Chapter 2 - Environmental Context:Globalization, Diversity, and Ethics

Full file at

CHAPTER 2 - ENVIRONMENTAL CONTEXT:GLOBALIZATION, DIVERSITY, AND ETHICS

I.PURPOSE AND TEACHING OBJECTIVES

To understand the impact of globalization, diversity, andethicson today’s organizations. The need for cultural understanding and global leadership is discussed. Major areas of ethical concerns and specific ethical issues are examined.

II.TEACHING NOTES AND REVIEW OUTLINE

A.Advances in technology make it possible for organizations to effectively reach new, broader regions of the world. Globalization requires an understanding of cultural differences and demands global leadership.

1. According to ThomasFriedman, we have currently entered the third phase of globalization.

a. First phase (1492-1800) – countries globalizing.

b. Second phase (1800-2000) – companiesglobalizing.

c. Third phase (since the turn of the new century) – fueled byinformation technology available to everyone in the world, groups and individuals.

2. Implications of globalization for organizational behavior are profound and direct. Today financial resources have ceased to remain the problem, and instead there is a lack of human resources – with very few resources with global leadership capabilities.

3. While there maybe superficial cultural similarities (clothes, entertainment, English as the accepted international business language), there are still important differences in the ways in which people think and behave around the world.In understanding and applying organizational behavior concepts in other countries around the world, one must be aware of the similarities and differences.

4. The global context is now an accepted reality, but the problem is that theincreasingly frequent intercultural encounters cannot be solved by simple guidelines.Nardon and Steers have summarized some of thereasons for the complexity of cross-cultural management:

a. People are influenced by multiple cultures—national, regional, organizational, functional,and professional.

b. Even though people are from the same country, they still have different beliefs, values,and behaviors.

c. Counterparts from other cultures are becoming savvy in how to deal with foreigners andthus may not be typical of their own culture.

d. Because of the complexity of culture, simplistic categorizations may initially be helpful,but turn out to be poor predictors of behavior.

1. To deal with the complexity of culture, today’s organizational leaders must develop anduse a “global mindset”, which would enable them to view and evaluate a cultural event or interaction through a broad array of potential categories and quickly recognize nuances that differentiate cultural groups

1. According to a conference dedicated to global mindset, a set of individual attributes that enable an individualto influence individuals, groups, and organizations from diverse social/cultural/ institutional systems is defined as global mindset.

B. Diversity is an important component in the contemporary environment for organizations. It is not just something to deal with, but instead a reality to build on to make a stronger, more competitive enterprise.

• According to the current trend, diversity means much more than ethnicity, gender, or sexual orientation.
• Society of Human Resource Management (SHRM) has identified following outcomes for effective diversity management:

• Creating a work environment or culture that allows everyone to contribute all that they can to the organization.
• Leveraging differences and similarities in the workforce for the strategic advantage of the organization.
• Enhancing the ability of people from different backgrounds to work effectively together.

1. Figure 2.1 on page 35 shows major reasons for the emergence of diversity as an important reality.

2. Emerging diversity can be systematically managed to ensure a truly multiculturalorganization. A multicultural organization has been described as one that:

a. Reflects the contributions and interests of diverse cultural and social groups in its mission, operations, and product or service.

b. Acts on a commitment to eradicate social oppression in all forms within the organization.

c. Includes the members of diverse cultural and social groups as full participants,especially in decisions that shape the organization.

d. Follows through on broader external social responsibilities, including support of other institutional efforts to eliminate all forms of social oppression.

Stages leading up to a multicultural organization:

a. Exclusionary organization - Devoted to maintaining the dominance of one group over all others on factors such as age, education, gender, or race and characterized by exclusionary hiring practices and other forms of discrimination.

b. Club organization - Characterized by the maintenance of privileges by those who traditionally have held power.

c. Compliance organization - Committed to removing some of the discriminatory practices that are inherent in the exclusionary and club organizations, but turns

out to meet the letter rather than the spirit of the laws.

d. Redefining organization - Goes beyond being proactively antiracist and antisexist, questions the core cultural values of the organization, recognizes the value of a diverse work force, and engages in visionary planning and problem solving to tap the strength of the diversity.

e. Multicultural organization - Is characterized by core cultural values and an ongoing commitment to eliminate social oppression and promote dignity and respect for everyone throughout the organization.

3. An individual can play an important role in effectively supporting diversity by learning appropriate communication and interaction behaviors and by empathizing with those facing discrimination.

4. Organizational approaches to manage diversity include the following techniques:

a. Testing - Develop and use job-specific tests that are well-suited for selecting and evaluating individuals within diverse groups.

b. Training - Provide training for members of diverse groups and also to managers and other employees who work with diverse employees. and understanding of other groups.

c. Mentoring - Assign mentors to help support members of diverse groups in their jobs, socialize them in the cultural values of the organization, and assist their development and advancement.

d.Work/Family Programs - Allow all employees, but especially parents of small children, greater autonomy and flexibility in their work arrangements. The most common arrangements are flextime, the compressed work week, job sharing, and telecommuting.

Table 2.1 on page 45 providesa broad sampling of innovative work/family programs.

C. Ethical issuesare important in the study of organizational behavior because they impact employees, their work, and organizational outcomes. There is also increasing evidence that ethical behavior positively impacts “bottom-line” financial performance. This chapter focuses on the following ethical problems:

1. The impact of ethics on “bottom-line” outcomes: There is increasing evidence that ethics programs and being ethical pays off for organizations. Accumulating evidence on the value of ethical practices is leading to the development of theory, research, and measurement of corporate social performance (CSP). Ethics can affect the well-being of employees and their performance.

III.QUESTIONS FORDISCUSSION ANDREVIEW

1. What is meant by and what are some examples of globalization?

Answer

Globalization refers to the interdependence of world markets and businesses resulting

in the creation of a global economy. This trend has been fuelled by the advances in communication, transportation, and infrastructure making it possible to do business internationally. This has also resulted in technological, economic, political, and cultural exchanges.

An example of globalization is the trend toward similar clothes, entertainment, and material possessions, and even general recognition that English is the international business language. Business offshoring is also an example of globalization.

2. What are some of the major reasons why diversity has become such an important dimension of today’s organizations?

Answer

A major reason for the emergence of diversity as an important reality is changing demographics. Older workers, women, minorities, and those with more education are now entering the workforce.

Another reason is the realization that diversity can help organizations meet the competitive pressures they currently face. Firms that aggressively try to hire and promote women and minorities are going to end up with a more talented and capable workforce than those that do not take such a proactive, affirmative action approach.Companies that gain a reputation for “celebrating diversity” are more likely to attract the best employees regardless of age, gender, or ethnicity.

Stimulated by competitive pressures, organizations now recognize and strive to obtain diverse viewpoints in their decision-making processes and teams. There is growing practical evidence that diversity leads to innovation and often breakthrough competitive advantages.

Legislation and the fear of lawsuits have also contributed to the emergence of diversity in the organization. Individuals and groups that have found themselves excluded from organizations or managerial positions can bring and have brought lawsuits in an effort to overcome discriminatory barriers and ensure themselves equal opportunity in employment.

The final reason for the emerging challenge of diversity is that more and more organizations are entering the international arena. A natural by-product of going international is increased diversity, in this case cultural diversity. If domestic organizations have and promote diversity, then, as they expand globally, they will be accustomed to working with people who have different cultures, customs, social norms, and mores.

3. How can diversity be effectively managed? Offer suggestions at both the individual and organizational levels.

Answer

Individual approaches to managing diversity typically take two interdependent paths: learning and empathy.

Learning: Managers who may not think they need to learn about diversity must work especially hard to learn and experience as much as they can about developing appropriate behavior. They must openly communicate one-on-one, regardless of age, gender, ethnicity, sexual preference, religion, or those challenged with a disability, in order to determine how best to understand and interact with them. In this way managers can learn more about a diverse group’s personal values and how the

individuals like to be treated. Managers can also begin to develop a personal style that works well with each member of a diverse group.They can encourage diverse employees to give them candid feedback regarding how they are being treated.

Empathy: This is the ability to put oneself in another’s place and see things from that person’s point of view. Members of diverse groups often feel that onlythey can truly understand the challenges or problems they are facing. Empathy helps the manager understand the diverse employee’s point of view.

Organizational approaches to managing diversity include a variety of techniques such as testing, training, mentoring, and programs designed to help personnel effectively balance their work and family lives.

Testing: A great deal of attention has been focused on developing tests that are indeed valid for selecting and evaluating diverse employees. One way to make tests more valid for diverse employees is to use job-specific tests rather than general aptitude or knowledge tests. Tests should beable to identify whether the applicant has the necessary skills for doing the job. In some cases, carefully conducted interviews or role playing can be used. If pencil-and-paper or online tests are used, then to help ensure that they are not biased,scientific norming could be used.

Training: There are two ways in which this training can play a key role in managing diversity. One way is by offering training to diverse groups. Members from a diverse group can be trained for an entry-level skill or how to more effectively do their existing or future job. The other approach is to provide training to managers and other employees who work with diverse employees. Most diversity training programs get the participants directly involved.

Mentoring: A mentor is a trusted counselor, coach, or advisor who provides advice and assistance. The purpose of the mentor program is to help support members of a diverse group in their jobs, socialize them in the cultural values of the organization, and pragmatically help their chances for development and advancement.

Work/family programs: The needs of the dual-career family are met through alternative work schedules, which allow the parents flexibility in balancing their home and work demands. The most common alternative work schedule arrangements are flextime, the compressed workweek, job sharing, and telecommuting.

4. What is meant by ethics, and what types of factors influence ethical behavior?

Answer

Ethics involves moral issues and choices and deals with right and wrong behavior. A number of relevant factors from the cultural, organizational, and external environment along with the individuals and groups determine ethical behavior. Cultural influences on ethical behavior come from family, friends, neighbors, education, religion, and the media. Organizational influences come from ethical codes, role models, policies and practices, and reward and punishment systems. The external forces having an impact on ethical behavior include political, legal, economic, and international developments. These factors often work interdependently in shaping the ethical behavior of individuals and groups in organizations.

5. What is meant by corporate social responsibility? How can and does it affect the “bottom-line” of today’s organizations?

Answer

Corporate social responsibility is defined as the theme of engaging in economically sustainable business activities that go beyond legal requirements to protect the well-being of employees, communities, and the environment. Corporate social responsibility does affect an organization’s bottom-line as there is increasing evidence that ethics programs and being ethical pays off for organizations. In the past the linkage between corporate social performance and bottom-line results has been vague or dependent on faith and anecdotal evidence but the cost of illegal, unethical practices is now clearly documented.Research has shown that there is a strong link between a company’s ethical commitment, market value added and the investment in social programs and the firm’s financial outcomes. The social programs involved community and employee relations, product characteristics, diversity, and especially an ethical organizational culture

IV.HINTS FOR INTERNET EXERCISE: Ethical Issues in the Workplace

1.Do you believe employers should be allowed to electronically monitor workers? Would you like to be monitored in this fashion?

Employee monitoring, due to the increase in cyberloafing and lawsuits, has become more widespread and much easier with the use of new and cheaper technologies. While employers may feel entitled to monitor workers electronically and consider this no different than traditional methods of observing employees’ performance, many employees may consider electronic monitoring a violation of their privacy and personal rights and may not like it.

1. Summarize the different perspectives that you found on the Internet. Be specific as to where you found this information.

The ACLU is adamant in their call for more laws to protect the privacy rights of workers, stating that “unless new protections are in place, companies will continue to take advantage of new/cheaper technologies to spy on employees. The privacy rights of employees do not end when the work day starts.”

Employee monitoring can help protect intellectual property and keep an eye on employee activities, if it's done properly.It should not be 'owned' by the IT or security department; it is a management, legal and human resources issue.

The biggest mistakeof deploying an employee-monitoring systemis not creating and communicating a policy on it.

There are various lawsthat might affect employee monitoring, and it just depends on the situation.

• Civil Rights Act
• Electronic Communications Privacy Act
• Fair Labor Standards Act
• National Labor Relations Act
• Various state laws

The benefits of employee monitoring are, it enhances employee productivity, helps catch trade secrets leaving the company, and protects the employees and business from sexual

harassment, defamation or illegal activity lawsuits. (Source:

It is found that when organizations involve employees in the design and implementation of monitoring systems, restrict monitoring to performance-related activities, and use data obtained through electronic means in a concretive manner by emphasizing two-way communication and supportive feedback, they are likely to reap positive results but when employees are not involved in the introduction of monitoring, when data gathered through electronic performance monitoring are used to provide coercive, obtrusive feedback, or when monitoring includes nonwork activities, the organization may experience negative results. Hence the ethical perspective to this would be the objective of monitoring. (Source:

3.Discuss other ethical issues that surfaced when looking at the suggested websites or others that you found.

Workplace drug testing remains a sensitive issue because of the difficulty of balancing safety andproductivity requirements against the essential need to prevent the invasion of privacy and discrimination.The contentiousness of workplace drug testing (WDT) arises out of the collision between workers’ andemployers’ interests.

The range of testing carried out in the workplace includes the following:

• Pre-employment testing
• Probable cause testing
• Reasonable suspicion testing
• Periodic testing
• Random testing
• Testing on return from treatment
• Testing related to transfer or promotion
• Voluntary testing

(Source: , Ethical Issues in Workplace Drug Testing in Europe by Behrouz Shahandeh and Joannah Caborn)

Few ethical issues arising from internal and industry practices are:

• Employment of disabled people
• Child labor in the developing world
• Bribes to secure contracts
• Price fixing cartels

(Source:

V.STUDENT INVOLVEMENT EXERCISES

1.Divide the class into groups and give them the assignment to go into the local community to find and orally report to the rest of the class an Internet application. An example would be big national corporations, but encourage them to find small local firms as well.

2.Invite to class a representative from a company in your area that does international business. Hopefully this person has had actual experience in an overseas assignment. Have the students develop questions to ask. What are the similarities and differences between managing in the U.S. and in the particular country he or she is familiar with? Specifically, can he or she give examples of communication, motivation, and leadership? You may want to prepare the speaker before hand of the types of questions to expect and to have him or her use as many examples and "war stories" as possible.