1. Chapter3Chapter3 PowerPoint Presentation by Charlie Cook © Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved. Managing Ethics and Diversity

2. © Copyright 2004 McGraw-Hill. All rights reserved.3–23–2 Learning Objectives After studying the chapter, you should be able to:After studying the chapter, you should be able to:  Illustrate how ethics help managers determine the right or proper way to behave when dealing with different stakeholder groups.  Explain why managers should strive to create ethical organizational cultures.  Appreciate the increasing diversity of the workforce and of the organization environment.  Grasp the central role that managers play in the effective management of diversity.

3. © Copyright 2004 McGraw-Hill. All rights reserved.3–33–3 Learning Objectives After studying the chapter, you should be able to:After studying the chapter, you should be able to:  Understand why the effective management of diversity is both an ethical and a business imperative.

4. © Copyright 2004 McGraw-Hill. All rights reserved.3–43–4 Ethics and Stakeholders Organizational StakeholdersOrganizational Stakeholders  Shareholders, employees, customers, suppliers, and others who have an interest, claim, or stake in an organization and in what it does. Each group of stakeholders wants a different outcome and managers must work to satisfy as many as possible.Each group of stakeholders wants a different outcome and managers must work to satisfy as many as possible. Managers have the responsibility to decide which goals an organization should pursue to most benefit stakeholders— decisions that benefit some stakeholder groups at the expense of others.Managers have the responsibility to decide which goals an organization should pursue to most benefit stakeholders— decisions that benefit some stakeholder groups at the expense of others.

5. © Copyright 2004 McGraw-Hill. All rights reserved.3–53–5 Ethics and Stakeholders (cont’d) EthicsEthics  Moral principles or beliefs about what is right or wrong. Which is the proper?  Ethics guide managers in their dealings with stakeholders and others when the best course of action is unclear.  Managers often experience an ethical dilemma in choosing between the conflicting interests of stakeholders.

6. © Copyright 2004 McGraw-Hill. All rights reserved.3–63–6 Ethical Decision Models Utilitarian ModelUtilitarian Model  An ethical decision is one that produces the greatest good for the greatest number of people. Moral Rights ModelMoral Rights Model  An ethical decision is one that best maintains and protects the fundamental rights and privileges of the people affected by it. Justice ModelJustice Model  An ethical decision is one that distributes benefits and harms among stakeholders in a fair, equitable, or impartial way.

7. © Copyright 2004 McGraw-Hill. All rights reserved.3–73–7 Practical Guide to Ethical Decisions Does the manager’s decision fall within usual and accepted standards?Does the manager’s decision fall within usual and accepted standards? Is the manager willing to personally and openly communicate the decision to all affected stakeholders?Is the manager willing to personally and openly communicate the decision to all affected stakeholders? Does the manager believe that his friends would approve?Does the manager believe that his friends would approve? If the answer is “Yes” to all of the above, the decision is probably an ethical decision.If the answer is “Yes” to all of the above, the decision is probably an ethical decision.

8. © Copyright 2004 McGraw-Hill. All rights reserved.3–83–8 Ethical versus Unethical Decisions Ethical DecisionEthical Decision  A decision that is reasonable or typical stakeholders would find acceptable because it aids stakeholders, the organization, or society. Unethical DecisionUnethical Decision  A decision that a manager would prefer to disguise or hide from other people because it enables the company or a particular individual to gain at the expense of society or other stakeholders.

9. © Copyright 2004 McGraw-Hill. All rights reserved.3–93–9 Which Behaviors are Ethical? A key ethical issue is how to disperse harm and benefits among stakeholders.A key ethical issue is how to disperse harm and benefits among stakeholders.  If a firm has been very profitable for two years, who should receive the profits? Employees, managers and stockholders all will want a share.  Should the firm keep the cash for future slowdowns? What is the ethical decision?  What about the reverse, when firms must layoff workers?  If stockholders are the legal owners of the firm, shouldn’t they alone decide these questions?

10. © Copyright 2004 McGraw-Hill. All rights reserved.3–10 Ethical Decisions and Dilemmas Other issues managers must consider.Other issues managers must consider.  Should a firm withhold payment to suppliers as long as possible to benefit the firm? This will harm its supplier who is a stakeholder.This will harm its supplier who is a stakeholder.  Should a firm provide severance pay to its laid off workers? This will decrease the owners’ (the stockholders’) return.This will decrease the owners’ (the stockholders’) return.  Should goods be bought from overseas firms that employ children? If they aren’t bought, the children might not earn enough money to eat.If they aren’t bought, the children might not earn enough money to eat.

11. © Copyright 2004 McGraw-Hill. All rights reserved.3–11 Why Behave Ethically? Managers should behave ethically to avoid harming others.Managers should behave ethically to avoid harming others.  Managers are responsible for protecting and nurturing resources of the firm. ReputationReputation  The esteem or high repute that individuals or organizations gain when they behave ethically. Unethical managers run the risk for loss of reputation.Unethical managers run the risk for loss of reputation. This is a valuable asset to any manager; reputation is critical to long-term management success.This is a valuable asset to any manager; reputation is critical to long-term management success.

12. © Copyright 2004 McGraw-Hill. All rights reserved.3–12 Sources of An Organization’s Code of Ethics Figure 3.1

13. © Copyright 2004 McGraw-Hill. All rights reserved.3–13 Sources of Ethics Societal EthicsSocietal Ethics  Standards that govern how members of a society are to deal with each other on ethical issues. Based on values and standards found in society’s legal rules, norm, and mores.Based on values and standards found in society’s legal rules, norm, and mores. Codified in the form of laws and societal customs.Codified in the form of laws and societal customs. Ethical norms dictate how people should behave.Ethical norms dictate how people should behave. Societal Ethics Vary Among Societies.Societal Ethics Vary Among Societies.  Strong beliefs in one country may differ elsewhere. Payment of bribes, an illegal act in the U. S., is an accepted business practice in many countries.Payment of bribes, an illegal act in the U. S., is an accepted business practice in many countries.

14. © Copyright 2004 McGraw-Hill. All rights reserved.3–14 Sources of Ethics Professional ethicsProfessional ethics  Standards that govern how members of a profession are to make decision when the way they should behave is not clear-cut. Physicians and lawyers have professional associations that enforce these.Physicians and lawyers have professional associations that enforce these. Individual ethicsIndividual ethics  Personal standards that govern how individuals are to interact with other people. Influenced by family, upbringing in general, and life experiencesInfluenced by family, upbringing in general, and life experiences

15. © Copyright 2004 McGraw-Hill. All rights reserved.3–15 Ethical Organizational Cultures Components of an Ethical CultureComponents of an Ethical Culture  Ethical values and norms are a central component of the organizational culture.  A code of ethics guides decisions when ethical decisions arise.  Managers serve as ethical role models. Ethics OmbudsmanEthics Ombudsman  An ethics officer who monitors an organization’s practices and procedures to ensure they are ethical.

16. © Copyright 2004 McGraw-Hill. All rights reserved.3–16 Johnson & Johnson Credo Figure 3.2 Source: Johnson & Johnson Annual Report.

17. © Copyright 2004 McGraw-Hill. All rights reserved.3–17 The Increasing Diversity of the Workforce and the Environment DiversityDiversity  Differences among people in age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background, and capabilities/disabilities. Diversity Concerns and IssuesDiversity Concerns and Issues  The ethical imperative for equal opportunity  The illegality of unfair treatment  Diversity’s positive effect on organizational performance  The continuing bias toward diverse individuals

18. © Copyright 2004 McGraw-Hill. All rights reserved.3–18 Sources of Diversity in the Workplace Figure 3.3

19. © Copyright 2004 McGraw-Hill. All rights reserved.3–19 Workforce Diversity Glass CeilingGlass Ceiling  A metaphor alluding to the invisible barriers that prevents minorities and women from being promoted to top corporate positions. Figure 3.4 Source: Bureau of Labor Statistics, Projections from Current Population Survey, 1988–1998. 2008: Projected New Entrants in the U.S. Labor Force

20. © Copyright 2004 McGraw-Hill. All rights reserved.3–20 Workforce Diversity: Age Aging U.S. PopulationAging U.S. Population  Median age in the United States is 35.3 years, up 2.5 years from 1990.  The 45-54 age group cohort has grown rapidly and now contains 37.7 million persons.

21. © Copyright 2004 McGraw-Hill. All rights reserved.3–21 Major Equal Employment Opportunity Laws Affecting Human Resources Management Federal Anti-Discrimination LawsFederal Anti-Discrimination Laws  1963Equal Pay Act  1964Title VII of the Civil Rights Act  1967Age Discrimination in Employment Act  1978Pregnancy Discrimination Act  1990Americans with Disabilities Act  1991Civil Rights Act  1993Family and Medical Leave Act

22. © Copyright 2004 McGraw-Hill. All rights reserved.3–22 Workforce Diversity: Gender Women in the Work PlaceWomen in the Work Place  U.S. workforce is 46% percent female.  Women’s median earnings are less than two-thirds of the median earnings of men.  Women hold 49% of managerial positions, but only 12% of corporate officer positions.

23. © Copyright 2004 McGraw-Hill. All rights reserved.3–23 Workforce Diversity: Race and Ethnicity 1998 to 2008 Growth Rates for the U.S. Working Population1998 to 2008 Growth Rates for the U.S. Working Population

24. © Copyright 2004 McGraw-Hill. All rights reserved.3–24 Workforce Diversity: Religion Accommodation for Religious BeliefsAccommodation for Religious Beliefs  Scheduling of critical meetings.  Providing flexible time off for holy days.  Posting holy days for different religions on the company calendar.

25. © Copyright 2004 McGraw-Hill. All rights reserved.3–25 Capabilities and Disabilities Disability IssuesDisability Issues  Providing reasonable accommodations for individuals with disabilities.  Promoting a nondiscriminatory workplace environment.  Educating the organization about disabilities and AIDS.

26. © Copyright 2004 McGraw-Hill. All rights reserved.3–26 Socioeconomic Background Socioeconomic Background IssuesSocioeconomic Background Issues  Widening diversity in income levels  Single mothers and the “working poor”  Child and elder care for working parents

27. © Copyright 2004 McGraw-Hill. All rights reserved.3–27 Workforce Diversity: Sexual Orientation Sexual Orientation IssuesSexual Orientation Issues  Employment and workplace discrimination  Provision of domestic-partner benefits

28. © Copyright 2004 McGraw-Hill. All rights reserved.3–28 The Effective Management of Diversity Critical Managerial RolesCritical Managerial Roles  Interpersonal FigureheadFigurehead LeaderLeader LiaisonLiaison  Informational MonitorMonitor DisseminatorDisseminator SpokespersonSpokesperson  Decisional EntrepreneurEntrepreneur Disturbance HandlerDisturbance Handler Resource AllocatorResource Allocator NegotiatorNegotiator

29. © Copyright 2004 McGraw-Hill. All rights reserved.3–29 Effectively Managing Diversity Makes Good Business Sense What a Diversity of Employees Provides:What a Diversity of Employees Provides:  A variety of points of view and approaches to problems and opportunities that improves managerial decision making.  A wider range of creative ideas.  Better attuned to the needs of diverse customers.  Increased retention of valued organizational members.  Helps in avoiding costly lawsuits and negative publicity affecting the firm’s image and reputation.