Human resources management faces ethical issues everyday. Whether adhering to the legalities of Title VII of the Civil Rights Act, affirmative action and the Americans with Disabilities Act or complying with the Sarbanes-Oxley Act of 2002, human resources managers deal with the ethical treatment of individual employees and ethicality of business decisions.
Maintaining objectivity in hiring, promotion, discipline, training, retention, termination and compensation lies at the core of human resources. HR ensures that company policies follow anti-discrimination legislature and polices the integrity of performance reviews to ensure that the evaluation process remains fair with like jobs critiqued equally.
While ethics and compliance officers have become popular components of America’s executive suites, the HR department is best positioned to observe the organization in action and propose change where needed.
Keeping senior management informed on legal and ethical obligations falls under the HR umbrella. HR prepares communication vehicles (for example, documents, seminars, and informal meetings) to advise employees of the company’s code of ethics and no-tolerance policies. HR must also train employees and supervisors on procedures for reporting violations.
HR’s vigilance toward employment law plays a major role in protecting company assets by minimizing exposure to employee lawsuits. Drafting employment agreements with noncompete and nondisclosure clauses that effectively limit a new hire’s ability to work for a competitor or share confidential information stems risk.
A key business conduct law that involves ethics and HR managers is the Sarbanes-Oxley Act of 2002--also known as SOX--which imposes strict regulations on financial reporting and record keeping. Section 806 of the law, known as the “whistleblower provision,” requires HR to investigate all fraud allegations and suspected retaliation against tipsters. Section 301 requires HR to administer a formal procedure for fraud grievances. Retirement plans and corporate loan programs must be monitored by HR to respect trading blackout periods (Section 306) and credit restrictions to officers (Sections 402).
Linda Gravitt, a senior professional in human resources, notes that “it’s possible to comply with the law and still not be on solid ethical ground. … Determining the right choice when people are involved can be challenging.” An HR manager could be faced with deciding to support “what’s right” or ignore unacceptable activity. This dilemma carries economic and personal consequences in the form of job loss or resignation, damaged reputation and career derailment.