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PART FIVE

EMPLOYEE RELATIONS

C H A P T E R

F o u r t e e n

Ethics, Justice and Fair Treatment in HR Management

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In Brief: This chapter explores issues, policies, and problems related to ethics, fair treatment, discipline and termination of employees. These issues have become more critical in todays environment. Interesting Issues: With the recent events at Enron, WorldCom and other scandals, ethics has become a major issue in todays world. It is worth discussing what has changed to make this an issue. Is there more unethical behavior or have standards changed, or is it simply that todays media and communications shed more light on the problems?

Lecture Outline
Strategic Overview Ethics and Fair Treatment at Work The Meaning of Ethics Ethics and the Law Ethics, Fair Treatment, and Justice What Shapes Ethics Behavior at Work? Individual Factors Organizational Factors The Bosss Influence Ethics Policies and Codes The Organizations Culture The Role of HR Management in Fostering Ethics and Fair Treatment Why Treat Employees Fairly? HR Ethics Activities Building Two-Way Communications Employee Discipline and Privacy Formal Disciplinary Appeals Processes Discipline Without Punishment Employee Privacy Managing Dismissals Grounds for Dismissal Avoiding Wrongful Discharge Suits Personal Supervisory Liability The Termination Interview Layoffs and the Plant Closing Law Adjusting to Downsizings and Mergers

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ANNOTATED OUTLINE

I.

Ethics and Fair Treatment at Work A. The Meaning of Ethics Ethics refers to the principles of conduct governing an individual or a group. Ethical decisions also involve morality, which is societys accepted standards of behavior. It would simplify things if it was always clear which decisions were ethical and which were not. Unfortunately, it is not. B. Ethics and the Law The law is not the best guide about what is ethical, because something may be legal but not right, and something may be right but not legal. Dont lie, dont cheat, dont steal. We were all raised with essentially the same values. Ethics means making decisions that represent what you stand for, not just what is legal. C. Ethics, Fair Treatment, and Justice Experts generally define organizational justice in terms of its three componentsdistributive justice, procedural justice, and interpersonal or interactive justice. Distributive justice refers to the fairness and justice of the decisions result. Procedural justice refers to the fairness of the process. Interactional or interpersonal justice refers to the manner in which managers conduct their interpersonal dealings with employees, and in particular to the degree to which they treat employees with dignity as opposed to abuse or disrespect. The New Workplace: Employment Contracts In Europe, most countries require employers to give detailed information to new employees about their employment contract. Most of these include such things as grievance procedures.

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Educational Materials to Use

II.

What Shapes Ethics Behavior at Work? A. Individual Factors Because people bring to their jobs their own ideas of what is morally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes. B. Organizational Factors The scary thing about unethical behavior at work is that its usually not driven by personal interests. Being under the gun to meet scheduling pressures was the number-one factor in causing ethical lapses. Most ethical lapses occurred because employees felt pressured to do what they thought was best to help their companies. C. The Bosss Influence The boss sets the tone, and by his or her actions sends signals about what is right or wrong. According to one report, for instance, the level of misconduct at work dropped dramatically when employees said their supervisors exhibited ethical behavior.

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D. Ethics Policies and Codes An ethics policy and code is one signal that the firm is serious about ethics. Sometimes ethics codes work, and sometimes they dont. E. The Organizations Culture 1. What is Organizational Culture? Organizational culture is the characteristic values, traditions, and behaviors a companys employees share. A value is a basic belief about what is right or wrong, or about what you should or shouldnt do. To an outside observer, a companys culture reveals itself in several ways. You can see it in employees patterns of behavior, such as ceremonial events and written and spoken commands. You can also see it in the physical manifestations of a companys behavior, such as written rules, office layout, organizational structure, and dress codes. 2. The Managers Role When it comes to creating a corporate culture, effective managers do not leave it to chance. Things that help are: Clarify Expectations, Use Signs and Symbols. Symbolism, Provide Physical Support, Use Stories, Organize Rites and Ceremonies NOTES Educational Materials to Use

III.

The Role of HR Management in Fostering Ethics and Fair Treatment A. Why Treat Employees Fairly? There are some practical reasons for taking care that you treat the firms employees with the fairness and justice that all employees deserve. An increasingly litigious workforce is one reason. Perceptions of fairness relate to enhanced employee commitment; to enhanced satisfaction with the organization, with jobs, and with leaders; and to organizational citizenship behaviors. B. HR Ethics Activities 1. Staffing and Selection Screening out undesirables can actually start before the applicant even applies, if the HR department creates recruitment materials containing explicit references to the companys emphasis on integrity and ethics. The selection process also sends signals about what the companys values and culture really are, in terms of ethical and fair treatment. 2. Training Ethics training typically plays a big role in helping employers nurture a culture of ethics and fair play. Such training usually includes showing employees how to recognize ethical dilemmas, how to use ethical frameworks to resolve problems, and how to use HR functions in ethical ways. 3. Performance Appraisal The firms performance appraisal processes provide another opportunity to emphasize its commitment to ethics and fairness. First, the appraisal can actually measure employees adherence to high ethical standards.

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4. Reward and Disciplinary Systems ensure that the firm rewards ethical behavior and penalizes unethical behavior 5. Workplace Aggression and Violence workplace aggression and violence are increasingly serious problems. Many HR actions, including layoffs, being passed over for promotion, terminations, and discipline can prompt perceptions of unfair treatment that translate into dysfunctional behavior. 6. Other HR Activities Employers ethics committees will often include HR professionals. Improving Productivity Through HRIS: Complying with SarbanesOxley Among other things, the act requires that the CEO and the CFO of publicly traded companies personally attest to the accuracy of their companies financial statements, and also to the fact that its internal controls are adequate. With their personal credibility on the line, the new law has focused top managements attention on ensuring that all the firms employees take ethics very seriously. The problem is, training and following up programs like this can be very expensive. All of one companys employees have easy access to a standardized ethics training program through their PCs, and they can easily track who has taken the training and who has not. C. Building Two-Way Communications The opportunity for two-way communication plays an important role in our perceptions of how fairly were being treated. When Youre on Your Own, HR for Line Managers and Entrepreneurs: Small Business Ethics studies suggest that small and midsize enterprises are prone to the same unethical corporate behavior as big firms. There are several steps a small business owner can take to establish a workable, simple ethics program. First, size up your companys current ethics-related activities as they stand now. Second, create a code of conduct, and make it clear to all employees that you take it seriously. Third, train your people. Fourth, make it easier to solicit feedback from your employees. NOTES Educational Materials to Use

IV.

Employee Discipline and Privacy The purpose of discipline is to encourage employees to behave sensibly at work. In an organization, rules and regulations serve about the same purpose that laws do in society; discipline is called for when one of these rules or regulations is violated. A fair and just discipline process is based on three pillars: clear rules and regulations, a system of progressive penalties, and an appeals process. When Youre on Your Own, HR For Line Managers and Entrepreneurs: Disciplining and Employee Even if youre a

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manager in a Fortune 500 company, you may find yourself without company guidelines when youre thinking of disciplining or discharging an employee for violating company rules. Thirteen guidelines are given to assist the manager who must implement disciplinary action. The New Workplace: Comparing Males and Females in a Discipline Situation A study is cited in which female employees were disciplined much more harshly for the same violations than were male employees. The gender of the boss made no difference in the differential treatment. A. Formal Disciplinary Appeals Processes even companies without unions may have a very formalized appeals process. B. Discipline Without Punishment aims to avoid disciplinary problems. It does this by gaining employees acceptance of the rules and by reducing the punitive nature of the discipline itself. C. Employee Privacy The four main types of employee privacy violations upheld by courts are intrusion, publication of private matters, disclosure of medical records, and appropriation of an employees name or likeness for commercial purposes. Background checks, monitoring off-duty conduct and lifestyle, drug testing, workplace searches, and monitoring of workplace activities trigger most privacy violations. NOTES Educational Materials to Use

V.

Managing Dismissals Dismissal is the most drastic disciplinary step the manager can take. Because of this, special care is required to ensure that sufficient cause exists for it. A. Grounds for Dismissal 1. Unsatisfactory performance 2. Misconduct 3. Lack of qualifications for the job 4. Changed requirements (or elimination) of the job Know Your Employment Law: Gross Misconduct There are instances in which the employees conduct is so outrageous that it qualifies as gross misconduct. A list of factors extracted from court decisions on gross or willful misconduct by employees in other contexts will aid the employer in writing its policy on gross misconduct

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B. Avoiding Wrongful Discharge Suites Wrongful discharge occurs when an employees dismissal does not comply with the law or with the contractual arrangement. Avoiding wrongful discharge suits requires a two-pronged approach. First, set up employment policies and dispute resolution procedures that make employees feel they are treated fairly. Second, do the preparatory work Paying particular attention to the employee handbook that will help avoid such suits. C. Personal Supervisory Liability Courts sometimes hold managers personally liable for their supervisory actions. Managers should be fully familiar with applicable federal, state, and local statutes and know how to uphold their requirements. D. The Termination Interview Guidelines include: 1) Plan the interview carefully, 2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of the severance package, 6) Identify the next step. 1. Outplacement Counseling is a systematic process by which someone youve terminated is trained and counseled in the techniques of conducting a self-appraisal and securing a new job appropriate to his or her needs and talents. 2. Exit Interview Many employers conduct exit interviews with employees who are leaving the firm. They aim to elicit information about the job or related matters that might give the employer a better insight into what is rightor wrongabout the company. E. Layoffs and the Plant Closing Law 1. The Plan Closing Law requires employers of 100 or more employees to give 60 days notice before closing a facility or starting a layoff of 50 people or more. It simply gives employees time to seek other work or retraining by giving them advance notice of the shutdown. 2. Bumping/Layoff Procedures Employers who encounter frequent business slowdowns and layoffs may have procedures that let employees use their seniority to remain on the job. 3. Alternatives to Layoffs Given the investments they have in recruiting, screening, and training employees, many employers are hesitant to lay off people at the first sign of business decline. There are several alternatives. F. Adjusting to Downsizings and Mergers Firms often use downsizingreducing, usually dramatically, the number of people the firm employsto better their financial position. Yet many firms discover operating earnings dont rise after major cuts. Low morale among those remaining may be part of the problem. Regardless of why youre downsizing, think through the process, both to avoid unnecessary consequences and to ensure the process is fair. Some guidelines for implementing a reduction in force are provided. The HR Scorecard Strategy and Results : The Hotel Pariss New Ethics, Justice, and Fair Treatment Process: Having fair and just procedures in place effected employee morale and behavior, and

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thus company performance. supervision. Procedural justice and satisfaction with supervision were both related to improved employee commitment. And employee commitment was related to intention to remain with the hotel, and therefore to reducing employee turnover. Procedural and interpersonal justice led to improved employee satisfaction with supervision and commitment, and thus, to improved employee discretionary behaviors, and ultimately to higher guest service satisfaction.

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Educational Materials to Use

DISCUSSION QUESTIONS 1. Explain how you would ensure fairness in disciplining, discussing particularly the prerequisites to disciplining, disciplining guidelines, and the discipline without punishment approach. There are many things that can be helpful: Make sure the evidence supports the charge of employee wrongdoing. Ensure that the employees due process rights are protected. Warn the employee of the disciplinary consequences. The rule that was allegedly violated should be reasonably related to the efficient and safe operation of the particular work environment. Fairly and adequately investigate the matter before administering discipline. The investigation should produce substantial evidence of misconduct. Rules, orders, or penalties should be applied evenhandedly. The penalty should be reasonably related to the misconduct and to the employees past work history. Maintain the employees right to counsel. Dont rob a subordinate of his or her dignity. Remember that the burden of proof is on you. Get the facts. Dont base a decision on hearsay or on your general impression. Dont act while angry. Create a formalized appeals process. Make sure all rules and policies are communicated and clearly explained in advance. 2. Why is it important in our highly litigious society to manage dismissals properly? If you do not follow the law, and your own policies and procedures, you are likely to have the courts rule against you. This can be very costly and damaging to employee morale and your reputation. 3. What techniques would you use as alternatives to traditional discipline? What do such alternatives have to do with organizational justice? Why do you think alternatives like these are important, given industrys need today for highly committed employees? If you are going to attract and retain top quality employees, it is critical to have a strong sense of organizational justice. Disciplinary techniques and methods can be related to the legal techniques and methods in our society at large. If they work well, people believe justice is served. If the do not work well, people feel there is injustice. DESSLER COMPANION WEB SITE
We invite you to visit the Dessler homepage (http://www.prenhall.com/dessler) on the Prentice Hall Web site for the best online business support available. This site provides professors with a customized course Web site, including new communication tools, one-click navigation of chapter content, and great resources, such as Internet Resources, an HRCI Exam Prep Guide, assessment exercises, and more.

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INDIVIDUAL AND GROUP ACTIVITIES 1. Working individually or in groups, interview managers or administrators at your employer or college in order to determine the extent to which the employer or college endeavors to build two-way communication, and the specific types of programs used. Do the managers think they are effective? What do the employees (or faculty members) think of the programs in use at the employer or college? Encourage students to be precise and inquisitive in their pursuit of this information. 2. Working individually or in groups, obtain copies of the student handbook for your college and determine to what extent there is a formal process through which students can air grievances. Based on your contacts with other students, has it been an effective grievance process? Why or why not? Ask what effect this has on the sense of organizational justice. 3. Working individually or in groups, determine the nature of the academic discipline process in your college. Do you think it is effective? Based on what you read in this chapter, would you recommend any modifications? Encourage students to be inquisitive and insightful as they examine this critical and real issue. 4. The HRCI Test Specifications appendix at the end of this book lists the knowledge someone studying for the HRCI certification exam needs to have in each area of human resource management (such as in Strategic Management, Workforce Planning, and Human Resource Development). In groups of four to five students, do four things: (1) review that appendix now; (2) identify the material in this chapter that relates to the required knowledge the appendix lists; (3) write four multiple choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your teams questions in front of the class, so the students in other teams can take each others exam questions. Material from this chapter that applies to the HRCI exam would include: the meaning of ethics, ethics and the law, ethics fair treatment and justice, what shapes ethics behavior at work, ethics policies and codes, the organizations culture, HR ethics activities, building two-way communications, formal disciplinary appeals processes, discipline without punishment, employee privacy, grounds for dismissal, avoiding wrongful discharge suits, personal supervisory liability, the termination interview, layoffs and the plant closing law, adjusting to downsizings and mergers. 5. In a recent research study at Ohio State University, a professor found that even honest people, left to their own devices, will steal from their employers. In this study, the researchers gave financial services workers the opportunity to steal a small amount of money after participating in an after-work project for which the pay was inadequate. Would the employees steal to make up for the underpayment? In most cases, yes. Employees who scored low on an honesty test stole whether or not their office had an ethics program that said stealing from the company was illegal. Employees who scored high on the honesty test also stole, but only if their office did not have such an employee ethics programthe honest people didnt steel if there was an ethics policy. In groups of four or five students, answer these questions: Do you think findings like these can be generalized? In other words, would they apply across the board to employees in other types of companies and situations? If your answer is yes, what do you think this implies about the need for and wisdom of having an ethics program? You should receive a wide variety of responses to this question. It is a real question of whether the employees who score high on honesty tests will, in fact, respond differently based on the existence of an ethics policy.

EXPERIENTIAL EXERCISES & CASES

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Experiential Exercise: Discipline or Not? The purpose of this exercise is to provide the student with some experience in analyzing and handling an actual disciplinary action. Students have the opportunity to look at a disciplinary action that went to arbitration and see if they come up with the same decision that the arbitrator did. Application Case: Fire My Best Salesperson? 1. What should you do now? The salesperson should be fired. 2. Why should you do it? Because his actions represent gross misconduct. 3. How would you do it? Guidelines in the textbook for a termination interview include: 1) Plan the interview carefully, 2) Get to the point, 3) Describe the situation, 4) Listen, 5) Review all elements of the severance package, 6) Identify the next step. Continuing Case: Carter Cleaning Company Guaranteeing Fair Treatment

1. What you do if you were Jennifer, and why? The difficulty is that even though they have always felt strongly about not allowing employees to smoke, eat, or drink in their stores, they had apparently never established any policies about this. Given this, it seems appropriate to give them a strong verbal warning, including the explanation that future violations will result in more severe disciplinary action. 2. Should a disciplinary system be established at Carters Cleaning Centers? Definitely. 3. If so, what should it cover, and how would you suggest it deal with a situation such as the one with the errant counter people? It should cover all behavior and performance that is expected of employees. It would identify the steps of the process, including verbal warnings, written warnings, and dismissal. 4. How would you deal with the store manager? The real question is whether the store manager knew about their beliefs about eating in the store. If he or she did, then a written warning is in store, if not, then a strong verbal warning similar to the employees.

KEY TERMS
ethics The principles of conduct governing an individual or a group; specifically, the standards you use to decide what your conduct should be. The fairness and justice of a decisions results. The fairness of the process. The manner in which managers conduct their interpersonal dealings with employees. The characteristic values, traditions, and behaviors a companys employees share. Discipline without punishment.

distributive justice procedural justice interactional justice organizational culture nonpunitive discipline

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discipline without punishment

A disciplinary process in which employees who violate policies are given oral reminders, then a written reminder, then a one-day decision-making leave, then dismissal.

1. List three specific steps Hotel Paris should take with respect to each individual human resource function (selection, training, and so on) to improve the level of ethics in the company.

Answers will vary. However, some possible steps would be to incorporate honesty testing in selection, to train employees using ethics cases, and to discipline immediately and severely for ethics breaches on the part of any employee. (LO 14.3; AACSB: Analytic Skills; Learning Outcome: Describe the role of human resource management in promoting ethics and fairness)

2. Based on what you read in this chapter, create in outline form a strategy map showing how the Hotels HR function can foster employee ethics.

A. Highlight the importance of ethics and fair treatment within the new employee orientation. B. Provide additional training to all supervisory staff on employment legislation and the importance of building and maintaining a culture of fair treatment and equity. C. Develop and implement a policy that stresses the importance of all staff being treated in a fair and equitable manner. The policy should also outline why ethics in the workplace is important. D. Implement a program where claims of discrimination or unethical treatment can be reviewed and addressed. Appeals to the final decision should rest with senior leadership. E. Periodic staff meetings should be conducted where the topic of ethics and fair treatment are addressed and staff has the option to ask questions and/or discuss concerns. (LO 14.1-3; AACSB: Analytic Skills; Learning Outcome: Describe the role of human resource management in promoting ethics and fairness)

3. Based on what you learned in this chapter, write a short (less than one page) explanation Lisa can use to sell to top management the need to improve the hotel chains fairness and justice processes.

Senior leadership should be educated that claims of unfair treatment can be both expensive and expansive. Litigation to defend a claim can be costly and result in an unpopular reflection of the organization in the media. Also, recent cases have included personal liability on the part of senior management. Senior management can have the most significant impact on creating and maintaining a culture of fair treatment. (LO 14.4; AACSB: Reflective Thinking Skills; Learning Outcome: Describe the role of human resource management in promoting ethics and fairness)

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