Corporate Responsibility, Ethics and Strategic HRM

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Chapter 11

• Corporate Responsibility, Ethics and Strategic
  HRM

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• This chapter aims to
• Explore the growing interest in ethics and
  Corporate Social Responsibility
• Understand the economic and socio-political
  context of HRM
• Discuss the relevance of ethical theories, the
  law and theories of rights and justice to HRM

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• Consider organisations as human organisations and
  how people within them are critical to the
  delivery of ethical behaviour, at all levels
• Assess the nature and use of organisational
  values and ethical codes
• Assess HRM as a profession and its role in
  organisational ethics and Corporate Social
  Responsibility (CSR)

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• Corporate Social Responsibility and
• Business Ethics
• Whats in a name?
• Corporate Responsibility/Social Responsibility/
• CSR
• All imply taking into account range of
  stakeholders in considering economic, social /
  political and environmental factors

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• Other terms include
• Corporate Philanthropy giving to others in need
• Corporate Citizenship acting as agents in
  economic, social and political issues
• Sustainability the link between a sustainable
  business and a sustainable planet

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CSR Definitions

• business decision-making linked to ethical
  values, compliance with legal requirements, and
  respect for people, communities, and the
  environment
• Originates from a US organisation that
  encourages corporate social responsibility,
  Business for Social Responsibility (www.bsr.org)
• process by which a company manages, measures and
  reports its commitment to improve its positive
  impact on society and the environment
  Emphasises that to be successful and
  sustainable CSR approaches must be integrated
  into the very heart of the business and not left
  as a separate function or responsibility
  (www.bitc.org.uk)

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Growing Interest and Awareness of Ethics and
CSR

• High-profile scandals and unethical behaviour
• Demand for ethical behaviour
• Globalisation and instant communications
• Public awareness and consumer behaviour
• Reputational risk
• Used as a competitive advantage
• Offensive and defensive marketing

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• Other Pressures and Influences
• Government policies and regulations
• Laws / policies / funding, e.g regeneration
• Tax supportive / punitive
• Charities and NGOs (civil society)
• HRM Strategy issues
• Recruitment
• Retention
• Corporate culture

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• Market Economics and Differing Views
• There is one and only one social responsibility
  of business to use its resources and engage in
  activities designed to increase its profits (so
  long as it stays within the rules)
• Milton Friedman, The Social Responsibility of
  Business is to Increase its Profits, The New York
  Times Magazine, 13 September 1970
• A business of business outlook has blinded
  companies to outcomes (or shifts in their
  implicit social contract) which often could have
  been anticipated
• Ian Davis, The Biggest Contract, The Economist,
  28 May 2005

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• A stakeholder is defined as any group or
  individual who is
• either harmed by or benefits from the
  corporation or whose rights can be violated or
  have to be respected, by the corporation
• Evan and Freeman (1993)

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Steps of Social Responsibility

• Philanthropic
• Ethical
• Legal
• Economic
• A. Carroll, The Pyramid of Corporate Social
  Responsibility (1991)

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• Stakeholders
• Examples
• Shareholders
• Customers
• Employees
• Suppliers
• Communities local and global
• Governments
• Civil society

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• Globalisation can be defined as
• the progressive eroding of the relevance of
  territorial bases for social economic and
  political activities, processes and relations
• (Scholte, 2000)
• Strategic HRM Issues
• Conflicts of interest create complexity in
  ethical dilemmas in the workplace (and how to
  handle them)
• This can include decisions about recruitment and
  training as well as approaches to reward
  management and employee relations

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• Ethics or Values in Action
• Ethical theories provide rules that can be
  applied to any given situation. Most fall into
  two broad groups
• 1. those that base the judgement of the decision
  on the outcome of the actions
• 2. those that do not look at the whether the
  outcomes are desirable but at the underlying
  principles of the motivation to act
• (see downsizing example in chapter)

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• Virtue Ethics good actions come from good
  people
• Absolutism v Relativism (important in
  globalisation)
• Absolutists maintain that if an ethical
  principle is valid, it must be applicable
  everywhere
• Relativists would say that there is no one view
  of ethics and what is ethical is always related
  to the social, cultural and historical context

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• Further theories to consider
• Discourse Ethics (using discourse to resolve
  conflict and achieve mutually acceptable
  solutions)
• Feminist Ethics (emphasising care for others and
  the promotion of harmonious relationships)
• Postmodern Ethics (using moral impulses and
  emotions to address ethical dilemmas)

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• Justice
• Distributive concerned with outcomes and equity
• Procedural concerned with processes and
  activities
• Interactional concerned with communication,
  including trust and openness

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• Trust, fairness and justice all affect the
  expectations of individuals psychological
  contracts
• Individual personal values and integrity are
  important
• Kohlberg (1969) developed stages of moral
  reasoning and cognitive development
• Mismatch between an individual employees stage
  of moral reasoning and that of an organisation
  (or those in positions of power within it) can
  result in actions such as whistleblowing

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• The Nature of Organisations
• Organisations are collections of people working
  together in a coordinated and structured fashion
  to achieve one or more goals (Barney and
  Griffin, 1992, p2)
• It is the people within organisations (their
  individual morals, values and attitudes that
  affect decisions, behaviour and actions at all
  levels) who are critical to the delivery of
  ethical behaviour

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Ethics HRM

• Human Resource Management evolved from Personnel
  Management with its roots in the welfare
  officers role in the original philanthropic
  business organisations such as Cadburys and
  Rowntrees in the 1900s
• HRM is seen to promote working relationships,
  employee involvement, development, equal
  opportunities and justice. Yet it is unitarist
  in its approach, minimising the role of trade
  unions
• The strategy of justifying its existence in
  accounting terms may cede too much to the
  dominant accounting culture which in turn may
  also achieve little security for the HRM
  function (Armstrong, 1999)

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Rights Duties of Employees

• The rights duties include The issues include
• freedom from discrimination race, gender, age,
  disability,
• privacy surveillance of employees,
  work-life balance
• due process disciplinary / dismissal,
  promotion, grievance
• participation and association, trade unions,
  participation and involvement
• healthy safe working occupational health,
  working conditions conditions
• fair wages pay, new forms of work,
  industrial action
• freedom of conscience whistleblowing
• speech
• work access to employment and
  opportunities
• (Adapted from Crane Matten (2007) Business
  Ethics, 2nd edn, Oxford University Press)

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Ethical Principles / Codes Values

• Mission or value statements
• Codes of ethics
• Organisation codes
• They should be aspirational and set out rules /
  expectations for employees
• Professional codes
• Obligations to obey the law, be competent and
  character-based norms

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• HRs Role in Ethics and CSR
• CSR is an opportunity for HR to demonstrate a
  strategic focus and act as a business partner.
  CSR needs to be embedded in an organisations
  culture to make a change to actions and
  attitudes, and the support of the top team is
  critical to success
• CIPDs Corporate Social Responsibility fact
  sheet (June 2006)

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CSR Competency Framework

• Understanding society
• Building capacity
• Questioning business as usual
• Stakeholder relations
• Strategic view
• Harnessing diversity
• There are five levels of attainment for each
  characteristic.
• These range from basic awareness to
  understanding, application, integration and
  leadership
• (www.bitc.org.uk)

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• In developing a strategy for
• Corporate Responsibility, Ethics and
• Strategic HRM it is important to pay
• as much attention to how such as
• strategy will be implemented as to
• the strategy itself

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Key Principles of Implementation

• 1. Establish and clarifying the organisations
  core values and principles. These are the thread
  that binds all the policies and principles
  together
• 2. Ensure that there is clear leadership
  throughout the organisation in establishing the
  core values and principles
• 3. Develop an understanding of the
  organisations stakeholders, the nature of the
  relationships and responsibilities towards them

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• 4. Ensure that the business strategy, ethical
  principles, CSR and HR practices are aligned
• 5. Communicate consistently and effectively to
  all stakeholders
• 6. Provide timely and appropriate training to
  reinforce values and principles
• 7. Review strategy, policy, procedures and
  practices to ensure consistency and compliance

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Challenges of this Chapter

• To understand the key strategic role that HRM
  practitioners in organisations can play in
  Corporate Responsibility and Ethics
• For all engaged in HRM to appreciate the
  different philosophies, perspectives and cultures
  in developing approaches to ethical decision-
  making
• To bring together literature from the many
  different disciplines contributing to the debates
  about Corporate Responsibility, Ethics and
  Strategic HRM to develop theoretical frameworks
  for the conduct of HRM in organisations

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• To ensure that higher education and professional
  bodies follow the UN Principles for Responsible
  Management Education' in the design and delivery
  of management education, including HRM
• To develop reliable methodologies for exploring
  the difference between the espoused and the
  enacted organisational strategies and policies in
  relation to corporate responsibility and ethics
• To explore models and strategies that develop
  thinking and analytical skills using ethical
  frameworks to promote the integration of
  responsible and ethical decision-making in HRM