Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-1
Ethics,Social
Responsibility,
and Diversity
5
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-2
Ethics and Stakeholders
?Stakeholders,people or groups that have an
interest in the organization,
? Stakeholders include employees,customers,
shareholders,suppliers,and others,
? Stakeholders often want different outcomes and
managers must work to satisfy as many as possible,
?Ethics,a set of beliefs about right and
wrong,
? Ethics guide people in dealings with stakeholders and
others,to determine appropriate actions,
? Managers often must choose between the conflicting
interest of stakeholders,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-3
Ethics
It is difficult to know when a decision is
ethical,Here is a good test,
Managerial ethics,If a manager
makes a decision falling within
usual standards,is willing to
personally communicate the decision
to stakeholders,and believes friends
would approve,then it is likely an
ethical decision,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-4
Ethical Models
Social Ethics,
Legal rules,customs
Professional Ethics,
Values in workplace
Individual Ethics,
Family influence
Organization’s
Code of Ethics
Figure 5.2
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-5
Ethical Origins
?Societal Ethics,standards that members of
society use when dealing with each other,
? Based on values and standards found in society’s
legal rules,norm,and mores,
? Codified in the form of law and society customs,
? Norms dictate how people should behave,
?Societal ethics vary based on a given
society,
? Strong beliefs in one country may differ elsewhere,
? Example,bribes are an accepted business practice in
some countries,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-6
Ethical Origins
?Professional ethics,values and standards used
by groups of managers in the workplace,
? Applied when decisions are not clear-cut ethically,
? Example,physicians and lawyers have professional
associations that enforce these,
?Individual ethics,values of an individual
resulting from their family& upbringing,
? If behavior is not illegal,people will often disagree on if
it is ethical,
? Ethics of top managers set the tone for firms,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-7
Ethical Decisions
?A key ethical issue is how to disperse harm
and benefits among stakeholders,
? If a firm is very profitable for two years,who should
receive the profits? Employees,managers and
stockholders all want a share,
? Should we keep the cash for future slowdowns?
What is the ethical decision?
?What about the reverse,when firms must
layoff workers,
?Final point,stockholders are the legal owners
of the firm!
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-8
Ethical Decisions
?Some other issues managers must consider,
? Should you hold payment to suppliers as long as
possible to benefit your firm?
?This will harm your supplier who is a stakeholder,
? Should you pay severance pay to laid off workers?
?This may decrease the stockholder's return,
? Should you buy goods from overseas firms that hire
children?
?If you don’t the children might not earn enough
money to eat,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-9
Why Behave Ethically?
?Managers should behave ethically to avoid
harming others,
? Managers are responsible for protecting and nurturing
resources in their charge,
?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,
? All stakeholders are judged by reputation,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-10
Social Responsibility
?Social Responsibility,the manager’s duty to
nurture,protect and enhance the welfare of
stakeholders,
There are many ways managers respond to
this duty,
?Obstructionist response,managers choose not
to be socially responsible,
? Managers behave illegally and unethically,
? They hide and cover-up problems,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-11
?Defensive response,managers stay within the
law but make no attempt to exercise
additional social responsibility,
? Put shareholder interest above all other stakeholders,
? Managers say society should make laws if change is
needed,
?Accommodative response,managers realize
the need for social responsibility,
? Try to balance the interests of all stakeholders,
?Proactive response,managers actively
embrace social responsibility,
? Go out of their way to learn about and help stakeholders,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-12
Levels of Responsibility
Obstruction
response
Defensive
response Accommodative response Proactive response
Low High Social responsibility
Figure 5.3
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-13
Why be Responsible?
?Managers accrue benefits by being
responsible,
? Workers and society benefit,
? Quality of life in society will improve,
? It is the right thing to do,
?Whistleblowers,a person reporting illegal or
unethical acts,
? Whistleblowers now protected by law in most cases,
?Social audit,managers specifically take ethics
and business into account when making
decisions,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-14
The Social Audit
Profitability
Negative Low Medium High
Negative
Low
Medium
High
Favored
Strategies S
oc
ial
R
etu
rn
s
Figure 5.4
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-15
Promoting Ethics
?There is evidence showing that ethical
managers benefit over the long run,
?Ethical Control System,a formal system to
encourage ethical management,
? Firms appoint an ethics ombudsman to monitor
practices,
? Ombudsman communicates standards to all employees,
?Ethical culture,firms increasingly seek to
make good ethics part of the norm and
organizational culture,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-16
Managing Diverse Workforces
?The workforce has become much more
diverse during the last 30 years,
? Diversity refers to differences among people such as age,
gender,race,religion,
? Diversity is an ethical and social responsibility issue,
?Managers need to give all workers equal
opportunities,
? Not following this is against the law and unethical,
? When all have equal opportunity,the organization
benefits,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-17
Types of Diversity
Figure 5.5
Capabilities
Disabilities
Socioeconomic
background
Sexual
orientation
Religion Ethnicity
Race
Gender
Age
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-18
Manage Diversity
?Distributive Justice,dictates members be
treated fairly concerning pay raises,
promotions,office space and similar issues,
? These rewards should be assigned based on merit and
performance,
? A legal requirement that is becoming more prevalent in
American business,
?Procedural Justice,Managers should use fair
practices to determine how to distribute
outcomes to members,
? This involves how managers appraise worker
performance or decide who to layoff,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-19
Diversity Makes Business Sense
?Diverse employees provide new,different
points of view,
? Customers are also diverse,
?Still,some employees may be treated unfairly,
? Biases,systematic tendencies to use information in ways
that result in inaccurate perceptions,
? People often view those like themselves positively and
have biases about others,
? Social status is a type of bias conferred to people of
differing social position,
? Stereotypes,inaccurate beliefs about a given group,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-20
How to Manage Diversity
?Increase diversity awareness,managers need
to become aware of their own bias,
?Understand cultural differences and their
impact on working styles,
?Practice effective communication with diverse
groups,
?Be sure top management is committed to
diversity,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-21
Sexual Harassment
?Damages both the person being harassed and
the organization,
? Both men and women can be victims,
?Quid pro quo harassment,victim is requested
to perform sexual favors to keep a job or win
promotion,
?Hostile work environment harassment,Some
members are faced with a hostile,
intimidating work environment,
? Lewd jokes,pornographic displays and remarks,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-22
Avoiding Harassment
?Develop and communicate a sexual
harassment policy,
? Point out that these actions are unacceptable,
?Set up a fair complaint system to investigate
allegations,
? If there are problems,correct them at once,
?Provide harassment training to employees and
managers,
5-1
Ethics,Social
Responsibility,
and Diversity
5
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-2
Ethics and Stakeholders
?Stakeholders,people or groups that have an
interest in the organization,
? Stakeholders include employees,customers,
shareholders,suppliers,and others,
? Stakeholders often want different outcomes and
managers must work to satisfy as many as possible,
?Ethics,a set of beliefs about right and
wrong,
? Ethics guide people in dealings with stakeholders and
others,to determine appropriate actions,
? Managers often must choose between the conflicting
interest of stakeholders,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-3
Ethics
It is difficult to know when a decision is
ethical,Here is a good test,
Managerial ethics,If a manager
makes a decision falling within
usual standards,is willing to
personally communicate the decision
to stakeholders,and believes friends
would approve,then it is likely an
ethical decision,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-4
Ethical Models
Social Ethics,
Legal rules,customs
Professional Ethics,
Values in workplace
Individual Ethics,
Family influence
Organization’s
Code of Ethics
Figure 5.2
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-5
Ethical Origins
?Societal Ethics,standards that members of
society use when dealing with each other,
? Based on values and standards found in society’s
legal rules,norm,and mores,
? Codified in the form of law and society customs,
? Norms dictate how people should behave,
?Societal ethics vary based on a given
society,
? Strong beliefs in one country may differ elsewhere,
? Example,bribes are an accepted business practice in
some countries,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-6
Ethical Origins
?Professional ethics,values and standards used
by groups of managers in the workplace,
? Applied when decisions are not clear-cut ethically,
? Example,physicians and lawyers have professional
associations that enforce these,
?Individual ethics,values of an individual
resulting from their family& upbringing,
? If behavior is not illegal,people will often disagree on if
it is ethical,
? Ethics of top managers set the tone for firms,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-7
Ethical Decisions
?A key ethical issue is how to disperse harm
and benefits among stakeholders,
? If a firm is very profitable for two years,who should
receive the profits? Employees,managers and
stockholders all want a share,
? Should we keep the cash for future slowdowns?
What is the ethical decision?
?What about the reverse,when firms must
layoff workers,
?Final point,stockholders are the legal owners
of the firm!
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-8
Ethical Decisions
?Some other issues managers must consider,
? Should you hold payment to suppliers as long as
possible to benefit your firm?
?This will harm your supplier who is a stakeholder,
? Should you pay severance pay to laid off workers?
?This may decrease the stockholder's return,
? Should you buy goods from overseas firms that hire
children?
?If you don’t the children might not earn enough
money to eat,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-9
Why Behave Ethically?
?Managers should behave ethically to avoid
harming others,
? Managers are responsible for protecting and nurturing
resources in their charge,
?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,
? All stakeholders are judged by reputation,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-10
Social Responsibility
?Social Responsibility,the manager’s duty to
nurture,protect and enhance the welfare of
stakeholders,
There are many ways managers respond to
this duty,
?Obstructionist response,managers choose not
to be socially responsible,
? Managers behave illegally and unethically,
? They hide and cover-up problems,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-11
?Defensive response,managers stay within the
law but make no attempt to exercise
additional social responsibility,
? Put shareholder interest above all other stakeholders,
? Managers say society should make laws if change is
needed,
?Accommodative response,managers realize
the need for social responsibility,
? Try to balance the interests of all stakeholders,
?Proactive response,managers actively
embrace social responsibility,
? Go out of their way to learn about and help stakeholders,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-12
Levels of Responsibility
Obstruction
response
Defensive
response Accommodative response Proactive response
Low High Social responsibility
Figure 5.3
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-13
Why be Responsible?
?Managers accrue benefits by being
responsible,
? Workers and society benefit,
? Quality of life in society will improve,
? It is the right thing to do,
?Whistleblowers,a person reporting illegal or
unethical acts,
? Whistleblowers now protected by law in most cases,
?Social audit,managers specifically take ethics
and business into account when making
decisions,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-14
The Social Audit
Profitability
Negative Low Medium High
Negative
Low
Medium
High
Favored
Strategies S
oc
ial
R
etu
rn
s
Figure 5.4
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-15
Promoting Ethics
?There is evidence showing that ethical
managers benefit over the long run,
?Ethical Control System,a formal system to
encourage ethical management,
? Firms appoint an ethics ombudsman to monitor
practices,
? Ombudsman communicates standards to all employees,
?Ethical culture,firms increasingly seek to
make good ethics part of the norm and
organizational culture,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-16
Managing Diverse Workforces
?The workforce has become much more
diverse during the last 30 years,
? Diversity refers to differences among people such as age,
gender,race,religion,
? Diversity is an ethical and social responsibility issue,
?Managers need to give all workers equal
opportunities,
? Not following this is against the law and unethical,
? When all have equal opportunity,the organization
benefits,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-17
Types of Diversity
Figure 5.5
Capabilities
Disabilities
Socioeconomic
background
Sexual
orientation
Religion Ethnicity
Race
Gender
Age
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-18
Manage Diversity
?Distributive Justice,dictates members be
treated fairly concerning pay raises,
promotions,office space and similar issues,
? These rewards should be assigned based on merit and
performance,
? A legal requirement that is becoming more prevalent in
American business,
?Procedural Justice,Managers should use fair
practices to determine how to distribute
outcomes to members,
? This involves how managers appraise worker
performance or decide who to layoff,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-19
Diversity Makes Business Sense
?Diverse employees provide new,different
points of view,
? Customers are also diverse,
?Still,some employees may be treated unfairly,
? Biases,systematic tendencies to use information in ways
that result in inaccurate perceptions,
? People often view those like themselves positively and
have biases about others,
? Social status is a type of bias conferred to people of
differing social position,
? Stereotypes,inaccurate beliefs about a given group,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-20
How to Manage Diversity
?Increase diversity awareness,managers need
to become aware of their own bias,
?Understand cultural differences and their
impact on working styles,
?Practice effective communication with diverse
groups,
?Be sure top management is committed to
diversity,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-21
Sexual Harassment
?Damages both the person being harassed and
the organization,
? Both men and women can be victims,
?Quid pro quo harassment,victim is requested
to perform sexual favors to keep a job or win
promotion,
?Hostile work environment harassment,Some
members are faced with a hostile,
intimidating work environment,
? Lewd jokes,pornographic displays and remarks,
Irwin/McGraw-Hill ?The McGraw-Hill Companies,Inc.,2000
5-22
Avoiding Harassment
?Develop and communicate a sexual
harassment policy,
? Point out that these actions are unacceptable,
?Set up a fair complaint system to investigate
allegations,
? If there are problems,correct them at once,
?Provide harassment training to employees and
managers,
