Legal & Ethical Issues in Managing People

Two businesspeople conversing at a conference table in an office.
Two businesspeople conversing at a conference table in an office. (Image: XiXinXing/XiXinXing/Getty Images)

It is possible to satisfy legal requirements for human resource management but still not operate ethically. Legal counsel will provide guidance for compliance with applicable laws, but the manager must supply his own yardsticks to ensure that he runs an ethical organization. An additional challenge is that different people may not define the concept of ethical operation in the same way. Going back to some basic ethical core values will help a manager make the right ethical decisions.

Equal Opportunity

Ensuring equal opportunity when considering candidates for hire or employees for promotion is both a legal and an ethical requirement. Making decisions based on factors other than the ability and willingness to perform the tasks in question is always unethical. When these decisions are based on such things as race, they are also illegal. In either case, the manager introduces influences into the workplace that have nothing to do with the job at hand. Such influences are usually detrimental to a healthy workplace atmosphere.


A characteristic of an ethical workplace is that everyone is treated fairly. Key components of fair treatment are equal pay for similar work, equal praise or criticism in similar situations and equal non-monetary rewards for similar achievements. There may be legal implications to unfair treatment of employees but it is always unethical. Because applying fair treatment in all situations is often complicated, written guidelines for major elements of the compensation, reward and evaluation of employees are useful.


In an organization that has high ethical standards, all employees take responsibility for their actions. It is the manager's role to ensure that, rather than assign blame, the focus will always be to find solutions and avoid repetition of mistakes. When there are complaints or when something doesn't work, an employee's focus must be on ways the employee contributed to the failure and what he could do better. The manager must lead the way by example and then achieve consensus on what went wrong and what to do about it.

Ethical Decisions

Legal counsel must review decisions with legal consequences but ethical decisions are more personal and often challenging. Two methods for determining whether the decision being considered is the right one are the authority test and the public scrutiny test. In the former, the manager identifies a person whose judgment she respects and asks herself what that person would do; alternatively, the manager might ask herself what that person would think about the manager's decision. For the public scrutiny test, the manager asks herself whether she would be comfortable defending her decision in public. A formal code of ethics for the company also is useful.

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