Managing Ethics and Diversity

Managing Ethics and Diversity

• Illustrate how ethics help managers determine the right way to behave when dealing with different stakeholder groups
• Explain why managers should behave ethically and strive to create ethical organizational cultures
• Appreciate the increasing diversity of the workforce and the organizational environment
• Grasp the central role that managers play in the effective management of diversity
• Understand why the effective management of diversity is both an ethical and a business imperative
• Understand the two major forms of sexual harassment and how they can be eliminated

The Nature of Ethics

• Ethical Dilemma: A quandary in which people decide whether to act in a way that helps another person or group, even if it goes against their self-interest
• Ethics: The inner-guiding moral principles, values, and beliefs used to analyze a situation and decide the appropriate way to behave

Stakeholders and Ethics

• Stakeholders: People and groups that supply a company with its productive resources, having a claim and stake in the company

Types of Company Stakeholders

• Stockholders want to ensure managers behave ethically and don't risk investors' capital through actions damaging the company's reputation
• Stockholders also aim to maximize their return on investment
• Managers use a company's financial capital and human resources to increase performance and stock price
• Right to expect a good return or reward by investing their human capital to improve a company's performance.
• Employees: Companies can act ethically toward employees by creating an occupational structure that fairly and equitably rewards employees for their contributions
• Suppliers expect to be paid fairly and promptly for their inputs
• Distributors expect to receive quality products at agreed-upon prices
• Customers, as the most critical stakeholder, require companies to increase efficiency and effectiveness to build loyalty and attract new customers
• Community: Physical locations in which companies are located
  • Includes towns or cities, or social milieus, and ethnic neighborhoods
• Community provides a company with the physical and social infrastructure that allows it to operate

Four Ethical Rules

• Utilitarian Rule: An ethical decision should produce the greatest good for the greatest number of people
• Moral Rights Rule: An ethical decision should maintain and protect the fundamental rights and privileges of people
• Justice Rule: An ethical decision should distribute benefits and harm among people in a fair, equitable, and impartial manner
• Practical Rule: An ethical decision should be one that a manager has no hesitation about communicating to people outside the company because the typical person in a society would think the decision is acceptable

Practial Decision Model

• Does my decision fall within the acceptable standards that apply in business today?
• Am I willing to see the decision communicated to all people and groups affected by it?
• Would the people with whom I have a significant personal relationship approve of the decision?

Why Should Managers Behave Ethically?

• Relentless pursuit of self-interest can lead to a collective disaster if it leads to unethical behavior, encouraging others to act similarly
• 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

Sources of an Organization's Code of Ethics

• Societal ethics: The values and standards embodied in a society's laws, customs, practices, and norms and values
• Professional ethics: The values and standards that groups of managers and workers use to decide how to behave appropriately
• Individual ethics: Personal values and standards resulting from the influence of family, peers, upbringing, and involvement in significant social institutions

Ethical Organizational Cultures

• Managers can ensure important ethical values and norms are a central component of an organization's culture
• Managers become ethical role models whose behavior is scrutinized by their subordinates
• Ethics Ombudsman: An ethics officer who monitors an organization's practices and procedures to be sure they are ethical

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, experience, physical appearance, capabilities, disabilities, and any other characteristic used to distinguish people

Diversity Concerns

• There is an ethical imperative for equal opportunity
• Effectively managing diversity can improve organizational effectiveness
• Diverse individuals continue to experience unfair treatment in the workplace due to biases, stereotypes, and overt discrimination
• Glass Ceiling: Refers to the invisible barrier that prevents minorities and women from being promoted to top corporate positions

Workforce Diversity

• Aging U.S. Population:
  • The median age is 37.8
  • By 2030, 20% 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
• Gender:
  • U.S. workforce is 44.3% female
  • Women's weekly median earnings are $726 compared to $895 for men
  • Women hold only 14.6% of executive officer positions in the 500 largest U.S. companies
• Ethnicity:
  • Grouping of people based on some shared characteristic such as national origin
• Ethnic Demographics of United States:
  • 72.4% white
  • 16.3% Latino
  • 12.6% African American
  • 4.8% Asian
• 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
• Capabilities and Disabilities:
  • Disability Issues:
    • Providing reasonable accommodations for individuals with disabilities
    • Promoting a nondiscriminatory workplace environment
    • Educating the organization about disabilities
• Socioeconomic Background:
  • Managers need to be sensitive and responsive to the needs and concerns of workers who might not be as well off as others
• Sexual Orientation:
  • Sexual Orientation Issues:
    • Employment and workplace discrimination
    • Provision of domestic-partner benefits

Critical Managerial Roles

• Managers have more influence than rank-and-file employees
• When managers commit to diversity, their authority and positions of power and status influence other members of an organization to make a similar commitment

Effectively Managing Diversity Makes Good Business Sense

• Diversity of organizational members can be a source of competitive advantage
• Recruiting diverse employees must be followed up with ongoing effective management of diversity to retain those employees
• Many organizations insist that their suppliers support diversity
• Effective management of diversity is necessary to avoid costly lawsuits

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
• 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

Steps to Eradicate Sexual Harassment

• Develop and clearly communicate a sexual harassment policy endorsed by top management
• Use a fair complaint procedure to investigate charges of sexual harassment
• Take corrective action as soon as possible when sexual harassment has taken place
• Provide sexual harassment education and training to all organizational members, including managers