Essentials of
Contemporary
Management
Chapter
3
Managing Ethics and Diversity
PowerPoint Presentation by Charlie Cook
© Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved.
Learning Objectives
• 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.
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Learning Objectives
• After studying the chapter, you should be able to:
Understand why the effective management of
diversity is both an ethical and a business imperative.
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Ethics and Stakeholders
• Organizational 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.
• 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.
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Ethics and Stakeholders (cont’d)
• Ethics
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.
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Ethical Decision Models
• Utilitarian Model
An ethical decision is one that produces the
greatest good for the greatest number of people.
• Moral Rights Model
An ethical decision is one that best maintains and
protects the fundamental rights and privileges of
the people affected by it.
• Justice Model
An ethical decision is one that distributes benefits
and harms among stakeholders in a fair, equitable,
or impartial way.
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Practical Guide to Ethical Decisions
• 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?
• 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.
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Ethical versus Unethical Decisions
• Ethical Decision
A decision that is reasonable or typical stakeholders
would find acceptable because it aids stakeholders,
the organization, or society.
• Unethical 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.
© Copyright 2004 McGraw-Hill. All rights reserved.
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Which Behaviors are Ethical?
• 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?
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Ethical Decisions and Dilemmas
• 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.
Should a firm provide severance pay to its laid off
workers?
• 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.
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Why Behave Ethically?
• Managers should behave ethically to avoid
harming others.
Managers are responsible for protecting and
nurturing resources of the firm.
• Reputation
The esteem or high repute that individuals or
organizations gain when they behave ethically.
• 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.
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Sources of An
Organization’s
Code of Ethics
Figure 3.1
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Sources of Ethics
• Societal 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.
• Codified in the form of laws and societal customs.
• Ethical norms dictate how people should behave.
• 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.
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Sources of Ethics
• Professional 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.
• Individual ethics
Personal standards that govern how individuals are
to interact with other people.
• Influenced by family, upbringing in general, and life
experiences
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Ethical Organizational Cultures
• Components 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 Ombudsman
An ethics officer who monitors an organization’s
practices and procedures to ensure they are ethical.
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Johnson &
Johnson Credo
Source: Johnson & Johnson Annual Report.
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Figure 3.2
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The Increasing Diversity of the Workforce
and the Environment
• Diversity
Differences among people in age, gender, race,
ethnicity, religion, sexual orientation, socioeconomic
background, and capabilities/disabilities.
• Diversity 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
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Sources of Diversity in the Workplace
Figure 3.3
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Workforce Diversity
• Glass Ceiling
A metaphor alluding to the invisible barriers that
prevents minorities and women from being
promoted to top corporate positions.
2008: Projected New Entrants
in the U.S. Labor Force
Source: Bureau of Labor Statistics, Projections
from Current Population Survey, 1988–1998.
© Copyright 2004 McGraw-Hill. All rights reserved.
Figure 3.4
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Workforce Diversity: Age
• Aging 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.
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Major Equal Employment Opportunity Laws
Affecting Human Resources Management
• Federal Anti-Discrimination Laws
1963 Equal Pay Act
1964 Title VII of the Civil Rights Act
1967 Age Discrimination in Employment Act
1978 Pregnancy Discrimination Act
1990 Americans with Disabilities Act
1991 Civil Rights Act
1993 Family and Medical Leave Act
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Workforce Diversity: Gender
• Women 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.
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Workforce Diversity: Race and Ethnicity
• 1998 to 2008 Growth Rates for the U.S.
Working Population
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
.5%
.0%
White
© Copyright 2004 McGraw-Hill. All rights reserved.
Black
Hispanic
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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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Capabilities and Disabilities
• Disability Issues
Providing reasonable accommodations for
individuals with disabilities.
Promoting a nondiscriminatory workplace
environment.
Educating the organization
about disabilities and AIDS.
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Socioeconomic Background
• Socioeconomic Background Issues
Widening diversity in income levels
Single mothers and the “working poor”
Child and elder care for working parents
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Workforce Diversity: Sexual Orientation
• Sexual Orientation Issues
Employment and workplace discrimination
Provision of domestic-partner benefits
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The Effective Management of Diversity
• Critical Managerial Roles
Interpersonal
Decisional
• Figurehead
• Entrepreneur
• Leader
• Disturbance
Handler
• Liaison
Informational
• Monitor
• Resource Allocator
• Negotiator
• Disseminator
• Spokesperson
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Effectively Managing Diversity Makes
Good Business Sense
• 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.
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