McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 3
Managing Ethics and Diversity
McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
1. Illustrate how ethics help managers
determine the right or proper way to
behave when dealing with different
stakeholder groups
2. Explain why managers should strive to
create ethical organizational cultures
3. Appreciate the increasing diversity of
the workforce and of the organization
environment
3-3
Learning Objectives
4. Grasp the central role that managers
play in the effective management of
diversity
5. Understand why the effective
management of diversity is both an
ethical and business imperative
6. Understand the two major forms of
sexual harassment and how they can be
eliminated
3-4
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 selfinterest
3-5
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
3-6
Ethics and the Law
• Neither laws nor ethics are fixed principles
• Laws change to reflect the changing
ethical beliefs of a society
3-7
Stakeholders and Ethics
• Stakeholders
–The people and groups that supply a
company with its productive resources and so
have a claim on and stake in the company
3-8
Types of Company
Stakeholders
Figure 3.1
3-9
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
3-10
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
3-11
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
3-12
Employees
• Companies can act ethically toward
employees by creating an occupational
structure that fairly and equitably rewards
employees for their contributions
3-13
Suppliers and Distributors
• Suppliers expect to be paid fairly and
promptly for their inputs
• Distributors expect to receive quality
products at agreed-upon prices
3-14
Customers
• Most critical stakeholder
• Company must work to increase efficiency
and effectiveness in order to create
loyal customers and attract new ones
3-15
Community, Society, and
Nation
• 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
3-16
Ethical Decision Making
Figure 3.2
3-17
Rules for Ethical Decision
Making
• Utilitarian Rule
–Decision that produces the greatest good for
the greatest number of people
• How do you measure the benefits and harms that
will be done to each stakeholder group?
• How do you evaluate the rights and importance of
each group?
3-18
Rules for Ethical Decision
Making
• Moral Rights rule
–Decision that best maintains and protects the
fundamental or inalienable rights and
privileges of the people affected by it
3-19
Rules for Ethical Decision
Making
• Justice rule
–Decision that distributes benefits and harms
among people and groups in a fair, equitable,
or impartial way
3-20
Rules for Ethical Decision
Making
• Practical rule
–Decision that a manager has no hesitation
about communicating to people outside the
company because the typical person would
think it is acceptable
3-21
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?
3-22
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
3-23
Some Effects of
Ethical/Unethical
Behavior
Figure 3.3
3-24
Question?
What is confidence and faith in another
person’s goodwill?
A. Reputation
B. Trust
C. Empathy
D. Hope
3-25
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
3-26
Why should managers behave
ethically?
• Reputation
–esteem or high repute that individuals or
organizations gain when they behave ethically
3-27
Determinants of Ethics
Figure 3.4
3-28
Societal Ethics
• Societal Ethics
–Standards that govern how members of a
society should deal with each other on issues
such as fairness, justice, poverty, and the
rights of the individual
• People behave ethically because they
have internalized certain values, beliefs,
and norms
3-29
Professional Ethics
• Professional Ethics
– Standards that govern how members of a
profession are to make decisions when the
way they should behave is not clear-cut
–Medical & legal ethics
3-30
Individual Ethics
• Individual Ethics
–Personal values and attitudes that govern how
individuals interact with other people
3-31
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
3-32
Ethical Organizational Cultures
• Ethics Ombudsman
–An ethics officer who monitors an
organization’s practices and procedures to be
sure they are ethical
3-33
Johnson &
Johnson
Credo
Figure 3.5
3-34
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
3-35
Diversity Concerns
• The ethical imperative for equal
opportunity
• Effectively managing diversity can
improve organizational effectiveness
• The continuing bias toward diverse
individuals
3-36
Question?
What is the metaphorical barrier that
prevents minorities and women from being
A.
B.
C.
D.
promoted to top corporate positions?
Gender Barrier
Gender Prejudice
Glass Ceiling
Glass Top
3-37
Diversity Concerns
• Glass ceiling
–A metaphor alluding to the invisible barriers
that prevent minorities and women from being
promoted to top corporate positions
3-38
Sources of Diversity in the
Workplace
Figure 3.6
3-39
Workforce Diversity: Age
• Aging U.S. Population
–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
3-40
Workforce Diversity: Gender
• Women in the Work Place
–U.S. workforce is 46.5 % percent female.
–Women’s weekly median earnings are $572
compared to $714 for men.
–Women hold only 16% of corporate officer
positions.
3-41
Major EEO Laws
3-42
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
3-43
Workforce Diversity:
Capabilities and Disabilities
• Disability Issues
–Providing reasonable accommodations for
individuals with disabilities
–Promoting a nondiscriminatory workplace
environment
–Educating the organization about disabilities
and AIDS
3-44
Workforce Diversity:
Socioeconomic Background
• Socioeconomic Background Issues
–Widening diversity in income levels
–Single mothers and the “working poor”
–Child and elder care
for working parents
3-45
Workforce Diversity: Sexual
Orientation
• Sexual Orientation Issues
–Employment and workplace discrimination
–Provision of domestic-partner benefits
3-46
Critical Managerial Roles
3-47
Critical Managerial Roles
• Managers have more influence than
rank-and-file employees
• When managers commit to diversity,
it legitimizes diversity efforts of others
3-48
Forms of Sexual Harassment
• Quid pro quo
–Asking or forcing an employee to perform
sexual favors in exchange for some reward or
to avoid negative consequences
3-49
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.
3-50
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
3-51
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
3-52
Video Case:
Bakery with a Conscience
• What does Trish Karter do differently with
the Dancing Deer Bakery?
• How does Dancing Deer Bakery impact
the community?
3-53
Movie Example: John Q
Is it ethical for a hospital to base treatment
on the ability of a
patient to pay?
3-54