Ethics and the Law

Is it legal? Is not a perfect guide about what is ethical? You can make a decision that involves ethics (such as firing an employee) using what’s legal as a guide. However, that doesn’t mean the decision will be ethical. Firing a 39 year old employee with 20 years tenure without notice or cause may be legal but many would view doing so as unethical. Patrick Gnazzo, vice president for business practices at United Technologies Corp. (and former trial lawyer) put it this way: Don’t lie, don’t cheat, and don’t steal. We all raised with essentially the same values. Ethics means making decisions that represent what you stand for, not just what the laws are. Sometimes behavior is both illegal an unethical. For example, one huge meat processor had to respond to a federal indictment charging it with smuggling illegal immigrants from Mexico to cut factory costs.

As far as the ethical conduct of commercial business in India is concerned the Companies Act of 1952 and the market regulator. Securities and Exchange Board of India (SEBI) have laid down corporate governance norms. Independent regulators like the Reserve of Bank of India (RBI) for banking and the Telecom Regulatory authority of India (TRAI) for the telecom sector also set operational norms for ethical behavior and act as watch dogs. Various labor legislations set the frame work for dealing with employees who are directly and indirectly employed by firms.

Ethics, fair Treatment and Justice

Managing human resources often requires making decisions in which fairness plays a role you hire one candidate and reject another, promote one and demote another, pay one more and one less and settle one’s grievances while rejecting another’s. How employees react to these decisions depends, to some extent, on whether they think the decisions and the processes that led up to they were fair.

Fairness is inseparable from what most people think of as Justice. A company that is just is among other things equitable fair impartial and unbiased in how it does things, With respect to employee relations, experts generally define organizational justice in terms of its three components – distributive justice, procedural justice and interpersonal or interactive justice.

Distributive justice:

The fairness and justice of a decision’s result

Procedural justice

The fairness of the process

Interaction (inter personal) justice:

The manner in which managers conduct their interpersonal dealings with employees.

1) Distributive justice: refers to the fairness and justice of the decision’s result (for instance. Did I get an equitable pay rise?)
2) Procedural justice refers to the fairness of the process (for instance Is the process my company uses to allocate merit raises fair?)
3) Interactional or interpersonal justice refers to the manner in which managers conduct their interpersonal dealings with employees and in particular to the degree to which they treat employees with dignity as opposed to abuse or disrespect.

Employees tend to correlate fairness, justice and ethics with each other when it comes to employers. One study focused on how employees reacted to fair treatment. It concluded that to the extent that survey respondents believed that employees were treated fairly [they] reported less unethical behavior in their organizations. They also reported that employees and their organizations were more aware of ethical issues [and] more likely to ask for ethical advice. Similarly [H]ring performance evaluation discipline and terminations can be ethical issues because they all involve honesty fairness and the dignity of the individual. Most employees associate fairness with ethical behavior. In practice, fair treatment reflects concrete actions such as employees are trusted employees are treated with respect and employees are treated fairly. The bottom line is that ethics, fairness, and justice tend to be intertwined.