Business ethics in HR management

Ethical issues :-

This article throws light on the seven major issues faced by human resources i.e.

1) Employment Issues  2) Cash and incentives plans  3) Employee discrimination 

4) Performance Appraisal  5) privacy  6) Safety and health  7) Restructuring and layoffs

1. Employment Issues:

HR professionals are likely to face maximum ethical dilemmas in the areas of hiring of employees.

a. Pressure to hire a friend or relative of a highly placed executive.

b. Faked credentials submitted by a job applicant.

c. Discovery that an employee who has been with the organisation for some time, is skilled and has established a successful record, had lied about his educational credentials.

2. Cash and Incentive Plans:

Cash and incentive plans include issues like basic salaries, annual increments or incentives, executive perquisites and long term incentive plans:

Basic Salaries: HR managers have to justify a higher level of basic salaries or higher level of percentage increase than the competitors to retain some employees. In some situations, where the increase is larger than normal they have to elevate some positions to higher grades. Annual increment/incentive Plans. This situation is particularly true in case of top management executives. The fear of losing some outstanding executives, the HR managers is forced to give higher incentives to them than what the individuals actually deserve.

3. Employees Discrimination's:

A framework of laws and regulations has been evolved to avoid the practices of treatment of employees on the basis of their caste, sex, religion, disability, age etc. No organisation can openly practice any discriminatory policies, with regard to selection, training, development, appraisal etc. A demanding ethical challenge arises when there is pressure on the HR manager to protect the firm or an individual at the expense of someone belonging to the group which is being discriminated against.

4. Performance Appraisal:

Ethics should be the basis of performance evaluation. Highly ethical performance appraisal demands that there should be an honest assessment of the performance and steps should be taken to improve the effectiveness of employees. However, HR managers, sometimes, face the dilemma of assigning higher rates to employees who are not deserving them; based on some unrelated factors eg. closeness to the top management. Some employees are, however, given low rates, despite their excellent performance on the basis of factor like caste, religion or not being loyal to the appraiser.

5. Privacy:

The private life of an employee which is not affecting his professional life should be free from intrusive and unwarranted actions.

(i) The first dilemma relates to information technology. A firm’s need for information particularly about employees while on job may be at odds with the employee’s privacy. Close circuit cameras, tapping the phones, reading the computer files of employees etc. breach the privacy of employees.

(ii) The second ethical dilemma relates to the AIDS testing. AIDS has become a public health problem. HR managers are faced with two issues: Whether all the new employees should be subject to AIDS test and what treatment should be melted out to an employee who is affected with the disease. It is however generally understood that since AIDS cannot be contracted by casual and normal workplace contract, employees with this illness should not be discriminated against and they should be allowed to perform jobs for which they are qualified.

(iii) The third ethical dilemma relates to Whistle Blowing. Whistle blowing refers to a public disclosure by former or current employees of any illegal, immoral or illegitimate practices involving their employers. Generally, employees are not expected to speak against their employers, because their first loyalty in towards the organisation for which they work. However, if the situation is such that some act of the organisation can cause considerable harm to the society, it may become obligatory to blow the Whistle. The HR manager is in the dilemma how to solve this issue between the opponents and defenders of whistle blowing.

6. Safety and Health:

Industrial work is often hazardous to the safety and health of the employees. Legislations have been created making it mandatory on the organisations and managers to compensate the victims of occupational hazards. Ethical dilemmas of HR managers arise when the justice is denied to the victims by the organisation.

7. Restructuring and layoffs:  

Restructuring of the organisations often result in layoffs and retrenchments. This is not unethical, if it is conducted in an atmosphere of fairness and equity and with the interests of the affected employees in mind. If the restructuring company requires closing of the plant, the process by which the plant is chosen, how the news is to be communicated and the time frame for completing the layoffs is ethically important. 

Unethical issues:-

Listed below, according to the study, are the five most frequently observed unethical behaviours in the workplace.

1. Misusing company time

Whether it is covering for someone who shows up late or altering a time sheet, misusing company time tops the list. This category includes knowing that one of your co-workers is conducting personal business on company time. By "personal business" the survey recognises the difference between making cold calls to advance your freelance business and calling your spouse to find out how your sick child is doing.

2. Abusive behaviour

Too many workplaces are filled with managers and supervisors who use their position and power to mistreat or disrespect others. Unfortunately, unless the situation you're in involves race, gender or ethnic origin, there is often no legal protection against abusive behaviour in the workplace.

3. Employee theft

one out of every 40 employees in 2012 was caught stealing from their employer. Even more startling is that these employees steal on average 5.5 times more than shoplifters ($715 vs $129). Employee fraud is also on the uptick, whether its check tampering, not recording sales in order to skim, or manipulating expense reimbursements. Ethical alert: The FBI recently reported that employee theft is the fasting growing crime in the U.S. today.

Business Ethics in Marketing

Ethical issues in Marketing :-

Ethical issues in marketing arise from the conflicts and lack of agreement on particular issues. Parties involved in marketing transactions have a set of expectations about how the business relationships will take shape and how various transactions need to be conducted. Each marketing concept has its own ethical issues, which we will discuss in this chapter.

Emerging Ethical Problems in Market Research

Market research has experienced a resurgence with the widespread use of the Internet and the popularity of social networking. It is easier than ever before for companies to connect directly with customers and collect individual information that goes into a computer database to be matched with other pieces of data collected during unrelated transactions.

The way a company conducts its market research these days can have serious ethical repercussions, affecting the lives of consumers in ways that have yet to be fully understood. Further, companies can be faced with a public backlash if their market research practices are perceived as unethical.

Grouping the Market Audience

Unethical practices in marketing can result in grouping the audience into various segments. Selective marketing may be used to discourage the demand arising from these so-called undesirable market segments or to disenfranchise them totally.

Examples of unethical market exclusion may include the industry attitudes towards the gay, ethnic minority, and plus-size groups.

Delivery Channels

Direct marketing is one of the most controversial methods of advertising channels, especially when the approaches included are unsolicited.

Some common examples include TV and Telephonic commercials and the direct mail. Electronic spam and telemarketing also push the limits of ethical standards and legality in a strong manner.

Anti-Competitive Practices

There are various methods that are anti-competitive. For example, bait and switch is a type of fraud where customers are "baited" through the advertisements for some products or services that have a low price; however, the customers find in reality that the advertised good is unavailable and they are "switched" towards a product that is costlier and was not intended in the advertisements.

Another type of anti-competitive policy is planned obsolescence. It is a method of designing a particular product having a limited useful life. It will become non-functional or out of fashion after a certain period and thereby lets the consumer to purchase another product again

Pricing Ethics

There are various forms of unethical business practices related to pricing the products and services.

Bid rigging is a type of fraud in which a commercial contract is promised to one party, however, for the sake of appearance several other parties also present a bid.

Predatory pricing is the practice of sale of a product or service at a negligible price, intending to throw competitors out of the market, or to create barriers to entry.

Unethical issues in Marketing :-

some of the five most unethical marketing practices that are commonly employed. Is your company guilty of any of these?

1. Misleading advertising.

Misleading ads are more than just unethical—they’re illegal. The Federal Trade Commission (FTC) regulates “truth in advertising,” mandating that businesses make accurate statements in their advertising campaigns and, when possible, back their claims with scientific evidence. However, it’s common for advertisers to exaggerate certain features and downplay others in order to make their products look as attractive as possible, so the line becomes somewhat blurry. The ethical line here is when your claims start to be unprovable; for example, tobacco cigarettes were originally advertised as “healthy.” A more recent example is Nutella, a sugary hazelnut spread that was pitched as part of a nutritious breakfast for children—the company was sued, ultimately reimbursing up to $20 to anyone who bought Nutella products for this reason.

2. Black-hat link building.

Media exposure is almost always a good thing for businesses, and earning inbound links to your company website is the single best way to boost your organic search rankings. There are ethical ways to build links and increase mentions of your brand; the most common is to use guest posting opportunities to write high-quality content for your target audience that cites one of your brand’s pieces of original research. However, using black-hat link building techniques, such as by spamming people’s comment sections, forum threads, or even going as far as hacking websites to put a self-serving link somewhere in them screams of a lack of ethics.

3. Contacting people without consent.

Have you ever thought about buying a list of email addresses so you can bulk up your company’s subscriber list? You’re not the first one. Many businesses have used this tactic to contact people who they otherwise wouldn’t have known. Remember our friends at the FTC? They also enforce a law called the CAN-SPAM act, and under it, you’re legally allowed to email people without their consent—but for one time only. Even that single contact can start irritating people, making your uninvited communication do more harm than good for your brand image, so don’t push the limits here. You’re better off building your contact lists organically.

5. Emotional exploitation.

One of the most effective ways to advertise a business is to call to people’s emotions. Making them laugh or evoking a sense of nostalgia helps consumers forge a small bond with your brand. However, when you intentionally evoke rage or sadness in a tasteless way, you could be seen as exploiting emotions, rather than sympathizing with them. Rather than a single example here, I’m going to reference a chain of advertisements that attempted to exploit the 9-11 terrorist attacks as a way to earn customer sympathy. These ads often seem well-intentioned, showing respect for surviving family members, firefighters, and New Yorkers, but the fact that these messages are being used to hock products are what make them offensive and unethical.

Busines ethics in Finance

Ethical issues in finance:-

Financial managers prepare reports, oversee accounting functions, plan investment strategies and direct cash management functions. They also are involved in branch management functions at banks and other financial institutions. They are required to uphold the highest ethical standards because internal and external stakeholders depend on transparent, timely and complete financial documents to make decisions.

Accuracy

A company’s financial manager ensures that all financial publications accurately and fairly reflect the financial condition of the company. Accounting errors and financial fraud, such as what was seen in the cases of Enron and World Com, damage the interests of shareholders, employees and affect confidence in the financial system. Some organisations document ethics guidelines specifically for financial managers. For example, the ethics code of the United States Postal Service requires senior financial managers to maintain accurate records and books, maintain internal controls and prepare financial documents in accordance with generally accepted accounting principles.

Transparency

Financial documents reflect a company's performance relative to its peers, and its internal strengths and weaknesses. Regulatory agencies require publicly traded companies to submit periodic financial statements and make full disclosures of material information. A change in the senior executive ranks, buyout offers, loss or win of a major contract and new product launches are examples of material information. Transparency also means explaining financial information clearly, especially for those who aren't familiar with the company’s operations. Financial managers should not hide, obscure or otherwise render relevant financial information impossible for ordinary shareholders to understand.

Unethical Practices in Finance:-

The unethical practices in accounting are more in proprietary, partnership and private limited companies. It is at lower levels in public limited companies and MNCs.

Some of the unethical practices in financing and accounting are as under:

i. Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.

ii. Delays in paying wages, interest to financiers, incentive, bonus to employees.

iii. Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.

iv. Not prompt in statutory payments of ESI, PF, Sales Tax and Excise Duties.

v. Cheating employees of their dues towards medical expenses, leave travel assistance, children education fees etc.,

vi. Opening of current accounts in different banks to avoid adjustments against loans by earlier banker.

vii. Creating bogus bills of purchase to show higher costs and hence losses to avoid bonus payment to employees.

viii. Collecting loans from private financiers at higher rate of interest to help kith and kin and to get kick-backs.

ix. Quick release of payments to known or adjustment parties and delaying payment to others.

x. Taking private finance only from those who are ready to do personal favours to the finance department head.