Ethics should be thought of as the heart of your organization’s HR function. Similarly, HR is likely to be at the heart of attempts to manage ethics within your organization. Here’s why.
While HR may not get the glory that, say, Finance does, it’s hard to imagine a function more essential to most business. Hiring, training, evaluating, and retaining the right people are all undeniably core management challenges. The relevant difference between Finance and HR is that Finance gains prestige by bringing to bear the tools of quantitative analysis; HR issues, on the other hand, are typically harder to quantify and turn into math, leading many people to think of them as “mushy.” But mushy typically just means “I find this stuff difficult.” Managers who find HR difficult would rather hide in the numbers. Ironically, HR gets called “soft” precisely because it is so hard.
At many large companies, the HR Department is in charge of ethics—or at least that part of ethics that isn’t bundled with Compliance. The department is often tasked, for example, with making sure every employee gets a copy of the company Code of Ethics, with taking charge of ethics training, and with updating the company’s Conflict of Interest policy.
But the fact that many companies embed their ethics function within their HR function may actually obscure the extent to which every aspect of HR is ethically significant.
Remember, ethics is fundamentally concerned with the choices we make—either as individuals or as companies—when those choices have an impact on people’s well-being or their rights. And so ethics is and must be part of all of the policies and activities for which HR is responsible, not just the ones to which the word “ethics” is explicitly attached.
Hiring (or setting the rules for hiring), for instance, involves balancing a range of value-laden criteria, such as skill and experience and reliability, and avoiding ethically-inappropriate criteria such as race, gender, and sexual orientation. The same goes for policies related to discipline and performance evaluation. Likewise, how overtime is handled—who is eligible, under what conditions, with whose permission—is a fundamental question of justice.
So even if HR was not in charge of ethics training and ethics policies, its function would remain ethically crucial.
Finally, HR also gains ethical significance by embodying most of the few tools available for managers to shape that elusive thing known as corporate culture. Culture—that communal set of understandings, beliefs and traditions that give a shared sense of “how we do things around here”—is widely acknowledged to be a critical element of organizational success. Indeed, there’s a well-worn saying to the effect that culture trumps strategy every time. That is, regardless of what strategic initiatives senior managers put in place, or what policies they put down on paper, those initiatives and policies are liable to fail if the workplace culture isn’t suited to them.
Enron famously had a rather lengthy code of ethics, but the culture fostered by the company’s compensation model and its performance review process went a long way toward engendering a culture in which unethical behaviour was readily tolerated. Culture, you might say, makes up an organization’s collective ethical character.
So HR is 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, one that will hopefully support rather than frustrate ethical decision making.
Chris MacDonald is Director of the Jim Pattison Ethical Leadership Education & Research Program at the Ted Rogers School of Management
A shorter version of this blog entry appeared at the Cornerstone Blog