Ethical Considerations for Successful ERP Implementation

Managers often face ethical dilemmas when balancing financial returns and the well-being of employees

Published: Wednesday, September 6, 2023 - 11:02

In this age of rapid technological innovation, the introduction of sophisticated technologies in various industries has raised complex ethical dilemmas. As businesses strive to achieve financial goals and keep stakeholders happy, they also have to mitigate the adverse effects of technology implementation. In this article, we’ll examine how implementing enterprise resource planning, particularly custom ERP solutions, can affect employee well-being, data privacy, cybersecurity, and fairness in the workplace, and how organizations can minimize or mitigate the negative effects.

Balancing stakeholder obligations

Although ERP implementation can streamline workflows in many industries, managers are often faced with the ethical dilemma of balancing the maximization of financial returns, fulfilling obligations to stakeholders, and prioritizing the well-being of employees.

In theory, ERP implementation can lead to job loss, increased workloads, or employee retraining. From a purely business standpoint, there is no clear-cut way to effectively mitigate these outcomes without sacrificing profits. However, the most important change some managers can make to minimize ethical implications is to shift from an often justifiable winner-take-all approach to a win-win situation.

In other words, open communication is key. Upper management must provide employees with the means to ask questions, communicate their feelings (simply vent, in many cases), and express their fears about the incoming changes caused by ERP implementation. Based on these discussions, managers can figure out a way to implement ERP that benefits all stakeholders, for example, by reevaluating how the firm counts employee work hours and exploring the possibilities for some workers or departments to transition to part-time work.

What’s more, by fostering the dialogue between management and employees early in the ERP implementation, project managers can gain nuanced insights into how to configure ERP to maximize its value.

Data security

Additionally, ERP implementation raises concerns about data privacy and security. Storing corporate data for different purposes within one centralized platform, ERP systems are vulnerable to data breaches and unauthorized access, which can lead to substantial financial losses and often irreversible reputation damage. This is why the ERP project management team must ensure that only authorized employees can access the system’s databases that contain sensitive information about employees, customers, and partners.

While responsible user ID management is a default requirement in any organization, it’s still important to pay attention to how passwords are formulated, choosing complex password combinations that can’t be guessed using common logic. This should go beyond simply reminding or encouraging users to adopt secure password practices and take the form of dedicated awareness campaigns and training that thoroughly educates employees on the importance of strong passwords.

Other than that, ERP project managers have to collaborate closely with the IT department to establish robust cybersecurity measures covering both physical hardware and network security. Authentication, access cards, VPN, regular network monitoring, robust encryption protocols, real-time intrusion detection mechanisms, and other security measures must be implemented to ensure that ERP data are used only by authorized individuals.

Since ERP implementation requires constant employee work-data collection, storage, and analysis, it becomes paramount for organizations to obtain employee consent before starting to gather this sensitive data.

Fairness

Successful and ethical ERP implementation is a continuous process rather than a one-time transformation. For example, modern ERP systems can track employee performance, among other things, which can be used to decide who receives a promotion or bonus. While such performance metrics can usually be directly correlated to work quality, it’s paramount to routinely reassess those dependencies. Moreover, it’s crucial to ensure that these metrics aren’t used to penalize employees or create a toxic, competitive environment. Organizations should stay open to feedback from employees about these matters and routinely question whether the existing metrics accurately reflect job responsibilities.

Besides, employees should also clearly understand how their performance relates to rewards and promotions because ambiguous definitions inevitably leave the workforce demotivated and indifferent.

Employee consent

Since ERP implementation requires constant employee work-data collection, storage, and analysis, it becomes paramount for organizations to obtain employee consent before starting to gather these sensitive data. A clear-cut process should be established to ensure that both present and future employees are aware of how exactly the data are collected and who has access to them. Similarly to those recurring emails about changing user agreement conditions you get from your email service, companies should update their employees on changes in the collection process over time.

While obtaining employee consent is, on the surface, about compliance with data privacy regulations, in the long run it can drive trust and transparency within the organization. So keep in mind that employees should never be pressured or obligated to consent but should be able to withdraw their consent at any time, while you should have effective process workarounds in place if this happens.

Ethics is integral to long-term success

Ethical implementation of ERP systems is a rather complex project that extends beyond technological readiness. From balancing stakeholder obligations to data privacy concerns, navigating these challenges should start with a shift in the managerial perspective. Establishing and following ethical guidelines when implementing ERP can delay achieving ROI but will inevitably bring more profits and workforce resilience in the long term.

By creating a healthy dialogue between employees and managers, and instituting robust security measures, organizations can fully realize all the benefits of ERP while remaining steadfast in their ethical obligations. This can also ensure a better working environment and foster mutual trust, which is essential to long-term success. Ultimately, organizations must keep in mind that ERP implementation is a continuous journey that requires openness to feedback, regular reassessments, and commitment to ethical principles.

About The Author

Andrey Koptelov

Andrey Koptelov is an innovation analyst at Itransition, a custom software development company headquartered in Denver. With a profound experience in IT, he writes about new disruptive technologies and innovations.