External Auditing for HRM: Red Tape Crisis?

Welcome to this week’s Discuss HR, the HR blog written for and by members of Human Resources UK.

Today, in our penultimate post of the year, we welcome our latest guest writer Claire Smith.  Claire has written an excellent and well researched article which I’m sure you will find very engaging.  (Ed Scrivener)

External Auditing for HRM: Red Tape Crisis?

Earlier this year a thought provoking article was released by Personnel Today questioning whether HR should be regulated by external auditors.  I can hear the shouts of concern from many HR practitioners even now, but why shouldn’t HR be regulated? As HR professionals, we have a responsibility to add value within our organisations and contribute to organisation success. This covers many HR disciplines, but at the heart of it we are trying to guide the organisation holistically down an ethical and legal path in terms of people management.

If one consults the work of Friedman, it is suggested that organisations should not concern itself with society and considering the effects of people and employees, but simply to make as much money as possible for their shareholders within the parameters of the law. However, times have changed, with society making up the vast consumer base, it is possible to see that where organisations cannot and do not relate to society (including their employees), through their brand and reputation they are unlikely to make the profits as desired. We also saw the fall of great organisations at the start of the 2000’s, where organisations such as Worldcom, Enron, Arthur Andersen, amongst others, had become so focused on the bottom line, they were willing to sacrifice anything to achieve these financial goals.  Although we would hope these days are over, only recently it was highlighted that Starbucks, Google and Amazon alongside the BBC have been in talks regarding tax avoidance in the UK. Although these are not directly related to HR, as owners of performance management tools and often, internal codes of conduct / ethics, surely HR has some accountability. Farrell et al conducted a study, which found that organisations that had a code of ethics in place were found to be breaking these ethics (through whistle blowing), or simply lying about their activities. Kish-Gephart et al follow on from this advising that codes of ethics cannot influence simply through existence. That they need to be effectively enforced through a performance management process, which will discipline for behaviour that is not consistent with the code the organisation sets as expectation. Within this context, it is possible to see the value that may come of external regulation within HR departments.

Although a standard of professionalism is set for HR people, particularly through the CIPD, as HRM strives to add value within its organisation it is possible that HR itself may face some tough decisions in terms of legal interpretation and ethics. Many organisations operate pre employment assessment centres that are held in high regard by practitioners and academics alike. However, the ethical considerations are not without substance, with Pilbeam and Corbridge identifying several unethical practices that can occur; candidates not knowing what to expect thus unable to withdraw in time, observation during informal periods, deprivation of sleep to enable preparation for the following day amongst others. Although not breaking any legal requirement, one might consider why we would wish to undertake these techniques. Alongside a potential unfair disadvantage to those with protected characteristic including, disability, religious or child-care reasons why a candidate may not wish to stay overnight. Further to selection activities, it has been known for employers to dismiss employees then re-hire on a substantially lower package. This follows as another aspect where HR are traditionally in a position of direct influence to ensure the organisation operates within legislative requirements. This practice of dismissal then re-hire could certainly be considered as an opportunity for employees to raise a case for unfair dismissal within the UK. This also does not add up to Ulrich et al comment that HR “represent employee interests…”

As a HR professional, friends have occasionally consulted me for advice when finding themselves in questionable situations at work. These queries are often related to acts of indirect discrimination although some have felt directly discriminated against – a clear legal and ethical issue. Mostly I suggest calling ACAS as a place they can get proper advice (and probably tell some of the things that they would prefer not to tell a friend). However, it is clear that many organisations still have issues operating ethically even in aspects that are covered by effective legislation. Raising an employment tribunal is also costly, especially when the person at detriment – the employee – does not have “hard evidence”. It is a big risk.

So, back to the original question of a red tape crisis if we externally audit HR. Yes, it would probably cause us all a bit more work but less so for those who operate legally. It would also encourage the HR departments who are relying on the grey areas of employment law or employees ignorance to operate more ethical and legal processes.

About the author

I commenced a career in HR over 4 years ago at LG Electronics where I played a key position in operating a complete performance management process, participated as part of a European culture and engagement council and managing diversity. After 3 years, I left LG to complete my MA in HRM full-time at University of Wolverhampton where I am completing my dissertation. In the meantime I have acquired a new position at Allegis Group Service, as HR Advisor for the EMEA region.

LinkedIn

*****

Discuss HR is the blog for Human Resources UK, the leading LinkedIn group for those involved with HR in the UK. 

Any source