Chapter 3 - The Manager's ChangingWork Environment & Ethical ResponsibilitiesDoing the Right ThingManagers operate in two organizational environments-internal and external both made up of stakeholders, the people whose interests are affected by the organization. The first, or internal, environment consists of employees, owners, and the board of directors.Internal & External StakeholdersShould a company be principally responsible to just its stockholders? A broader term to indicate all those with a stake in an organization is stakeholders-the people whose interests are affected by an organization's activities.Managers operate in two organizational environments, both made up of various stakeholders. Internal stakeholders External stakeholders

Internal StakeholdersWhether small or large, the organization to which you belong has people in it who have an important stake in how it performs. These internal stakeholders consist of employees, owners, and the board of directors.Employees conflict may lower the performance of the organization, thereby hurting everyone's stake employees are considered "the talent"-the most important resource Even during the recent Great Recession, when there were six unemployed workers for every available U.S. job opening, SAS continued to treat employees exceptionally well, resulting in a turnover rate of only 2% in 2009, compared with a software industry average of 22%.Owners The owners of an organization consist of all those who can claim it as their legal property, such as Walmart's stockholders. In the for-profit world, if If you're running a one-person graphic design firm, the owner is just you-you're what is known as a sole proprietorship. If you're in an Internet start-up with your brother-in-law, you're both owners-you're a partnership. If you're a member of a family running a car dealership, you're all owners-you're investors in a privately owned company. If you work for a company that is more than half owned by its employees (such as Lakeland, Florida-based, Publix Super Markets or W L. Gore & Associates, maker of Gore-Tex fabric and No. 13 on Fortune's 2010 "Best Companies to Work For" list), you are one of the joint owners-you're part of an Employee Stock Ownership Plan (ESOP). And if you've bought a few shares of stock in a company whose shares are listed for sale on the New York Stock Exchange, such as General Motors, you're one of thousands of owners-you're a stockholder. Board of Directors In a corporation, it is the board of directors, whose members are elected by the stockholders to see that the company is being run according to their interests. In non-profit organizations, such as universities or hospitals, the board may be called The Environment of Management the board of trustees or board of regents. Board members are very important in setting the organization's overall strategic goals and in approving the major decisions and salaries of top management.External StakeholdersPeople or groups in the organization's external environment that are affected by it. The external environment consists of the task environment and the general environment.The Task EnvironmentThe task environment consists of 11 groups that present you with daily tasks to handle: customers, competitors, suppliers, distributors, strategic allies, employee organizations, local communities, financial institutions, government regulators, special-interest groups, and mass media.1. Customers a. The first law of business (and even nonprofits) is to take care of the customer.b. Customers are those who pay to use an organization's goods or services. c. Many customers value service over price, according to a Forrester Research report, with 54% thinking it would be easy to have a customer service issue resolved in clothing and apparel outlets but only 30% thinking the same in health insurance companies.

2. Competitors a. Compete for customers or resources, such as talented employees or raw materialsb. Every organization has to be actively aware of its competitors. c. Customers can buy the same products at their rivals stores.

3. Suppliersa. Provides supplies-that is, raw materials, services, equipment, labour, or energy to other organizations. b. Suppliers in turn have their own suppliers: i. The publisher of this book buys the paper on which it is printed from a paper merchant, who in turn is supplied by several paper mills, which in turn are supplied wood for wood pulp by logging companies with forests in the United States or Canada.

4. Distributors a. A distributor is a person or an organization that helps another organization sell its goods and services to customers.b. Distributors can be quite important because in some industries there is not a lot of competition, and the distributor has a lot of power over the ultimate price of the product. c. However, the rise in popularity of the Internet has allowed manufacturers of personal computers, for example Dell, to cut out the "middleman"-the distributor-and to sell to customers directly.

5. Strategic Allies a. Companies, and even non-profit organizations, frequently link up with other organizations (even competing ones) in order to realize strategic advantages. b. The term strategic allies describes the relationship of two organizations that join forces to achieve advantages which neither can perform as well alone.

6. Employee Organizations: Unions & Associations a. Labour unions tend to represent hourly workers; professional associations tend to represent salaried workers.

7. Local Communities a. Local communities are important stakeholders, as becomes evident not only when a big organization arrives but also when it leaves, sending government officials scrambling to find new industry to replace it.

8. Financial Institutionsa. Established companies often need loans to tide them over when revenues are down or to finance expansion, but they rely for assistance on lenders such as commercial banks, investment banks, and insurance companies.

9. Government Regulators a. The preceding groups are external stakeholders in your organization since they are clearly affected by its activities. b. Government regulators-regulatory agencies that establish ground rules under which organizations may operate are considered stakeholders, because they have the legal authority to prescribe or proscribe the conditions under which you may conduct business.i. Such government regulators can be said to be stakeholders because not only do they affect the activities of your organization, they are in turn affected by it.ii. The Federal Aviation Agency (FAA), for example, specifies how far planes must stay apart to prevent mid-air collisions. But when the airlines want to add more flights on certain routes, the FAA may have to add more flight controllers and radar equipment, since those are the agency's responsibility.

10. Special-Interest Groupsa. Special-interest groups are groups whose members try to influence specific issues, some of which may affect your organization.b. Special-interest groups may try to exert political influence, as in contributing funds to lawmakers' election campaigns or in launching letter-writing efforts to officials. Or they may organize picketing and boycotts - holding back their patronage of - certain companies

11. Mass Mediaa. Communicate clearly with the public about a crisis, cooperate with government officials, swiftly begin its own investigation of a problem, and, if necessary, quickly institute a product recall.b. No manager can afford to ignore the power of the mass media-print, radio, TV, and the Internet-to rapidly and widely disseminate news

The General EnvironmentBeyond the task environment is the general environment, or macroenvironment, which includes six forces: economic, technological, sociocultural, demographic, political-legal, and international.You may be able to control some forces in the task environment, but you can't control those in the general environment. Economic Forces Economic forces consist of the general economic conditions and trends-unemployment, inflation, interest rates, economic growth-that may affect an organization's performance.

Technological Forces Technological forces are new developments in methods for transforming resources into goods or services.

Sociocultural Forces Sociocultural forces are influences and trends originating in a country's, a society's, or a culture's human relationships and values that may affect an organization.

Demographic Forces Demographic forces are influences on an organization arising from changes in the characteristics of a population, such as age, gender, or ethnic origin.

Political-Legal Forces Political-legal forces are changes in the way politics shape laws and laws shape the opportunities for and threats to an organization.

International Forces International forces are changes in the economic, political, legal, and technological global system that may affect an organization.

The Ethical Responsibilities of a ManagerImagine having to choose between economic performance and social performance, which in business is what most ethical conflicts are about. This is known as an ethical dilemma, a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even illegal.Ethics are the standards of right and wrong that influence behaviour.Ethical behaviour is behaviour that is accepted as "right" as opposed to "wrong" according to those standards.Ethical dilemmas often take place because of an organization's value system, the pattern of values within an organization. Values are the relatively permanent and deeply held underlying beliefs and attitudes that help determine a person's behaviourOrganizations may have two important value systems that can conflict: 1. the value system stressing financial performance versus 2. the value system stressing cohesion and solidarity in employee relationships.The Utilitarian Approach: For the Greatest GoodEthical behaviour in the utilitarian approach is guided by what will result in the greatest good for the greatest number of people. Managers often take the Utilitarian Approach, Using financial performance-such as efficiency and profit-as the best definition of what constitutes "the greatest good for the greatest number."The Individual Approach: For Your Greatest Self-Interest Long Term, Which Will Help Others. Ethical behavior in the individual approach is guided by what will result in the individual's best long-term interests, which ultimately are in everyone's self-interest. The assumption here is that you will act ethically in the short run to avoid others harming you in the long run.The Moral-Rights Approach: Respecting Fundamental Rights Shared by Everyone Ethical behaviour in the moral-rights approach is guided by respect for the fundamental rights of human beings. We would all tend to agree that denying people the right to life, liberty, privacy, health and safety, and due process is unethical.The Justice Approach: Respecting Impartial Standards of Fairness Ethical behavior in the justice approach is guided by respect for impartial standards of fairness and equity. One consideration here is whether an organization's policies-such as those governing promotions or sexual harassment cases-are administered impartially and fairly regardless of gender, age, sexual orientation, and the like.Unethical PracticesInsider trading is the illegal trading of a company's stock by people using confidential company information.Ponzi scheme is the act of using cash from newer investors to pay off older ones.Sarbanes-Oxley Act of 2002, often shortened to SarbOx or SOX, established requirements for proper financial record keeping for public companies and penalties of as much as 25 years in prison for noncompliance.How do people learn ethics?1. Level 1, pre-conventional - follows rules. a. People who have achieved this level tend to follow rules and to obey authority to avoid unpleasant consequences. b. Managers of the Level 1 sort tend to be autocratic or coercive, expecting employees to be obedient for obedience's sake.

2. Level 2, conventional - follows expectations of others. a. People whose moral development has reached this level are conformist but not slavish, generally adhering to the expectations of others in their lives. b. Level 2 managers lead by encouragement and cooperation and are more group and team oriented. c. Most managers are at this level.

3. Level 3, post-conventional - guided by internal values. a. The farthest along in moral development, Level 3 managers are independent souls who follow their own values and standards, focusing on the needs of their employees and trying to lead by empowering those working for them. b. Only about a fifth of American managers reach this level.

How Organisations can Promote Ethics Creating a Strong Ethical Climate An ethical climate represents employees' perceptions about the extent to which work environments support ethical behavior. It is important for managers to foster ethical climates because they significantly affect the frequency of ethical behavior. Screening Prospective Employees Companies try to screen out dishonest, irresponsible employees by checking applicants' resumes and references. Some also use personality tests and integrity testing to identify potentially dishonest people. Instituting Ethics Codes & Training Programs A code of ethics consists of a formal written set of ethical standards guiding an organization's actions. Rewarding Ethical Behavior: Protecting Whistle-Blowers A whistle-blower is an employee who reports organizational misconduct to the public, such as health and safety matters, waste, corruption, or overcharging of customers.Social Responsibilities Required of a Manager Social Responsibility is a manager's duty to take actions that will benefit the interests of society as well as of the organization. When generalized beyond the individual to the organization, social responsibility is called corporate social responsibility (CSR), the notion that corporations are expected to go above and beyond following the law and making a profit.Is Social Responsibility Worthwhile?No it is not worthwhile Yes it is worthwhile

"The social responsibility of business is to make profits." That is, unless a company focuses on maximizing profits, it will become distracted and fail to provide goods and services, benefit the stockholders, create jobs, and expand economic growth-the real social justification for the firm's existence.This view would presumably support the efforts of companies to set up headquarters in name only in offshore Caribbean tax havens (while keeping their actual headquarters in the United States) in order to minimize their tax burden ."A large corporation these days not only may engage in social responsibility," Beyond the fact of ethical obligation, the rationale for this view is that since businesses create problems (environmental pollution, for example), they should help solve them. Moreover, they often have the resources to solve problems in ways that the nonprofit sector does not. Finally, being socially responsible gives businesses a favourable public image that can help head off government regulation.

Corporate Social Responsibility: The Top of the PyramidAccording to University of Georgia business scholar Archie B. Carroll, corporate social responsibility rests at the top of a pyramid of a corporation's obligations, right up there with economic, legal, and ethical obligations. That is, while some people might hold that a company's first duty is to make a profit, Carroll suggests the responsibilities of an organization in the global economy should take the following priorities Be a good global corporate citizen, as defined by the host country's expectations. Be ethical in its practices, taking host-country and global standards into consideration. Obey the law of host countries as well as international law. Make a profit consistent with expectations for international business.

One Type of Social Responsibility: Philanthropy, Not Dying Rich"From a hardheaded manager's point of view, do ethical behavior and high social responsibility pay off financially? Effect on Customers more apt to buy from companies that are socially responsible than from companies that are not prefer to purchase products and services from a company with ethical business practices and higher prices Effect on Employees' Work Effort workers are more efficient, loyal, and creative when they feel a sense of purpose-when their work has meaning Effect on Job Applicants & Employee Retention Ethics can also affect the quality of people who apply to work in an organization. Effect on Sales Growth The announcement of a company's conviction for illegal activity has been shown to diminish sales growth for several years. people said they decide to buy a firm's goods or services partly on their perception of its ethics. Effect on Company Efficiency 71% of employees who saw honesty applied rarely or never in their organization had seen misconduct in the past year, compared with 52% who saw honesty applied only occasionally and 25% who saw it frequently Effect on Company Revenue Unethical behavior in the form of employee fraud costs U.S. organizations around $652 billion a year, according to the Association of Certified Fraud Examiners. 103 Employee fraud, which is twice as common as consumer fraud (such as credit card fraud and identity theft), costs employers about 20% of every dollar earned. Effect on Stock Price 74% of people polled said their perception of a firm's honesty directly affected their decision about whether to buy its stock Earlier research found that investments in unethical firms earn abnormally negative returns for long periods of time. Effect on Profits Studies Suggest that profitability is enhanced by a reputation for honesty and corporate citizenship. Ethical behaviour and social responsibility are more than just admirable ways of operating. They give an organization a clear competitive advantage.

Personality At the centre of the diversity wheel is personality. It is at the centre because personality is defined as the stable physical and mental characteristics responsible for a person's identity.

Internal Dimensions Internal dimensions of diversity are those human differences that exert a powerful, sustained effect throughout every stage of our lives: gender, age, ethnicity, race, sexual orientation, physical abilities. These are referred to as the primary dimensions of diversity because they are not within our control for the most part. Yet they strongly influence our attitudes and expectations and assumptions about other people, which in turn influence our own behaviour.

External Dimensions External dimensions of diversity include an element of choice; they consist of the personal characteristics that people acquire, discard, or modify throughout their lives: educational background, marital status, parental status, religion, income, geographic location, work experience, recreational habits, appearance, personal habits. They are referred to as the secondary dimensions of diversity because we have a greater ability to influence or control them than we do internal dimensions.These external dimensions exert a significant influence on our perceptions, behaviour, and attitudes.

Organizational Dimensions Organizational dimensions include management status, union affiliation, work location, seniority, work content, and division or department.

Trends in Workforce Diversity Age: More older people in the workforce Number and proportion of younger people is rapidly shrinking. Those shrinking numbers of younger people will have to both drive their economies and help support much larger numbers of older people

Gender: More women working glass ceiling-the metaphor for an invisible barrier preventing women and minorities from being promoted to top executive jobs. Women slowly making up an increasing percentage of the workforce

Race & Ethnicity: More People of Colour in the Workforce more minorities hitting the glass celling

Sexual Orientation: Gays & Lesbians Become More Visible harassed, pressured to quit, or denied a promotion because of their sexual orientation. if managers are concerned about hiring and keeping workplace talent, they shouldn't ignore the motivation and productivity of 6% of the workforce

People with Differing Physical & Mental Abilities People with disabilities have difficulty finding work

Educational Levels: Mismatches between Education & Workforce Needs College graduates may be in jobs for which they are overqualified. some are underemployed working at jobs that require less education than they have such as tending bar, managing video stores, or other jobs that someone with less education could do. High-school dropouts and others may not have the literacy skills needed for many jobs.

Barriers to DiversityResistance to change in general is an attitude that all managers come up against from time to time, and resistance to diversity is simply one variation.1. Stereotypes & Prejudices a. Ethnocentrism is the belief that one's native country, culture, language, abilities, or behaviour is superior to that of another culture.b. When differences are viewed as being weaknesses, this may be expressed as a concern that diversity hiring will lead to a sacrifice in competence and quality.

2. Fear of Reverse Discrimination a. Some employees are afraid that attempts to achieve greater diversity in their organization will result in reverse discrimination.

3. Resistance to Diversity Program Priorities a. Some companies, such as 3M, offer special classes teaching tolerance for diversity, seminars in how to get along.i. Some employees may see diversity programs as distracting them from the organization's "real work." 1. In addition, they may be resentful of diversity promoting policies that are reinforced through special criteria in the organization's performance appraisals and reward systems.

4. Unsupportive Social Atmosphere a. Diverse employees may be excluded from office camaraderie and social events.

5. Lack of Support for Family Demandsa. more and more women are moving back and forth between being at-home mothers and in the workforce, as economic circumstances dictatei. Yet in a great many households, it is still women who primarily take care of children, as well as other domestic chores. b. When organizations aren't supportive in offering flexibility in hours and job responsibilities, these women may find it difficult to work evenings and weekends or to take overnight business trips.

6. Lack of Support for Career-Building Stepsa. Organizations may not i. provide diverse employees with the types of work assignments that will help qualify them for positions in senior management. ii. provide the kind of informal training or mentoring that will help them learn the political savvy to do networking and other activities required to get ahead.