The Importance of Ethics and Compliance in HR: CIPD Level 3 Perspective

When you’re at the beginning of your HR career and you’re studying an entry-level qualification like the CIPD Level 3 Foundation Certificate in People Practice, it’s natural that your head is going to be filled with questions. After all, Human Resources is a huge area, with lots of interconnecting parts. 

One of the biggest themes that those studying a CIPD Level 3 qualification are likely to come up against is ethics and compliance. These two topics are absolutely crucial to the well-functioning of every HR department and, whilst they might not sound very interesting at first glance, without an understanding of them even the most efficient department would collapse. 

Here’s a guide to just why ethics and compliance in HR is so important, written specifically for those currently studying a CIPD Level 3 qualification. 

Ethics and Human Resources

Ethics: helping HR stay professional

Ethics are essentially principles: foundational ideas that form the basis of the way that we understand and interact with the world. 

It sounds ridiculous to even have to explain why, but ethics are a good thing because they help us contribute to the world in a positive way. They help us determine right from wrong and they guide the way we behave so that we can contribute productively to society and live peacefully with others.

When it comes to a business or an organisational context, ethics perform broadly the same function as they do in an individual context: they help your organisation to follow the rules and behaviours that society expects from them, allowing them to contribute positively to society. 

As the department whose overwhelming function is to manage the ‘people’ aspect of an organisation (hence the ‘People Practice’ in the title of the CIPD Level 3 qualification) – an area filled with a range of challenges – it’s clear that underlying rules and principles are essential to keeping HR departments on the right track. 

In a HR context, ethics and principles are as fundamental to your department as air is to breathing. As the department that deals with a range of confidential, personal matters – from running grievance and disciplinary processes, through to completing payroll each month and overseeing performance reviews – being able to complete tasks according to the required legislation, conventions and quality is absolutely essential to its function.

There are also other, more subtle reasons that ethics are useful in a work context – besides being nice to others.

In a business environment driven by the relentless drive for growth, the search for wider profit-margins and the quest for ever-more dominant brand recognition, working according to a set of guiding principles and morals is crucial to your success as a HR professional. Here are some of the other key reasons why ethics and compliance are so important in HR:

1. They can help you stay on the right side of the law

It almost goes without saying that there is a huge array of legislation affecting the way that companies work and behave. Whether it’s laws about accounting practices, laws about health and safety in the workplace, or even laws about how you recycle waste, there are a range of ways in which legislation has a direct impact on the workplace. 

When it comes to HR, the legislation that you’re most likely to have to deal with intimately is employment law. As Human Resources departments deal with the people-function at an organisation (hence the name, ‘human’ resources), you’ll be responsible for carrying out a huge range of responsibilities that are directly related to the employees of your organisation. Think of things like:

• Grievance processes
• Disciplinary processes
• Capability reviews
• Maternity and Paternity leave
• Recruitment and resignation
• Redundancy processes
• Industrial Action disputes

Employers can’t just go gung-ho into a situation involving employees at work without following the existing rules, processes and policies that exist in law to protect workers and the public from exploitation. This type of legislation is known as ‘employment law’.

Employment law can be a tricky field to navigate, full of potential pitfalls for even the most seasoned of HR professionals. Fall foul of employment law, and your organisation could risk prosecution and massive fines. 

 One common way that organisations reduce the risk of situations like this occurring is by making sure that they comply with the law in everything they do. Adopting clear ethics helps to focus behaviour at a company and align the day-to-day activities of an organisation with the realities of legislation. 

2. It can improve recruitment and retention

Maintaining strong values and ethics has been shown to play an important role in improving recruitment and retention at organisations. 

According to a recent ‘LRN Ethics Study: Employee engagement’ report, 94% of employees surveyed said that it was ‘critical or important’ that their organisation is ethical. A further 43% of employees said that they had even left a job previously because of concerns over ethics and standards. 

Recruitment and retention represent challenging areas to most Human Resources departments. Recruitment, for example, can be a significant drain on resources, costing a lot of time and money to get right – with no guarantee that the candidate hired at the end will stay with the company long enough to provide a clear ROI (Return on Investment).

As a result, most organisations are looking for ways that they can make their businesses more attractive, so that top candidates are attracted to them and talented employees stay for longer. After all, if a candidate that you’ve spent hours and hundreds of pounds recruiting leaves after a few months, that’s ultimately a huge waste of resources. 

By adopting clear values and being honest about them, many organisations are able to tap into the innate need that we have as humans to be proud of the work that we do. Celebrate the values, ethics and morals that your organisation has and you’ll be able to support a culture of positivity across your company, improving retention and attracting the top tier candidates when recruiting. 

3. It can enhance and strengthen your brand reputation

Being called ‘compliant’ isn’t exactly something that would thrill most of us if we were being described by a friend to someone who had never met us before. In the context of the world of business and third-sector/public organisations though, compliance is absolutely everything. 

Compliance is an unexpectedly attractive word when it comes to organisations and their reputations. 

At the heart of the issue is the fact that most customers and suppliers want reliable, trustworthy partners – they don’t necessarily want unpredictable rock-stars (as fun as that might be).

Having strong ethics and a clear moral responsibility can also help to supercharge your reputation amongst everyone from employees, suppliers and customers. As Thomas Sehested argues in this Forbes article, whilst in the past irreputable companies might have been able to get away with having questionable ethics, the invention of social media and online reviews has made that much harder to get away with now.

 Technology has made the ethics of a company and their moral record much easier to research nowadays. It’s also made their record on compliance a lot simpler to track too. 

4. It can help employee relations

Ensuring that your organisation has a focus on ethics and following clear values can have an added benefit of improving employee relations.

The CIPD describes ethics as a type of ‘moral compass’ that helps both employers and employees build positive working relationships and create a more inclusive, happier and productive workplace. 

Employees, quite rightly, expect employers to act with the utmost integrity and honesty. They place their trust in employers to treat them fairly and with respect. When there is a disconnect between these expectations and reality, employee relations can suffer. Morale can sink. Productivity can plummet. Employees may even take industrial action through their trade union. 

Of course, your organisation being principled in its actions and working according to clear values might not stop all of these things happening – external factors, like the economy and political events, can influence them too. Embedding ethics and morals in your organisation can, however, go a long way to improving the general mood of your internal culture and reduce the risk of avoidable industrial unrest from occurring. 

Ultimately, an organisation that holds clear values and operates ethically is likely to build more trust with employees and thus, reduce the likelihood of employee unrest forming from things that you could easily prevent. 

Ethics and Compliance: One of HR’s Vital Concerns

Arguably, one of the most essential focuses of a HR department should be the ethics of an organisation, and whether they are being complied with. The two topics are mutually interdependent – without ethics, you likely won’t be compliant with legislation and rules; and without compliance, you won’t be able to live up to the ethics of your organisation.

We hope this blog has given you a good introduction to the topic and has helped inform your study on the CIPD Level 3 Foundation Certificate in People Practice!

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