Why the Path to Good Ethics Starts in Human Resources

Hiring, training, evaluating, and retaining the right people are all undeniably core management challenges for any human resources department, but they also constitute a huge chunk of any company's ethical fiber.

HR may not always get the glory that the finance department does, for example, but it’s just as important. The relevant difference between finance and HR is that finance gains prestige by bringing to bear the tools of quantitative analysis; HR issues are typically harder to quantify and harder to mathematize. Managers who find HR difficult would rather hide in the numbers. Ironically, HR gets a "soft" reputation precisely because it is so hard to evaluate.

HR gains ethical significance by embodying the tools that shape the ever-elusive buzz-phrase "corporate culture." Culture -- the communal set of understandings, beliefs and traditions that give a shared sense of "how we do things around here" -- is widely acknowledged as a critical element of organizational success.

Indeed, there’s a well-worn saying that culture trumps strategy every time. That is, regardless of what strategic policies are put in place or written down, the initiatives are liable to fail if the culture of the workplace isn’t suited to them. Enron, for example, famously had a rather lengthy code of ethics, but the culture fostered by the company’s compensation model and its performance review process meant unethical behavior was readily tolerated. Culture, you might say, makes up an organization’s collective ethical character.

At many companies, the HR department is in charge of company ethics: tasked with making sure every employee gets a copy of the company code of ethics, leading ethics training, updating the company’s conflict-of-interest policy and overseeing other ethically-salient policies.

However, ethics must be part of every policy and activity for which HR is responsible, not just the ones that have the word "ethics" explicitly attached to them.

Hiring, for instance, involves balancing a range of value-laden criteria (like skill, experience and reliability) and avoiding ethically-inappropriate criteria (race, gender, and sexual orientation, for example). The same goes for performance evaluation. Likewise, how overtime is handled – who is eligible, under what conditions, with whose permission – is a fundamental question of justice. This is also true of policies related to discipline, which obviously require attention to fairness, another central sub-topic within ethics.

So we see that HR is actually ethically significant in two ways: it is the locus of an enormous number of central, ethically-relevant policies, practices, and decisions; and it is the mechanism through which organizational culture is built.

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