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Learning Objectives (1 of 2)
3-1. Illustrate how ethics help managers
determine the right way to behave when
CHAPTER 3 dealing with different stakeholder groups.
3-2. Explain why managers should behave
MANAGING ETHICS ethically and strive to create ethical
AND DIVERSITY organizational cultures.
3-3. Appreciate the increasing diversity of the
workforce and of the organizational
environment.

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Learning Objectives (2 of 2) The Nature of Ethics (1 of 2)

3-4. Grasp the central role that managers play in Ethical Dilemma
the effective management of diversity.
A type of quandary in which people have to decide if
3-5. Understand why the effective management they should act in a way that might help another
of diversity is both an ethical and a person or group even though doing so might go
business imperative. against their own self-interest
3-6. Understand the two major forms of sexual
harassment and how they can be
eliminated.

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The Nature of Ethics (2 of 2) Stakeholders and Ethics

Ethics Stakeholders
The inner-guiding moral principles, values, and The people and groups that supply a company with
beliefs that people use to analyze or interpret a its productive resources and so have a claim on and
situation and then decide what is the “right” or a stake in the company
appropriate way to behave

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Types of Company Stakeholders Stockholders

Figure 3.1 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.
They want to maximize their return on
investment.

Jump to Appendix 1 long description.

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Managers Topics for Discussion (1 of 5)

Managers are responsible for using a company’s When are ethics and ethical standards especially
financial capital and human resources to important in organizations? [LO 3-1]
increase its performance and thus its stock
price.
They have the right to expect a good return or
reward by investing their human capital to
improve a company’s performance.
Frequently managers juggle multiple interests.

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Employees Suppliers and Distributors

Companies can act ethically toward employees Suppliers expect to be paid fairly and promptly
by creating an occupational structure that fairly for their inputs.
and equitably rewards employees for their Distributors expect to receive quality products
contributions. at agreed-upon prices.

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Customers Community, Society, and Nation

Customers are the most critical stakeholder. Community
Company must work to increase efficiency and Physical locations in which companies are located
effectiveness in order to create loyal customers • towns or cities
and attract new ones. or social milieus,
• ethnic neighborhoods
Community provides a company with the
physical and social infrastructure that allows it
to operate.

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Four Ethical Rules Practical Decision Model

Figure 3.2 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?

Jump to Appendix 2 long description.

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Why Should Managers Behave Ethically? (1 of 2) Some Effects of

Ethical/Unethical Behavior
The relentless pursuit of self-interest can lead to Figure 3.3

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.

Jump to Appendix 3 for the long description.

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Why Should Managers Behave Ethically? (2 of 2) Sources of an Organization’s Code of Ethics

Trust Figure 3.4

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

Jump to Appendix 4 for long description.

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Ethical Organizational Cultures (1 of 2)
Managers can ensure that 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.
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Ethical Organizational Cultures (2 of 2)
Ethics Ombudsman
An ethics officer who monitors an organization’s
practices and procedures to be sure they are ethical
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Topics for Discussion (3 of 5)
How can managers ensure that they create ethical
organizational cultures? [LO 3-2]
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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
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Diversity Concerns (1 of 2) Diversity Concerns (2 of 2)

There is an ethical imperative for equal Glass Ceiling
opportunity. A metaphor alluding to the invisible barrier that
Effectively managing diversity can improve prevents minorities and women from being
promoted to top corporate positions
organizational effectiveness.

There is evidence that diverse individuals

continue to experience unfair treatment in the
workplace as a result of biases, stereotypes, and
overt discrimination.

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Sources of Diversity in the Workplace Workforce Diversity: Age

Figure 3.5 Aging U.S. Population
• 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

Jump to Appendix 5 long description.

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Workforce Diversity: Gender Workforce Diversity: Race and Ethnicity

Women in the Workplace Ethnicity
U.S. workforce is 44.3% female. Grouping of people based on some shared
characteristic such as national origin
Women’s weekly median earnings are $726
compared to $895 for men. Ethnic Demographics of United States
Women hold only 14.6% of executive officer • 72.4% white
positions in the 500 largest U.S. companies.
• 16.3% Latino
• 12.6% African American
• 4.8% Asian

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Workforce Diversity: Religion Workforce Diversity: Capabilities and Disabilities

Accommodation for Religious Beliefs Disability Issues

• Scheduling of critical meetings
• Providing flexible time off for holy days
• Posting holy days for different religions on the
company calendar
• Providing reasonable accommodations for
individuals with disabilities
• Promoting a nondiscriminatory workplace
environment
• Educating the organization about disabilities

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Topics for Discussion (5 of 5) Workforce Diversity: Socioeconomic Background

Why might some employees resent workplace Managers need to be sensitive and responsive
accommodations that are dictated by the Americans to the needs and concerns of workers who
with Disabilities Act? [LO 3-3] might not be as well off as others.

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Workforce Diversity: Sexual Orientation Topics for Discussion (4 of 5)

Sexual Orientation Issues Why are gay and lesbian workers and workers who
test positive for HIV sometimes discriminated
• Employment and workplace discrimination against? [LO 3-3]
• Provision of domestic-partner benefits

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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.
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Forms of Sexual Harassment (1 of 2)
Quid Pro Quo
Asking for or forcing an employee to perform sexual
favors in exchange for receiving some reward or
avoiding negative consequences
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Effectively Managing Diversity Makes Good Business Sense
The diversity of organizational members can be
a source of competitive advantage.
The recruiting of 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.
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Forms of Sexual Harassment (2 of 2)
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
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Steps to Eradicate Sexual Harassment (1 of 2)
Develop and clearly communicate a sexual
harassment policy endorsed by top
management.
Use a fair complaint procedure to investigate
charges of sexual harassment.
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BE THE MANAGER
What are you going to do to address this issue?
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Steps to Eradicate Sexual Harassment (2
of 2)
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.
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APPENDICES
Long descriptions of images
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Appendix 1: Types of Company Stakeholders
The cluster graphic has the company at the center. A type of
company stakeholder is in each of the six circles that surround
the center: employees, stockholders, managers, suppliers and
distributors, customers, and community, society, and nation-
state.
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Appendix 3: Some Effects of
Ethical/Unethical Behavior
Ethical behavior increases efficiency and effectiveness of production and
trade, increases company performance, and increases national standard of
living, well-being, and prosperity.
Unethical behavior reduces efficiency and effectiveness of production and
trade, reduces company performance, and reduces national standard of
living, well-being, and prosperity.
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Appendix 2: Four Ethical Rules
The cluster graphic has rules for ethical decision making in the center. Each of
the four rectangles that surround the center describes one of the four ethical
rules. The rules are moral rights rule, utilitarian rule, justice rule, and practical
rule.
Moral Rights Rule: An ethical decision should maintain and protect the
fundamental rights and privileges of people.
Utilitarian Rule: An ethical decision should procure the greatest good for the
greatest number 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.
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Appendix 4: Sources of an Organization’s Code
of Ethics
Societal ethics, professional ethics, and individual ethics all influence an
organization’s code of ethics.
Societal ethics are the values and standards embodied in a society’s laws,
customs, practices, and norms and values.
Professional ethics are the values and standards that groups of managers and
workers use to decide how to behave appropriately.
Individual ethics are the personal values and standards that result from the
influence of family, peers, upbringing, and involvement in significant social
institutions.
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Appendix 5: Sources of Diversity in the

Workplace

A circle is divided equally into sources of diversity in the

workplace. The sources are age, gender, race, ethnicity,
religion, sexual orientation, socio-economic background,
capabilities or disabilities, education, experience, physical
appearance, and other characteristics.
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Return to slide.

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