Wednesday, October 28, 2009

Ethics – An Inherent Element of an Effective HR Program

Over my 34 year HR career, I have witnessed a deterioration of ethics in the general public’s behavior and in business practices. WorldCom, Enron, Tyco, Adelphia, Global Crossing, Bernard L. Madoff Investment Securities, etc., are recent reminders of how far some executive management teams and their “friendly” Boards are willing to go to achieve personal and business objectives that are not in the long-term interest of the organization. Consequently, it should come as no surprise that many HR professionals have fallen victim to this trend.

An effective HR function serves as the steward of organizational culture. As HR professionals we should provide a touchstone for our organizations and nurture a high ethical and compliant culture. Ethics and an effective HR program are inseparable. Inherent in any effective HR Program is a foundation of trust, credibility, objectivity and impartiality. Without these elements, HR is often labeled as an extension of management and viewed by employees as a biased arbiter who causes employees to avoid raising issues within the company or to seek resolution outside of the company.

According to the National Business Ethics Survey [1] the longest study of ethics and compliance in the workplace, just 55% of employees who observed misconduct at work in 2005, reported it. This is a 10% decrease since 2003!

Other key findings of this national survey were:

* Formal ethics and compliance programs are on the rise, but positive outcomes expected of those programs are not
* Ethics and compliance programs do have an impact, but organizational culture is more influential in determining outcomes

Throughout my career, as HR professionals we have generally worked to gain credibility and respect as a leveraging business function and equal “player” to the other “C” Level positions in our organizations. We have seen our efforts rewarded as more and more of us earned a “seat at the table.” Unfortunately, for many of us, that seat became more akin to a massage chair that seduced us into complicity and slowly undermined our integrity and reputation, which hampered our ability to effectively act as our organizations’ culture and ethical stewards, and internal arbiters. Over the years, our function has evolved from a “necessary expense,” to a valuable internal business partner; to what I now see all too often as a co-conspirator or passive observer. Our greatest triumph of earning that seat at the table has, in many cases, beguiled us with the well paying jobs, corner offices, stock options and grants, and all of the other trappings and perquisites available to other valued colleagues. These perks are now often viewed by many HR professionals as rewards far too valuable to risk by “bucking the system.” So, at best, we “work around the edges” in a more passive attempt to remain true to our former selves; or at worst, we become complicit in supporting or initiating the unethical behavior often observed in our organizations.

Before one begins to believe that I am anti-capitalism, management or HR, let me set the record straight. I love this profession and have practiced it for over 30 years. I am more an optimist than a pessimist, and believe people are basically good and hard-working. I remember and see the fantastic possibilities that accrue when our business and HR functions operate in the long-term interest of the organization, instead of the short-term interest of individuals in the organization. It is because of my devotion to my craft that I am writing this article.

A 2008 national survey [2] conducted by Clemson University found that CEO’s viewed the top ethical concerns in the general business community as:

1. Improper accounting practices
2. Lying on reports/falsifying records and conflicts of interest
3. Exorbitant executive compensation
4. Dishonesty with customers
5. Misleading the public or the media

All of these behaviors can be influenced by an effective HR function.

It has been my experience that unless management is highly trained and employee communications are nearly transparent; HR professionals usually find when we look out for the long-term interest of the organization, that half the time, the resolution of ethical dilemmas or misconduct is managements’ cross to bear while the other half of the time the employee is at fault. This is as it should be and if we want to have an effective HR program, we have to call it, like we see it. We have to put the interest of the organization before our personal interest. To act contrary to this, will serve to undermine the organization’s culture and ethical standards, and the reputation and effectiveness of our HR function.


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