Ethical Practice

The correct action is to advise the hiring executive on the severe legal and ethical risks involved and to disqualify the candidate immediately.

This is the best course of action because the candidate's willingness to divulge confidential, proprietary information (trade secrets) from a former employer demonstrates a significant lack of professional integrity. Hiring such an individual exposes the organization to legal liability for trade secret misappropriation and invites a security risk, as a leader willing to betray a former employer is likely to betray the new one as well.

Requesting a legal review of the documents is incorrect because it implies the organization is considering using the stolen information, which is ethically compromised regardless of technical legality.

Directing the candidate to consult personal counsel deflects the issue and fails to protect the hiring organization from the immediate ethical and legal exposure.

Proceeding with the hire, even with a waiting period, ignores the fundamental character flaw demonstrated by the candidate and signals that the organization tolerates unethical behavior for potential gain.

The Ethical Agent competency in SHRM's Behavioral Competency Model requires HR professionals to uphold the highest standards of ethical conduct, promote organizational integrity, and ensure transparency and accountability in all practices. This situation presents a critical distinction between legal compliance and ethical practice.

The best response involves escalating to the Board Audit Committee while emphasizing that legal compliance and transparency are separate standards, and recommending a comprehensive review against organizational values. Here's why this is most appropriate:

1. Separation of Legal and Ethical Standards: Just because something is legally compliant doesn't make it ethically sound or aligned with organizational values. Deliberately obscuring beneficial ownership, even if legal, raises significant ethical concerns about transparency and accountability.

2. Appropriate Escalation: The Board Audit Committee is the proper governance body to address matters involving executive compensation structures that may pose reputational, ethical, or stakeholder trust issues.

3. Values Alignment: The response directly addresses whether current practices align with stated organizational values of accountability and openness to stakeholders.

4. Stakeholder Consideration: This approach considers the broader impact on shareholders, employees, and other stakeholders who expect transparency in executive compensation.

The other options fall short because:

One option suggests merely enhancing documentation and scheduling reviews while maintaining the current arrangement. This represents passive acceptance of a potentially problematic structure simply because it's legal, failing to address the ethical dimensions of deliberately obscuring information.

Another proposes a gradual transition while documenting current structures as compliant. While this shows some recognition of issues, it delays action and prioritizes financial considerations over immediate ethical concerns, potentially allowing reputational damage to accumulate.

The final option suggests a working group and enhanced disclosure that only meets minimum regulatory requirements. This falls short because it seeks the lowest acceptable standard rather than aspiring to ethical excellence, and it doesn't adequately address the fundamental question of whether deliberately obscuring ownership aligns with organizational values.

As an Ethical Agent, the HR Senior Director must proactively address situations where legal compliance may not equal ethical practice, especially when structures deliberately reduce transparency. This requires courage to escalate concerns to appropriate governance bodies and advocate for alignment between practices and stated organizational values.

The correct answer is to decline the request by citing the breach of established confidentiality commitments, while working with the broker to identify alternative cost-saving strategies that maintain the required data aggregation standards.

This action best demonstrates ethical stewardship because it prioritizes the organization's integrity and the trust of its workforce over immediate financial gain. HR professionals serve as stewards of the organization's values and are responsible for upholding the commitments made to employees, such as the confidentiality guarantees outlined in the employee handbook. Sharing individual health scores when employees were promised anonymity violates that trust and could ultimately damage employee morale and engagement. Furthermore, seeking alternative cost-saving measures allows the HR Director to address the CFO's financial concerns constructively without compromising ethical standards.

The other options are incorrect because they all involve violating the established confidentiality agreement to varying degrees. Modifying the contract to allow internal access still compromises the privacy employees were promised. Updating enrollment policies to authorize the transition prioritizes administrative convenience over the initial ethical commitment made to employees regarding their data privacy. Finally, implementing the structure only for high-risk categories targets specific individuals based on health status, which raises significant ethical and potential legal concerns regarding discrimination and privacy.