Current Ethical and Unethical issues in discipline of Human Resource Management (HRM), Finance.

Ethics

• Ethics are moral principles that govern a person's behaviour or the conducting of an activity.

• The word Ethics stem from the greek word ethike which attribute to a social environment referred to a social environment referred to as ethos or social millieu, or we can say the general word Ethics means what is right to do and what is wrong to do.

• Ethics or moral philosophy is a branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct.

• Ethics is concerned with what is good for individuals and society and is also described as moral philosophy.

Business Ethics

• Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics, that examines ethical principles and moral or ethical problems that can arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. These ethics originate from individuals, organizational statements or from the legal system. These norms, values, ethical, and unethical practices are the principles that guide a business. They help those businesses maintain a better connection with their stakeholders.

• Business ethics is the behavior that how an organisation deal with the world. The Ethics of the business can be diverse .They are applied not only on how the business interact with the world but also to interact with an individual.

• If an organisation want to run their  in the competitive market then it is necessary to follow the ethics in business for moral values, norms, and as well as for the society.It would be beneficial for an organisation to follow the business ethics.It is the responsibility of the organisation to maintain the ethical status.

Human Resource

• Human resource management is the strategic approach to the effective management of people in an organization, so that they help the business gain a competitive advantage. It is designed to maximize employee performance in service of an employer's strategic objectives.

• Also called personnel or talent management human resource management involves overseeing all things related to managing an organization’s human capital.

• Human resource is defined as managing laborers or employee in an organisation in an efficient and effective manner for the betterment of the organisation.

• Human resource management is a contemporary, umbrella term used to describe the management and development of employees in an organization.

Ethical Issues Related to Human Resource

• Of all the organisational issues or problems, ethical issues are the most difficult ones to handle or deal with. Issues arise in employment, remuneration and benefits, industrial relations and health and safety.

Cash and Compensation Plans

• There are ethical issues pertaining to the salaries, executive perquisites and the annual incentive plans etc. The HR manager is often under pressure to raise the band of base salaries. There is increased pressure upon the HR function to pay out more incentives to the top management and the justification for the same is put as the need to retain the latter. Further ethical issues crop in HR when long term compensation and incentive plans are designed in consultation with the CEO or an external consultant. While deciding upon the payout there is pressure on favouring the interests of the top management in comparison to that of other employees and stakeholders.

Race, Gender and Disability

• In many organisations till recently the employees were differentiated on the basis of their race, gender, origin and their disability. Not anymore ever since the evolution of laws and a regulatory framework that has standardised employee behaviours towards each other. In good organisations the only differentiating factor is performance! In addition the power of filing litigation has made put organisations on the back foot. Managers are trained for aligning behaviour and avoiding discriminatory practices.

Employment Issues

• Human resource practitioners face bigger dilemmas in employee hiring. One dilemma stems from the pressure of hiring someone who has been recommended by a friend, someone from your family or a top executive. Yet another dilemma arises when you have already hired someone and he/she is later found to have presented fake documents. Two cases may arise and both are critical. In the first case the person has been trained and the position is critical. In the second case the person has been highly appreciated for his work during his short stint or he/she has a unique blend of skills with the right kind of attitude. Both the situations are sufficiently dilemmatic to leave even a seasoned HR campaigner in a fix.

Privacy Issues

• Any person working with any organisation is an individual and has a personal side to his existence which he demands should be respected and not intruded. The employee wants the organisation to protect his/her personal life. This personal life may encompass things like his religious, political and social beliefs etc. However certain situations may arise that mandate snooping behaviours on the part of the employer. For example, mail scanning is one of the activities used to track the activities of an employee who is believed to be engaged in activities that are not in the larger benefit of the organisation.

Similarly there are ethical issues in HR that pertain to health and safety, restructuring and layoffs and employee responsibilities. There is still a debate going on whether such activities are ethically permitted or not. Layoffs, for example, are no more considered as unethical as they were thought of in the past.

Unethical issues of Human Resources

Examples for unethical issues are as follows:-

Reasons why above practices are wrong are as follows,

•  Unethical behavior is an action that falls outside of what is considered morally right or proper for a person, a profession or an industry. Individuals can behave unethically, as can businesses , professionals and politicians.The employees, function, involvement, loyalty,dedication, discipline,and decision making play a big role in the success of the organisation . However great facilities, machinery,and building a corporate provides,it is ultimately the people who have to make them workable and to achieve the organisations success.More or less organisation sources is obvious signs of unethical behavior you may have faced with public problems of ultimately loss business .some of the problems promoting ethical business on the right path are lying about performance , breach of contact ,crossing harassment,failure to maintain safety in workplace.

Finance

• Finance is a field that is concerned with the allocation of assets and liabilities over space and time, often under conditions of risk or uncertainty. Finance can also be defined as the art of money management.

• Participants in the market aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be split into three sub categories: Public finance, Corporate finance, Personal Finance.

• Public finance is the study of the role of the government in the economy. It is the branch of economics which assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achieve desirable effects and avoid undesirable ones.

• Corporate finance consists of the financial activities related to running a corporation, usually with a division or department set up to oversee the financial activities.

• Personal finance is the financial management which an individual or a family unit performs to budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.

Ethical issues of Finance

Financial managers prepare reports, oversee accounting functions, plan investment strategies and direct cash management functions. They also are involved in branch management functions at banks and other financial institutions. They are required to uphold the highest ethical standards because internal and external stakeholders depend on transparent, timely and complete financial documents to make decisions.

• Ethical issues of finance are involved in the managerial activities at financial institutions i.e. BANK.They are required to mark the highest ethical standards because of the internal and external stakeholders are completely dependent on the transparency of the financial status of the organisation.The financial document helps to make decision in an organisation are transparency, integrity, accuracy and time period.

Accuracy

• A company’s financial manager ensures that all financial publications accurately and fairly reflect the financial condition of the company. Accounting errors and financial fraud, such as what was seen in the cases of Enron and WorldCom, damage the interests of shareholders, employees and affect confidence in the financial system. Some organizations document ethics guidelines specifically for financial managers. For example, the ethics code of the United States Postal Service requires senior financial managers to maintain accurate records and books, maintain internal controls and prepare financial documents in accordance with generally accepted accounting principles.

Transparency

• Financial documents reflect a company's performance relative to its peers, and its internal strengths and weaknesses. Regulatory agencies require publicly traded companies to submit periodic financial statements and make full disclosures of material information. A change in the senior executive ranks, buyout offers, loss or win of a major contract and new product launches are examples of material information. Transparency also means explaining financial information clearly, especially for those who aren't familiar with the company’s operations. Financial managers should not hide, obscure or otherwise render relevant financial information impossible for ordinary shareholders to understand.

Timeliness

• Timely financial information is just as important as accurate and transparent information. Management, investors and other stakeholders require timely information to make the right decisions. Many cases exist of a publicly traded company's stock reacting sharply and negatively to negative earnings surprises or unpleasant product-related news. For example, a company should promptly disclose manufacturing problems that could temporarily affect sales. Similarly, the company should not hold back news of a major contract loss in the hope that it can replace the lost revenue with new contracts.

Integrity

• Financial managers should strive for unimpeachable integrity. Customers, shareholders and employees should be able to trust a financial manager's words. Managers should not allow prejudice, bias and conflicts of interest to influence their actions. Managers should disclose real or apparent conflicts of interest, such as an investment position in a stock or an ownership interest in one of the bidding companies for a procurement contract. The structure of certain stock-based incentive compensation schemes could also result in ethical issues.

• For example, managers might be tempted to manipulate stock prices by selectively disclosing or not disclosing relevant financial information.

Unethical issues of Finance

• Unethical behavior is an action that falls outside of what is considered morally right or proper for a person, a profession or an industry. Individuals can behave unethically, as can businesses, professionals and politicians.

• The unethical practices in accounting are more in proprietary, partnership and private limited companies. It is at lower levels in public limited companies and Multi National Companies.

• Some of the unethical behaviours in finance are as follows:-

1. Deliberate abnormal delays in payments to (a) Vendors, (b) Dealers commissions and promotion costs.
2. Delays in paying wages, interest to financiers, incentive, bonus to employees.
3. Holding up bills of vendors on silly reasons and ultimately buying from others to avoid payment to earlier vendors.
4. Not prompt in statutory payments of  PF, Sales Tax and Excise Duties.
5. Quick release of payments to known or adjustment parties and delaying payment to others.
6. Taking private finance only from those who are ready to do personal favor's to the finance department head.

Thank You.

By :- J.G.M.N Saan

Section :- 1802

Roll No. :- A15