The Importance Of Ethics In Human Resources

We handpick every product we feature. We may earn commission from the links on this page.Small Business|Human Resources|Human Resource PlansThe Importance of Ethics in Human ResourcesBy David Ingram, Contributor

Paying attention to business ethics is an important part of any business owner or manager's job. The human resources function deals with a variety of ethical challenges; being the department that deals directly with people employed by a company, HR includes numerous ethical pitfalls that can damage a company's reputation or financial sustainability if not handled properly. Understanding the importance of ethics in human resources is crucial for any business owner, whether in a local startup or a multinational powerhouse.

The Right Side of the Law

Breaches of ethics in human resources can lead companies into a world of legal trouble, in both the civil and criminal arenas. Breaches of ethics in the HR department are more likely to be reported by victims to the Better Business Bureau, the Equal Employment Opportunity Commission or other regulatory agencies than those committed in other areas, such as product development or accounting. Companies with comprehensive ethics programs in place can avoid costly trouble regarding discrimination and hostile-work-environment issues, resulting in lower costs for litigation and out-of-court settlements.

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Safeguarding the Company Reputation

In the business world, legal trouble can introduce additional challenges to employers, as news outlets and ethics watchdog organizations spread the word about companies' misdeeds. Discrimination issues, sexual harassment and unfair employment policies can land companies on the front page of consumer or business-focused publications, damaging a company's reputation among consumers, potential strategic partners and potential future employees.

Gaining a reputation as an ethical employer can help to attract the top talent in your industry from a wider area, as employees seek to find the most beneficial employment relationships they can. The opposite holds true, as well; if job applicants see your company as an unethical employer, the most skilled, experienced, creative and productive applicants are likely to put their resumes in elsewhere.

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Keeping Employee Loyalty

Treating employees ethically can garner long-term employee trust and loyalty, which conveys a range of distinct benefits to employers. Loyal employees gain more experience working with their employers, allowing them to master production processes and more fully understand the inner workings of the firm. This can increase employees' productivity and efficiency over time in addition to keeping recruiting and training costs under control.

Sellers of consumer goods can gain marketing advantages from loyal employees, as well. Loyal employees often act as champions for a company's products, purchasing goods from their employer and spreading positive word-of-mouth advertising to friends, family and acquaintances over the years.

Promoting Ethics Programs

A solid reputation as an ethical employer does not happen on its own. Savvy, ethics-conscious business owners put comprehensive ethics programs in place to display a firm commitment to ethics in every area of business, including human resources. Put HR ethics policies in place regarding discrimination, sexual harassment and the treatment of employees, and put each of your managers and supervisors through ethics training programs to make sure they are fully aware of your expectations.

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Most importantly, lead by example in your organization to create a culture of mutual respect and dignity, where ethical decision-making is valued and rewarded.

References

• SHRM.com: Introduction to the Human Resources Discipline of Ethics and Corporate Social Responsibility and Sustainability
• Forbes.com: How Much Do A Company's Ethics Matter In The Modern Professional Climate?

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Resources

• McGraw Hill; Ethics and Human Resource Management; Amanda Rose

David IngramContributor

David Ingram has written for multiple publications since 2009, including "The Houston Chronicle" and online at Business.com. As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law. He has earned a Bachelor of Arts in management from Walsh University.