Critically evaluate whether HRM practitioners should promote ethical HR practices that improve employee well-being as well as contributing to responsible business and the wider social good.

Strategic Human Resource Management as Ethical Stewardship

Critically evaluate whether HRM practitioners should promote ethical HR practices that improve employee well-being as well as contributing to responsible business and the wider social good. Please use 5 real world examples to support your answer.

Strategic Human Resource Management as Ethical Stewardship

Strategic Management and Competitive Advantage View project
Covenantal Relationships View project

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The user has requested enhancement of the downloaded file.Strategic Human Resource Management
as Ethical Stewardship
Cam Caldwell
Do X. Truong
Pham T. Linh
Anh Tuan

ABSTRACT.
The research about strategic human
resource management (SHRM) has suggested that human
resource professionals (HRPs) have the opportunity to
play a greater role in contributing to organizational success if they are effective in developing systems and policies
aligned with the organization’s values, goals, and mission.
We suggest that HRPs need to raise the standard of their
performance and that the competitive demands of the
modern economic environment create implicit ethical
duties that HRPs owe to their organizations. We define
ethical stewardship as a model of governance that honors
obligations due to the many stakeholders and that maximizes long-term organizational wealth creation. We
propose that if HRPs adopt an ethical stewardship
framework and the qualities of transformative leaders,
they will be more aware of their ethical duties to their
organizations and more effective in helping their organizations to create increased wealth, achieve desired
organizational outcomes, and establish work environments that are more satisfying to employees.
KEY WORDS: strategic human resource management,
ethical stewardship, transformative leadership, roles of
human resource professionals, ethical duties in human
resources, employee commitment
Research about the strategic role of human resource
management (HRM) has exponentially increased
over the last decade (Hartel et al., 2007), with scholars
and practitioners acknowledging the critical importance of ethical issues in HRM as key factors in aligning and guiding organizational success (Hernandez,
2008; Werhane et al. 2004). Scholars have also noted
that the strategic focus of human resource systems is
more effective when aligned with an organization’s
mission, purposes, values, and structure (Becker and
Gerhart, 1996; Becker and Huselid, 2006; Huselid
and Becker, 1997). This article examines the ethical
duties associated with the implementation of HRM
systems in helping organizations to achieve their
potential (cf. Payne and Wayland, 1999) and identifies the leadership roles which make up an ethical
stewardship approach to organizational systems.
We begin by citing the strategic human resource
management (SHRM) literature to provide a contextual framework for examining the importance of the
alignment and congruence of HRM systems (Becker
and Huselid, 2006; Pfeffer, 1998) with the strategic
goals of an organization (Becker et al., 2001). We then
examine the nature and duties of ethical stewardship
(Caldwell et al., 2008) related to the effective governance of organizations. Integrating the importance of
SHRM with this framework of ethical stewardship, we
identify important but sometimes implicit leadership
roles that human resource professionals (HRPs) ought
to contribute in optimizing the ability of their organizations to achieve that long-term wealth creation
(Senge, 2006). We conclude by identifying the contributions of our article and offer comments about the
importance of ethical leadership in creating the work
systems, cultures, and the high level of employee
commitment that are essential for organizations in
today’s global workplace (Pfeffer, 1998, 2007).
Strategic human resource management
Understanding of the important role of SHRM in the
modern organization provides an important context
to understanding the ethical duties owed by HRPs.
The most effective HRPs add value to their organization’s effectiveness by linking people, strategy,
Journal of Business Ethics (2011) 98:171–182 Springer 2010
DOI 10.1007/s10551-010-0541-yvalues, and performance (Becker et al., 2001). This
linking of an organization’s overall strategy with
aligned human resource systems is critical to the
maximization of performance outcomes (Ulrich and
Brockbank, 2005) in a world that is increasingly
dependent upon the initiative, creativity, and commitment of employees to succeed (Covey, 2004;
Senge, 2006). A growing body of empirical evidence
has suggested that aligned systems in combination
create superior organizational outcomes as compared
to the implementation of individual human resource
practices, although many scholars note that an
incremental approach is more likely to occur (Pfeffer,
1998; Sun et al., 2007). However, the goals of
effective organizations are not simply instrumental or
outcome oriented. Great organizations are also normative, or value-based, and achieve their greatness
because of their commitment to values and principles
which guide employees (Collins, 2001; Collins and
Porras, 2004) and which create strong and effective
employee cultures (Schein, 2004).
Becker and Huselid (1999) noted that integrating
key human resource functions to reframe an organization’s internal environment results in significantly
higher organizational outcomes and financial performance that is superior to what firms can attain by
implementing individual human resource program
elements piecemeal. The three key functions that
Becker and Huselid (1999) cited as most important
were (1) a management culture aligned with the corporate strategy; (2) operational and professional excellence in conducting key tasks; and (3) a human resource
structure focusing on human resource managers as
business partners to other departments. These three
organizational factors are interrelated (Becker and
Huselid, 1999; Paine, 2003) and organizational cultures
can enrich human lives as well as increase profitability
(Cameron, 2003; Senge, 2006).
Empirical evidence by an award-winning HRM
study (Huselid, 1995) demonstrated that high performance HRM systems had a significant positive
impact upon overall financial performance, productivity, and turnover. Pfeffer (1998) has provided a
comprehensive body of business evidence citing
studies that demonstrate that strategically crafted
HRM systems can generate organizational wealth
when effectively integrated with organizational
goals. More importantly, Pfeffer’s research and that of
other scholars provides valuable insight about how to
implement those systems. Pfeffer (1998, p. xv) noted
that ‘‘enormous economic returns (can be) obtained
through the implementation of what are variously
called high involvement, high performance, or high
commitment management practices.’’
Unfortunately, many HRPs and organizational
leaders have consistently lacked the know-how to
design and implement systems and policies that mesh
with organizational goals. 2005). As Pfeffer (1998,
p. 14) and Kouzes and Posner (2007, p. 75) have
emphasized in their discussions of the roles of organizational leaders, the key to effective organizational
change is execution. Becker and Huselid (2006,
p. 99) called HR architecture, ‘‘the systems, practices, competencies, and employee performance
behaviors’’ of SHRM a key element to ‘‘building sustainable competitive advantage and creating
above-average financial performance.’’ Ulrich and
Beatty (2001, p. 293) have explained that the critical
contribution made by human resources in accomplishing strategic goals required that they fill the roles
of coach, architect, facilitator, conscience, and contributing leader – rising from the status of subservient
‘‘partners’’ to substantial ‘‘players.’’ In order to
achieve that higher level of status and impact, Beer
(1997, pp. 49–51) noted that a successful transformation of the human resource function focused on
three key change factors:
Focus on cost-effectiveness: Reframing the human
resource function to deliver services at a reduced
cost made the HRM function more financially
accountable.
Merger of the HRM function with the strategic role:
Aligning core processes – the key tasks performed
by organizations – so that when systems mesh rather than conflict the entire organization is able to
utilize people efficiently and effectively.
Development of new knowledge: Empirical studies
(e.g., Collins and Porras, 2004) confirmed that
organizational culture, financial performance,
and goal achievement were interdependent elements of successful organizations – and that valuing people and treating them well improved
the bottom line.
Successful SHRM ‘‘involves designing and implementing a set of internally consistent policies and
practices that ensure that employees’ collective
172 Cam Caldwell et al.knowledge, skills, and abilities contribute to the
achievement of its business objectives’’ (Huselid
et al., 1997, p. 172). If HRPs lack the knowledge
and skill to craft these policies and practices and
implement them in their organizations, then they fail
to honor their professional duties and ethical obligations to the organizations they serve.
Historically, HRPs have traditionally played the
role of internal service provider and deliverer of
programs for operating departments (Beer, 1997;
Lawler III, 2008). Organizational leaders and HRPs
have apparently been slow to either understand the
benefits of implementing high performance and high
commitment systems, or they simply lack the skills
required to implement such systems (Pfeffer, 1998).
Pfeffer (1998, Part II) thoughtfully examines the
consistent failure of HRPs and organizational leaders
to apply the best thinking and empirical research that
affirms proven principles of HRM, and clearly
identifies the need for today’s organizations to raise
the standard of their performance in applying those
principles. Yet the sub-optimization of organization
performance persists and organization leaders miss
opportunities to effectively serve their employees,
shareholders, and society at large (Pfeffer, 1998,
Chapter 1).
Increasingly, today’s HRPs acknowledge that
they can earn a place at their organization’s strategic
policy making table only if they understand how to
measure the added value of employee contributions
– the ‘‘decision science’’ of human resources – and
help create organizational programs and systems
that reinforce desired employee behaviors (Boudreau and Ramstad, 2005, p. 17). Clardy (2008) has
suggested that to manage the core competencies
and human capital of the entire firm, HRPs must
clearly understand the strategic goals of the firm
and must then play a key leadership role in taking
advantage of those competencies. Despite this
obligation, HRPs are often unprepared to help
their organizations to optimize the use of human
capital and today’s organizations fail to perform effectively (Lawler III, 2008). This inability to
respond to the needs of the modern organization is
an implicit but often unacknowledged and unintended violation of the responsibilities and duties
owed to the organizations that those HRPs serve
(Hosmer, 2007).
The HR professional as ethical steward
The role of the leader as a steward in the governance
of organizations has received increasing attention in
the post-Enron era (cf. Carroll and Buchholtz, 2007;
Caldwell et al., 2008; Hernandez, 2008; Hosmer,
2007). In articulating the relationship that exists
between organizations and their employees, Block
(1993) described leaders as stewards who owed a
complex set of duties to stakeholders. These duties
achieve long-term wealth creation which ultimately
benefits all stakeholders and honors the obligations
owed by business to society (Caldwell and Karri,
2005; Solomon, 1992). DePree (2004, Ch. 1) and
Pava (2003, Chapter 1) have described the duties of
organizational leaders as ‘‘covenantal’’ in nature,
suggesting that the relationship that organizations
owed to employees was akin to both a contact and a
sacred obligation.
Ethical stewardship has been defined as ‘‘the
honoring of duties owed to employees, stakeholders,
and society in the pursuit of long-term wealth creation’’ (Caldwell et al., 2008, p. 153). Ethical stewardship is a theory of organizational governance in
which leaders seek the best interests of stakeholders
by creating high trust cultures that honor a broad
range of duties owed by organizations to followers
(Caldwell and Karri, 2005; Pava, 2003). Covey
(2004) has described the stewardship role as valuebased, principle-centered, and committed to the
welfare of all stakeholders. In pursuit of the best
interests of each stakeholder, Covey has emphasized
that the duty of leaders is to optimize outcomes,
rather than settling for a compromise position that
overlooks opportunities – a phrase Covey (2004,
pp. 204–234) has described as ‘‘Win–Win or No
Deal.’’
Both Block (1993) and DePree (2004) viewed the
ethical obligations of organizations as neither idealistic
nor soft. Block (1993, pp. 91–97) has argued that the
responsibility of organizations was to fully disclose
critical information and to clearly identify threats
facing an organization as well as the accompanying
implications of those threats upon employees. Block
(1993, pp. 25–26) advocated treating employees as
‘‘owners and partners’’ in the governance process
and emphasized that in the highly competitive global
that relationship encompassed sharing honest and
Strategic Human Resource Management as Ethical Stewardship 173extensive communication. DePree (2004, p. 11)
emphasized that ‘‘(t)he first task of the leader is to
define reality’’ – a reality that included an obligation
to tell all of the truth to employees, rather than
withholding key information that might treat the
employees as mere hirelings or the means by which
the firm achieved its goals.
The moral position of ethical stewardship is that
organizational leaders have the obligation to pursue
long-term wealth creation by implementing systems
that strengthen the organizational commitment of
each stakeholder (Caldwell and Karri, 2005). Ethical
stewards in HRM demonstrate the insights of great
organizations that transform their companies into
human and humane communities which emphasize
inclusion, shared partnership, empowerment, and
leadership trustworthiness (Kanter, 2008). This
transforming culture occurs when followers believe
that systems will enable employees to achieve desired
outcomes and that social contracts will be honored
(Caldwell and Karri, 2005; Caldwell et al., 2008).
Such a culture is also achieved by treating employees
as ‘‘yous’’ or as valued individuals and organizational
partners, rather than as ‘‘its’’ or a mere organizational
commodity with a human form (cf. Buber, 2008).
Grossman (2007) has noted that the HR professional must become a steward in framing an organization’s culture and in facilitating change. Although
some scholars have advocated that HRPs become
ethical advocates (Payne and Wayland, 1999), the
scope of that advocating role and the ethical values
to be incorporated therein have been a source of
debate (Guest, 2007; Legge, 2000; Palmer, 2007;
Schultz and Brender-Ilan, 2004). Nonetheless,
human resource managers have not typically reported
performing a major role as ethical educators within
their organizations nor have they been successful
when they attempted to perform that role (Coltrin,
1991). HRPs would benefit to understand that
organizations owe a complex set of duties to multiple
stakeholders, and that they must be accountable to
help organizations understand the ethical implications of their actions (Hosmer, 2007). In providing a
glimpse into the ethics of management and the duties
of organizations to society, Hosmer (2007) is just
one of many ethics scholars who have addressed
the responsibilities of organizational leaders to constantly examine the moral calculus of leadership in
evaluating consequences of a firm’s behaviors to
diverse stakeholders.
If the HRP is to function as an ethical steward in
the modern organization, she/he must combine a
profound knowledge (Deming, 2000) of the operations of the firm, an understanding about how to
implement systems by which organizations can
maximize human performance (Becker and Huselid,
2006), an understanding of the empirical value and
cost/benefit contribution of high performance systems (Pfeffer, 1998), and the ability to communicate
effectively to top management and Boards of
Directors in a convincing manner so that those policy
makers will adopt policies and systems essential for
creating integrated and effective HRM systems that
support organizational goals (Lawler III, 2008).
HRPs and the duties of leadership
As organizational leaders HRPs have responsibilities
that require insight, skills, wisdom, experience, and a
profound knowledge of their organizations (Becker
and Huselid, 1999). In this section of our article, we
suggest that HRPs are ‘‘transformative leaders’’
(Bennis and Nanus, 2007) who honor a broad set of
ethical duties in their role as ethical stewards.
The HRPs demonstrate principles of transformational leadership when they combine a commitment to
helping both individuals and organizations to achieve
unprecedented excellence (Kupers and Weibler,
2006). Dvir et al. (2002) found that transformational
leaders had a positive impact on followers’ development and performance and the accomplishment of
organizational priorities, affirming Bass and Avolio’s
(1990, p. 22) claim that transformational leaders
‘‘elevate the desires of followers for achievement and
self-development while also promoting the development of groups and organizations.’’ Citing the
example of the U.S. Naval Academy graduate, Jim
Schwappach, Kouzes and Posner (2007, pp. 118–
119) describe Schwappach as a leader who was
effective at listening deeply to others and involving
others in developing solutions that empower
employees while greatly increasing the effectiveness
of an organization in accomplishing organizational
goals. HRM practices that view employees as valued
assets and contributors to the creation of strategic
174 Cam Caldwell et al.competitive advantage empower people to enhance
their potential to contribute to the organization’s
success while simultaneously improving employees’
skill sets along the way (Becker and Gerhart, 1996;
DePree, 2004). Empowering employees maximizes
commitment and enables employees to become a
source of strategic competitive advantage that competitors rarely can duplicate (Becker et al., 2001).
Becker et al. (2001, p. 4) have noted that ‘‘(w)e’re
living in a time when a new economic paradigm –
characterized by speed, innovation, short cycle times,
quality, and customer satisfaction – is highlighting the
importance of intangible assets.’’ The intangible
human assets essential for sustaining competitive
advantage depend on whether a firm’s leadership
understands how to integrate people into the
achievement of organizational goals (Becker and
Huselid, 1998, 2006). The ability of transformational
leadership to simultaneously pursue both individual
needs and organizational goals has long been considered a critical element of organizational success
(Barnard, 1938), and is widely regarded as an
important characteristic of high performance organizations (Cameron, 2003).
The HRPs also honor their duties to others when
they apply principles of charismatic leadership.
Charismatic leaders are ethical stewards to the degree
that they personally inspire others to achieve worthy
goals (Caldwell et al., 2007). Charismatic leadership
is ‘‘an attribution based on follower perceptions of
their leader’s behavior’’, and reflects the followers’
‘‘perception of their leader’s extraordinary character’’
(Conger et al., 2000, p. 748). House (1977) described
charismatic leadership as being characterized by
high emotional expressiveness, self-confidence, selfdetermination, freedom from internal conflict, and a
conviction of the correctness of the leader’s own
beliefs. Kouzes and Posner (2007, p. 133) emphasized
that inspiring leaders appeal to common ideals and
animate an organization’s vision in a way that resonates deeply within the hearts of others.
Charismatic leaders recognize that it is in resonating with people at the emotional level that creates
the greatest personal commitment (Boyatzis and
McKee, 2005). While writing of effective human
resource leadership, Pfeffer (1998, p. 125) cited the
case of Elmar Toime of the New Zealand Post who
implemented high trust practices based upon close
relationships with individual employees. Toime’s
style demonstrates the influence of charismatic leadership in implementing human resource practices
which transformed the New Zealand Post ‘‘from a
typical government bureaucracy to a profitable stateowned enterprise and the most efficient post office in
the world’’ (Pfeffer, 1998, p. 125).
The HRPs, who demonstrate the ability to create
a personal charismatic connection with organizational employees, and who maintain that connection
by honoring commitments, honor the duties of
ethical stewardship by encouraging the hearts of
employees (Kouzes and Posner, 2007, Chapters 11
and 12). That ability to create high commitment and
high trust is at the heart of high performing organizations (Senge, 2006) and is a key responsibility of
effective leadership.
In honoring ethical duties, HRPs are also principle-centered. Principle-centered leadership incorporates foundations of ethical stewardship to the degree
that it seeks to integrate the instrumental and normative objectives of an organization while being
congruent with universal principles demonstrated by
effective leaders. Covey (1992, 2004) argued that
leadership is the most successful when it adheres to a
patterned set of well-accepted principles of effectiveness and respected moral values. According to
Covey (1992, p. 31), principle-centered leadership is
practiced ‘‘from the inside out’’ at the personal,
interpersonal, managerial, and organizational levels.
Principle-centered leaders earn trust based upon their
character and competence (Covey, 2004). Kouzes
and Posner (2003b, 2007) have noted that great
leaders sustain their credibility based upon their
consistency in modeling correct principles and in
honoring values that demonstrate personal integrity.
The principle-centered leader recognizes that
virtuous outcomes supersede adherence to rules
(Kohlberg, 1985) and that moral purposes complement best practices in achieving stewardship goals
(Caldwell and Karri, 2005). Principle-centered
leaders model organizational values (Kouzes and
Posner, 2007) and recognize that effective leadership
is ultimately the integration of both ends and means
(cf. Burns, 1978). In their classic study of the most
successful businesses of the past century, Collins and
Porras (2004, pp. 131–135) noted the emphasis that
Procter and Gamble placed on creating a strong
principle-based culture based on core values and a
core ideology.
Strategic Human Resource Management as Ethical Stewardship 175The HRPs honor the obligations of ethical
stewards when they develop a knowledge of guiding
principles that characterize great organizations
(Pfeffer, 1998), and when they help organizations to
create aligned organizational cultures that match
actual behaviors with espoused values (Schein, 2004).
This commitment to values and principles of principle-centered leadership is a key element in establishing and implementing human resource systems
that earn employee commitment and trust (Covey,
2004).
The HRPs that demonstrate principles of servant
leadership build trust and inspire the confidence of
others. Servant leadership is at the heart of ethical
stewardship (Caldwell et al., 2007) and exemplifies its
depth of commitment to serving the individual.
DePree (2004, p. 11), one of the most highly regarded advocates of servant leadership, opined that
organizational leaders had the ethical responsibility to
be ‘‘a servant and a debtor’’ to employees by establishing policies that demonstrate the organization’s
commitment to the welfare of each employee.
Hamilton and Nord (2005, p. 875) describe servant
leadership as ‘‘valuing individuals and developing
people, building community, practicing authenticity,
and providing leadership that focuses on the good of
those who are being led and those whom the organization serves.’’
Greenleaf (2004, p. 2) emphasized that the great
leader is a servant first because that commitment to
serving others is his identity ‘‘deep down inside.’’
Servant leadership honors each individual as a valued
end, rather than simply as a means to organizational
outcomes (cf. Buber, 2008; Hosmer, 1995). The
servant leader puts the needs, desires, interests,
and welfare of others above his or her self-interest
(Ludema and Cox, 2007, p. 343) while also honoring
duties owed to the organization (DePree, 2004).
Pfeffer (1998, pp. 91–92) noted that Herb Kelleher,
the former CEO of Southwest Airlines, and Sam
Walton, the founder of Wal-Mart, were both known
for valuing employees as critical to the success of their
organizations and for adopting a leadership philosophy incorporating principles of servant leadership.
This valuing of employees at both Wal-Mart and
at Southwest Airlines balanced a consideration for
employees’ welfare with a recognition that treating
employees well increases their commitment in
return.
The HRPs who demonstrate a commitment to the
‘‘welfare, growth, and wholeness’’ (Caldwell et al.,
2002, p. 162) of stakeholders are servant leaders and
ethical stewards. It is this commitment to stakeholder
interests that makes leaders credible and trustworthy
(Kouzes and Posner, 2003a). HRPs, who fail to
create policies that demonstrate a commitment to
serving employees, and who do not behave congruently with those values, undermine the trust of
employees and inhibit the ability of organizations to
maximize long-term wealth creation (Senge, 2006).
The HRPs are Level 5 leaders when they demonstrate their fierce commitment to the success of the
organization while creating systems that recognize
employee contributions and give credit to employees
for achieving an organization’s success. Level 5 leaders
demonstrate a leadership insight that willingly shares
both power and the credit for accomplishments while
accepting personal responsibility for organizational
failures (Collins, 2001). In his study of great corporations, Collins (2001, pp. 17–40) found that the
leaders of the organizations that evolved ‘‘from good
to great’’ were typified by high commitment coupled
with great personal humility. In discussing these
Level 5 leaders, Marcum and Smith (2007) explained
that Level 5 leaders avoided the counterfeit leadership qualities of egoistic self-interest that typified
high profile leaders in many organizations. Collins
(2001, p. 27) emphasized that Level 5 leaders were not
‘‘I-centered’’ leaders who pursued self-serving goals
or who viewed themselves as the upfront personification of their organization’s success. Instead, they
tended to be described by those who worked with or
wrote about them as ‘‘quiet, humble, modest, reserved,
shy, gracious, mild-mannered, self-effacing, understated,
did not believe his own clippings; and so forth’’ [Italics in
the original] (Collins, 2001, p. 27).
Collins (2001, p. 30) reported that Level 5 leaders
also possessed a ‘‘ferocious resolve, an almost stoic
determination to do whatever needs to be done’’ to
serve the organization and to make it great. Werhane
(2007, p. 433) also noted that the most successful
leaders in her study of effective women leaders were
Level 5 leaders who ‘‘seem to care more about the
sustained success of their organization than their own
legacy.’’ Level 5 leaders are transformative in demonstrating humility about their own accomplishments, giving credit to others in their organization
for success while accepting full responsibility for the
176 Cam Caldwell et al.errors made by an organization and working
unceasingly to address those errors (Collins, 2001,
2005). Citing the case of AES Corporation’s CEO,
Dennis Bakke, Pfeffer (1998, pp. 99–103) emphasized that effective organizations do not achieve
short-term profitability by short-changing employees. Working for the long-term success of an organization and creating policies and systems that reward
employees for laying the foundation to achieve longterm growth rather than a short-term appearance of
growth takes courage and integrity in the face of
pressures to achieve short-term results in today’s
distorted business environment (Pfeffer, 1998).
Human resource professionals act as both ethical
stewards and Level 5 leaders when they create human
resource systems and processes that are fully aligned
with the normative and instrumental goals of the
organization while giving employees credit for their
role in the accomplishment of those goals (Caldwell
et al., 2007). These aligned and congruent systems
and processes balance the needs of the organization
with a commitment to the best interests of its
stakeholders (Pauchant, 2005) and create reward
systems that also reward employees for contributing
to organizational success.
When HRPs model the behaviors of covenantal
leadership, they help organizations create new
knowledge which enables firms to create and maintain competitive advantage and constantly improve.
Covenantal leadership integrates the roles of the leader
as a servant, role model, a source of inspiration and as
a creator of new insight and meaning (Caldwell et al.,
2007; Pava, 2003). Covenantal leadership encompasses the pursuit of a noble purpose, often described
as rising to the level of a contractual or even a sacred
duty (Barnett and Schubert, 2002; DePree, 2004;
Pava, 2003). Covenantal leaders seek not only to
enhance the skills and abilities of those with whom
they associate, but also to ‘‘unleash the great human
potential which is often dormant and silent’’
in organizations (Pava, 2003, p. 26). Striving to
serve both individuals and the organization, sharing knowledge, inspiring by personal example,
and learning with others, covenantal leadership is
attuned to the importance of continuous learning
(Pava, 2003).
Covenantal leadership incorporates ethical stewardship’s commitment to creating new solutions to
problems, creating new wealth and value, and
working for the welfare of stakeholders (Caldwell
et al., 2006). It is in this ability to help people to
discover new truths and achieve the best within
themselves at both the individual and organizational
levels, enabling organizations to optimize wealth
creation (Senge, 2006) and honor their role as
covenantal leaders and ethical stewards (Caldwell
and Dixon, 2007; Caldwell et al., 2007). Kouzes
and Posner (2007, p. 317) cited the example of
Bob Branchi, the Managing Director of Western
Australia’s largest network of automobile dealerships,
in teaching a delivery driver that his value as an
individual and his role in the organization were also
important to the organization’s success – thereby
helping that individual not only to share in the
organization’s accomplishments but also to redefine
himself.
Sung-Choon et al. (2007) have emphasized the
vital role of knowledge creation in firms as an
important element of the human resource architecture and have advocated the importance of adopting
a learning organization culture to create a sustainable
competitive advantage. HRPs become covenantal
leaders when they focus on individuals, empower
them to increase their level of commitment to
themselves and to the organization, and create
opportunities for creating new knowledge and
insight that benefits both the organization and the
individual (cf. Pava, 2003; Senge, 2006).
As HRPs adopt the characteristics of ethical
stewardship, they help their organizations add value
to the lives of individuals and organizations. Solomon and Flores (2003, p. 6) have called leaders who
demonstrate high commitment to others and to their
organizations ‘‘authentic’’ and praise the trustworthiness and integrity of those who lead unselfishly
and effectively. Kolp and Rea (2005, pp. 154–158)
have also cited the character of such leaders and have
described their accomplishments as balancing ‘‘value
and virtue’’ in creating cultures where employees
feel empowered to take risks and achieve unprecedented results. HRPs who adopt the leadership
behaviors of ethical stewardship understand the value
of the individual as well as the organization while
holding both people and the organization in high
regard.
By integrating the best elements of leadership,
HRPs honor their role as ethical stewards and contribute to the capability of their organizations while
Strategic Human Resource Management as Ethical Stewardship 177profoundly benefiting the employees who work in
those organizations. As contributors to the optimal
strategic accomplishment of an organization’s mission, HRPs who exhibit transformative leadership
behaviors have the opportunity to serve the needs of
a multiple set of stakeholders in honoring a broad
range of ethical duties (Hosmer, 2007). HRPs can
help organizations to build trust and commitment in
the pursuit of long-term wealth creation (cf. Senge,
2006) as ethical stewards when they serve their
organizations as transformative leaders.
Contributions of our article
Today’s modern organizations desperately need
leaders who they can trust if their organizations are to
be successful in a highly competitive global market
place (Cameron, 2003). Those leaders include highly
competent, knowledgeable, and skilled HRPs who
understand how to align HRM programs with corporate objectives and strategic plans (Becker et al.,
2001). We argue that the leadership skills of these
HRPs must encompass the moral perspectives of
ethical stewardship and the unique contributions of
transformative leadership.
We suggest that our article contributes to the
SHRM literature in four significant ways.
1. We affirm the importance of SHRM as a vital element of successful organizations when aligned with
the overall goals, values, and priorities of that organization. We note, however, that many HRPs
either fail to understand this strategic role of HRM
or lack the abilities to align HRM systems to
serve their firms. Human resource management
practices that are integrated in a manner
that reinforces strategic objectives can play
a major role in enabling organizations to
utilize employees as the source of strategic
competitive advantage (Hartel et al., 2007;
Konzelmann et al., 2006). Although designing
aligned human resource systems and framing
a well-conceived strategy are important, it
is in implementing these systems that a firm
achieves desired organizational outcomes
(Pfeffer, 1998; Sun et al., 2007). The failures
of organizations to create aligned and congruent organizations with HR systems that mesh
with strategic objectives are well documented
by management scholars (Lawler III, 2008;
Pfeffer, 1998, 2007).
2. We describe and clarify the role of SHRM as it
relates to the principles of ethical stewardship and
emphasize the implicit ethical duties owed by
HRPs to their organizations. Ethical stewardship
is a philosophy of leadership and governance
that optimizes long-term wealth creation and
that honors duties owed to all stakeholders
(Caldwell and Karri, 2005; Pava, 2003). As a
framework that integrates both normative and
instrumental ethical values (cf. Paine, 2003),
the principles of ethical stewardship build
both the trust and the commitment of followers (Caldwell et al., 2008). HRPs owe their
organizations a set of obligations and duties
that include helping the top management
team to contribute to the strategic effectiveness of the firm while simultaneously meeting
the needs of organizational members (Barnard,
1938; Becker and Huselid, 1999). Rarely are
organizations able to earn the trust of employees if HRM systems and processes conflict
with the strategic goals of the firm (Pfeffer,
1998). Congruent and effective leadership and
consistent policies help organizations to obtain
the commitment from employees which is the
key to long-term wealth creation (Senge, 2006).
3. We identify the importance of the ethical duties
inherent in best leadership practices as essential elements of the HRPs’ responsibilities in honoring
their organizational roles. The leadership obligations and responsibilities of HRPs incorporate
the best elements of transformational leadership, charismatic leadership, servant leadership, Level 5 leadership, and covenantal
leadership. Each of these six leadership perspectives of leadership is normatively and
instrumentally consistent with the scope
and duties of SHRM (Pfeffer, 1998, 2007)
and facilitate both social and financial outcomes of organizations (cf. Collins, 2001;
Hosmer, 2007; Paine, 2003). These ethical
responsibilities demonstrate the importance of
aligned and congruent organizational systems
and are consistent with the empirical
evidence that affirms the importance of
high performing organizations in creating
178 Cam Caldwell et al.long-term wealth (Collins, 2001; Paine, 2003;
Senge, 2006).
4. We reinforce the importance of human resource professionals elevating their contribution to organizations professionally, ethically, and strategically.
HRPs have often been ineffective at contributing to the success of organizations because
they have failed to demonstrate the requisite
knowledge and skills to help organizations to
achieve objectives that are vital to their role
as business partners and major decision makers (Lawler and Mohrman, 2000). In today’s
highly competitive business environment, the
role of employees has become increasingly
important to achieving strategic competitive
advantage, and the opportunity for organizations to create that advantage by unlocking
employee potential is often the key difference
for both competitive advantage and increased
profitability (Pfeffer, 2007). HRPs who help
create organizational cultures based on normatively virtuous principles can increase the
ability of their companies to earn the high
trust and employee commitment which leads
to better quality, improved customer service,
and increased profitability (Cameron, 2003).
The roles of HRPs in organizations enable
their companies to be more professional and
more successful strategically while enabling
the companies to honor the implicit ethical
duties owed to employees.
The clear message of management scholars who study
today’s organizations is that ‘‘good’’ is not good enough and is, in fact, ‘‘the enemy of great’’ (Collins,
2001, p. 1). The challenge for today’s leaders is to
move from ‘‘effectiveness’’ to ‘‘greatness’’ (Covey,
2004, pp. 3–4) to optimize the potential of the
modern organization.
Conclusion
Only when HRPs are perceived as competent and
ethical will they be able to merit the trust of those
organizational stakeholders with whom they work
(Graham and Tarbell, 2006). Adopting the standards
of ethical stewardship and the best practices of leadership may be a daunting challenge for HRPs.
Nonetheless, this challenge is consistent with the
needs of organizations that must compete in an
increasingly competitive world that is heavily
dependent on the skills and commitment of
employees to create value and long-term wealth
(Covey, 2004; Pfeffer, 2007).
Although the role of HRM has changed substantially over the past 20 years, HRPs continue to have
opportunities to broaden and strengthen their role in
helping organizations maximize productivity, govern
more ethically, and compete more effectively (Pfeffer, 2007). In understanding their role as transformative organizational leaders, HRPs have the
obligation to prepare themselves to accomplish the
goals of their organizations by honing their expertise
about organizational goals, developing the skills of
organizational members, and creating aligned systems
that are critical to the success of modern organizations (Hosmer, 2007; Werhane et al., 2004). Such
preparation demands that HRPs also develop insights
about ethical and moral issues and that they set the
example as ethical leaders (Kouzes and Posner, 2007;
Pinnington, et al., 2007).
The willingness of organizations to pursue
systematically the twin goals of achieving organizational mission and assisting employees to achieve their
personal goals is an implicit obligation of ethical
stewardship and organizational leadership (Barnard
and Andrews, 2007; Caldwell et al., 2008). The
resource-based view of the firm emphasizes the
importance of meeting the needs of employees to
retain them as a resource-based source of competitive
advantage (Barney and Wright, 1998). Scholarly
research about successful organizations has increasingly suggested that the most successful companies are
those that balance instrumental or outcome-based and
normative or value-based objectives (Cameron, 2003;
Collins, 2001; Pfeffer, 1998). Measuring results and
maintaining a commitment to people are wellrespected elements of high performance systems that
balance the instrumental and normative priorities of
organizations (Pfeffer, 1998, 2007).
Organizations that integrate principles of ethical
leadership with a strategic approach to HRM optimize the maximization of values and outcomes and
achieve results which pay off long-term (Collins and
Clark, 2003; Paine, 2003). By honoring their duties
as ethical stewards and incorporating principles of
transformative leadership, HRPs can make a major
Strategic Human Resource Management as Ethical Stewardship 179contribution to their organization’s financial success
while helping their organizations honor the implicit
duties owed to organization members (DePree,
2004; Paine, 2003).
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Cam Caldwell
University of Georgia,
Athens, GA, U.S.A.
E-mail: cam.caldwell@gmail.com
Do X. Truong, Pham T. Linh and Anh Tuan
Vietnam National University,
Hanoi, Vietnam
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