Skills HR will need in 2021: Becoming your organisation's ethical compass

The jury’s out on whether keeping firms on the straight and narrow is chiefly HR’s job. But the current climate demands the function plays a key role

Skills HR will need in 2021: Becoming your organisation's ethical compass

Adversity brings out the best in people... and sometimes also the worst. The same can be said of organisations. Over the course of the coronavirus pandemic, corporate behaviour has been in the spotlight – and for some businesses what’s been illuminated is far from admirable. 

Whether regarding executive pay, how job cuts are handled or attitude to money made available by the government, firms are being scrutinised as never before. There is a heightened expectation that, at a time of fear and uncertainty, they will do the right thing – for example, Disney's executive chairman Bob Iger (pictured), who took a pay cut after the company was hit hard by the impact of Covid. But is it HR’s job to keep employers on the straight and narrow? Should HR act as a firm’s ethical compass? And if so, how to go about this?

One senior business executive, with years in HR leadership roles under his belt, is rather scathing of the notion. Speaking anonymously to People Management, he says: “I think everyone should act ethically and it’s no single function’s job to enforce that. It is just all of us behaving like decent human beings, from the top down. Constantly telling HR it’s their responsibility makes them overloaded, stretched and contributes to absolving others of the responsibility – which is exactly the problem we are trying to avoid.”

Judy Keir, group HR director at energy services and smart metering company SMS, adds: “Integrity and ‘doing the right’ thing is the mantra of HR and its raison d’etre. But as far as being the organisation’s ethical compass, they are only one compass point (albeit a very important one). Equally important is the CEO, board, executive team and wider directors. The whole culture is the central point that should ensure the organisation has continued to act ethically throughout the pandemic.”

But Harvey Francis, executive vice president at construction company Skanska UK, believes HR is uniquely placed to act as an ethical compass that can locate “the sweet spot where how a business operates is good for both the company and its shareholders, and also its people” – and in the current climate, more than ever. 

There are now ethical considerations with respect to wider society that make it harder for organisations – and so HR – to sit on the sidelines, says Francis. While the sudden prominence of Black Lives Matter met with a variety of responses, with some companies viewing it as a political or societal issue, Francis dismisses this as far too simplistic because, by definition, what happens in society affects employees, given they are part of the society that is affected. “My personal observation is that the business ethics agenda is now shifting to a new space where it’s being blurred with moral, societal and political considerations,” he says. “People don’t see issues through these separate lenses, they see them as a whole issue that has many facets.”

Severn Trent Water group HRD Neil Morrison is of broadly the same school of thought. “While there’s an argument that says ‘everybody is responsible for ethical behaviour’, and while philosophically that’s true, the reality is that we are most effective when there is clear accountability. HR has a pivotal role to play in ensuring our workplace practices are fair and ethical,” he says.

“That runs from the more obvious aspects, such as supporting inclusion, to the more nuanced, such as ensuring the alignment of executive reward with the wider workforce and working to provide security of employment. We have to have a voice on these matters and more, which means developing an opinion on how we feel our firms should operate and being unafraid to express it. It also means creating the organisational systems that allow people to speak out, raise concerns and be supported in doing so.” 

Underlining the importance of companies behaving ethically in today’s climate, and HR’s role here, is the CIPD’s latest report on this topic, Responsible business through crisis – senior leaders on trust and resilience during Covid-19, based on research among business leaders across a broad array of organisations. It points to the need to show compassion, fairness and inclusion, even while making tough decisions, and to operate ethically while understanding the firm’s role in our communities and society more broadly.

One of the standout strands of the report pertains to trust and fairness, in particular the way in which we are in fact not all in it together – in that many frontline workers, and not only those in the NHS, have had to shoulder a far greater risk during the pandemic. Professor Veronica Hope-Hailey, vice president and dean of the School of Management at Bath University and the report’s lead author, warns that “inequality of risk” is a simmering issue that may boil over, perhaps when business leaders who have temporarily taken pay cuts or deferred bonuses return to full remuneration and the glaring pay differential with frontline workers comes to the fore once more. “This is going to be a bit like coming back from the Second World War,” says Hope-Hailey. 

“There will be a lot of people saying: ‘Well I was in Dunkirk while you were sitting in your study at home. You are now taking a £2m bonus and I’m just above minimum wage.’ I think that is dangerous. HR has to have a voice on this and the responsible businesses must have a recalibration around reward systems. There is an ethics dimension to this and it is HR’s area.”

Also squarely HR’s area is the ethical imperative of ensuring all workers have a voice, says Compass Group chief people officer Sarah Morris. “As a big global employer of frontline key workers this is essential,” she says. “Keeping the business on the straight and narrow is the job of the whole leadership team, but HR is in a position to enable all employees to not only have a voice but to be heard too, whether that be from the board or the frontline. One of the most important roles we play is to ensure that business decisions balance the needs and fair treatment of our people along with other stakeholders, and even more so during a crisis.”

A key skill for HR professionals going forwards, then, may well be the ability to fight for what they believe to be right. It’s a point underlined by the CIPD’s report, which details the plight of one PLC Group HRD who had to take on her audit director over employee productivity. The message HR wanted to promote was: ‘If you’re working from home during a pandemic, we don’t expect the same levels of productivity.’ Whereas the audit director was campaigning for a spreadsheet to log everyone’s time. 

Indeed, there are still apparently plenty of battles, unfortunately, for people professionals to fight. While responsible business is hearteningly crammed full of positive examples of companies behaving ethically, it also makes clear it’s not representative of the entire business community, with the sample skewed by it being those organisations doing good things that are typically most willing to subject themselves to scrutiny and to share. “There are still many dark corners of the economy where businesses are not behaving in good ways,” laments the CIPD’s chief executive, Peter Cheese. 

“They are driven by leaders who don’t care about political correctness and are saying: ‘I’ve got a business to run; you do what I tell you to do.’ What we are trying to do is encourage the HR profession to be more confident, to be able to challenge and to fulfil the role of goalkeeper.”

Another reason it’s crucial for HR to view themselves somewhat as the gatekeepers of responsible business – beyond challenging bad behaviour – comes down to the function’s crucial role in setting the right tone for all staff through its rules and systems, says Cheese. Overly controlling or ill-thought out rules and structures often lead employees to ‘play the game’ within a corporate culture in pursuit of what they think will help them get on, he says. And in so doing, they might behave in a manner they would never dream of in their personal lives. “The more you write rules and measure people by 101 different things, the more they disassociate from their own accountability,” says Cheese. 

“We’ve seen examples like the Mid Staffs Health Trust and others besides where they are so buried in the rules and what they are supposed to be reporting against, they lost sight of what their purpose was.

“If you look at a paradigm of a lot of work cultures of the past, we felt that the right way to have people behave as we want them to was to write a lot of rules. In fact, the paradox is if you give people more autonomy, if you base them on core values and principles, then by and large – unless you are recruiting unethical people – they will do the right thing for you. You have got to set that tone. So I don’t think tone and ethics are different things – good tone should be good ethical practice and competence.”

So promoting ethical behaviour should be a collective endeavour and by no means the sole responsibility of the HR function. Yet there is no function better placed for encouraging and embedding a compassionate and responsible mindset. Given the likely challenging climate of the months and years ahead, people practitioners must hone their ability to navigate ethical quandaries, and where appropriate be more assertive to help their organisations make the right decisions in these difficult times.

Read the rest of our 'Skills HR will need in 2021' series: