I will be discussing the impact ethics have on a company, the public, as well as their employees. I talk further in depth of ethics dealing with the major scandals that lead to the Sarbanes-Oxley act, dealing with attitudes and behaviors within the company and outside of the company (internal, external), and the teaching of ethics.
The Sarbanes-Oxley act (SOX) was passed by Congress to make certain that publicly trades companies follow accounting controls that would reduce the likelihood of illegal and unethical behaviors. “The startling and recent scandals in the stock market have generated significant losses to investors and, for a time, they left the American economy in virtual chaos. In today's market, trust does not seem to be prudent. From financial statements and market analysts to politicians and company executives, enough evidence of impropriety has surfaced recently to raise investor skepticism for years to come…concerns regarding the ethical behavior of business enterprises and the effectiveness of accounting and auditing standards.” (Gregory, M. Larson, et.al). After so many scandals had went on for so long, congress wanted to regain the public trust back into accounting profession. So, former President George W. Bush signed the SOX law to change the way business conduct businesses and how the accounting professions perform audits. All public companies must make the necessary changes to abide by requirements of SOX law. It includes "all the activities that managers engage in to attract and retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals" (Gregory, M. Larson, et.al). The five major components of a human resource management system typically present in organizations are recruitment and selection, training and development, performance appraisal and feedback, pay and benefits, and labor relations. HR profession had to become strict with the rules and guidelines for everyone who makes up a business to follow. “HR dimensions of the Sarbanes-Oxley Act include protection for whistleblowers; requirements to develop, clarify, and implement codes of ethics; increased fines and penalties for unethical actions; greater efforts to ensure independence in fact and appearance; restrictions involving compensation programs; increased fiduciary responsibilities; and employment provisions” (Gregory, M. Larson, et.al).
Attitudes and Behavior
“Performance appraisals over the years have increasingly become a prime focus in the psychology and organizational behavior fields. However, few companies use appraisals of their managers as perceived by the subordinates” (Kantor, Jeffrey, and Jacob Weisberg). Normally the employees will give feedback performance to HR on their manager performance, attitudes, behavior, and etc. This in doing helps the HR to point out the manager weakness, area they need better improving on. “there are real and substantial costs to unethical behavior including: deterioration of relationships; mistrust; negative impact on employee productivity; stifling of employee creativity; information flows throughout the company become ineffective; employee loyalty declines and absenteeism and labor turnover increases” (Kantor, Jeffrey, and Jacob Weisberg). HR set standard when dealing with employee’s diversities and inappropriate behavior by introducing the company code of ethics which outlines attitudes and behaviors towards customers, coworkers and managers. “This is virtually a self-regulation process which is defined in the literature as a situation whereby the existence of formal rules (codes of conduct) affect attitudes and behavior” (Kantor, Jeffrey, and Jacob Weisberg).
Teaching of Ethics
“Most people want to do the "right thing." This is true in business as well as in life. It is the duty of business educators to provide a framework for students and peers to judge the operational, legal, and ethical rigor of managerial decisions. This article focuses attention on the human resource management function. The importance of human resource management (HRM) practices to the success of the firm is accepted by scholars and practitioners alike…” (Charles, G. Smith, and D. Hindman Hugh). In order for ethics to be taught. It must first start at home. I believe people should adopt ethics into their daily life. Also, in their children’s, professions, ethics is simply knowing right from wrong. Which should have been taught at home! “An industrial relations system is a conceptual tool used to order one's beliefs, attitudes, and behavior about the manner in which people deal with one another at work. Its purpose is to provide an understanding of the development and operation of structures and processes involved in the production of goods and services as they relate to the parties involved and to the larger society” (Charles, G. Smith, and D. Hindman Hugh). Once you have grasps the knowledge of how an individual talks, deals, handle any situation with a co-worker while at the workforce. You can apply that structure and formality with the code of ethics HR has written under the business code of conduct.
Charles, G. Smith, and D. Hindman Hugh. "How Industrial Relations Informs the Teaching of Ethics in Human Resource Management." Southern Business Review 32.2 (2007): 16-32. ProQuest. Web. 13 Dec. 2013
Gregory, M. Larson, H. Thompson James, and Bruce Walters. "HUMAN RESOURCE ASPECTS OF THE SARBANES-OXLEY ACT." Journal of Legal, Ethical and Regulatory Issues 7.1 (2004): 143-54. ProQuest. Web. 13 Dec. 2013.
Kantor, Jeffrey, and Jacob Weisberg. "Ethical Attitudes and Ethical Behavior: Are Managers Role Models?" International Journal of Manpower 23.8 (2002): 687-703. ProQuest. Web. 13 Dec. 2013.
Klikauer, Thomas. "The Ethics of Employment Relations and Human Resource Management: Kohlberg's Seven Levels of Morality." New Zealand Journal of Employment Relations (Online) 37.2 (2012): 1-20. ProQuest. Web. 13 Dec. 2013.