Legal, Ethical, and Risk Issues in Human Resources

Introduction

Human resources, a modern term for personnel management evolved after industrialization when labour welfare became the main social reform across industries. Thereafter, emergence of trade unions and global competition recognized human resources as the most significant resource of any organization. Human resource management, as defined by Tambe et al (2019) means, ‘the acquisition and retention of new skills, capacities and competencies of an organization through its personnel through the use of various management strategies.’ Various approaches in human resource have been dedicated and embedded to normative, ideological and socio-political domains. However, Greenwood (2013) suggests that the very idea of human resource management raises ethical considerations that are to be placed as ‘central warrants.’ Guest (2011) emphasizes the need to embrace ‘rational and material conceptualizations of actor behaviour’ because human resource management is an inherent ethical activity because it is fundamentally concerned with humans (Greenwood, 2013), their behaviours and different ways and methods to deal with and treat them. Further, the risks are high in the human resource management if it does not add serious ethical analyses (Budd & Scoville, 2005) into its domain as firms seek social legitimacy through its behaviour continuously. With such complexities, studies in United Kingdom (UK) and Australia focused on industrial sociology and critical management studies in early 1990s while in United States of America (USA) the focus was on business ethics, applied psychology and organizational behaviour (Greenwood, 2013).

The impact in human resource management such as transformation of workplaces (Ferris et al, 2004), shifts between labour and capital (Mueller & Carter, 2005) and other changes were reflection of Margret Thatcher and Ronald Reagan’s drive for political, social and economic transformations of 1980s and 1990s (Greenwood, 2013). Thus, the modern human resource management had its origins in USA in 1980s and later spread to UK. Its emergence was mainly contributed to recessionary trends in 1980-82 that exerted considerable pressure in product market and declining power of unions. The economy in USA during these times were facing severe challenges from Japan and comparisons started emerging between the way American workers and Japanese counterparts were managed and handled by companies. In addition, American industries were experiencing declining rates of innovation and thereby it was of utmost importance to reorganize things and create work situations that were free from conflicts and tensions (Armstrong, 2004; Badwel & Holden, 1996; Dankert et al., 1948).

It was during these times that the words like employee ‘commitment’ and ‘empowerment’ became buzzwords in human resource management and it was realized that motivated employees can change the fortunes of the companies. This included involved management styles that responded to market changes and brought success stories of companies like IBM, Hewlett Packard, General Motors and others (Peters & Waterman, 1982).