When human resources fails in its conduct, the fall-out is particularly traumatic for organisations. How can practitioners protect their professional reputation?
Human resources seems more behaved than other executives when it comes to corporate scandals. However, incidents of wrong doing by HR do exist – it just normally goes unreported or doesn’t garner media attention. HR is often seen as the voice of reason or the corporate conscience. When that ‘conscience’ is seen to be on the wrong side of unethical behaviour, the damage to professional reputation can be devastating.
“Whenever HR is the culprit, the reaction seems to be more severe, this is because compliance with rules and regulations is often viewed as the specialty and provenance of HR.”
In 2013, Lucy Adams, who was the head of HR at the BBC, was labelled a liar by a parliamentary committee, and there were sections of the BBC newsroom cheering on in agreement. Accusations were that ‘lip-gloss Lucy’ had allowed the BBC to lose its way by supporting cronyism and fraud in six-figure settlements to executives.
HR on the frontline
One study of ethics programs in Fortune 500 service and industrial firms found that those companies vested ethics and compliance management as much with HR as they did with legal disciplines.
The study also found that HR and legal departments were equally involved in ethics training, while legal, audit and control functions dominated investigations into ethical or legal violations.
If human resources is to continue to be the ‘conscience’ or a leader in ethics, then we had better be clear about what that means and what it takes.
In many companies, the expression used around ethics is ‘compliance programs’, or a code of ethics and code of conduct.
The problem with this is:
- What is legal might not be ethical.
- There is a difference between codes of ethics based on compliance versus those based on integrity and values.
- Audits are too late and retroactive. They don’t deal with problems as they arise or proactively.
Compliance is based on prevention, detection and punishment. ‘Thou shalt not’. Most organisations are still on the low road of a compliance and audit culture.
Employees who are mandated to follow rules or follow the leader can end up in a dangerous situation, depending on who the leader is. In this environment there is less independent thinking or challenge to the rules. Situations change and rules can become defunct.
If we are to stem the flow of corporate scandals such as we have seen with VW and 7-Eleven, both of which had public codes of conduct and ethics, then we need to move up to the high road.
In the new world of technological disruption, where the law cannot keep pace with change, measures of success for CEOs are as much about character, integrity and ethical behaviour. All that requires better moral reasoning and virtue-based leadership.
The high road is when employees are motivated by co-operation, values and integrity. They can examine and challenge rules, and are taught to independently use moral reasoning and judgement.
The high road results in a culture where autonomous morality is present and where each person must also think and act morally beyond rules or instruction. In order to get to the high road, organisations need to invest in leadership development that supports the concept of personal power versus positional power.
The benefits and ROI are clear in the potential avoidance of fines, decreased risk, improved brand image and reputation, access to increasing capital from responsible investors, and improved financial performance. ROI is one reason, but the fundamental reason is that it is the right thing to do and the best way to preserve professional reputation.
Human resources is a leader in this space, but we need to ensure that the profession understands what it takes to lead, take others on that journey, and be the role model that is required of the profession.