Should HR be a moral compass for organisations?

Who do you trust more: your employer, media, or the government?

People actually trust their own employer more. That’s according to the latest Edelman Trust Barometer.

In fact, the barometer revealed that two-thirds of employees want employers to take a stand on societal issues. A further 76% of us believe our CEOs should lead on this change, rather than waiting for the government to act.

In a world where employees expect their employers to take responsibility for issues such as climate change, inequality and public health, what can companies do?

More importantly for HR and People teams, what is their role in this changing landscape?

What are business ethics?

Business ethics are the application of ethical values to business behavior, according to the UK’s Institute of Business Ethics. They apply to the actions of individuals and the organisation, across the whole scope of business practices.

They are tricky to define in real terms, however. Some business ethics – such as carbon emissions, equal pay for men and women and protecting customers’ data – are enshrined in law. Yet there are many choices a business is free to make on its own.

For instance, how would you feel if your company had a tobacco or weapons manufacturer as a client? What if your CEO put a freeze on pay-rises, but paid huge bonuses to the senior management team? Or if your company vehemently refused to switch from fossil fuels to renewable energy?

Some of these decisions are driven by profits. At the end of the day, a business’ prime directive is to make money. However, by making less ethical choices, they run the risk of alienating their customers, clients and even their own employees.

Who should oversee business ethics in organisations?

So, who should steer companies’ moral standards?

The responsibility could fall on the C-suite, who oversee major business practices in the organisation.

Alternatively, you could ensure that employees themselves are responsible for overseeing their ethical obligations. The Ethics and Compliance Initiative Global Business Ethics Survey 2018 found that employees whose managers and supervisors talk to them about the importance of ethics are 12 times more likely to speak up when they need to.

The third choice is for a corporate social responsibility (CSR) or sustainability lead or team to look after the ethical standards of the business. They will be exposed to much more content that will keep them informed about the ethical landscape beyond the company and can be invaluable in helping to steer the ethical standards.

However, not all organisations are large enough to have dedicated CSR teams or leads.

As experts in people and a team likely to have their pulse on opinions across the organisation, the fourth and final option could be the HR and People team.

In the words of the UK’s HR professional body the CIPD: “As the experts on people and organisations, People professionals have unique access to staff throughout their careers, as well as opportunities to influence the organisation’s strategy and the way it manages its workforce.”

The Ethical Corporation seems to agree. They quote a Conference Board survey which found 77% of respondents from 214 global companies said they would “like to see a more collaborative approach” between a company’s ethics and HR and People functions.

Yet, while Neil Morrison, HR Director for Severn Trent Water, agrees the two functions should work hand-in-hand, he warns HR and People professionals should maintain a sense of humility.

“I believe everyone has their own moral compass. And I don’t believe that as a profession we should be the first to occupy the moral high ground”, he says.

Morrison believes that “HR professionals have a duty to challenge cultural under-performance before anyone else.” However, while HR and People teams should can define unethical practices, it ultimately falls upon the entire organisation to deliver a truly ethical culture.

Establishing the moral compass of your organisation

Each organisation has the right to define their own ethical standards, with some setting a higher bar than others.

No company can survive by being 100% fast-and-loose with their morals, just as no company can survive by being 100% puritanical. HR and People leaders must strike a balance and decide their approach to every issue individually.

To do that, you could first conduct a listening exercise with your employees to judge how they feel about certain ethical issues, and where they would like to see the company make progress. You could also include questions in your intro and exit interviews, and appraisals.

Next, you could compile the data, produce recommendations for next steps, and present them to your C-suite. You could decide together where your company sits on the scale for key issues such as:

• Are you committed to using only green and renewable energy?
• Do you donate your profits to charitable causes?
• Would your company turn down a supplier, client or customer who was not aligned with your business’ ethics?

The way your organisation answers these questions will help to determine its moral standards. You must then agree how you will highlight these values to employees.

What do you think?

As HR and People leaders, is it our responsibility to make sure employees understand and adhere to our company’s ethical policies? What do you think?