Application of Ethical Principles to Employee Salaries - Example of Serbia and BiH

Salaries of employees are one of the ethically most sensitive issues in human resource management, precisely because salaries can meet a whole spectrum of human needs. The basic ethical principles in salary distribution are fairness and equality. The application of these principles is facilitated by objective criteria. The work shows that regular salary payments are an ethical principle that is more important than the amount itself, or the distribution of salaries, relying on Adams' theory of equity, which postulates that salaries should be equivalent to the effort, knowledge, skills, and results achieved, but also fair in relation to other employees. The application of these principles of equivalence and fairness can only be ensured by clear criteria and procedures known in advance as the "rules of the game," which determine the expectations of the employees. The aim of the research is to answer the research question of whether and to what extent the prevailing practices of determining salaries in Serbia and Bosnia and Herzegovina can be assessed as ethical based on the application of ethical arguments, through the analysis of these practices from a business ethics perspective. The research was conducted on a sample of 325 respondents, of which 208 are from Serbia and the remaining 117 are from Bosnia and Herzegovina. A survey method was used to collect primary data. The SPSS statistical program was used to process the obtained results. Basic methods of descriptive statistical analysis, causality tests, factor analysis, and other multivariate analysis techniques were used to test the main hypothesis. The results of the research confirmed the initial assumptions that employee salaries are determined based on an established system that is known to all employees, but also that there is a low level of application of ethical principles in the distribution of salaries.