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Managing Ethics and Diversity

Chapter Three

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Learning Objectives

LO3-1 Illustrate how ethics help managers determine the right way to behave when dealing with different stakeholder groups

LO3-2 Explain why managers should behave ethically and strive to create ethical organizational cultures

LO3-3 Appreciate the increasing diversity of the workforce and of the organizational environment

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Learning Objectives (cont.)

LO3-4 Grasp the central role that managers play in the effective management of diversity

LO3-5 Understand why the effective management of diversity is both an ethical and a business imperative

LO3-6 Understand the two major forms of sexual harassment and how they can be eliminated

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The Nature of Ethics

Ethical Dilemma

Quandary people find themselves in when they have to decide if they should act in a way that might help another person even though doing so might go against their own self-interest

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The Nature of Ethics

Ethics

The inner-guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the “right” or appropriate way to behave

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Stakeholders and Ethics

Stakeholders

The people and groups that supply a company with its productive resources and so have a claim on and a stake in the company

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Types of Company Stakeholders

Figure 3.1

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Stockholders

Want to ensure that managers are behaving ethically and not risking investors’ capital by engaging in actions that could hurt the company’s reputation

Want to maximize their return on investment

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Managers

Responsible for using a company’s financial capital and human resources to increase its performance

Have the right to expect a good return or reward by investing their human capital to improve a company’s performance

Frequently juggle multiple interests

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Discussion Question: Managers

Is it ethical for managers to receive vast amounts of money from their companies?

A. Yes

B. No

C. Sometimes

D. Never

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Employees

Companies can act ethically toward employees by creating an occupational structure that fairly and equitably rewards employees for their contributions

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Suppliers and Distributors

Suppliers expect to be paid fairly and promptly for their inputs

Distributors expect to receive quality products at agreed-upon prices

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Customers

Most critical stakeholder

Company must work to increase efficiency and effectiveness in order to create loyal customers and attract new ones

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Community, Society, and Nation

Community

Refers to physical locations like towns or cities or to social milieus like ethnic neighborhoods in which companies are located

Provides a company with the physical and social infrastructure that allows it to operate

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Four Ethical Rules

Figure 3.2

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Practical Decision Model

1. Does my decision fall within the acceptable standards that apply in business today?

2. Am I willing to see the decision communicated to all people and groups affected by it?

3. Would the people with whom I have a significant personal relationship approve of the decision?

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Why should managers behave ethically?

The relentless pursuit of self-interest can lead to a collective disaster when one or more people start to profit from being unethical because this encourages other people to act in the same way

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Some Effects of Ethical/Unethical

Behavior

Figure 3.3

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Question?

What is confidence and faith in another person’s goodwill?

A. Reputation

B. Trust

C. Empathy

D. Hope

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Why should managers behave ethically?

Trust

Willingness of one person or group to have faith or confidence in another person’s goodwill, even though this puts them at risk

Reputation

Esteem or high repute that individuals or organizations gain when they behave ethically

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Determinants of Ethics

Figure 3.4

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Ethical Organizational Cultures

Managers can ensure that important ethical values and norms are key features of an organization’s culture

Managers become ethical role models whose behavior is scrutinized by their subordinates

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Ethical Organizational Cultures

Ethics Ombudsman

An ethics officer who monitors an organization’s practices and procedures to be sure they are ethical

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The Increasing Diversity of the Workforce and the Environment

Diversity

Differences among people due to age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background, education, physical appearance, capabilities, disabilities, and any other characteristic used to distinguish people.

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Diversity Concerns

The ethical imperative for equal opportunity

Effectively managing diversity can improve organizational effectiveness

Evidence that diverse individuals continue to experience unfair treatment in the workplace as a result of biases, stereotypes, and overt discrimination.

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Question?

What is the metaphorical barrier that prevents minorities and women from being promoted to top corporate positions?

A. Gender Barrier

B. Gender Prejudice

C. Glass Ceiling

D. Glass Top

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Diversity Concerns

Glass ceiling

A metaphor alluding to the invisible barriers that prevent minorities and women from being promoted to top corporate positions

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Sources of Diversity in the Workplace

Figure 3.5

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Workforce Diversity: Age

Aging U.S. Population

Median age is 36.9

By 2030, 20 percent of the population will be over 65

Federal Age Discrimination Laws

1964 Title VII of the Civil Rights Act of 1964

1967 Age Discrimination in Employment Act

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Workforce Diversity: Gender

Women in the Work Place

U.S. workforce is 46.7 % percent female

Women’s weekly median earnings are $688 compared to $843 for men.

Women hold only 14.1% of corporate officer positions

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Workforce Diversity: Religion

Accommodation for Religious Beliefs

Scheduling of critical meetings

Providing flexible time off for holy days

Posting holy days for different religions on the company calendar

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Workforce Diversity: Capabilities and Disabilities

Disability Issues

Providing reasonable accommodations for individuals with disabilities

Promoting a nondiscriminatory workplace environment

Educating the organization about disabilities

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Workforce Diversity: Socioeconomic Background

Managers need to be sensitive and responsive to the needs and concerns of workers who may be less fortunate than themselves in terms of income and financial resources, child care and elder care options, housing opportunities, and existence of sources of social and family support

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Workforce Diversity: Sexual Orientation

Sexual Orientation Issues

Employment and workplace discrimination

Provision of domestic-partner benefits

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Critical Managerial Roles

Managers have more influence than rank-and-file employees

When managers commit to diversity, it legitimizes diversity efforts of others

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Forms of Sexual Harassment

Quid pro quo

Asking for or forcing an employee to perform sexual favors in exchange for receiving some reward or avoiding negative consequences.

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Forms of Sexual Harassment

Hostile work environment

Telling lewd jokes, displaying pornography, making sexually oriented remarks about someone’s personal appearance, and other sex-related actions that make the work environment unpleasant.

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Steps to Eradicate Sexual Harassment

Develop and clearly communicate a sexual harassment policy endorsed by top management

Use a fair complaint to investigate charges of sexual harassment

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Steps to Eradicate Sexual Harassment

When it has been determined that sexual harassment has taken place, take corrective action as soon as possible

Provide sexual harassment education and training to all organizational members, including managers

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Video: Hewlett Packard

Why should an investor be concerned with a potential $40 million severance package for an exiting CEO?

Should severance clauses in an executive contact be considered unethical?