Blog 04: Managing Ethical Dilemmas and Whistleblowing Through HR Policies in Banking

 Introduction

Good ethical behavior is a key part of good management in banks because public trust and following the rules are important for the bank’s reputation and success.Bank employees are often faced with situations that pose ethical dilemmas, such as conflicts of interest, confidentiality breaches, or pressure to meet financial targets at the risk of compromising ethics.Consequently, human resource management (HRM) assumes a critical role in developing and enforcing policies that encourage ethical behaviour and facilitate secure whistleblowing practices (Kaptein, 2011).

The level of intricacy in the operations at banks also creates several ethical tensions, which should call for formalised HR interventions. HRM functions, therefore, go beyond recruitment and training to the institutionalisation of ethical norms through codes of conduct, ethics training, and transparent mechanisms of communication, as supported by Kish-Gephart, Harrison & Treviño 2010. These policies help employees to stay aware of ethics and make the right choices even in stressful situations which is a key component.

Whistleblowing systems are an important HR tool that help find and prevent unethical or illegal actions. However, the effectiveness of such frameworks depends on the organizational culture and perceived psychological safety by employees. Therefore, HR needs to create a culture of openness and trust where the protection of individuals reporting misconduct from retaliation and stigma is ensured (Park & Blenkinsopp, 2009). This is also a means of enhancing institutional accountability through assured confidentiality of reporting channels and clearly articulated anti-retaliation clauses.

Also, including ethical standards in the performance management system helps evaluate employees not just by numbers or results, but also by how well they follow ethical values. Ethical leadership and top management commitment further reinforce the credibility of HR-driven ethical policies, embedding integrity as an organisational value rather than a compliance formality (Valentine & Godkin, 2019).

Conclusion

HRM has an irreplaceable part to play in embedding ethical governance in banking institutions: developing full-cycle ethics policies, protecting whistleblowers, and monitoring performance appraisal, which creates a sustainable culture of integrity and transparency. In the banking industry, which increasingly faces a plethora of regulatory demands, the strategic involvement of human resources will be basic in such a process to maintain trust and organizational legitimacy.


References

1Kaptein, M., 2011. ‘From Inaction to External Whistleblowing: The Influence of the Ethical Culture of Organizations on Employee Responses to Observed Wrongdoing’, Journal of Business Ethics, 98(3), pp. 513‑530.

2.Kish‑Gephart, J.J., Harrison, D.A. & Treviño, L.K., 2010. ‘Bad Apples, Bad Cases, and Bad Barrels: Meta‑analytic Evidence About Sources of Unethical Decisions at Work’, Journal of Applied Psychology, 95(1), pp. 1‑31.

3.Park, H. and Blenkinsopp, J., 2009. Whistleblowing as planned behavior – A survey of South Korean police officers. Journal of Business Ethics.

4.Valentine, S. and Godkin, L., 2019. Ethical context, organizational commitment, and person–organization fit. Journal of Business Ethics.


Student ID- 25026307 

Comments

  1. Hasala GallageNovember 4, 2025 at 7:38 PM

    A strong and relevant post on ethical dilemmas faced by HR. I liked your explanation of confidentiality and fairness. To enhance academic depth, you could include short references to ethical HR frameworks or CIPD guidelines, and cite them within the text.

    ReplyDelete
    Replies
    1. GihaniNovember 7, 2025 at 5:42 AM

      Thank you for your valuable feedback. I agree that citing ethical HR frameworks and CIPD guidelines would enhance both the theoretical and practical relevance of the discussion.

      Delete
  2. Kalani BinushaNovember 4, 2025 at 10:40 PM

    The blog gives a thoughtful view on how HR must handle ethical dilemmas and misconduct with transparency and integrity. It reminds me of our work at a state-owned bank, where maintaining ethical standards is essential for both staff trust and institutional reputation.

    ReplyDelete
    Replies
    1. GihaniNovember 7, 2025 at 5:45 AM

      Thank you for your comment. Linking technology adoption to employee capability is central to achieving effective digital transformation.

      Delete
  3. Kanishka BandaranayakeNovember 5, 2025 at 7:23 AM

    According to this analysis, moral behavior and strong whistleblower policies are key HR governance mechanisms in the banking industry that are necessary for both regulatory compliance and public confidence. It accurately highlights that in order to shield those who report misconduct from reprisals, HR's role entails both formalizing codes of conduct and cultivating a culture of psychological safety.

    ReplyDelete
    Replies
    1. GihaniNovember 15, 2025 at 9:15 PM

      Thank you for engaging with the article. I appreciate your recognition of how HR governance and psychological safety mechanisms support both compliance and public trust.

      Delete
  4. Githmini DasanayakaNovember 6, 2025 at 5:07 AM

    This blog presents a careful and persuasive analysis of the critical role that HRM plays in promoting ethical governance in the banking industry. By emphasizing how well-structured ethical policies and encouraging cultures enhance organizational trust, accountability, and long-term sustainability, it successfully links ethical frameworks with HR practices.

    ReplyDelete
    Replies
    1. GihaniNovember 15, 2025 at 9:16 PM

      Thank you for your feedback. I appreciate your acknowledgment of how HR practices support ethical cultures and contribute to sustainable organizational success.

      Delete
  5. Dilmini WanigasekaraNovember 6, 2025 at 8:58 AM

    Excellent insights! I especially agree with the point about creating a strong whistleblowing framework. In banking, where trust is paramount, HR policies need to protect employees from retaliation while encouraging them to report unethical practices. It’s also crucial that employees are trained to recognize ethical dilemmas before they escalate

    ReplyDelete
    Replies
    1. GihaniNovember 15, 2025 at 9:17 PM

      Thank you for your comment. Your recognition of whistleblowing frameworks and ethical training reinforces the importance of HR in safeguarding trust and integrity in banking.

      Delete
  6. Rukshan HewamallikageNovember 21, 2025 at 11:53 AM

    Reading this article on ethical dilemmas and whistleblowing in banking really resonated with me as someone from the hospitality industry. While our settings differ, the challenges feel familiar—employees in hotels also face pressures that can test integrity, whether it’s handling guest confidentiality, managing supplier relationships, or meeting revenue targets. What struck me is the emphasis on HR policies that build trust and psychological safety. In hotels, just like in banks, staff need to know they can raise concerns without fear of retaliation. Embedding ethics into performance reviews and leadership culture is something we too can learn from banking practices. Ultimately, whether it’s finance or hospitality, HR’s role in safeguarding dignity and transparency is what sustains both guest trust and employee wellbeing

    ReplyDelete
    Replies
    1. GihaniNovember 23, 2025 at 11:17 PM

      Thank you for your comment. I agree that ethical challenges and the need for safe reporting exist in many industries, including hospitality. When HR supports employees to speak up without fear and promotes ethical practices, it helps to build trust, protect staff, and ensure better experiences for clients.

      Delete

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