOCIALIZATION
In India, children are looked after by their parents till they could independently
manage themselves in life. In Japan, children are strapped on to the bodies of their
mothers and sleep with them until the age of 6 or 7, which strengthens the sense of
dependency. Such parenting practices are consistent with the emphasis on harmony.
On the contrary, American children are slowly encouraged to explore the world about
them as early in life as possible. This strengthens either a group-oriented style of
ethical decision making as in the case of Japan or individualistic style as in the case of
USA.

6.4.1 Education
It is another important primary influence on values and behaviors. Tutoring of 4 year
old is quite common. Children are separated into different types of schools at the end
of fourth or fifth grade in Germany. Similar things are found in other European
countries after 8th grade. Rich people can afford to hire tutors to help their children
pass the rigorous tests required for admission to good schools that lead to a good
degree from the university and a prosperous life. USA punishes more of its managers
for unethical acts as compared to all the other developed countries combined. The
reason can be partly attributed to the more open educational system that exists.

6.4.2 Religion
Some of the major religions, particularly Catholicism and Confucianism tends to have
an anti business bias, thereby making major business activity in and off itself immoral
and unethical. According to them, a price should be 'just' to cover only the costs of
labour and materials. Their approach was anti-ethical to charging interest, which is a
major foundation stone of modern economic life. Two religious theories, the
Confucian ethic and the Protestant ethic are related to radically different managerial
and ethical behaviors. Even Islam is against charging the interest.

6.4.3 Secondary Influences
The secondary influences on values and behaviors that are not as direct as the primary
influences include the laws, organizational cultures and human resources management
systems; they still exert a powerful influence.

6.5 PSYCHOLOGICAL EXPECTANCY MODEL
It is necessary to understand the usefulness of the psychological expectancy model for
examining the critical variables in all choice situations, including ethical decision
making. In this model, choices are asserted to be the result of the individual
expectations about achieving a goal or outcome and the degree of desirability
associated with it, considering all of its consequences and their meaning for the
individual decision maker. The consequences are a function of individual factors and
environmental factors. Management controls and surveillance procedures might make
an action impossible and therefore, in that situation, the action would be avoided. If
the action is possible because of some opportunity and the individual has the


capability of doing it, the next calculation is whether the pluses and minuses of an
unethical act may include the possibility of making money, the individual shame etc.

Whether
management
control or
surveillance
exist

Employee
tends to be
unethical
Based on Individual
or Environmental
Factors

Yes
Action Avoided

No
Employee
calculates

1. Possibility of making
money
2. How much?
3. Social Reward

1.

+

Is’t

Worth?

No

2.
3.

Individual shame
experienced by doing
soothing unethical
Punishment given by
one’s peers
Probability of getting
caught and paying a
penalty

Yes
Proceed

Source: Business Ethics, C.S.V. Murthy

Figure 6.3: Psychological Expectancy Model

From this expectancy model that a particular reaction to an ethical situation in which
an individual finds himself will be affected by:
z

A wide variety of individual

z

A wide variety of group

z

A wide variety of work environment

z

A wide variety of societal factors

The above includes personality, values, needs, beliefs, laws, HRM practices,
organization culture, professional group standards, and social cultural expectations.
There are various HRM policies in the areas of recruitment, training, performance
evaluation and reward systems that exert a powerful influence on ethical practices.
Example: Sears, Roebuck and Correctly, changed its policy of paying its employees in
auto services on a commission basis, because some of them deliberately charged
customers for services that were never rendered.
IBM had a no-lay off policy until recently and it supposedly led to a more
conservative approach to decision making and by extension, what was acceptable or
ethical behaviour. Many large Japanese organisations guarantee life time employment
to a core set of managers and employees, and although this has led to an increase in
feelings of company loyalty. It has also been accompanied by conservative decision
making and the treating of some employees performing approximately the same jobs
in radically different ways. Salary of an employee who has been granted life term
employment may be twice to that of his short term counter part.

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HRM systems are part of the management function of organizing. They include all
those practices used in creating the human organization such as:
z

Hiring and training of employees.

z

Influencing employee behaviors through the organizations performance appraisal
and compensation programmers.

z

Establishing rules about job behaviour through disciplinary and collective
bargaining systems.

Many of these systems also have the function of retaining such employees, after they
are hired, because such employees represent an organisations human capital and
frequently its distinctive competence needed to carry out its corporate and business
strategies. The human resource system of a company constitutes an essential part of
the organisations control system. The organization has a set of targeted behaviour that
it needs and desires; through selection, training and behaviour - influencing programs,
it attempts to ensure that they occur. The HRM practices can affect ethical behaviour
in a number of ways. They not only communicate a society's and an organization’s
beliefs and values but also may provide direct incentives and pressures to override
personal values.

In terms of representing societal values, there is employment law of the nation first,
which in large measure may reflect aspects of that nation’s culture. All nations
regulate the employment condition for their citizens. These regulations may be laws
and even such things as tax code regulations. Employment laws may not only reflect
cultural factors but also simplify the state of maturity of an economy. As a nation
matures and prospers, more rights and privileges are given to employees in that
society; other groups (consumers and environmentalists) may also gain increased
power. The scenario provides some support for a developmental theory of ethics,
which holds that as a society starts to solve some of its most fundamental problems of
insecurity and scarcity, increased concerns with justice and equity emerge.
HRM practices mirror various other normative pressures in a society as what is
appropriate or inappropriate.
Example
Institutional theory tells us that existing practices in other organisations in a society
have to be considered while planning and managing on HRM program because these
become the norm in the minds of employees with respect to what should be.
Institutional pressures or forces may reflect national culture as well. HRM practices of
a nation like Taiwan or Korea can be significantly different from US because of
cultural differences; so also Japan's with USA's.
The business strategies of the firm and its distinctive situation are also important in
structuring HRM systems used for managers or Executive Human Resource
Management (EHRM) systems. This helps in determining the nature of HRM systems
that help managers in carrying out their roles.
There is a clear distinction drawn between manager’s employees and managers in the
area of HRM systems and practices in all or most countries. In terms of legal
requirements of HRM systems also, they differ.
HRM Practices tightly controlled by central government for a number of years - there
has been a loosening of such control now. In the past, workers in China were assigned
to companies by the government irrespective of the company's needs. Government
decides on the rate of pay (by comparing description of jobs to national sets of wage

grades). Managers have to negotiate all decisions with trade union representatives and
also with office of internal security (the ruling communist party in the company).


Many Chinese companies are overstaffed. Expensive for them in providing extensive
training plus housing plus health and medical care plus other benefits. Retired at
60 years of age. Superiors sit with subordinates periodically, discuss their
performance weaknesses.
Recently experiments with profit based company bonus systems are carried out. Vast
economic changes occurring and HRM systems are changing privately owned firms,
joint ventures and cooperatives are becoming increasingly important.
These newer types of firms use non-traditional type of HRM systems.

6.6 PERSONAL CHARACTERISTICS
z

Personal ethical standards or values with respect to that particular action.

z

Risk taking propensities.

z

Importance of or need for money.

z

Or the rewards in the situation.

z

Need for social acceptance.

Note: Varies from individual to individual. Varies on an average or model basis from
one culture to another.
Check your Progress 2
Fill in the blanks:
1.

__________ is freedom from intrusion or public attention.

2.

Weight given by the individual will depend on __________.

3.

__________ system of a company also affects how managers behave
towards their employees.

6.7 ETHICAL IMPLICATIONS OF VARIATION IN HRM
PRACTICES
These are due to:
z

The type of people, the organization hires, Carelessness of hiring who trust is
worthy: dishonest people very ambitious, achievement oriented, wealth oriented.
They may achieve high level performance but also a greater incidence of unethical
behaviour. Content of training is important.

z

What behaviors do the performance appraisal and compensation systems
encourage?
Example: Results at all costs, irrespective of the means used to achieve them?
Extremely high compensation levels sometimes provide a very strong enticement
to achieve results by unethical means.

z

Punishments (lack of promotions, layoffs) might also create conditions under
which people behave unethically.

z

Is the performance of employees are actually discussed by supervisors? Little
monitoring of behaviour - greater tending for ethical problems to occur.

z

Collective bargaining or employee governance system of a company also affects
how managers behave towards their employees. If the organization views its
employees or their unions as enemies, there is higher likelihood of non-trust and
mistreatment. Employees do judge their HRM system as ethical or unethical.
These assessments are made on the basis of degree to which such HRM system
correspond to culturally determined norms of procedural justice.

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6.8 LET US SUM UP
HRM systems vary from country to country. HRM systems for managers are different
from those for ordinary level of worker. HRM practices in plant locations in other
countries cannot be the same as such practices create problems and strain relations
with the local population both within such overseas subsidiaries and outside them. The
utilitarian say that great harm is done to individuals when inaccurate or incomplete
information collected by an employer is used on the basis for making important
personnel decisions.

6.9 LESSON END ACTIVITY
Define ethical approach towards business and role of individuals in organization.

6.10 KEYWORDS
Privacy: Freedom from intrusion or public attention.
Parenting: Rearing of kids.
Socialisation: Social nurturing of children.

6.11 QUESTIONS FOR DISCUSSION
1. Define ethics at work place.
2. “The individual will be weighed on the personal characteristics” Comment on this
statement.
3. Elucidate ethics in HR with examples.
4. Describe the ethical implications of business.

Check Your Progress: Model Answers

CYP 1
Many philosophers suggest that the key to a more satisfactory theory of
privacy can be constructed by understanding the way in which individuals are
socialized in our culture. Privacy is an essential part of the complex social
practice by means of which the social group recognizes-and communications
to the individual that his existence is his own. To be a person, an individual
must recognize not just his actual capacity to shape his destiny by his choices.
He must also recognize that he has an exclusive moral right to shape his
destiny.
CYP 2
1. Privacy
2. Personal characteristics
3. Employee governance

6.12 SUGGESTED READINGS
Manuel G. Velasquez, Business Ethics.
Laura P. Hart Man, Business Ethics.
John R. Boat Right, Ethics in Conduct of Business.
William A. Wines, Ethics Law and Business.