Human Resource Management 1 ELEVENTH EDITION GARY DESSLER

Human Resource Management 1 ELEVENTH EDITION GARY DESSLER Part 5 | Employee Relations Chapter 14 Ethics, Justice, and Fair Treatment in HR Management Power. Point Presentation by Charlie Cook The University of West Alabama

After studying this chapter, you should be able to: 1. Explain what is meant by ethical behavior at work. 2. Discuss important factors that shape ethical behavior at work. 3. Describe at least four specific ways in which HR management can influence ethical behavior at work. 4. Employ fair disciplinary practices. 5. List at least four important factors in managing dismissals effectively. © 2008 Prentice Hall, Inc. All rights reserved. 2

Ethics and Fair Treatment at Work • The Meaning of Ethics Ø The principles of conduct governing an individual or a group. Ø The standards you use to decide what your conduct should be. Ø Ethical behavior depends on a person’s frame of reference. • Ethical Decisions Ø Normative judgments Ø Morality © 2008 Prentice Hall, Inc. All rights reserved. 3

FIGURE 14– 1 The Wall Street Journal Workplace. Ethics Quiz Note: The spread of technology into the workplace has raised a variety of new ethical questions, and many old ones still linger. Source: Wall Street Journal, October 21, 1999, pp. B 1–B 4. Reproduced with permission via Copyright Clearance Center. © 2008 Prentice Hall, Inc. All rights reserved. 4

TABLE 14– 1 Specific Observed Unethical Behaviors Abusive or intimidating behavior toward employees 21% Lying to employees, customers, vendors, or to the public 19% A situation that places employee interests over organizational interests 18% Violations of safety regulations 16% Misreporting of actual time worked 16% E-mail and Internet abuse 13% Discrimination on the basis of race, color, gender, age, or similar categories 12% Stealing or theft 11% Sexual harassment 9% Provision of goods or services that fail to meet specifications 8% Misuse of confidential information 7% Alteration of documents 6% Falsification or misrepresentation of financial records or reports 5% Improper use of competitors’ inside information 4% Price fixing 3% Giving or accepting bribes, kickbacks, or inappropriate gifts 3% Source: From 2005 National Business Ethics Survey: How Employees Perceive Ethics at Work, 2005, p. 25. Copyright © 2006, Ethics Resource Center (ERC). Used with permission of the ERC, 1747 Pennsylvania Ave. , N. W. , Suite 400, Washington, DC 2006, www. ethics. org. Reprinted in O. C. Ferrell, John Fraedrich, and Linog Ferrell, Business Ethics (Boston: Houghton Mifflin, 2008) , p. 61. © 2008 Prentice Hall, Inc. All rights reserved. 5

Ethics and Fair Treatment at Work (cont’d) A behavior may be legal but unethical. Ethics and the Law A behavior may be illegal but ethical. A behavior may be both legal and ethical. A behavior may be both illegal and unethical. © 2008 Prentice Hall, Inc. All rights reserved. 6

Ethics, Fair Treatment, and Justice Components of Organizational Justice Distributive Justice © 2008 Prentice Hall, Inc. All rights reserved. Procedural Justice Interactional (Interpersonal) Justice 7

FIGURE 14– 2 Perceptions of Fair Interpersonal Treatment Scale Source: Michelle A. Donovan et al. , “The Perceptions of Their Interpersonal Treatment Scale: Development and Validation of a Measure of Interpersonal Treatment in the Workplace, ” Journal of Applied Psychology, 83, no. 5 (1998), p. 692. © 2008 Prentice Hall, Inc. All rights reserved. 8

What Shapes Ethical Behavior at Work? Individual Factors The Organization’s Culture Ethical Policies and Codes © 2008 Prentice Hall, Inc. All rights reserved. Ethical Behavior At Work Organizational Factors The Boss’s Influence 9

FIGURE 14– 3 How Do My Ethics Rate? Source: Adapted from A. Reichel and Y. Neumann, Journal of Instructional Psychology, March 1988, pp. 25– 53. With permission of the authors. © 2008 Prentice Hall, Inc. All rights reserved. 10

TABLE 14– 2 Principal Causes of Ethical Compromises Senior Mgmt. Middle Mgmt. Front. Line Supv. Prof. Non. Mgmt. Admin. Salaried Hourly Meeting schedule pressure 1 1 1 Meeting overly aggressive financial or business objectives 3 2 2 2 Helping the company survive 2 3 4 4 3 4 Advancing the career interests of my boss 5 4 3 3 4 5 Feeling peer pressure 7 7 5 6 5 3 Resisting competitive threats 4 5 6 7 Saving jobs 9 6 7 7 7 6 Advancing my own career or financial interests 8 9 9 8 Other 6 8 8 9 Note: 1 is high, 9 is low. Sources: O. C. Ferrell and John Fraedrich, Business Ethics, 3 rd ed. (New York: Houghton Mifflin, 1997), p. 28; adapted from Rebecca Goodell, Ethics in American Business: Policies, Programs, and Perceptions (1994), p. 54. Permission provided courtesy of the Ethics Resource Center, 1120 6 th Street NW, Washington, DC: 20005. © 2008 Prentice Hall, Inc. All rights reserved. 11

Employees and Ethical Dilemmas • Questions employees should ask when faced with ethical dilemmas: Ø Is the action legal? Ø Is it right? Ø Who will be affected? Ø Does it fit the company’s values? Ø How will it “feel” afterwards? Ø How will it look in the newspaper? Ø Will it reflect poorly on the company? © 2008 Prentice Hall, Inc. All rights reserved. 12

What Is Organizational Culture? • Organizational culture Ø The characteristic values, traditions, and behaviors a company’s employees share. • How is culture is revealed? Ø Ceremonial events Ø Written rules and spoken commands Ø Office layout Ø Organizational structure Ø Dress codes Ø Cultural symbols and behaviors Ø Figureheads © 2008 Prentice Hall, Inc. All rights reserved. 13

The Manager’s Role in Creating Culture Clarify Expectations Organize Rites and Ceremonies Use Stories © 2008 Prentice Hall, Inc. All rights reserved. Use Signs and Symbols Provide Physical Support 14

Human Resource Management’s Role in Promoting Ethics and Fair Treatment Ethics Training Selection Performance Appraisal Workplace Aggression and Violence © 2008 Prentice Hall, Inc. All rights reserved. HRM–Related Ethics Activities Reward and Disciplinary Systems HR’s Ethics and Compliance Activities 15

HRM-Related Ethics Activities • Selection Ø Fostering the perception of fairness in the processes of recruitment and hiring of people. v Formal procedures v Interpersonal treatment v Providing explanations v Selection tools v Two-way communication • Training Ø How to recognize ethical dilemmas. Ø How to use ethical frameworks to resolve problems. Ø How to use HR functions in ethical ways. © 2008 Prentice Hall, Inc. All rights reserved. 16

FIGURE 14– 4 U. S. Data Trust Web site Source: Reprinted with permission of U. S. Data Trust Corporation. www. USData. Trust. com/company. © 2008 Prentice Hall, Inc. All rights reserved. 17

FIGURE 14– 5 The Role of Training in Ethics Source: Susan Wells, “Turn Employees into Saints, ” HR Magazine, December 1999, p. 52. Reproduced with permission via Copyright Clearance Center. © 2008 Prentice Hall, Inc. All rights reserved. 18

HRM-Related Ethics Activities (cont’d) • Performance Appraisal Ø Appraisals that make it clear that the company adheres to high ethical standards by measuring and rewarding employees who follow those standards. • Reward and Disciplinary Systems Ø The organization swiftly and harshly punishes unethical conduct. • Workplace Aggression and Violence Ø Taking care that HR actions do not foster perceptions of inequities that translate into dysfunctional behaviors by employees. © 2008 Prentice Hall, Inc. All rights reserved. 19

HRM-Related Ethics Activities (cont’d) • HR’s Ethics Compliance Activities Ø Complying with the Sarbanes-Oxley Act of 2002 v Requires that the CEO and the CFO of publicly traded companies personally attest to the accuracy of their companies’ financial statements and that its internal controls are adequate. v Increased the need for ethics training and verification of training. Ø Firms are using online ethics training programs to comply with the act’s requirements. © 2008 Prentice Hall, Inc. All rights reserved. 20

Building Two-Way Communications Perceptions of fair treatment depend on: Engagement © 2008 Prentice Hall, Inc. All rights reserved. Explanation Expectation Clarity 21

Employee Discipline and Privacy Fair and Just Discipline Process Clear Rules and Regulations © 2008 Prentice Hall, Inc. All rights reserved. A System of Progressive Penalties An Appeals Process 22

Guidelines for Fair Discipline • Does evidence support the charge of employee wrongdoing? • Were the employee’s due process rights protected? • Was the employee warned of disciplinary consequences? • Was a rule violated and was it “reasonably related” to the efficient and safe operation of the work environment? • Was the matter fairly and adequately investigated before administering discipline? • Did the investigation produce substantial evidence of misconduct? • Have rules, orders, or penalties been applied evenhandedly? • Is the penalty reasonably related to the misconduct and to the employee’s past work history? • Did the employee have the right to counsel? • Did anger, hearsay, or personal impression affect the decision? © 2008 Prentice Hall, Inc. All rights reserved. 23

FIGURE 14– 6 Disciplinary Action Form Source: Reprinted from www. HR. BLR. com with permission of the publisher Business and Legal Reports, Inc. , 141 Mill Rock Road East, Old Saybrook, CT © 2004. © 2008 Prentice Hall, Inc. All rights reserved. 24

Formal Disciplinary Appeals Processes • Fed. Ex's Multi-Step Guaranteed Fair Treatment Program Ø Step 1: Management review Ø Step 2: Officer complaint Ø Step 3: Executive appeals review © 2008 Prentice Hall, Inc. All rights reserved. 25

FIGURE 14– 7 Grievance Form as Part of Appeal Process Source: http: //www. wfu. edu/hr/forms/ staff-grievance. pdf. Accessed May 24, 2007. © 2008 Prentice Hall, Inc. All rights reserved. 26

Discipline Without Punishment (Nonpunitive Discipline) 1. Issue an oral reminder. 2. Should another incident arise within six weeks, issue a formal written reminder, a copy of which is placed in the employee’s personnel file. 3. Give a paid, one-day “decision-making leave. ” 4. If no further incidents occur in the next year, then purge the one-day paid suspension from the person’s file. If the behavior is repeated, the next step is dismissal. © 2008 Prentice Hall, Inc. All rights reserved. 27

Employee Privacy • Employee privacy violations upheld by courts: Ø Intrusion Ø Publication of private matters Ø Disclosure of medical records Ø Appropriation of an employee’s name or likeness • Actions triggering privacy violations: Ø Background checks Ø Monitoring off-duty conduct and lifestyle Ø Drug testing Ø Workplace searches Ø Monitoring of workplace © 2008 Prentice Hall, Inc. All rights reserved. 28

Employee Privacy (cont’d) • What Is Monitored: Ø Identity Ø Location Ø E-mail activity and Internet use Ø Telephone calls • Why Employers Monitor: Ø To guard against liability for illegal acts and harassment suits caused by employee misuse. Ø To improve productivity. Ø To detect leaks of confidential information. Ø To protect against computer viruses. © 2008 Prentice Hall, Inc. All rights reserved. 29

Restrictions on Workplace Monitoring • The Electronic Communications Privacy Act (ECPA) Ø Restricts employer interception and monitoring of oral and wire communications. v “business v “consent purpose exception” • Common law Ø Provides protections against invasion of privacy. © 2008 Prentice Hall, Inc. All rights reserved. 30

FIGURE 14– 8 Sample Telephone Monitoring Acknowledgement Statement Source: Reprinted with permission from Bulletin to Management (BNA Policy and Practice Series) 48, no. 14, Part II, (April 3, 1997), p. 7. © 1997 by The Bureau of National Affairs, Inc. © 2008 Prentice Hall, Inc. All rights reserved. 31

Managing Dismissals • Dismissal Ø Involuntary termination of an employee’s employment with the firm. • Terminate-at-Will Rule Ø Without a contract, the employee can resign for any reason, at will, and the employer can similarly dismiss the employee for any reason (or no reason), at will. © 2008 Prentice Hall, Inc. All rights reserved. 32

Managing Dismissals (cont’d) Protections Against Wrongful Discharge Statutory Exceptions © 2008 Prentice Hall, Inc. All rights reserved. Common Law Exceptions Public Policy Exceptions 33

Grounds for Dismissal Unsatisfactory Performance Bases for Dismissal Misconduct Lack of Qualifications Changed Requirements of (or Elimination of) the Job © 2008 Prentice Hall, Inc. All rights reserved. 34

Insubordination 1. Direct disregard of the boss’s authority. 2. Direct disobedience of, or refusal to obey, the boss’s orders, particularly in front of others. 3. Deliberate defiance of clearly stated company policies, rules, regulations, and procedures. 4. Public criticism of the boss. 5. Blatant disregard of reasonable instructions. 6. Contemptuous display of disrespect. 7. Disregard for the chain of command. 8. Participation in (or leadership of) an effort to undermine and remove the boss from power. © 2008 Prentice Hall, Inc. All rights reserved. 35

Managing Dismissals (cont’d) • Fostering Perceptions of Fairness in Dismissals Ø Have a supervising manager give full explanations of why and how termination decisions were made. Ø Institute a formal multi-step procedure (including warning). Ø Establish a neutral appeal process. • Security Measures Ø Disable employee passwords and network access. Ø Collect all company property and keys. Ø Escort employee from company property. © 2008 Prentice Hall, Inc. All rights reserved. 36

FIGURE 14– 9 Typical Severance Pay • Nonexempt employee—one week of pay for each year with a minimum of four weeks and maximum of two months. • Exempt employee to $90, 000—two weeks for each year with a minimum of two months and a maximum of six months. • Exempt employee over $90, 000 to director or VP level—two to three weeks for each year with a minimum of three months and maximum of nine months. • Director or VP to company officer—three weeks for each year with a minimum of four months and maximum of a year. • Officer—usually covered by an employment contract or Change of Control provisions and can be all the way from one year of pay to three or four years, with other perks that may be continued. Source: www. shrm. org, Accessed March 6, 2004. © 2008 Prentice Hall, Inc. All rights reserved. 37

Avoiding Wrongful Discharge Suits • Bases for Wrongful Discharge Suits Ø Discharge does not comply with the law. Ø Discharge does not comply with the contractual arrangement stated or implied by the firm via its employment application forms, employee manuals, or other promises. • Avoiding Wrongful Discharge Suits Ø Set up employment policies and dispute resolution procedures that make employees feel treated fairly. Ø Do the preparatory work that helps to avoid such suits. © 2008 Prentice Hall, Inc. All rights reserved. 38

FIGURE 14– 10 TJP Inc. Employee Handbook Acknowledgment Form © 2008 Prentice Hall, Inc. All rights reserved. 39

Personal Supervisory Liability • Avoiding Personal Supervisory Liability Ø Be familiar with applicable statutes and know how to uphold their requirements. Ø Follow company policies and procedures. Ø Be consistent with application of rules or regulations. Ø Don’t administer discipline in a manner that adds to the emotional hardship on the employee. Ø Allow employees to tell their side of the story. Ø Do not act in anger. Ø Utilize the HR department for advice regarding how to handle difficult disciplinary matters. © 2008 Prentice Hall, Inc. All rights reserved. 40

The Termination Interview Guidelines for the Termination Interview 1 Plan the interview carefully. 2 Get to the point. 3 Describe the situation. 4 Listen. 5 Review all elements of the severance package. 6 Identify the next step. © 2008 Prentice Hall, Inc. All rights reserved. 41

Termination Assistance • Outplacement Counseling Ø A systematic process by which a terminated employee is trained and counseled in the techniques of conducting a self-appraisal and securing a new job appropriate to his or her needs and talents. v Does not imply that the employer takes responsibility for placing the person in a new job. v Is part of the terminated employee’s support or severance package and is often done by specialized outside firms. © 2008 Prentice Hall, Inc. All rights reserved. 42

Termination Assistance (cont’d) • Outplacement Firms Ø Can help the employer devise its dismissal plan regarding: v How to break the news to dismissed employees. v Dealing with dismissed employees’ emotional reactions. v Instituting the appropriate severance pay and equal opportunity employment plans. © 2008 Prentice Hall, Inc. All rights reserved. 43

Interviewing Departing Employees • Exit Interview Ø Its aim is to elicit information about the job or related matters that might give the employer a better insight into what is right—or wrong—about the company. v The assumption is that because the employee is leaving, he or she will be candid. v The quality of information gained from exit interviews is questionable. © 2008 Prentice Hall, Inc. All rights reserved. 44

FIGURE 14– 11 Employee Exit Interview Questionnaire Source: http: //www. fin. ucar. edu/forms/HR/ exit_form/exit. pdf. Accessed May 24, 2007. © 2008 Prentice Hall, Inc. All rights reserved. 45

FIGURE 14– 11 Employee Exit Interview Questionnaire (cont’d) Source: http: //www. fin. ucar. edu/forms/HR/ exit_form/exit. pdf. Accessed May 24, 2007. © 2008 Prentice Hall, Inc. All rights reserved. 46

The Plant Closing Law • Worker Adjustment and Retraining Notification Act (1989) Ø Requires employers of 100 or more employees to give 60 days notice before closing a facility or starting a layoff of 50 people or more. Ø The law does not prevent the employer from closing down, nor does it require saving jobs. Ø The law is intended to give employees time to seek other work or retraining by giving them advance notice of the shutdown. © 2008 Prentice Hall, Inc. All rights reserved. 47

Layoffs and Downsizing • Bumping/Layoff Procedures Ø Seniority is usually the determinant of who will work. Ø Seniority can give way to merit or ability. Ø Seniority is usually based on the employee’s hiring date, not the date he or she took a particular job. Ø Companywide seniority allows an employee in one job to bump or displace an employee in another job. © 2008 Prentice Hall, Inc. All rights reserved. 48

Layoffs and Downsizing • Alternatives to Downsizing Ø Voluntarily reducing employees’ pay. Ø Concentrating employees’ vacations. Ø Taking voluntary time off. Ø Releasing temporary workers. Ø Offering early retirement buyout packages. © 2008 Prentice Hall, Inc. All rights reserved. 49

Adjusting to Downsizings and Mergers • Reduction in Force Guidelines Ø Identify objectives and constraints. Ø Form a downsizing team. Ø Address legal issues. Ø Plan post-reduction actions. Ø Address security concerns. © 2008 Prentice Hall, Inc. All rights reserved. 50

Adjusting to Downsizings and Mergers (cont’d) • Guidelines for treatment of departing employees during a merger: Ø Avoid the appearance of power and domination. Ø Avoid win–lose behavior. Ø Remain businesslike and professional. Ø Maintain a positive feeling about the acquired company. Ø Remember that how the organization treats the acquired group will affect those who remain. © 2008 Prentice Hall, Inc. All rights reserved. 51

KEY TERMS ethics code distributive justice procedural justice interactional (interpersonal) justice organizational culture nonpunitive discipline Electronic Communications Privacy Act (ECPA) dismissal © 2008 Prentice Hall, Inc. All rights reserved. wrongful discharge unsatisfactory performance misconduct insubordination termination interview outplacement counseling exit interviews bumping/layoff procedures downsizing 52