Critically evaluate whether HRM practitioners should promote ethical HR practices that improve employee well-being as well as contributing to responsible business and the wider social good.

Introduction

Human resource management (HRM) is concerned with the effective management of people within organizations so business goals can be achieved (Rowan, 2010). The intense competition caused by globalization has significantly enhanced organizations’ awareness towards HRM because human resource has a profound role to organizational productivity and performance. In recent years, the relationship between ethics and HRM has been the subject of much discussion and there is a rising concern about whether ethical HR practices should be promoted to ensure employees’ well-being and improve the wider social good (Graham and Tarbell, 2016). This essay believes that HRM has a close relationship with companies’ corporate social responsibility, and it is HRM professionals’ responsibilities to adopt ethical HR practices to make organizations a responsible business. Based on this view, this essay will offer a critical discussion and evaluates the importance of ethical HR practices. Several issues will be covered in this essay. Firstly, two HRM approaches will be discussed and compared. Secondly, the importance of employees’ well-being will be addressed. Thirdly, HRM’s role to make firms socially responsible will be discussed. Finally, a conclusion will be made to summarize the key opinions of the essay. 

Main Body

Before further discussing the importance of ethical HR practices, it is essential to firstly review two schools of HRM approaches, which are hard and soft HRM approaches. Although both approaches recognize the importance of human resource and regard it as a critical factors for competitive advantage, they lie on two extremes of management and show very different HRM styles (Pinnington and Edward, 2010). Hard HRM approach focuses on systems, functions, and process, while soft HRM approach focuses on culture and behavioral orientation of organizational members (Caldwell et al., 2012).

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According to Becker and Gerhart (2015), hard HRM approach treats employees as a company’s resources such as buildings and machinery and HRM practices are implemented based on business needs. For example, HRM professionals will firstly identify workforce needs or business strategy, and then implement recruitment or firing. On the other hand, soft HRM approach regards employees as important assets of companies (Huselid, 2015). HRM professionals would take employees’ needs into account, and then implement HRM practices such as motivation and rewards. From the brief introduction of two HRM approaches, it can be found that soft HRM is more ethically formed compared with hard HRM. Nevertheless, arguments have been raised on which approach is better and scholars such as Boxall and Purcell (2011) and Simmons (2018) claim that both approaches have merits and shortcomings. For instance, the hard approach can lead to a more cost-effective workforce, but it also causes problems such as higher staff turnover. On the other hand, more employee-oriented soft approach can build a good employee relationship, but companies may face the problem of high workforce costs (Simmons, 2018).

Even though the debates on hard and soft HRM approaches identify that ethically informed soft approach may cause some potential risks to companies, much literature shows that improving employees’ well-being is critical for HRM. Greenwood and Freeman (2011) conduct a study and discusses the issue based on the stakeholder theory. The study demonstrates that employees are primary stakeholders in the firm and they are high power influencer stakeholders to firms (Greenwood and Freeman, 2011). In consequence, employees, as an important stakeholder of the firm, their needs should be attached great importance by HRM.

Importance of employees’ well-being are confirmed by other scholars. According to Huselid (2015), employees influence companies’ productivity and highly satisfied employees usually have higher productivity. This would contribute to the overall business performance. In addition, Ford and Harding (2013) demonstrate that employees’ well-being can influence a company’s costs. This is because if employees’ needs cannot be satisfied, their job morale and job satisfaction would be low, which then lead to high turnover rate. As a result, companies need to cost much on hiring new staff and offering training to make new staff adapt to the job position (Ford and Harding, 2013). Simmons’s (2017) agrees with the view and conducts a study with over 300 American firms to explore how turnover can influence business costs. The study reports that firms which have 10% higher on turnover rate show 15% to 20% higher on business costs (Simmons, 2017).

Many business examples also confirm the importance of employee well-being. In the year 2013, the world was shocked by the Rana Plaza collapse in Bangladesh. The Rana Plaza is a commercial building where factors manufactured products for worldwide well-known brands such as Mango, Primark, and Benetton and so on (Bulter, 2014). The Rana Plaza collapsed on 24th April 2013 and 1134 workers died while over 2500 people injured (West, 2016). It was reported that workers at Rana Plaza suffered many unethical treatments including overtime working, poor working condition, unsafe working environment, as well as extremely low pay (West, 2016). After the tragedy occurred, companies’ brand image was significantly damaged and they also received much public criticism. To re-build brand image, firms such as Primark paid over £6 million to victims (Bulter, 2014). From this business example, it can be found that ignoring employees’ well-being influences business operation and costs.

Employees’ well-being can be improved through many ways. Maslow’s hierarchy of needs model can provide some insights. The model is widely used to understand employee needs and firms usually apply the model to develop staff motivation practices. According to Maslow (1943), human needs can be divided into five levels, which are 1) physiological needs; 2) safety needs; 3) social belonging; 4) esteem; and 5) self-actualization. Ethical HR practices can effectively improve employee well-being by addressing these needs. For instance, reasonable and fair pay can meet employees’ physiological needs, safe working condition and insurance can meet employees’ safety needs, caring and respect to employees can satisfy their social belonging needs, fair promotion can met employees’ esteem needs, and concerns with employees’ personal development can satisfy their self-actualization needs (Colbert and Kurucz, 2017). From above discussion, it can be found that taking employee needs into account and satisfying their needs rest in HRM’s function and ethical HR practices do contribute to better employee well-being. 

In additional to the role to improve employees’ well-being, ethical HR practices also significantly contribute to the responsible business and the wider social good. In recent years, with public becoming more aware about corporate social responsibilities (CSR), firms are making great effort to build an ethical culture. According to Mankelow (2014), CSR refers to ‘the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interest’. In nowadays, more and more organizations place CSR at a prior position in their strategy making and HRM is found to have a great impact on making firms socially responsible. Galbreath (2016) demonstrates that the HRM system take the primary responsibility for managing firms’ CSR activities and Inyang (2015) thinks that HRM is both a component and a potential facilitator of CSR. 

West (2016) identifies that ethical businesses are concerned with different issues, including good treatment to employees, efforts to environmental protection, and product quality and health and so on. HR professionals can lead and educate organisations on the value of responsible business so the whole companies’ knowledge and awareness towards CSR can be enhanced (Preuss et al., 2016). Meanwhile, HR professionals play a significant role in helping companies make more contributions to the wider community (Preuss et al., 2016). For example, they can design charitable and fund raising activities and encourage employees to engage in these activities. This idea is supported by Graham et al. (2016) who think that HRM professionals can enhance employees’ engagement through effective HRM practices so their willingness to take CSR activities can be high. Also, Graham et al. (2016) believe that HRM is responsible to communicating with employees. This means that HRM professionals are able to communicate organisation’s ethical culture or CSR mission to employees so everyone in the company can make their own contribution to companies’ social responsibilities. Furthermore, as one of HRM function, performance appraisal also contributes to the business responsibility and the wider social good (Huselid, 2015). For example, HR professionals can assess employees’ ethical activities so everyone at the company can be encouraged to behave ethically.

From above discussions, it can be found that HRM professionals can significantly contribute to companies’ social responsibilities through ethical HR practices. Here is an example of the well-known shoe brand-Timberland which shows HRM’s impacts to the company’s CSR. Timberland attaches great importance to business ethics so its HRM professionals developed a series of practices to support the company’s CSR performance. For example, they organized voluntary services and encourages employees to participate. According to Timberland, over 76% of Timberland employees spent at least one hour on social service in the year 2016 (Timberland, 2018). In addition, Timberland’s HRM designed the practices and asked employees to plant trees. Consequently, in 2016 Timberland’s employees planted more than 500,000 trees around the world (Timberland, 2018). With good CSR, Timberland not only builds a positive brand image, but also significantly improves its financial performance.

It can be found from above example that HRM functions have a close relationship with companies’ ethics. In other words, while HMR professionals should implement ethical HR practices to improve business performance, they also have the ability to drive companies’ ethical behaviour. Therefore, it is critical for HRM practitioners to promote ethical HR practices. Nevertheless, at the beginning of essay, it has pointed out that soft HRM approaches may raise companies’ workforce costs because firms have to spend much to offer good salary or rewards (Colbert and Kurucz, 2017). To address this concern, it must be clear that ethical HR practices do not means that HRM professionals should constantly provide financial rewards to employees. Differently, they involve with different considerations from all aspects of business operation including detailed practices regarding to employees’ treatment, strategy and cultural developing, as well as other activities related to firms’ CSR.

Conclusion

This essay discusses why HRM professionals should promote ethical HR practices to improve employees’ well-being and contribute to responsible business as well as the wider social good. From the discussion, it can be found that employees’ well-being plays a critical role to business performance. For example, they are the important stakeholders of the organisations, and they influence the productivity and performance of organisations. Ensuring ethical treatment to employees can help companies build positive brand image, thereby generating higher financial performance. Then, the study discusses HRM’s role to companies’ CSR. From the discussion, it is learnt that HRM has a close relationship with firms’ CSR activities. For example, they enhance employees’ ethical awareness through training, they encourage employees’ engagement to ethical activities, and they also regulate employees’ behaviour through HRM function such as performance appraisal. To provide an in-depth understanding, the essay also provides two examples of Rana Plaza Collapse and Timberland. The example of Rana Plaza demonstrates that ignoring employee well-being can negatively affect business performance while the example of Timerland shows how ethical HRM practices contribute to companies’ CSR. At the end of the essay, it is pointed out ethical HR practices take different issues into account rather than simply concerning with satisfying employee needs through financial incentives.

References

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Boxall, P., & Purcell, J. (2011). Strategy and human resource management (3rd ed.). London: Palgrave.

Bulter. S (2014) Primark to pay more to victims. Retrieved online at: https://www.theguardian.com/world/2014/mar/16/primark-payout-victims-rana-plaza-bangladesh

Caldwell, C., Bischoff S. J. and Karri R.: (2012) ‘The Four Umpires: A Paradigm for Ethical Leadership’, Journal of Business Ethics 36(1/2), 153–163.

Colbert, B. A. & Kurucz, E. C. (2017). Three conceptions of triple bottom line business sustainability and the role of HRM. Human Resource Planning, 30(1): 21-29.

Ford, J., & Harding, N. (2013). Invoking Satan or the ethics of the employment contract. Journal of Management Studies, 40(5), 1131–1150

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Graham, M. E. and Tarbell. L.M (2016), ‘The Importance of the Employee Perspective in the Competency Development of Human Resource Professionals’, Human Resource Management 45(3), 337–355

Greenwood. M and Freeman. R.E (2011) Ethics and HRM: The Contribution of Stakeholder Theory Business & Professional Ethics Journal, vol. 30, nos. 3–4

Inyang, B. J. (2015). Harmonizing human resource management (HRM) practice in the public and private sector. Human Resources Management, 10(7): 8-14,21.

Huselid, M. A.: (2015), ‘The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance’, Academy of Management Journal 38, 635–672.

Mankelow, G. (2014). Social responsibility paradox of small business human resource management practices. The International Journal of Human Resource Management, 12: 2171–2181

Maslow, A.H. (1943). ”A theory of human motivation”. Psychological Review. 50 (4): 370–96. 

Rowan, J. R. (2010). “The Moral Foundation of Employee Rights.” Journal of Business Ethics 24(4): 355–361.

Simmons, J. (2017). Ethics and morality in human resource management. Social Responsibility Journal, 4(1/2), 8–23.

Timberland (2018) Our CSR. Retrieved online at: https://www.timberland.com/newsroom/press-releases/timberland-csr-sustainability-progress.html

Pinnington A and Edward T. (2010) Introduction to Human Resource Management, Oxford University Press, Oxford.

Preuss, L., Haunschild, A., Matten, D. (2016). The rise of CSR: implications for HRM and employee representation. The international Journal of Human Resource Management, 20: 953 – 973

West. W (2016) Rana Plaza collapse: 38 charged with murder over garment factory disaster. Retrieved online at:https://www.theguardian.com/world/2016/jul/18/rana-plaza-collapse-murder-charges-garment-factory