Human resources decision-making and ethical dilemmas in business

Business Strategy Tools: Human Resources

For the informed, the Human Resources (HR) department is just the branch of the company that gives employees their welcome packet when they are first hired, and is the place to go if there are any issues or problems they can’t fix on their own. This is a critical underestimation of this vital branch of the company. The HR department handles the massive task of ensuring employee well-being of firms great and small, and while they have to deal with the challenges of recruiting top talent, hiring, firing and dealing with internal conundrums, they also have to ensure that they are current with all relevant state and federal laws—which are subject to change. In the increasingly demanding and challenging professional environment, one that has only become tenser with the corporate scandals of the last 15 years, the HR department has experienced increased pressure to be the ethical watchdog. This is no easy task, particularly since having friction with upper management and corporate leaders could put their own jobs in jeopardy. “Like any other function, HR must show why the issues it addresses matter to the business and that it has sensible ways to manage them” (Cappelli, 2015). This paper will examine the complexities of HR decision making via three distinct examples. One decision that an HR professional might make that could definitively harm a company’s bottom line (and their reputation) would be acquiescing to pay equity between male and female employees. Wright and Snell offer the illuminating example of the pay equity issue at Boeing (2005). Such an issue shows such a grave conundrum that HR professionals face, even when they attempt to do the right thing. Admitting the pay disparity outright and striving to correct would not only cost the company money, but it could open the company up to substantial legal liability for past inequities (Wright & Snell, 2005). If the HR department decides to establish pay equity among both genders quietly over time might save the company legal liability (if no one finds out), but it does raise an ethical issue, “…Is it right to knowingly let female workers be underpaid for the time frame during which you will work to achieve equity?” (Wright & Snell, 2005). Deciding to quietly correct the issue will hurt the company’s bottom line without a doubt, but if no one finds out about past inequities, it will ensure the company is shielded from future legal litigation. Another decision that an HR professional might make would be to retain highly skilled, experienced and committed workers rather than hire a group of lower-skilled, less experienced and less committed workers—even if the company was in the red. Such a decision would no doubt upset the management, and would definitively hurt the company’s bottom line, but this is an example of a “bigger picture” decision that experienced HR professionals know is important. Wright and Snell offer the illuminating picture of how Delta replaced their skilled workers with a cheaper, less invested workforce, a move that got them back into profitability in the short term (2005). However, as the authors illustrate, this was a myopic decision, one that caused the organization to lose talent and to become a shell of its former self, ultimately losing customers to their competitors. A skilled, experienced and loyal workforce is the backbone of any company, particularly in an industry as competitive as airlines. Deciding to keep knowledgeable workers who might cost more, is a move that will ensure the company bounces back from any economic decline it is currently suffering. A final HR decision that would benefit the company in the long term, but which might undermine the overall efficiency process, would be giving the customer base to decide which employees should receive bonuses. This is a process known as “Rewards from the outside in: Customers help determine which employees are rewarded for their efforts” (Ulrich et al., 2012). Ulrich and colleagues give the example of an airline that sets aside an amount of its bonus pool to the travelers that use the company the most, and give them the power to delegate the bonus coupons (of various amounts) to the members of staff they believe are the most deserving (2012). Fundamentally, the company is telling their team of employees that customers matter and they matter big time. This is more than just lip service: they illustrate it by allowing their customer base to be in charge of around 2 percent of the bonus pool (Ulrich et al., 2012). Such a decision wouldn’t be popular because employees might feel that consumers simply aren’t qualified to make such decisions or don’t have enough exposure to the employees to do so. Furthermore, such as decision would be logistically complicated to administer. It means reaching out to customers by phone, email or letter, getting their responses, tallying the responses, checking their responses and moving forward on their decisions. Obviously, it would be easier to do this internally. But this decision send a clear message to the staff team: customers matter. In conclusion, the playing field of the modern HR department is akin to a battle-field. It is at time treacherous and uncertain. Sometimes the best decisions are obvious but will cause obvious discord. Sometimes the best path to take is completely nebulous. Looking at the past mistakes of other companies can help light the way as well as maintaining a strong ethical background and a sense of the bigger picture of the company’s visions and goals.