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Ethical Decision Making: It’s Not Academic

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Human resources professionals often do not have time to pontificate on the role of ethics in business and health care. Milton Friedman, the legendary economist, was quoted as saying, "The business of business is business (1970)." Others would argue that ethics do matter. Ethical scandals have plagued health care companies like Columbia/HCA, a featured case study in Business Ethics: Ethical Decision Making and Cases (Ferrell et al., 2008), a leading business ethics textbook. Ethics in human resources in health care is not solely academic; it is a matter of strategic and reputational importance to any senior leadership team and board.

Staying Out of the Headlines... and Off YouTube
Some would argue that health care, particularly nonprofit health care, is different than other industries in terms of having an ethical compass. A glimpse of some recent headlines would not support the claim that health care is different. A headline appearing in the New York Post reads, "Sickening bonuses: Hosp CEO snag $1M amid big health cuts (Klein & Edelman, 2009)." Yet another headline "Hospital bullies take a toll on patient safety: Bad behavior by doctors and others undercuts morale, leads to errors (Aleccia, 2008) appearing on www.msnbc.com. Do you have a plan in place to prevent and manage what the public, at least the media, is regarding as ethical scandals?

It's More Than Staying Out of the Headlines... and Off YouTube
At the door of the HR office, there are some common human resources decisions with ethical dimensions such as:

  • Off-shoring
  • Outsourcing
  • Child labor
  • Reneging on pension and benefits
  • Cutting hours
  • Layoffs
  • Electronic surveillance and monitoring.

Are these ethical issues the domain of the ethics committee and/or human resources? The ethics committees in most hospitals are to be commended for addressing those issues that fall under clinical ethics but far too many do not focus upon organizational ethics. In fact, it has been argued that there is a risk for hospital ethics committees to address business ethical issues because of being co-opted by institutional values (Boyle, 1990). In short, it is akin to "the fox guarding the hen house." Winstanley and Woodall (2000) argue that human resources management holds the moral stewardship of organizations. Furthermore, it has been argued that human resources management is a key part of business ethics (Trevino & Nelson, 2010).

This means more than ensuring legal and regulatory compliance. It is well known that what is legal may or may not be ethical (Trevino & Nelson, 2011). For example, it is legal to offer executives incentive bonuses while at the same time freezing pay for frontline workers and even laying off workers in certain departments. However, this may not be ethical.

Ethical Decision Making: Organizational, Group, and Individual Perspectives
Decisions are made at multiple levels in all organizations. Accordingly, it is critical that it is clear which body and/or individual has the responsibility to engage in particular ethical decisions. Nelson (2005) recommends using a "...deliberative, systematic decision-making process (page 14)" to address ethical conflicts. This ethical decision making process should be supported by an ethical infrastructure (Nelson, 2005) characterized by the following critical success factors:

  • Mission statement of organization
  • Values statement of organization
  • Code of conduct/ethics
  • Ethical standards and expectations

An example of how important it is to clarify who is making an ethical decision involves billing and collecting delinquent accounts. Generally, finance is responsible for accounts receivable (A/R). Given the Provena Covenant Medical Center legal case in which the state disqualified the property tax exemption of Provena for aggressive billing and collection policies and practices (Salinsky, 2007), the question arises as to whether HR should be involved by weighing in on decisions regarding the outsourcing of revenue cycle management services, the training of A/R staff of the ethical issues involved in collecting and even training in emotional intelligence to demonstrate caring and compassion even when collecting a delinquent account. The Provena case shows the role of ethics in the community. According to Trevino & Nelson (2011), the community is a stakeholder. In health care, the community has taken on special importance with the introduction of the Form 990 as well as Schedule H and the resurgence of the community benefit standard.

Organizational Level
At the organizational level, the board and senior executives formulate policy decisions and strategic decisions that impact the current and future state of the organization. In fact, board members are regarded as fiduciaries. This fiduciary duty extends beyond overseeing finances. It now encompasses overseeing patient safety and quality (Callendar et al., 2007). This means that they must regard each decision from the perspective of what is in the best interest of the entire organization. Organizations are complex and have multiple stakeholders. What is best for the organization today financially may not be best for current employees today in terms of their income or benefits, for instance, converting a defined benefit plan to a defined contribution plan or increasing health insurance deductibles, premiums, co-insurance, and co-pays?

In short, human resources is vital to the cultivation and maintenance of an ethical organizational culture through the design and delivery of formal systems such as selection systems and performance management systems (Trevino & Nelson, 2011). Do your selection, orientation, training, performance management, and reward systems include values and ethical expectations?

Group/Team Level
At the group or team level, leadership and management teams as well as steering committees make decisions which impact not only operations but patient care systems, the workforce and the community. For instance, a steering committee decides to streamline vendors to approve administrative efficiencies and as a result "underserved" small businesses are no longer eligible to bid on projects. Will this administrative streamlining result in the closure of that small business that relied upon the hospital to meet payroll?

Another illustration is the increase in pay-for-performance (P4P) programs for physicians and other direct-care providers. Wharam and colleagues (2009) have identified eight potential ethical problems with P4P programs. These eight ethical problems sit at the interface among clinical decisions, population health decisions and human resources management decisions. Is HR invited to the table to participate in these decisions which have an ethical implication or does HR have to invite itself to the table because of its unique role, knowledge and skills?

Individual Level
At the individual level, as an example, a nurse manager has to balance the ethical responsibilities to a patient against the ethical responsibilities to employees (Toren & Wagner, 2010), for instance, mandating overtime to cover the shift. HR professionals can use examples such as this one about the nurse manager as vignettes for selection interview questions, as case studies for training and even as dimensions of performance.

At all three levels, an ethical decision-making framework is required for organizations, groups, and individuals to methodically work through prior to formulating a decision. This will not always result in the optimal decision. There will still be ethical lapses. But if deliberation has occurred, then this can prevent many ethical lapses. An ethical decision-making model (Markula Center, 2011) is highlighted below for the use of HR professionals and those that they interact with both inside and outside the organization.

  1. Recognize the ethical issue
  2. Get the facts
  3. Evaluate alternative actions
  4. Make a decision and test it
  5. Act and reflect on the outcome.

A related ethical decision-making tool for HR professionals is to differentiate distributive justice from procedural justice. Distributive justice answers the question, "Was the outcome fair?" And procedural justice answers the question, "Was the way in which the outcome was decided fair?" HR professionals must attend to both and aim for the following response to both questions: Yes.

These recommendations are based upon the assumption that HR assumes a key role and responsibility for designing and managing not only ethical programs in the organization but also creating and sustaining an ethical culture. This suggested role on the part of HR does not diminish the role of clinical or hospital ethics programs but serves to complement those programs.

  1. Appoint a well-respected and well-trained individual to serve as Chief Ethics Officer or in a similar role.
  2. Develop a set of ethics policies, procedures and code of conduct aligned with the mission and strategies of the organization.
  3. Educate and train all managers and staff, including the voluntary medical staff, on spotting ethical dilemmas and then making deliberate ethical decisions before taking action.
  4. Conduct an ethical culture audit of all HR processes and systems to make sure that ethics is woven into the fabric of all HR processes and systems.
  5. Design an ethical reporting process that encourages individuals to report ethical violations in a psychologically and career-safe atmosphere without fear of reprisal.
  6. Integrate the work of ethics in human resources with other organization-wide initiatives like quality, safety, marketing, materials management, legal, compliance, community benefits, risk management and governance.
  7. Differentiate your organization from others by developing a reputation and brand for corporate social responsibility, integrity and ethical sensitivity.

Aleccia, J. 2008. Hospital bullies take a toll patient safety: Bad behavior by doctors and others undercut morale, leads to errors. Healthcare on MSNBC.com, July 9, 2008 (accessed on January 26, 2011). Available at: http://www.msnbc.msn.com/id/25594124/ns/health-health_care/.
Boyle, P.). Business ethics in ethics committees? Hastings Center Report, 20 (5), 37-38, 1990.
Callendar A.N., et al.: Corporate Responsibility and Health Care Quality. Office of the Inspector General, U.S. Department of Health & Human Services and the American Health Lawyers Association, 2007.
Ferrell, D.C., Fraedrich, J. and Ferrell, L. Business ethics: ethical decision making and cases. New York: Houghton Mifflin Company, 2008.
Friedman, M. The social responsibility of business is to increase profits. New York Times Magazine, September 13, 1970.
Klein, M. and Edelman, S. 2009. Sickening bonuses: Hosp CEOs snag $1m amid big health cuts. The New York Post. December 15, 2009 (accessed on February 12, 2011). Available at: http://www.nypost.com/p/news/local/sickening_bonuses_8pL0AI56MMF7wcPa3ibFDM.
Markula Center 2001. Ethical decision making framework (accessed on February 26, 2011). Available at: http://www.scu.edu/ethics/practicing/decision/framework.html.
Nelson, W. An organizational decision making process. Healthcare Executive, July/August, 8-14, 2005.
Salinsky, E. What have you done for me lately? Assessing hospital community benefit. National Health Policy Forum Issue Brief, 821, April 19, 2007, 1-19.
Toren, O. and Wagner, N. Applying an ethical decision making tool to a nurse management dilemma. Nursing Ethics, 17 (3), 393-402, 2010.
Trevino, L.K. and Nelson, K.A.. Managing business ethics: Straight talk about how to do it right. Hoboken, NJ: John Wiley & Sons, 2010.
Wharam, J.F., Paasche-Orlow, M.K., Farber, N.J., Sinsky, C., Rucker, L., Rask, K.J., Figaro, M.K., Braddock, C., Barry, M.J., and Sulmasy, D.P. High quality care and ethical pay-for-performance: A Society of General Internal Medicine Policy Analysis. Journal of General Internal Medicine, 24 (7), 854-859, 2009.
Winstanley, D. and Woodall, J. (Eds.) Ethical issues in contemporary human resource management. Basingstoke: Macmillan, 2000.

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