People, money and reputation are three critical factors in business life. Business principles and ethics – or lack thereof – can have a profound effect on an organization's employees, its balance sheet and how customers and consumers view its reputation. Consequently, ethics are vitally important for human resources because they are a reflection of the company and its overall business practices.

Employees Rely on Human Resources Ethics

People are your company's most valuable resource. Without appropriate staffing plans, employee and labor relations, training and development and retention efforts, your business would likely cease operation. The importance of HR ethics in these areas cannot be overstated.

Employees rely on the HR team to exercise discretion, good judgment and solid business principles not just during the hiring process, but throughout each employee's tenure with your company.

Specifically, an employee's reasonable expectation is that he will be treated fairly and with respect. Ethics in HR guarantees that the company meets that expectation.

HR Ethics Underlie Compliance

The expenses associated with noncompliance can cause a business to go from operating in the black to seeing red if HR engages in unethical business practices. Ethical HR practices are fundamental to your company's compliance with federal, state and local employment laws and regulations. For example, Title VII of the Civil Rights Act of 1964 prohibits discrimination based on factors such as age, race, ethnicity, sex and disability; it is within the HR department's purview to ensure that your company follows the rules.

Unethical business practices by the HR team can create serious legal problems for your business, and ultimately cause you to lose employees and customers. In addition, costly litigation and employment claim settlements will quickly burn through your operating funds and profits, which is why HR must act responsibly and honorably.

Business Reputations Are Built on Principles and Ethics

The employment relationship typically begins with an HR-sponsored orientation, which provides information about the company history, mission and values, code of ethics and business principles. Orientation sessions also include business processes and procedures; however, ethics underlie those processes and procedures.

Employees who complete orientation are then assigned to their work areas and expected to accomplish their tasks while upholding the values and principles of the organization. Regardless of whether an employee is in a back-office role or a customer-facing position, it's important to uphold the values and principles they learned during new-employee orientation.

The ethics training that HR develops is essential for employees to build and sustain customer relationships. Without HR guidance on business ethics, your company reputation could be damaged or even broken.