HUMAN RESOURCE MANAGEMENT AND BUSINESS ETHICS

A new dimension towards an integrated work structure in a liberalised market

T.Mbewa/KCCT/June 2002

Abstract

This paper looks at recruitment management and business ethics in a liberalised competitive market in the 21st century. The survival and success of any organisation in a liberalised market depends on a sound set of beliefs and decisions aimed at certain actions. A brief look at the relationship between the workers and the changing organisation strategy reveals that the two players govern the successful competition of the former. A successful organisation and a happy people are identified by their high productivity and profitability compared to that of their competitors.

Corporate strategy on the other hand must focus on business competitive advantage based on a strategic human resource management framework. Strategies for recruitment must adopt the corporate strategic approach. This paper further looks at the internal and external challenges which threatens the existence of the organisation. Notably is the fact that in the past, monopoly had no competition and as such the organisation had no problem copying with unexpected change. In the present millennium however, monopoly can only imply a huge advantage to a system that is able to take advantage of shaping change better than their rivals. One of the tools required to adequately face the competitive market, is recruitment and selection of skilled workforce and adherence to business ethics. Recruitment and selection is seen as a marketing tool which may have a positive or negative effect on the achievement of business. The manner in which a potential candidate is treated in an organisation can mar or enhance the image and profitability of the firm. Workers should be treated well since unethical practises by the organisations to employees or the surrounding community may easily influence its collapse.

Finally, the paper makes the conclusion that, the feasibility of integrating recruitment policies with business strategy will depend on which strategy the organisation adopts and that there is nothing in business which can make adjustment towards ethical behaviour impossible.

1. Introduction

The 21st century executive must adapt strategic thinking directions and planning. Why the strategic direction and corporate business strategy? In the fast changing business world, the survival and success of any organisation depends on a sound set of beliefs on which it basis all its policies and actions (Sagimo, 2002). The faithful adherence to these beliefs further enhances the success of the organisation in a competitive environment. In order to meet the challenge of the changing world, and compete effectively in the liberalised market, an organisation must be prepared to change everything about itself, except for the set beliefs. The recruitment of workers, their behaviour and the evolution of the system on the other hand, govern the interaction of competitors. The purpose of strategic management and ethical issues in this scenario is for the organisation to have courage to base its actions on the rules that govern the interaction of competitors and thereby beat both competition and evolution. Since most people say that, “experience is the best teacher”, it is preferable to learn from other peoples’ experience and mistakes. In order to lead in a competitive and liberalised market therefore, it is important to pit others’ experience and mistakes against our hope and deal with reality as it is, not as we wish it to be. This is the more reason to adapt an all-embracing corporate business out-look that includes the strategic human resources approach at its centre.

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2. Corporate Strategy

Corporate strategy is a management activity, which involves directing the organisation towards agreed goal (Wright, 1997). It is focused on business lifecycles, competitive advantage and strategic management styles with a strategic human resource management framework. Corporate strategies include among others, strategies for recruitment and selection, which will reflect the proposed corporate strategic approach. The notion of strategic recruitment and selection is a system of linking recruitment and selection to the overall organisational strategy and aiming to match the flow of personnel to emerging business strategies as a key integrated task. The exercise involves wide scale use of both internal and external labour markets, that is, from within the organisation and outside it, too.

For an effective contribution to the achievement of corporate objectives, human resource policies need to fit together. In particular, recruitment and selection strategies should have strategic links with human resource planning. For example, recruitment advertisements that sell a dynamic state of the art of the organisation can lead to disappointment if they are followed by lack of administration, poor selection practices and lengthy delays to respond. Recruits attracted to organisations selling care, commitment and partnership will be disappointed by selection procedures, which fail to sell the same message and thus create a negative impact on the business.

Recruitment methods may be designed to ensure that people understand the true nature of the job for which they are applying. For instance some organisations indicate to the applicant that they must learn several jobs, change shifts, work overtime, make and take constructive criticisms and submit constant suggestions in improving efficiency. In some cases, selection processes may also differ in that teams may play a significant role in the selection of new team members or more radically, family members of applicants may be evaluated as part of the selection process to ensure total commitment to the organisation. In perfection, human resource policies should be coherent and totally

integrated with the organisational business strategies of which the human resource is central. Recruitment procedure that may have a negative effect on productivity should be avoided at all cost.

3. Organisational Change and Challenges

Leaders in a business organisation are usually busy dealing with the pace of change and intensity of competition while trying to transform their organisation so as to win. A successful organisation and a happy people are identified by their higher performance and profitability compared to their competitors. They grow faster than their competitors and are recognised as leaders in some part of their industries. Every team and organisation however, is faced with two major immediate challenges:

How to deal with a hostile environment so as to keep at the top.

How to organise its members to do the hunt and to share the results with them in such a way as to be happy to continue the partnership.

The first challenge deals with external competition and poses the problem of strategy and how to deal with external and internal environment. The second deals with the internal performance and poses the problem of integration. Here survival is dependent on how to devise solutions for the two problems in the external and internal world. As the size of a successful organisation grows, new tools are invented, sophisticated methods of protection are developed, and a new challenge emerges on how to cope with the changes. In the past, monopoly had done it all. But according to Davidson (1995) monopoly can only imply a huge advantage to a group that is able to take advantage of shaping change better than their rivals.

In order for an organisation to meet the challenges of both the external and internal environment, human resource requirements must be properly planned and executed. This

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is done through recruitment and selection activity, which ensures the achievement of the organisation’s anticipated needs for reducing or increasing staff.

4. Recruitment, Selection and Corporate Strategy

Recruitment and selection activities are aimed at attracting the right persons in sufficient numbers into the organisation in a cost effective and timely manner. It ensures that the organisation has the required skills and the supporting procedures to enable it to meet its need for sufficient and suitable staff to face the competitive market through its business strategy.

In this millennium, the most appropriate recruitment and selection technique are those which balance the requirements of organisations with those of the employees. The approach adopted will however be determined partly by the external environment and the labour market forces.

There are a number of issues pertinent to recruitment and selection policy and practices. There is a need for business strategy, recruitment and selection policies to be compatible with corporate goals and other human resources initiatives. Coupled with this, consideration must also be given to ethical issues in recruitment and selection, especially in equality of opportunity, conformance and control.

4.1 Recruitment Policies

Recruitment policies constitute the code of conduct, which the organisation is prepared to follow in its search for the right recruits in the market place. Some policies make such requirements, as the need to advertise and seek candidates on the basis of their ability to perform the job required. Further to that, the organisation will not discriminate unfairly against possible candidates on any grounds such as disabilities, age, gender and ethnicity since every decision and issue can pose ethical questions at any time.

4.2 Recruitment Management Ethics and Marketing Function

Recruitment activities in an organisation represent the marketing activities of the human resource department and the organisation at large. The recruitment should be conducted in a manner that enhances positive reputation of the organisation. Negative marketing in recruitment may include non-response to applicant’s application, keeping applicant waiting for an interview for too long, and lack of feedback to the interview results at the end of the exercise, to indicate whether one is successful or not.

Negative response to some of these recruitment issues may raise the question of ethics. For instance, it is questionable whether it is ethical to invite people on a full day’s interview when they have no chance of being recruited at all. The case at hand is the notion by the interviewee that an internal candidate has already been selected for the job. On the other hand, a person may have already been identified from the external market for the job, and yet continue to carry the exercise a modality. In this case, while the recruitment policy may be seen to be fair, it is unethical, as it has no respect for individuals. This may mar the image of the organisation both internally and externally.

When advertisements fall short of certain information, it infringes on the respect for the individuals. Kitson (1996) notes that, when information given is incomplete, the potential candidate is left wondering whether they can apply for the job or not. In the process of seeking further clarification, they waste time, money and effort in search for such information. If adequate information is given on the other hand, then one can make a decision on whether to apply for the job or not and will save resources which are involved in seeking clarification. A good recruitment practice is ethical in dealing with potential and actual applicants and makes the organisation more efficient in its recruitment management. Further, it helps to minimise errors that might mar the organisation’s reputation both internally and externally as it ensures a rational and logical approach to the

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recruitment of employees throughout the organisation.

4.3 Skill deficiency in recruitment and its ethical effect on Business

Pre-employment screening offers an opportunity for employers to identify job applicants who have the quality to take up the job but have some skill deficiency that may require remedial training. Unfortunately at this stage interviewers often assume that certain candidates automatically master all the necessary skills required to perform the job at hand.

On shortage of qualified skilled labour, both internally and externally, it is necessary that employers become more innovative in their recruitment efforts by reaching all the citizens without discrimination. In most cases, however, such recruits are unskilled and require training in one way or the other. In this millennium, jobs demand new and more complex skills. Even clerical work need computer skills as the current job situations require independent thinking and ability to access situations and take action promptly. On the other hand, “can lack of certain skills, in particular literacy affect business productivity? Some questions however, may be raised as to whether it is ethical to still go ahead and recruit the illiterates?” The impact of illiteracy on business is reading, which according to Arthur (1991), accounts for substantial loss of business, lowers productivity, competitiveness and reduces promotion of the company. A worker, who cannot read instructions adequately, endangers the lives of other workers and survival of the company at large.

4.4 Employment Preference

Tradition views that certain jobs are only appropriate for certain category of people, men or women old or young. In the present millennium however this is no longer practical and is self-defeating from the standpoint of productivity and profitability order. Some companies do not hire old workers or retirees because they claim that they are more prone

to accidents, have poorer attendants, lower productivity and are unwilling to learn new skills and ideas. Some codes of ethics in human resource management in certain countries such as Britain provide guideline on equal opportunities to overcome discrimination in age and disabilities. In the case for age, it is recommended that as a general rule, age should not be used as a primary discriminator in recruitment decisions, where productivity and profitability is the order of the day.

Studies on the performance of older people at work, shows that they have fewer accidents at work, are dedicated and have less absenteeism (Arthur, 1991). Further, there is no data to indicate that one age group is superior to another in business productivity. As for unwillingness to change, older workers have experienced and observed a great deal of social and technological change and are therefore more familiar with the necessity of change. It is further observed that they exhibit less stress on the job, are always available and willing to work, enjoy their jobs more than the average employees, and as a product of the earlier loyalty, they actually stay on a job longer than the younger generation. They rate higher in work performance and lower in turnover than temporary and younger employees.

5. Qualified Workers And Work Options

As businesses strive to recruit qualified workers and accommodate changing working ethics, it is now evident that alternatives to tradition work schedule must be considered in order to maintain effective levels of productivity in a competitive environment.

Employees at all levels require flexible scheduling to fit in with other aspects of their lives. In this millennium, the emerging economic situation is such that employees are likely not to depend on one salary. The employer who prepares for these changes will have many productive recruitment opportunities. With several different work arrangements, the workforce may consist of workers from the lowest cadre to the highest level of management in the organisational set up. Alternative work options which include

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part-time, work at home and evening is required, to fit with all categories of workers.

Most employers have come to realise that there is a great deal of competition for good people, and as such, certain companies officially endorse reduced work schedules since such schedules help workers balance family and job responsibilities in their environment. There are many different work schedules, which can be applied to meet the challenges of the liberalised market. During recruitment and selection, such schedules must be clearly stated to the applicants if they are to be part of work arrangement in their new job. A few of these work alternatives are discussed below.

a) Job Sharing

Job Sharing is an arrangement in which employees divide the responsibilities of one full time job to positions that cannot be separated into two definite part-time jobs. It is seen as solution to some employees such as parents, students, retirees and retrenchees. In this way, employers benefit from broader range of skills and productivity. It eliminates the need for employees to take care of personal business while on duty, facilitates continuation of the job even if one partner terminates the service. It however, has its disadvantages in productivity such as client’s complaints are not dealt with by one person consistently.

b) Flexible work schedule

In flexible work schedule, each worker puts in the same number of hours each day with identical core hours and varying starting and quitting times. It allows employees to balance work demand with those at home and further cope with commuting problems and traffic jams. With the extended hours of coverage of services to the employer, it reduces overtime, absenteeism and turnover, improves work performance and boosts employee’s morale at work.

c) Overtime and compressed work time

Compressed workweek allows employees to work the required forty hours in less than five days. Overtime on the other hand allows one to work more hours than the scheduled time. Both of these alternatives have been found troublesome to employee’s social lives and family programs. They have long-term effects on health and can adversely affect productivity.

d) Work at home

Working at home arrangement includes employees who are electronically linked to their offices and those who do paperwork. But organising workers at home is likely to be difficult and time consuming.

The new workforce brings with it new attitudes and job requirements which necessitates organisations to become familiar with the needs of the worker. They must be prepared to offer appropriate work assignments, environments, and benefits in order to attract and retain qualified employees. During recruitment, issues pertaining to work arrangements must be clearly explained to the applicants, since ethical issues can be raised later on, especially in such areas as health in compressed workweek and overtime.

6. Business Ethics

Applyby (1994) defines ethics as a set of moral principles that govern the action of an individual or group. A code of ethics is therefore a statement of policies and principles that guides the behaviour of all persons. Business ethics are concerned with truth and justice and include aspects which society expects, such as fair competition, social responsibilities and corporate behaviour. Ethics is relevant in business. Many ethical requirements have been incorporated into legislation that is binding in commercial firms. Morality routinely affects strategic decisions in such areas as recruitment, safety, advertising, debt

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provision and collection, productivity and growth in an organisation.

Business ethics poses general questions which are answered by the help of theories of right or wrong (Asch, 1989). The theories may be found in religious code of conduct or moral philosophy, which analyses general concepts used in ethical argument. Some of the well-known moral philosophy is the theory of justice for those who are against meddling with the market forces and distribution justice in such matters as discrimination in recruitment of certain types of workers in the society.

Business ethics depend on the values of individuals and the culture created by the individual ethics of senior management and code of conduct. The actual value system is the moral climate expected by staff in their daily business lives, which will determine the behaviour of the organisation as a whole in order to survive in a competitive environment. Ethics tend to be culturally specific, and what may be considered as unethical in some societies may be considered as normal in others. For example, child labour of 14 years olds is normal in many parts of Asia but not so in the Western world (Welford, 1998).

6.1 Recruitment, Retrenchment and Business Ethics

Wright (1997) cautions that recruitment, which takes place at the same time as headcount is taking place elsewhere in the organisation, requires sensitive handling to maintain respect and approval and care must be taken on ethical issues. On the other hand, restructuring which takes place with a requirement for organisations to recruit staff from the internal market before looking outside faces potential risk. Ethical question that may arise is, “if those at risk are perceived not to possess the competencies required in the changing business environment, would it be ethical to retrench them and then recruit from the external market?” Despite the market picture of surplus of labour, difficulties may remain as particular skills are short in supply. In addition to the invariable economic cycle, organisations may experience difficulties in attracting appropriate candidates on the

external market especially in a particular geographical location, skills and knowledge. Further, are the ethical challenges in the situations where recruitment is undertaken to remove full time jobs in the name of flexibility and rationality.

6.2 Management Decision-Making and Business Ethics

There are certain factors affecting a manager involved in making decisions on business ethical problems. Some of these are government regulations and laws, organisation code of ethics, needs of the organisation, managers’ personal standards, social and political pressures. Organisations should be aware and respond to the social issues affecting the running of their businesses. Appleby (1994) advises that, companies should act early in the life cycle of any social issue so that they can enjoy the largest amount of managerial discretion over the result. Discrimination in recruitment whether from internal or external manpower, can equally shake the credibility of an organisation with the consequence of affecting its business dealings outside. In this case it is suggested that, if businesses have difficulty in self-regulating their activities, then the government should make regulation to assist their existence.

6.3 Ethical Issues In Strategic Decision-Making

Ethical questions addressed in decision-making must be concrete and specific. For instance one should ask such straight questions as “Would it be fair to make a certain number of employees redundant given an unexpected fall in profits in economic recession?”, “Is it morally justifiable to pay creditors late?”, or, “Would it be right to discharge toxic waste in a residential area without telling the resident community?” When the profound questions are made explicit, it is hard to ignore state of affairs without considering the ethical aspect of the matter that will eventually affect the progress of the business.

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6.4 Corporate Responsibility

Corporate responsibility has its roots in some key philosophical debates over ethics, values, equity and equality (Welford, 1998). Many of the shifts in political attitudes towards firms reflect abuse by specific companies and specific business leaders. Such abuses, which touch on business ethics, include the repression of workers, misappropriation of funds, bribery associated with deals and environmental mismanagement. Corporate decisions are linked with business ethics and the defined ethics determine corporate performance now and in the future.

A company has various stakeholders: employees, customers, shareholders, financial institutions, suppliers, the government and local communities. It has responsibilities to these stakeholders and must balance their competing demands put upon it by the different groups. As a result of this, ethical stand of a company will be influenced both by internal values and external pressures. Pressures have grown on companies because stakeholders have become increasingly interested in the activities of businesses. This is further enhanced by easy and faster accessibility to information through the improved communications technology. The company must device a way on how to deal with their various demands without loosing its credibility.

6.5 Ethics Committee

In a business environment, an appointed ethics committee should enhance a statement on code of ethics. The committee should hold regular meetings, check and enforce violations, review and update the codes, to show the commitment of the organisation to the principle. Ethical standards differ among nations and societies

and can cause a great concern when a business has various offices and branches in different parts of the world. For instance while it may be normal to make payment in some countries to expedite business transactions, this may be considered unethical in other countries. Further, in other countries it may be normal to pay some workers less than others of the same qualification. It is therefore important to appoint ethics committee who sees to it that the prescribed ethics are adhered to.

7. Summary and Conclusion

In order to have a coherent business social strategy, organisations need a consistent set of business ethics. Furthermore, the stakeholders’ accountability makes it difficult to separate ethical consideration from other issues such as the treatment of different age groups, the handicapped, retirees and the protection of the surrounding communities.

There is nothing in the nature of people or businesses, which make adjustment towards ethical behaviour impossible except the vested interests held by those in power, which must be addressed. This is one of the major challenges which must be overcome. The feasibility of integrating policies especially recruitment policies with business strategy will depend on which perspective or strategy and strategy-making the company adopts. Strategic decision-making comprises long-term direction of the organisation and the scope of its activities in the market share and their locations. One of the strategies is proper management of the recruitment process, which must be linked with corporate strategy, deployment, and effective utilisation of the human resources for maximum productivity and sustainable growth through profitability for business survival.

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