Business Ethics and Social Responsibility

CHAPTER THREE
ORGANIZATIONAL AND MANAGERIAL ETHICS
INTRODUCTION
In this chapter we elaborate the concept of organizational and managerial ethics. Managers have
a responsibility to behave ethically and manage ethically. They set the example for all employees
and will determine how effective ethics management can be. Ethical management provides a
number of benefits, both to the company culture and financial gain of the organization.
Chapter objectives
After completing this chapter, you should be able to:
 Define the term ethical management
 Explain the subordinate ethical issues
 Describe the characteristics of organizational ethical basis
 Listing organizational ethical principles
 Describing the ethical safeguard
 Explaining what supposed to mean corporate social responsibility

3.1. MANAGERIAL ETHICS

The Institute of Business Ethics describes ethical management as: “The application of ethical
values to business behavior. It applies to any and all aspects of business conduct, from
boardroom strategies and how companies treat their suppliers to sales techniques and accounting
practices. Ethical management is sometimes seen as an exercise in reconciling the four Ps:
1. Purpose in the case of a commercial organization is often the achievement of profit and
ethical management does not object to this. However an ethical commercial organization will
have other purposes including helping its clients to achieve their purposes.
2. People. This includes not only the staff of the ethically managed organization who would
expect good quality terms and conditions of employment; but also the organization’s other
stakeholders be they customers, shareholders, local communities or suppliers. Issues of
‘equality’ and ‘diversity’ are important to ethically managed organizations, as is participation
in the communities where ethical organizations work. Ethical Management seeks to build
long-term relationships with people based on all parties receiving ‘added value’.

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3. Planet ethical management seeks to minimize the negative impacts and maximize the
positive impacts. This includes sustainability, environment, biodiversity, natural resources,
heritage and 'fair trade'. The ethical organization is ‘green’.
4. Probity includes basing all activities and relationships on integrity, compassion, honesty,
trust, respect and truth. Probity enables the other potentially conflicting aims to be
harmonized so that the mix is sustainable.
Ethics is difficult to define in a precise way. In a general sense, ethics is the code of moral
principles and values that governs the behaviors of a person or group with respect to what is right
or wrong. Ethics sets standards as to what is good or bad in conduct and decision making.
Ethical management balances the different responsibilities of modern business organizations.
 Responsibilities:
 Profit: All companies are responsible to make a profit in order to survive and fulfill their
other obligations.
 People: This includes employees, customers, shareholders, and the community.
 Planet: Sustainability and the preservation of resources is a growing responsibility for
businesses.
 Principles: The ethics that govern the organization will help the company to act ethically
in every area.
 Identifying the Characteristics

There are many different characteristics of ethical management. There are three characters,
however, that people identify with ethical management:
 Integrity: The manager behaves with integrity and leads by example.
 Transparency: The company and its managers are transparent and do not hide their
actions.
 Utilitarianism: The organization and manager considers the happiness of the people
involved in the organization.
 Ensuring Ethical Behavior
Because ethics and values are extremely personal, it is difficult to ensure that all employees will
practice ethical behavior. There are ways to promote ethical behavior, however, by simply
instilling a few basic rules.

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 Develop an ethics management program.

 Develop a code of ethics.
 Develop a code of conduct.
 Create policies and procedures that reflect the company ethics.
It is not enough to simply create codes, programs, policies, and procedures. All rules must be
enforced in order to be effective and curb unethical behavior.
Implementing Ethics in the Workplace
Implementing ethics in the workplace is a complex but rewarding task. Every individual has a
unique set of ethical standards. Allowing each person to follow his or her moral compass will
result in varied results. Companies need to focus on implementing uniform ethical standards and
rules throughout their organizations. Employees should never have to question whether or not
they are doing the right thing.
 Benefits of implementing ethics in the work place
Implementing ethics in the workplace will lead to better profits and long‐term growth. Unethical
business practices can cause immediate financial gain, but they will cost companies customers
and employees over time.
Organizational Benefits:
 Convinces employees that the company truly values ethical decision‐making.
 Builds awareness of ethical issues.
 Creates an ethical guideline for employees to follow.
 Guidelines for Implementing and Managing Ethics
Give it time: Managing ethics is a process‐oriented activity that requires time and
constant assessment.
Focus on behavior: Do not give vague requirements; make sure that ethics management
has an impact on behavior.
Avoid problems: Create clear codes and policies that will prevent ethical problems.
Be open: Involve different groups in ethics program and make decisions public.
Integrate ethics: Make sure that all management programs have ethical values.
Allow for mistakes: Teach employees how to behave ethically, and do not give up when
mistakes happen.

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 Roles and Responsibilities

The roles and responsibilities necessary to effectively implement workplace ethics will vary with
each organization. A manager should be in place to oversee the ethics program, but he or she will
need the support provided by other positions. Smaller organizations may not need to fill all of the
roles listed below; determine what your company needs before executing an ethics program.
 Roles:
 Director, Sheriff, and Chief: The CEO of every company needs to support business
ethics and lead by example.
 Ethics committee: An ethics committee will develop and supervise the program.
 Ethics management team: Senior managers implement the program and train
employees.
 Ethics executive: An ethics executive or officer is trained to resolve ethical problems.
 Ombudsperson: This position requires interpreting and integrating values throughout
the organization.
3.2. ETHICAL TREATMENT OF SUBORDINATES
As a manager, one of your duties is to solve the ethical problems brought to you by your
subordinates. Here is a process you can use to help solve ethical problems brought to your
attention by subordinates:
1. Listen actively.
2. Obtain further information.
3. Explore possible solutions.
4. Select the best solution.
5. Implement the solution.
6. Evaluate the decision’s effectiveness.

Listening actively
When employees approach you with an ethical problem, you should listen actively. By asking
questions, you show that you aren’t taking the issue lightly. Also, be sure to document the
meeting. Documenting both the issue and the steps you decide to take to resolve it can serve as
evidence if the issue eventually involves court testimony.

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Obtaining further information

Investigation will help you determine whether the issue is limited to your department or involves
the entire organization. If the issue involves the entire organization, you might need to bring it to
the attention of other department heads, or even senior management.
Don’t stop investigating after gathering preliminary information. Gather as much information as
possible and be as thorough as you can. Remember that more information will help you to arrive
at the best decision.
Exploring possible solutions
After obtaining information, explore your options. Decide whether you need to take it to a higher
level. If the issue is one you can solve, list all possible solutions, and then list the consequences
of each on the various stakeholders involved.
Selecting the best solution
The best solution is the one that makes the most sense financially and causes the least amount of
harm to the stakeholders.
Implement the solution.

Evaluate the decision’s effectiveness.

Employer/Employee Rights
An ethical organization is able to balance the rights of employees with the rights of the
employer. This is why privacy policies are so important. Instituting clear privacy policies will
prevent any confusion between employees and employers. When creating policies, employers
need to remember that they are obligated to provide employees with a safe work environment
that is free from harassment, and this may require what some people consider an invasion of
privacy.
 Privacy Policies
Employee privacy is a tangled legal issue. Companies collect detailed personal information about
their employees for background checks and other reasons, and they need to clearly state the
purpose of collecting this information and how it will be used in their privacy policy. Personal
information must be protected and kept confidential, and the employees need to agree to the
background checks. Surveillance, drug testing, and searches are points of contention for many
employees, and they need to be addressed in privacy policies. Employees argue that they have

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the right to personal privacy at work, but there are limits to their privacy as more businesses take
drastic measures to prevent theft and harassment.
 Surveillance: Organizations routinely monitor the phone and Internet usage of their
employees while they are at work. Legally, these steps are protected in many countries
because the company phones and Internet are company property. Security cameras are also
used to ensure the safety of employees. Experts advise employers to include in their privacy
policies, a warning to employees that they will be monitored. There are limits to the use of
cameras. For example, cameras are not allowed in locker rooms or bathrooms. Always
check the legal ramifications of using surveillance.
 Drug Testing: Taking a drug test before beginning a new job is common, and employers
also have the right to demand drug tests in the event of an accident or suspicion of drug use.
Random drug tests, however, can be contested if they violate employee privacy. The policy
on random drug testing need to be reasonable and clearly spelled out. Companies are
responsible for keeping drug test results private.
 Searches: Privacy policies need to remind employees that their workspace and tools are
company property, and that they are not responsible for any lost or damaged personal
property. This should prevent any invasion of privacy claims if an employer who suspects
theft searches a locker. Searches should be conducted carefully and with the instruction of
senior management.
 Harassment Issues: Companies are legally bound to provide a safe working environment
for all of their employees. Employees can charge their employers for not protecting them
from harassment. The EEOC protects the rights of individuals from discrimination and
harassment, regardless of ethnicity, sex, religion, sexual orientation, disability, age, etc. An
employee who feels threatened or uncomfortable by any statement, gesture, or action may
be experiencing harassment. An anti-harassment policy and training in harassment will help
prevent harassment and protect the organization. Any harassment in the workplace needs to
be confronted immediately and the rights of the harassed employee protected.
 Technology: As technology changes, so does the clarity about employer and employee
rights. Employers have the right to expect their employees to work productively and
represent the company well. On the other hand, employees have the right to personal
privacy. Advances in technology provide employers with more ways to monitor employees.

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Social networking further complicates this issue. Employees often post things online for
their friends to see, but employers may be monitoring these posts well. It is becoming more
common for people to lose their jobs because of posts on their social networking sites. A
recent survey revealed that about half of employees feel that their social networks are not
any business of their employers, but 60 percent of executives think that they have the right
to monitor their representatives’ social network behavior. This use of social networks should
be included in privacy policies to protect both employee and employer, but many companies
cite personal conduct policies to validate their actions.
 Balancing Personal and Organizational Ethics
It is important to be ethical on a personal and organizational level. Personal ethics influence
decision both inside and outside of work. These are based on personal beliefs and values.
Organizational ethics determine workplace decisions. Managers and employees both face
organizational ethics, and the company should have ethical standards in place. Organizational
ethics flow from the top down.
Common Dilemmas
There are many different ethical dilemmas in business that are specific to industries. There are,
however, common dilemmas that every organization will face.
 Honest accounting practices
 Responsibility for mistakes such as accidents, spills, and faulty product
 Advertising that is honest and not misleading
 Collusion with competitors
 Labor issues
 Bribes and corporate espionage
Law governs many of these dilemmas, but an ethical organization will make the right decision
regardless of legal issues. Because these issues are so common, it is important to create ethical
standards and train employees to behave accordingly.

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 Making Ethical Decisions

Before making any final decisions, use the following steps to make sure that you are making
ethical decisions.
1. Determine the ethics of a situation: Does the decision affect a group or have legal
ramifications?
2. Gather Information: Learn as much as possible about the situation, and get the point of
view from all parties involved.
3. Evaluate Actions: Make different decisions based on the different ethical standards.
4. Test Decisions: Would you be proud of this decision if it were advertised?
5. Implement: Implement the decision, and evaluate the results.
 Unethical Behavior
Employees will act unethically from time to time. It is important to be able to identify unethical
behavior and address it. A successful manager should also be able to prevent poor behavior and
intervene before the behavior escalates.
 Recognize & Identify
Stress can take its toll on employees, who will occasionally act out at work. When unethical
behavior begins, managers need to identify it as soon as possible. Allowing unethical behavior to
continue will have long‐term consequences for the company.
Typical Unethical Behavior
 Abusing sick leave
 Lying
 Cutting corners
 Covering up mistakes
 Falsifying reports
The behavior may seem minor; most people are guilty of at least one these incidents. These
minor lapses in ethical judgment, however, can lead to more unethical behavior later.
Preventing: Preventing unethical behavior is much easier than dealing with the aftermath.
Employees often react to situations they feel are unfair.

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Addressing: Unethical behavior needs to be addressed carefully. It is important to discuss the

situation face‐to‐face. If the behavior specifically violates company policy, remind the person
about the policy.
Interventions: Workplace interventions occur when people are concerned about the welfare of
their co‐workers. Interventions are usually used to help co‐workers with addiction problems such
as alcohol or drug abuse.
1. Call an interventionist: A professional is needed to handle the situation.
2. Create an action plan: Plan how the intervention should go.
3. Meet: Have the group meet together beforehand to iron out details.
4. Intervention: Hold the intervention for an hour or two, and dialogue without
judgment.
5. Treatment: Help the co‐worker find treatment if he or she decides it is necessary.
3.3. ORGANIZATION BASICS
When building an ethical business it is important that the roles and responsibilities of each

member of the company are clearly outlined. An organizational chart will help determine how an

ethics program will run. There will need to be a chain of command overseeing the ethics

program.

All functional areas within an organization should establish ethical standards. You can break
down the functional areas into the following five categories:
•Human resources
•Accounting
•Finance
•Marketing
•Other
Human resources
Human resources issues result from employees working together, and are by far the largest
category of ethical dilemmas. The categories of human resource issues include discrimination,
performance appraisals, and sexual harassment.
Accounting

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Accounting is vital to any company’s success. It provides important financial information on

which decisions are based. A company’s financial statements also inform investors, the
government, and tax collectors about the state of the organization. Examples of unethical
behavior in accounting include falsified financial statements, bribery, and embezzlement. To
help guide the accounting process, professional accounting firms have developed principles that
all organizations should follow. These principles emphasize honesty, integrity, consistency, and
accuracy.
Finance
The finance function of a company has several responsibilities. These include forecasting and
planning, investing in financial markets, investing in assets, dealing with risks such as natural
disasters and fluctuating securities prices, and ensuring that the company operates in the most
efficient manner.
Common ethical issues in finance include insider trading, illegal stock transactions, inflated
financial information, and embezzled company profits. To prevent unethical finance behavior,
organizations must establish and uphold standards such as emphasizing honesty and not inflating
financial information. Corporations should maintain strong disciplinary procedures for
employees who engage in
Other functional areas
Other functional areas within an organization include information systems, production,
maintenance, and purchasing. Employees in all of these areas must act ethically to ensure overall
organization ethicality. For example, information systems departments must maintain
confidentiality among all stakeholders. Maintenance departments must dispose of toxic waste in
a manner that does not harm the environment. Production departments must take quality control
measures to ensure that products are safe and of the highest quality.
 Upholding the Ethics Program
.Managers must uphold the ethics program by adhering to it themselves and holding all of their
employees to the same standards. Managers are also responsible for ensuring that employees
have all of the necessary resources to be successful, and that they are fully trained in any new
policies or procedures.
 Managing Company Ethics and Social Responsibility

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Ethical managers must encourage the moral development of others. They find ways to focus the
entire organization’s attention on ethical values and create an organizational environment that
encourages, guides, and supports the ethical behavior of all employees. Two additional pillars are
needed to provide a strong foundation for an ethical organization: ethical leadership and
organizational structures and systems.

 Ethical Leadership
Ethical companies, no point emerged more clearly than the crucial role of leadership. The
primary way in which leaders set the tone for an organization’s ethics is through their own
behavior. In addition, leaders make a commitment to ethical values and help others throughout
the organization embody and reflect those values.
 Organizational Structures and Systems
The third pillar of ethical organizations is the set of tools that managers use to shape values and
promote ethical behavior throughout the organization. Three of these tools are a code of ethics,
ethical structures, and mechanisms for supporting whistle-blowers.
 Code of Ethics. A code of ethics is a formal statement of the company’s values concerning
ethics and social issues; it communicates to employees what the company stands for. A code
of ethics tends to exist in two types: principle-based statements and policy-based statements.
 Principle-based statements are designed to affect corporate culture; they define
fundamental values and contain general language about company responsibilities, quality of
products, and treatment of employees. General statements of principle are often called
corporate credos.
 Policy-based statements generally outline the procedures to be used in specific ethical
situations. These situations include marketing practice, conflicts of interest, observance of
laws, proprietary information, political gifts, and equal opportunities.
 Ethics committee: A group of executives assigned to oversee the organization’s ethics by
ruling on questionable issues and disciplining violators.
 Chief ethics officer: a company executive who oversees ethics and legal compliance.
 Ethics training: Training programs to help employees deal with ethical questions and
values.

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 Whistle-blowing: The disclosure by an employee of illegal, immoral, or illegitimate

practices by the organization. Employee disclosure of illegal, immoral, or illegitimate
practices on the employer’s part is called whistle-blowing. No organization can rely
exclusively on codes of conduct and ethical structures to prevent all unethical behavior.
Holding organizations accountable depends to some degree on individuals who are willing to
blow the whistle if they detect illegal, dangerous, or unethical activities. Whistle-blowers
often report wrongdoing to outsiders, such as regulatory agencies, senators, or newspaper
reporters. Some firms have instituted innovative programs and confidential hotlines to
encourage and support internal whistle blowing. For this to be an effective ethical safeguard,
however, companies must view whistle-blowing as a benefit to the company and make
dedicated efforts to protect whistle-blowers.
 Managing Social Responsibility Programs
Business managers must take four simple steps to foster social responsibility
1. Top Management Support
 Top managers such as CEOs and Presidents must make a clear decision as to whether
or not they want to pursue stronger social responsibility programs.
 They must then develop a policy statement that outlines their commitment.

2. Strategic Planning
 A committee comprised of several top managers must outline strategic plans to be
undertaken in order to outline the level of support to be directed towards social programs
 Should the corporation donate profits? How much do we donate? To whom does the
money go to? What programs do we most want to support? These are all questions that
strategic plans must answer.
3. Appointment of a Director
 must appoint an executive in charge of directing the firm’s social responsibility programs
 May chose to create an entirely separate position or the executive chosen may absorb
these duties in addition to his /her regular employment duties
4. Social Audit
 The firm should conduct social audits on a regular basis to monitor the failure or success
enjoyed by the firm in developing its social responsibility programs.

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 Addressing the Needs

The needs of the organization should be determined by surveying both customers and the
employees. Most companies have a plan to gauge customer satisfaction.
Needs to Address:
 Company values
 Personal responsibility
 Employee participation
 Conflicts
 Trust
3.4. Ethical Principles
An organization’s ethical principles should reflect its needs. For example a company that ranks
low in personal responsibility probably has a bullying problem and needs to create principles that
address the issue. There are a few basic business ethics principles that most companies can
benefit from instituting.
 Trust: Customers and employees react better to a company they trust and they feel trusts
them.
 Clarity: Make sure that all documents, codes, principles, etc. are clear and easy to
understand.
 Community: Support community involvement.
 Accurate records: Keep all records and accounting up‐to‐date and above suspicion.
 Respect: Treat all people with respect, regardless of their position
3.5 . Ethical Safeguards
Ethical safeguards need to be in place to ensure ethical behavior. Safeguards take away the
excuse that employees do not know better. Safeguards do more than protect the company; they
help bring in work. In fact, many government agencies demand that those they contract with
have ethical safeguards in place.
Examples:
 Code of Conduct
 Employee training
 Ethics audits

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 Developing Code of Ethics

A Code of Ethics is the foundation of an ethics program. The Code of Ethics needs to address
certain issues.
Laws and regulations: All legal requirements need to be considered.
Organizational needs: Consider the needs of the organization when creating a code.
Ethical values: Use the ethics and values of the company. Include two examples for each
value.
Wording: Make sure that everyone knows that they have to abide by the Code of Ethics.
Update the code each year, and make sure that everyone has a copy of these guidelines.
 Performing an Internal Ethics Audit
An internal ethics audit utilizes several different sources. An auditor (or a committee, if there is
no auditor) usually goes over the information to determine if any adjustments need to be made.
Sources:
 Surveys
 Interviews
 Documents
 Focus Groups
 Direct Observation
The audit is used to evaluate the design, execution, and effectiveness of the organization's ethical
objectives, programs, and activities.
Teaching ethics: How morality develops in humans
1. Lawrence Kohlberg, in his book “Moral Stages and Moralization”, proposes that moral stan-
dards of behavior are developed over time, as children mature into adults.
2. There are six stages, grouped into three major levels termed "preconvention," "conventional,"
and "post conventional."
a. Level 1-Preconventional: This is the level of most children under 9 years old, some
adolescents up to age 20, and many adolescent and adult criminal offenders. Individuals at this
level do not understand or accept societal rules.
1. Stage I Individual benefits. Avoid breaking rules backed by punishments. Think only in terms
of your own interests. Do not recognize the interests of others. Morality, in short, is doing what's
right for you.

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2) Stage 2- Interpersonal exchanges. Avoid breaking rules backed by rewards. Still focus on your
own interests, but recognize that others have interests too. Morality is an exchange, a deal, an
agreement on what's right for both.
b. Level 2-Conventional: This is the level of most adolescents and adults within our society and
within other societies as well. Individuals at this stage accept societal rules just because they are
society's rules, conventions, and expectations.
3. Stage 3- Interpersonal expectations. Live up to what is expected of you in a small family
group; follow the roles as a son or daughter that make the family function. Morality is behaving
as expected by others close to you.
4. Stage 4- Social expectations. Live up to what is expected of you in larger social groups to keep
those institutions going. Obey the law as a set of written social rules. Morality is behaving as
expected by others similar to you.
c. Level 3-Postconventional: This is the level that is reached by only a minority of adults.
Individuals at this stage accept societal rules, but acceptance is based upon recognizing the
general ethical principles that underlie those rules.
5. Stage 5- Social contract. Follow the law which is a reciprocal agreement to protect the rights and
welfare of all citizens. Recognize that others have different morals and values, but that you have
all agreed to honor such basic goals as the right to life, liberty, and property.
6. Stage 6- Social principles. Follow self chosen ethical principles. Obey the law only when it does
not violate those principles. Believe in the validity of rational ethical principles on such issues as
justice, equality, and respect for the worth of individual human beings actions to Promote Ethical
Behavior in a Business Organization.
A. Develop and distribute a written code of ethics.
The primary function of a code of ethics is to provide guidance to provide guidance to employees
faced with ethical dilemmas, especially ambiguous ones.
1) Some professional associations have developed highly detailed and enforceable
Codes of Ethics for their membership.
2) For example, the Model Rules of Conduct of the American Bar Association (ABA)
contains eight sections, construed according to 138 ethical considerations and
implemented by a comparable number of parallel disciplinary rules.

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 Other professions with Codes of Ethics include medicine, dentistry, engineering,

accounting, psychology, journalism, advertising, architecture, banking and real estate.
 Since some of these professions are not licensed, it is more difficult to obtain recourse for
a claim of unethical conduct.
3.6. Corporate social responsibility
Corporate social responsibility (CSR) is exercised by organizations when they conduct their
business in an ethical way, taking account of the social, environmental and economic impact of
how they operate and going beyond compliance.
CSR ACTIVITIES
CSR activities as listed by McWilliams et al (2006) include incorporating social characteristics
or features into products and manufacturing processes, adopting progressive human resource
management practices, achieving higher levels of environmental performance through recycling
and pollution abatement and advancing the goals of community organizations. Business in the
Community (2007) surveyed the CSR activities of 120 leading British companies and
summarized them under four headings:
1. Community: Skills and education, employability and social exclusion were frequently
identified as key risks and opportunities. Other major activities were support for local
community initiatives and being a responsible and safe neighbor.
2. Environment: Most companies reported climate change and resource use as key issues for
their business, and 85 per cent of them managed their impacts through an environmental
management system.
3. Marketplace: The issues most frequently mentioned by companies were research and
development, procurement and supply chain, responsible selling, responsible marketing and
product safety. There was a rising focus on fair treatment of customers, providing appropriate
product information and labeling, and the impacts of products on customer health.
4. Workplace. This was the strongest management performing area, as most companies have
established employment management frameworks that can cater for workplace issues as they
emerge. Companies recognized the crucial role of employees to achieving responsible business
practices. Increasing emphasis was placed on internal communications and training to raise
awareness and understanding of why it is relevant to them and valuable for the business. More
attention was being paid to health and well-being issues as well as the traditional safety agenda.

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More work was being done on diversity, both to ensure the business attracts a diverse workforce
and to communicate the business care for diversity internally. Business in the Community also
reported a growing emphasis on responsible business as a source of competitive advantage as
firms move beyond minimizing risk to creating opportunities.
A survey conducted by Industrial Relations Services (Egan, 2006) found that:
 Most employers believe that employment practices designed to ensure the fair and
ethical treatment of staff can boost recruitment and retention;
 Relatively few employers are strongly convinced of a positive link to business
performance or productivity;
 The issue of ethics in employment is often viewed as part of a broader social
responsibility package;
 Policies on ethical employment most commonly cover HR practice in the areas of
recruitment, diversity, redundancy and dismissal proceedings and employee
involvement.
 CSR Principles
 being truthful in advertising a business could ensure that their advertising does not
contain inaccurate or deceptive claims, statements, or illustrations
 Providing a safe and healthy work environment a business could choose to invest in an
employee wellness program that offers on-site daycare or fitness facilities
 Adopting fair labor policies a business could choose to pay more than minimum wage
and offer flexible hours of employment for workers
 Protecting the environment a business could help fund environmental programs in their
community and could themselves become more environmentally responsible
 Donating to charity a business could make it easy for employees to contribute to charities
through payroll plans, and could host an event that donates proceeds to charitable causes
in the community.
Chapter Summary
Managers bring specific personality and behavioral traits to the job. Personal needs, family
influence, and religious background all shape a manager’s value system. Specific personality
characteristics, such as ego strength, self-confidence, and a strong sense of independence, may
enable managers to make ethical decisions. Many managers are concerned with improving the

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ethical climate and social responsiveness of their companies. As one expert on the topic of ethics
said, “Management is responsible for creating and sustaining conditions in which people are
likely to behave themselves. “Managers must take active steps to ensure that the company stays
on an ethical footing. As we discussed earlier in this chapter, ethical business practices depend
on individual managers and the organization’s values, policies, and practices. Leaders make a
commitment to ethical values and help others throughout the organization embody and reflect
those values. If people do not hear about values from top leadership, they get the idea that ethical
values are not important in the organization. There are set of tools that managers use to shape
values and promote ethical behavior throughout the organization. Three of these tools are a code
of ethics, ethical structures, and mechanisms for supporting whistle-blowers. The ethics
committee assumes responsibility for disciplining wrongdoers, which is essential if the
organization is to directly influence employee behavior. Any ethical misstep can cost a company
its reputation and hurt its profitability and performance.
CSR means distinguishing right from wrong and doing the right thing. It means being a good
corporate citizen. The formal definition of social responsibility is management’s obligation to
make choices and take actions that will contribute to the welfare and interests of society as well
as the organization. As straightforward as this definition seems, social responsibility can be a
difficult concept to grasp because different people have different beliefs as to which actions
improve society’s welfare. To make matters worse, social responsibility covers a range of issues,
many of which are ambiguous with respect to right or wrong.

CHAPTER FOUR
MANAGING INTERCULTURAL DIVERSITY
4.1 NORMS, VALUES AND WORLD VIEWS
4.1.1 NORMS
Norms can be defined as attitudes and behaviors common to members of a particular group, or
what they believe is “normal”. For example, most cultures require that people wear clothes. We
have norms about how we speak, eat, dress and so forth. Nearly everything in human society is
governed by norms of some kind. This is why it feels so strange to go to a very different culture,
where their norms are so different to what we are used to – but it is normal to them. As groups,
organizations have their own norms. When you move from one job to another, whether between

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companies, or even within the same organization, part of learning your new role does not just
understand the tasks you must perform, but also the unwritten rules – the norms – associated
with that task.
People talk about conformity like it’s a bad thing. Yet imagine if there was no conformity, and
we disagreed on what product to manufacture, its color, which way to distribute it, or even on the
cost. We need a certain amount of agreement to get things done: we have to conform in some
way. However, conformity is not good when it causes problems. Here’s a practical example. The
management of a large organization noticed that many of their specialist employees were
resigning. They paid consultants to prepare a report based on the exit interviews of the
employees who left over a six-month period. The report clearly found that the main reason
employees were leaving was that they thought their managers were incompetent. The report
recommended that managers be properly trained in people skills, and the findings were presented
to the upper management board.
The managing director immediately dismissed the report with a wave of his hand. “The number
of employees leaving is not very many,” he said. “Management training is far too expensive”.
Anyway, our managers are smart; if they are any good, they should be able to figure it out for
themselves. What do these consultants know? They don’t work here. This is not an important
issue.” The rest of the management group were quick to agree, and moved on to the next item on
the agenda”.
What happened here? One of the norms in this organization is: “Agree with the boss, no matter
what”. Many people in organizations fear a reprisal if they oppose powerful points of view.
Another of the norms here is: “Don’t admit shortcomings.” If the report is accurate, then it also
implies that the management board is not good. Yet the board is not willing to correct the
situation; they deny it even when exists. Here we have a situation known as groupthink: where
the group prefers a state of harmony rather than properly evaluate situations. These groups also
tend to be overconfident in their own abilities. Groupthink can cause a lot of problems: in this
case, the organization is losing a lot of money by paying the consultants for nothing, losing good
employees to the competition, and allowing disruptive problems to continue.
So, conformity is not good if it is followed in order to please others or avoid conflict, but it is
needed to a certain degree to get work done. Norms, which provide a certain amount of

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conformity, not only show what acceptable behavior within a group is, but give a sense of shared
values.
4.1.2 VALUES
Basically, our values are what are important to us. All of us constantly exhibit our values every
day. The way we dress tells a lot about our values; do you have an un-tucked t-shirt and messy
hair, or do you wear a button-down collar, blazer, and use a comb? If you are sarcastic in your
comments you might value humor in your social relationships, but a person who is always polite
may place a higher priority on respect.
Values concentrate on different areas: some may be general life values, but we also have family
values, cultural values, and work values. And as people have values, so do organizations. Today,
nearly everybody who has worked for a company is familiar with the concept of company
values.
“Don’t do what I do, do what I say”, hypocrite managers
A company’s values usually first appear at orientation, and you will probably be reminded of
them at various times during your employment. Perhaps you hold them dearly; you can recite
them, and believe to apply them on a daily basis. You may feel that values unite the organization
into a common way of thinking. These are the espoused values of the company: the values the
company says it has. But what does the company actually do? How does it really treat its
employees, its customers, the environment and so on? These are the values-in-action, or the
values the company puts into practice.
Imagine an innovative engineering company where one of its values is “Teamwork”. The
manager of a research team claims that as the manager, he is responsible for all of his team’s
new ideas, and even files the patents for them in his own name. He is then given awards for the
high number of patents he has filed. The company is rewarding individual effort, which
contradicts its value of teamwork. Employees may start to hide their work from the manager, to
keep the patent in their own name. Over time, this can become a norm in the organization.
People sometimes join companies because their personal values match the company’s values.
However, employees become disillusioned when the company’s espoused values do not match
its values-in-action. In a person, this kind of behavior is called hypocrisy, and nobody likes a
hypocrite.

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The norms and values of any organization define its culture. Norms are the attitudes and
behaviors of the members of that organization, and the values are what are important to those
members. Norms give a sense of shared values, but values can also create their own norms.

4.2 CULTURAL REACTIVITY

4.2.1 DEFINITION AND MEANING OF CULTURE
Dear learners! Can you define the word ‘culture’? Why company managers worry about the
culture of a given community which has relationship with their business?
___________________________________________________________________________
___________________________________________________________________________
________________________________________________________.

Different scholars define the term culture in different words. But, though they define culture in
different words and on the basis of their own understandings, there is similarity in meaning given
to culture by those writers and scholars.
Some among the definitions are:
• The collective programming of the mind that distinguishes the members of one human
group from another. (Geert Hofstede).

• The collection of beliefs, values, behaviors, customs, and attitudes that distinguish the
people of one society from another. (Clyde Kluckholm).

• Shared motives, values, beliefs, identities, and interpretations or meanings of significant

events that result from common experiences of members of collectives that are
transmitted across generations. (Robert House and GLOBE associates).

• A tool kit of symbols, stories, rituals, and worldviews that help the people of a culture
survive and succeed. (Ann Swidler).

4.2.2 CHARACTERISTICS OF CULTURE

The following are the major characteristics of culture:
• Culture is shared by members of a group and sometimes defines the membership of the
group itself.

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• Culture is learned though membership in a group or community.

• Culture influences the attitudes and behaviors of group members (e.g., normative
behavior).

Example: Culture and normative behavior (Western vs. Islamic banking and investments)
• In the West, bank customers expect to receive interest on their deposits. In Islamic
banking, the Qur’an prohibits paying or receiving interest; this is seen as taking
advantage of others who are less fortunate. Instead, bank customers entrust funds to
banks in exchange for profit-sharing (mudaraba).
• In the West, stock market transactions are open to investments and speculation in almost
anything. Under Islamic law, only investments in economic activities that are consistent
with the values of Islam are acceptable (halal).

Culture provides its members with . . .

• Self identity: Who am I?
• Belongingness and social support: Where do I belong?
• Guidelines for behavior: What should I do or not do?
• Sense of purpose: Why am I here?
• Predictability and security: What will happen to me?
Quandaries for management
• Because cultures are shared, we would expect most members to have similar values, yet
all cultures allow for non-conformists in varying degrees. How can managers discover
what is allowed and what is not?

• Because cultures are learned, they are also adaptive over time. How can managers sense
cultural adaptations when they occur?

• Most cultures are amalgamations of various subcultures, each with subtle variations. To
which of these cultures should a manager try to adapt to?

• All cultures contain defining elements that defy universal qualifications. How do
managers discover these before it is too late?

Dear learners, What do you think is the impact of such differences when doing business across

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borders?
____________________________________________________________________________
____________________________________________________________________________
__________________________________________________________.

4.2.3 CULTURAL DIFFERENCES AND IMPLICATIONS

Cultural differences, while difficult to observe and measure, are obviously very important.
Failure to appreciate and account for them can lead to embarrassing blunders, injure
relationships, and drag down business performance. And the effects of culture persist even in
life-and-death situations. Consider the example of Korean Air’s high incidence of plane crashes
between 1970 and 2000. As an analysis of conversations recorded in the black boxes of the
crashed planes revealed, the co-pilots and flight engineers in all-Korean cockpits were too
deferential to their captains. Even in the advent of a possible crash, Korean Air co-pilots and
flight engineers rarely suggested actions that would contradict the judgments of their captains.
Challenging one’s superior in Korea was considered as culturally poor behavior. The Korean Air
example is particularly noteworthy for two reasons. First, if national culture can have significant
– not to say existential – consequences among people of the same cultural origin, we need to be
very cautious in how we deal with national cultural differences in cross-border interactions.
Second, it is interesting to note that the attitudes and behaviors revealed by Korean Air co-pilots
and flight engineers persisted in such a highly regulated environment like commercial aviation.
National culture shapes behavior and this influence reaches beyond administrative attributes such
as governmental policies, laws and public institutions. Therefore, this note focuses on how the
influence of culture materializes and how cultural differences affect the operation of firms
around the globe. For the purpose of this note, culture shall be defined as a set of shared
values, assumptions and beliefs that are learnt through membership in a group, and that
influence the attitudes and behaviors of group members.
This definition includes three key characteristics: First, culture can be understood as a group
phenomenon that distinguishes people of one group from another. From this perspective, cultures
exist at many different levels, including organizational functions or business units, occupational
groups, organizations, industries, geographical regions, and nations. This note focuses in
particular on national culture and the role of cultural differences across countries rather than

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other cultural groups because this level of culture is particularly relevant for multinational
business.
Second, the above definition implies that culture is not obtained by birth but rather acquired
through a process of socialization. The learning of shared values, assumptions and beliefs occurs
through interactions with family, teachers, officials, experiences, and society-at-large. In this
respect, Geert Hofstede speaks of culture as a process of “collective programming of the mind”.
Third, it is this collective programming that determines what is considered acceptable or
attractive behavior. In other words, cultural values provide preferences or priorities for one
behavior over another.
It is important to note that national cultural differences have remained fairly stable over time.
While at the surface level there may be some convergence in cultural habits, artifacts and
symbols, for example as witnessed by the spread of American consumer culture across the globe,
at a deeper level cultural differences persist. For example, data from the World Value Survey, a
study of 65 countries reflecting 75% of the world’s population, showed a remarkable resilience
of distinctive cultural values even after taking into account the far-reaching cultural changes
caused by modernization and economic development.

Members vs. non-members in a culture:

All cultures differentiate between members and non-members or foreigners, and all countries
have some people who are xenophobic.
Definition:
“A member is a person born in the country; or a person regarded as an insider or part of the
community in that country.”
“A foreigner is a person born in another country; an alien; a person regarded as an outsider or
stranger.”
Xenophobia: A fear or dislike of strangers or foreigners.

Cultural differences remain persistent and present an array of challenges for multinational
companies. Firms that manage adaptation effectively are able to achieve congruence in the

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various cultures where they operate while extending their main sources of advantage across
borders, and in some cases even making cultural diversity itself a source of advantage. While this
note has emphasized cultural differences, which are often underappreciated, it’s equally
important to take note of cultural similarities. High and low power distance cultures, for
example, both reflect responses to common challenges around how human beings should
properly interact with each other in the face of inevitable differences in the power they hold in
particular contexts. In managing adaptation, as well as more broadly, there’s also a great deal to
be gained by focusing on what unites us rather than what divides us.
Avoiding cultural stereotypes
When describing another group, cultural descriptions:
1. Should provide accurate descriptions of the beliefs, values, and social norms of a group.
2. Should be limited to objective characteristics and avoid evaluative components (e.g.,
good or bad).
3. Should be considered a first best guess about the behaviors of another group prior to
developing more specific information about individual members of the group.
4. Should recognize that they contain limited information that can mask other useful data
about cultural diversity.
5. Should be modified over time as new information about a group is discovered through
observation and experience.
6.

4.2.4 CORE CULTURAL DIMENSIONS

Organizational culture is postulated to be one of the greatest theoretical levers required for
understanding organizations. Verifying and using those theories minimally requires comparisons
between the cultures of different firms, which in turn imply the identification of common
dimensions for assessing organizational culture.
The following are the major cultural dimensions:

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These core cultural dimensions are presented separately with the explanations (showing
differences) of their components respectively.

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4.3 GENERAL OECD GUIDELINES FOR MULTINATIONALS

The OECD is a unique forum where the governments of 30 democracies work together to
address the economic, social and environmental challenges of globalization. The OECD is also at
the forefront of efforts to understand and to help governments respond to new developments and
concerns, such as corporate governance, the information economy and the challenges of an
ageing population. The Organization provides a setting where governments can compare policy
experiences, seek answers to common problems, identify good practice and work to co-ordinate
domestic and international policies.
The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic,
Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea,
Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak
Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The
Commission of the European Communities takes part in the work of the OECD.
OECD Publishing disseminates widely the results of the Organization’s statistics gathering and
research on economic, social and environmental issues, as well as the conventions, guidelines
and standards agreed by its members.
The OECD Guidelines for Multinational Enterprises (the Guidelines) are recommendations
addressed by governments to multinational enterprises. They provide voluntary principles and
standards for responsible business conduct consistent with applicable laws. The Guidelines aim
to ensure that the operations of these enterprises are in harmony with government policies, to
strengthen the basis of mutual confidence between enterprises and the societies in which they
operate, to help improve the foreign investment climate and to enhance the contribution to
sustainable development made by multinational enterprises. The Guidelines are part of the
OECD Declaration on International Investment and Multinational Enterprises the other
elements of which relate to national treatment, conflicting requirements on enterprises, and
international investment incentives and disincentives.
International business has experienced far-reaching structural change and the Guidelines
themselves have evolved to reflect these changes. With the rise of service and knowledge-
intensive industries, service and technology enterprises have entered the international
marketplace. Large enterprises still account for a major share of international investment, and
there is a trend toward large-scale international mergers. At the same time, foreign investment by

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small- and medium-sized enterprises has also increased and these enterprises now play a
significant role on the international scene. Multinational enterprises, like their domestic
counterparts, have evolved to encompass a broader range of business arrangements and
organizational forms. Strategic alliances and closer relations with suppliers and contractors tend
to blur the boundaries of the enterprise.
The rapid evolution in the structure of multinational enterprises is also reflected in their
operations in the developing world, where foreign direct investment has grown rapidly. In
developing countries, multinational enterprises have diversified beyond primary production and
extractive industries into manufacturing, assembly, domestic market development and services.
The activities of multinational enterprises, through international trade and investment, have
strengthened and deepened the ties that join OECD economies to each other and to the rest of the
world. These activities bring substantial benefits to home and host countries. These benefits
accrue when multinational enterprises supply the products and services that consumers want to
buy at competitive prices and when they provide fair returns to suppliers of capital. Their trade
and investment activities contribute to the efficient use of capital, technology and human and
natural resources. They facilitate the transfer of technology among the regions of the world and
the development of technologies that reflect local conditions. Through both formal training and
on-the-job learning enterprises also promote the development of human capital in host countries.
4.3.1 GENERAL POLICIES
Enterprises should take fully into account established policies in the countries in which they
operate, and consider the views of other stakeholders.
In this regard, enterprises should:
1. Contribute to economic, social and environmental progress with a view to achieving
sustainable development.
2. Respect the human rights of those affected by their activities consistent with the host
government’s international obligations and commitments.
3. Encourage local capacity building through close co-operation with the local community,
including business interests, as well as developing the enterprise’s activities in domestic and
foreign markets, consistent with the need for sound commercial practice.
4. Encourage human capital formation, in particular by creating employment opportunities and
facilitating training opportunities for employees.

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5. Refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory
framework related to environmental, health, safety, labor, taxation, financial incentives, or other
issues.
6. Support and uphold good corporate governance principles and develop and apply good
corporate governance practices.
7. Develop and apply effective self-regulatory practices and management systems that foster a
relationship of confidence and mutual trust between enterprises and the societies in which they
operate.
8. Promote employee awareness of, and compliance with, company policies through appropriate
dissemination of these policies, including through training program.
9. Refrain from discriminatory or disciplinary action against employees who make bona fide
reports to management or, as appropriate, to the competent public authorities, on practices that
contravene the law, the Guidelines or the enterprise’s policies.
10. Encourage, where practicable, business partners, including suppliers and sub-contractors, to
apply principles of corporate conduct compatible with the Guidelines.
11. Abstain from any improper involvement in local political activities.
4.4 ETHICAL OBLIGATIONS OF MULTINATIONALS
4.4.1 ETHICS IN INTERNATIONAL BUSINESS
Introduction
 Business ethics are the accepted principles of right or wrong governing the conduct of
business people.
 An ethical strategy is a strategy or course of action that does not violate these accepted
principles.
 Many of the ethical issues and dilemmas in international business are rooted in the fact that
political systems, law, economic development, and culture vary significantly from nation to
nation.
 In the international business setting, the most common ethical issues involve
- Employment practices
- Human rights
- Environmental regulations
- Corruption

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- Moral obligation of multinational corporations

Employment Practices
• Ethical issues associated with employment practices abroad include:
- When work conditions in a host nation are clearly inferior to those in a multinational’s home
nation, what standards should be applied?
- While few would suggest that pay and work conditions should be the same across nations, how
much divergence is acceptable?
Human Rights
• Questions of human rights can arise in international business because basic human rights still
are not respected in many nations.
- Rights that we take for granted in developed nations, such as freedom of association, freedom
of speech, freedom of assembly, freedom of movement, and freedom from political repression
are by no means universally accepted.
• The question that must be asked of firms operating internationally is: ‘what is the responsibility
of a foreign multinational when operating in a country where basic human rights are trampled
on?’
Environmental Pollution
• Ethical issues arise when environmental regulations in host nations are far inferior to those in
the home nation.
- Developing nations often lack environmental regulations, and according to critics, the result
can be higher levels of pollution from the operations of multinationals than would be allowed at
home.
• Environmental questions take on added importance because some parts of the environment are
a public good that no one owns, but anyone can despoil.
- The tragedy of the commons occurs when a resource held in common by all, but owned by no
one, is overused by individuals, resulting in its degradation.

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Corruption
• Corruption has been a problem in almost every society in history, and it continues to be one
today.
• International businesses can, and have, gained economic advantages by making payments to
government officials.
• The United States passed the Foreign Corrupt Practices Act to fight corruption.
- Outlawed the paying of bribes to foreign government officials to gain business.
Moral Obligations
• Multinational corporations have power that comes from their control over resources and their
ability to move production from country to country.
• Moral philosophers argue that with power comes the social responsibility for corporations to
give something back to the societies that enable them to prosper and grow.
- Social responsibility refers to the idea that businesspeople should consider the social
consequences of economic actions when making business decisions.
- Advocates of this approach argue that businesses need to recognize their noblesse oblige
(benevolent behavior that is the responsibility of successful enterprises)
Ethical Dilemmas
• Managers must confront very real ethical dilemmas.
- The ethical obligations of a multinational corporation toward employment conditions, human
rights, corruption, environmental pollution, and the use of power are not always clear cut.
- Ethical dilemmas are situations in which none of the available alternatives seems ethically
acceptable.
4.5 BRIBERY AND CORRUPTION
Enterprises should not, directly or indirectly, offer, promise, give, or demand a bribe or other
undue advantage to obtain or retain business or other improper advantage. Nor should enterprises
be solicited or expected to render a bribe or other undue advantage. In particular, enterprises
should:
1. Not offer, nor give in to demands, to pay public officials or the employees of business partners
any portion of a contract payment. They should not use subcontracts, purchase orders or
consulting agreements as means of channeling payments to public officials, to employees of
business partners or to their relatives or business associates.

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2. Ensure that remuneration of agents is appropriate and for legitimate services only. Where
relevant, a list of agents employed in connection with transactions with public bodies and state-
owned enterprises should be kept and made available to competent authorities.
3. Enhance the transparency of their activities in the fight against bribery and extortion.
Measures could include making public commitments against bribery and extortion and disclosing
the management systems the company has adopted in order to honor these commitments. The
enterprise should also foster openness and dialogue with the public so as to promote its
awareness of and co-operation with the fight against bribery and extortion.
4. Promote employee awareness of and compliance with company policies against bribery and
extortion through appropriate dissemination of these policies and through training programs and
disciplinary procedures.
5. Adopt management control systems that discourage bribery and corrupt practices, and adopt
financial and tax accounting and auditing practices that prevent the establishment of “off the
books” or secret accounts or the creation of documents which do not properly and fairly record
the transactions to which they relate.
6. Not make illegal contributions to candidates for public office or to political parties or to other
political organizations. Contributions should fully comply with public disclosure requirements
and should be reported to senior management.
Chapter Summary
Culture shall be defined as a set of shared values, assumptions and beliefs that are learnt through
membership in a group, and that influence the attitudes and behaviors of group members. Most
cultures require that people wear clothes. Some even have laws to enforce this dictum. Nearly
everything in human society is governed by norms of some kind. This is why it feels so strange
to go to a very different culture, where their norms are so different to what we are used to – but it
is normal to them. Values concentrate on different areas: some may be general life values, but we
also have family values, cultural values, and work values. And as people have values, so do
organizations. Today, nearly everybody who has worked for a company is familiar with the
concept of company values.
Cultural differences, while difficult to observe and measure, are obviously very important.
Failure to appreciate and account for them can lead to embarrassing blunders, injure
relationships, and drag down business performance. Cultural differences remain persistent and

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present an array of challenges for multinational companies. Firms that manage adaptation
effectively are able to achieve congruence in the various cultures where they operate while
extending their main sources of advantage across borders, and in some cases even making
cultural diversity itself a source of advantage.
The OECD Guidelines for Multinational Enterprises (the Guidelines) are recommendations
addressed by governments to multinational enterprises. They provide voluntary principles and
standards for responsible business conduct consistent with applicable laws. Enterprises should
not, directly or indirectly, offer, promise, give, or demand a bribe or other undue advantage to
obtain or retain business or other improper advantage. Nor should enterprises be solicited or
expected to render a bribe or other undue advantage.

CHAPTER FIVE
MANAGING STAKEHOLDERS AND THE ENVIRONMENT
INTRODUCTION
In a working environment where change is constant, we need to develop competence in
managing change. Changes, even small ones, inevitably involve a range of people, from the
positive to the negative, from the influential to the powerless, from the interested to those who
really don’t care. Regardless of their position, you need to manage the situation, and the various
people who can and will affect your outcome, if you want to be able to deliver change on time
and in full.
Who are stakeholders?
Stakeholders are defined as anyone who could or should have an interest in what you are trying
to achieve. They are individuals, groups or organizations that stand to lose or win as a result of
your success or failure..
Stakeholders may be external to the organization such as customers, service users, media,
politicians, pressure groups, partners or suppliers. Other stakeholders will be internal: staff
generally, particular delivery or functional teams or individuals, project managers, the Chief
Executive, directors, or sometimes, simply – ‘the boss’.
Knowing and understanding who your stakeholders are is the essential first step in managing
them, and when working with clients to deliver either major change programs or specific
business improvement projects, we advocate the development of a list of stakeholders. This must

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be generated by those who lead own and lead the change and can be simply achieved by a
brainstorming session, with constant reference to stakeholder definition.

5.1 AREAS OF ENVIRONMENTAL BUSINESS CONCEPT

A business firm is an open system. It gets resources from the environment and supplies its goods
and services to the environment. There are different levels of environmental forces. Some are
close and internal forces whereas others are external forces. External forces may be related to
national level, regional level or international level. These environmental forces provide
opportunities or threats to the business community. Every business organization tries to grasp the
available opportunities and face the threats that emerge from the business environment.
Business organizations cannot change the external environment but they just react. They change
their internal business components (internal environment) to grasp the external opportunities and
face the external environmental threats. It is, therefore, very important to analyze business
environment to survive and to get success for a business in its industry. It is, therefore, a vital
role of managers to analyze business environment so that they could pursue effective business
strategy.
A business firm gets human resources, capital, technology, information, energy, and raw
materials from society. It follows government rules and regulations, social norms and cultural
values, regional treaty and global alignment, economic rules and tax policies of the government.
Thus, a business organization is a dynamic entity because it operates in a dynamic business
environment.
5.1.1 SYSTEM APPROACH OF BUSINESS ENVIRONMENT
All the systems are subsystems of other system in the nature except the supra-system or cosmos.
We individually are also the part of our family. Formal organization or business is made of group
of people for specific purpose. Very similar to the organization we personally are the members of
our family and that is a component of a broader society. The same society is a component of a
nation. Group of nation with similar interest are grouped in regional alliances such as SAARC
and EU. World economy is made of with all these regional alliances and network. In this
approach, nothing is in isolation. All are integrated and interlinked. Organizations are open
systems because they get resources from others and give output to others. A business deals with
number of business environmental forces. These forces from where a business gets resources and

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supplies resources, forces that influence the business operation, and factor that present
opportunities and threats are taken as the business environment. In this sense, a business can be
viewed as an internal system or controllable system of a manager or strategist. Managers can
control their own businesses. Managers can collect resources such as capital, human,
information, idea, land, and equipments. These components are controllable. Managers can
operate their organization and use their decision to run it. Similarly, the output of the
organization is also under their control. But, other broader systems that cover the business may
not controllable.
In summary, it can be concluded that a business and its internal areas are controllable for a
manager but other broader systems control the businesses. Therefore, the strategy for a manager
is to control internal areas and react with the external forces to grasp the opportunity and face the
threats presented by the external environment. This system approach can be classified into three
environmental groups: uncontrollable, semi-controllable, and controllable that is further detailed
in the following section.
5.1.2 COMPONENTS OF BUSINESS ENVIRONMENT
A manager must follow a change in his or her structure, strategy and policies in response to the
changing environmental forces. Thus, a business firm exists in two level of business environment
a) Internal and b) External. Internal business environment comprises internal structure, system,
culture, staff, and resources of the organization. This is sometimes identified into the internal
functional areas such as marketing-distribution, finance accounting, human resources,
production-operation, and research-development. All these business environment components
are controllable.
External business environment comprises two layers that are task business environment and
general business environment. Task environment is also known as close or industry level
business environment. Such environment more directly interacts with the business operation and
semi-controllable in nature. Next layer is relatively broader and more indirect in nature that
covers the effect of environment emerged at national, regional, and international level.
Therefore, the business environment figure is presented in three layers. Business environment
comprises internal components of a business, which is manageable at managerial level. Internal
business environmental forces are the components of the business. As discussed before semi-
controllable and uncontrollable environmental forces are external business environmental forces.

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These forces can be classified into two levels: industry level and general level. These general
environmental forces may exist at national, regional and international level. The internal
environment or business components are surrounded by industry level environment and the
industry level business environment is surrounded by general level business environment.

5.1.3 VARIOUS APPROACHES OF IDENTIFYING AND REPORTING

ENVIRONMENT COMPONENTS
There are many distinct but similar approaches available in categorizing business environment
components. Jauch & Glueck (1988) identified business environment components into three sets
namely general, industry level, and internal. This concept became very popular and holistic
among the many academicians. They identified five major components including political-legal,
socio-cultural, economic, technological, and climatic factors of general business environment.
Industrial and general level business environment are grouped into external business
environment.
Many writers coined Political, Socio-cultural, Economic, and Technological factors as PEST.
Political and legal components are sometimes separated and PESTEL is also used as an acronym.
Some others address these external environment components as Social, Technological, Political,
and Economic (STEP) factors. Including natural environmental factors into this set social,
technological, economic, environmental and political (STEEP) model is presented. The same
natural environment is also taken as a distinct component; therefore, it is sometimes addressed as
Socio-cultural, political, legal, Economic, Natural, and Technological (SPENT). Cartwright
identified an acronym SPECTACLES to address the set of ten external environment components
such as Social, Political, Economic, Cultural, Technological, Aesthetic, Customer, Legal,
Environmental, and Sect oral.
External business environment are grouped into remote environment for general and operating
environment for task or industry level business environment. General business environment is
also used as macro-environment. Similarly the industry level environment is used as the
microenvironment in many writings. Furthermore, industry level business environment is also
taken as competitive environment. Some writers even merged competitive environment into a set
of external or general environment.
5.1.4 GENERAL BUSINESS ENVIRONMENT COMPONENTS

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A variety of factors can affect company's business. Such factors can be national level, regional
level, and international level environmental forces. These factors are also known as societal
factors or macro level business environment factors. In general, five forces are taken as the
general environmental factors namely economic, socio-cultural, political-legal, technological,
and international. Some writers included natural environment as a distinct component but the
growing social awareness on natural environment shows that this component can be included
into the socio-cultural environment.
Set of these environmental factors is mostly referred by first four factors PEST (Political-legal,
Economic, Socio-cultural, and Technological). The logic behind this is pervasiveness of the
international environment because it affects all these four sectors. Fast growing technological
development, outsourcing business, emergences of multinational companies, and global and
regional alliances have made the world a global village. In this context, effect of international
environment in four major components of general environmental factors is natural. In today's
dynamic business environment Information Communication Technology (ICT) revolution and
globalization are to be considered very important effect in today's international business
environment.
Growing multinational companies and their influence in one national economy is clearly evident.
Use of automated technology and e-commerce has replaced many of the manual works and
workplace. World Trade Organization and its growing members including Nepalese 147th
membership in Cancun summit has placed new opportunities and threats to the developing
countries like Nepal. South Asian Association for Regional Cooperation (SAARC) is active
since twenty years and it recently declared South Asian Free Trade Area (SAFTA) charter.
Furthermore, Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation
(BIMSTEC) and its future potentialities presented new prospectus to the local and international
business entities in this sector.
5.2 ENVIRONMENTAL POLICIES
Companies are committed to protecting the health and safety of their employees and protecting
the environment. Companies are committed to providing a safe working environment for all their
employees, independent contractors, vendors, and customers, and will operate their facilities in a
manner that prevents harm to public health and the environment. A Company will seek to
conserve energy, water and raw materials, use recycling and reduce waste where appropriate.

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Companies should develop a policy with an idea of “We will be good neighbors in our
communities by insuring that our facilities do not pose unreasonable risks, and by participating
in community activities related to Environment, Health & Safety (EHS). In all our activities, we
will comply with all applicable laws”. The Company will design its products in a manner that
eliminates unreasonable risks from the manufacture, use and disposal of the products.

5.2.1 RESPONSIBILITY FOR IMPLEMENTATION

The Presidents of business segments are responsible for the implementing this policy, and
developing and maintaining a system designed to ensure compliance with this policy and all
applicable environment, health and safety laws and regulations. The Presidents and their
delegates shall make all employees aware of this policy and the Company’s commitment to
environment, health and safety excellence, and shall provide leadership regarding this policy.
They will ensure that quarterly certifications of EHS performance are completed. They will also
ensure that an effective EHS management system, which will achieve the intent of this policy, is
operating effectively in their business. They will also report annually on the EHS performance of
their business segment. Every employee is also responsible for complying with this Policy. The
Corporate Environment, Health & Safety Department of a company will provide guidance and
assistance to the operating units in fulfilling the intent of this policy. Although the Presidents and
other management will provide leadership, direction, and resources to support implementation of
the policy, compliance with the policy and implementation of its terms is the responsibility of all
employees.
This policy applies to the Company worldwide, except where compliance with this policy would
cause an operating unit or division to violate any applicable law in the country in which it is
located.

APPLICATION
Working with the assistance of an EHS representative, the Presidents will ensure that all
operations in their businesses have an EHS management system in place that is designed to
achieve EHS operational goals. These goals are:
• Provide for a safe working environment for all our employees, independent contractors,
vendors, and customers;

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• Achieve 100% compliance around the world, both with all applicable laws and with all
policies and expectations of a company;
• Be good neighbors in our communities by preventing unreasonable risks to public health
and the environment;
• Eliminate unreasonable EHS risks from our products, processes and activities;
• Minimize waste and emissions by using source reduction, recycling and reuse where
appropriate
• Seek to continuously improve our EHS performance.
More specifically, Management will:
• Collect EHS performance data, certify it as complete and correct, and report to Corporate
EHS department on a quarterly basis;
• Establish and implement an Environment, Health and Safety Program that meets or exceeds
all EHS program expectations, including the Global Safety Standards, environmental
program requirements, and other EHS program expectations as they are published;
• Hold managers and supervisors accountable for the EHS performance of their facilities and
departments;
• Ensure that managers, supervisors and employees receive the necessary education and
training to understand their EHS responsibilities;
• Maintain an open communication environment, in which employees feel free to raise EHS
issues without fear of retribution, and in which managers and supervisors address
employees’ questions and concerns promptly and thoroughly;
• Provide the necessary resources and support to achieve these objectives.
Employees are responsible for:
• Working safely in accordance with regulations, standards, and procedures;
• Working in accordance with regulations, standards and procedures and in a manner that
eliminates unreasonable risk to public health and the environment;
• Notifying management of unsafe conditions or practices, unlawful activities and activities
that present unreasonable risks to public health or the environment;
• Reporting accidents, occupational illnesses, and safety and environmental incidents to
management.

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5.3 ENVIRONMENTAL MANAGEMENT

Environmental management is responsible for developing and maintaining the ISO 14000 family
of standards. The committee’s current portfolio consists of 21 published International Standards
and other types of normative document, with another nine new or revised documents in
preparation.
Organizations around the world, as well as their stakeholders, are becoming increasingly aware
of the need for environmental management, socially responsible behavior, and sustainable
growth and development. Accordingly, as the proactive management of environmental aspects
converges with enterprise risk management, corporate governance, and sound operational and
financial practices and performance, International Standards are becoming increasingly
important for organizations to work towards common and comparable environmental
management practices to support the sustainability of their organizations, products, and services.
Furthermore, governments and regulatory bodies are increasingly looking to ISO standards to
provide a framework to ensure alignment and consistency both nationally and internationally.
ISO International Standards and related normative documents provide consumers, regulators and
organizations in both public and private sectors with environmental tools with the following
characteristics:
Technically credible as ISO standards represent the sum of knowledge of a broad pool of
international expertise and stakeholders
Fulfill stakeholder needs as the ISO standards development process is based on international
input and consensus.
Facilitate the development of uniform requirements as the ISO standards development
process is built on participation by its national member institutes from all regions of the world.
Promote efficiencies when the same standards are implemented across markets, sectors, and/or
jurisdictions.
Support regulatory compliance when the standards are used to meet market and regulatory
needs.
Enhance investor confidence because the standards can be used for conformity assessment such
as by audit, inspection or certification. This enhances confidence in products, services and
systems that can be demonstrated to conform to ISO standards and provides practical support for
regulation.

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5.3.1 ISO AND ENVIRONMENTAL MANAGEMENT

ISO has a multi-faceted approach to meeting the needs of all stakeholders from business,
industry, governmental authorities and nongovernmental organizations, as well as consumers, in
the field of the environment.
1. ISO has developed standards that help organizations to take a proactive approach to managing
environmental issues: the ISO 14000 family of environmental management standards which can
be implemented in any type of organization in either public or private sectors – from companies
to administrations to public utilities.
2. ISO is helping to meet the challenge of climate change with standards for greenhouse gas
accounting, verification and emissions trading, and for measuring the carbon footprint of
products.
3. ISO develops normative documents to facilitate the fusion of business and environmental
goals by encouraging the inclusion of environmental aspects in product design.
4. ISO offers a wide-ranging portfolio of standards for sampling and test methods to deal with
specific environmental challenges. It has developed some 570 International Standards for the
monitoring of such aspects as the quality of air, water and the soil, as well as noise, radiation,
and for controlling the transport of dangerous goods. They also serve in a number of countries as
the technical basis for environmental regulations.
Although the ISO 14000 standards are designed to be mutually supportive, they can also be used
independently of each other to achieve environmental goals. The whole ISO 14000 family of
standards provides management tools for organizations to manage their environmental aspects
and assess their environmental performance. Together, these tools can provide significant
tangible economic benefits, including the following:
● Reduced raw material/resource use
● Reduced energy consumption
● Improved process efficiency
● Reduced waste generation and disposal costs
● Utilization of recoverable resources
Of course, associated with each of these economic benefits are distinct environmental benefits
too. This is the contribution that the ISO 14000 series makes to the environmental and economic
components of sustainable development and the triple bottom line.

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5.4 COMPANIES AND THEIR INTERACTION WITH ENVIRONMENTAL

COMPONENTS (STAKEHOLDERS)
5.4.1 CONSUMERS/CUSTOMERS
When dealing with consumers, enterprises should act in accordance with fair business, marketing
and advertising practices and should take all reasonable steps to ensure the safety and quality of
the goods or services they provide. In particular, they should:
1. Ensure that the goods or services they provide meet all agreed or legally required standards for
consumer health and safety, including health warnings and product safety and information labels.
2. As appropriate to the goods or services, provide accurate and clear information regarding their
content, safe use, maintenance, storage, and disposal sufficient to enable consumers to make
informed decisions.
3. Provide transparent and effective procedures that address consumer complaints and contribute
to fair and timely resolution of consumer disputes without undue cost or burden.
4. Not make representations or omissions, nor engage in any other practices, that are deceptive,
misleading, fraudulent, or unfair.
5. Respect consumer privacy and provide protection for personal data.
6. Co-operate fully and in a transparent manner with public authorities in the prevention or
removal of serious threats to public health and safety deriving from the consumption or use of
their products.
5.4.2 SCIENCE AND TECHNOLOGY
With respect to science and technology enterprises should:
1. Endeavour to ensure that their activities are compatible with the science and technology
(S&T) policies and plans of the countries in which they operate and as appropriate contribute to
the development of local and national innovative capacity.
2. Adopt, where practicable in the course of their business activities, practices that permit the
transfer and rapid diffusion of technologies and know-how, with due regard to the protection of
intellectual property rights.
3. When appropriate, perform science and technology development work in host countries to
address local market needs, as well as employ host country personnel in an S&T capacity and
encourage their training, taking into account commercial needs.

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4. When granting licenses for the use of intellectual property rights or when otherwise
transferring technology, do so on reasonable terms and conditions and in a manner that
contributes to the long term development prospects of the host country.
5. Where relevant to commercial objectives, develop ties with local universities, public research
institutions, and participate in co-operative research projects with local industry or industry
associations.
5.4.3 COMPETITORS
Enterprises should, within the framework of applicable laws and regulations, conduct their
activities in a competitive manner. In particular, enterprises should:
1. Refrain from entering into or carrying out anti-competitive agreements among competitors:
a) To fix prices;
b) To make rigged bids (collusive tenders);
c) To establish output restrictions or quotas; or
d) To share or divide markets by allocating customers, suppliers, territories or lines of
commerce.
2. Conduct all of their activities in a manner consistent with all applicable competition laws,
taking into account the applicability of the competition laws of jurisdictions whose economies
would be likely to be harmed by anti-competitive activity on their part.
3. Co-operate with the competition authorities of such jurisdictions by, among other things and
subject to applicable law and appropriate safeguards, providing as prompt and complete
responses as practicable to requests for information.
4. Promote employee awareness of the importance of compliance with all applicable competition
laws and policies.
5.4.4 GOVERNMENT TAXATION
It is important that enterprises contribute to the public finances of host countries by making
timely payment of their tax liabilities. In particular, enterprises should comply with the tax laws
and regulations in all countries in which they operate and should exert every effort to act in
accordance with both the letter and spirit of those laws and regulations. This would include such
measures as providing to the relevant authorities the information necessary for the correct
determination of taxes to be assessed in connection with their operations and conforming transfer
pricing practices to the arm’s length principle.

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5.4.5 ENVIRONMENT
Enterprises should, within the framework of laws, regulations and administrative practices in the
countries in which they operate, and in consideration of relevant international agreements,
principles, objectives, and standards, take due account of the need to protect the environment,
public health and safety, and generally to conduct their activities in a manner contributing to the
wider goal of sustainable development. In particular, enterprises should:
1. Establish and maintain a system of environmental management appropriate to the enterprise,
including:
a) Collection and evaluation of adequate and timely information regarding the environmental,
health, and safety impacts of their activities;
b) Establishment of measurable objectives and, where appropriate, targets for improved
environmental performance, including periodically reviewing the continuing relevance of these
objectives; and
c) Regular monitoring and verification of progress toward environmental, health, and safety
objectives or targets.
2. Taking into account concerns about cost, business confidentiality, and the protection of
intellectual property rights:
a) Provide the public and employees with adequate and timely information on the potential
environment, health and safety impacts of the activities of the enterprise, which could include
reporting on progress in improving environmental performance; and
b) Engage in adequate and timely communication and consultation with the communities directly
affected by the environmental, health and safety policies of the enterprise and by their
implementation.
3. Assess, and address in decision-making, the foreseeable environmental, health, and safety-
related impacts associated with the processes, goods and services of the enterprise over their full
life cycle. Where these proposed activities may have significant environmental, health, or safety
impacts, and where they are subject to a decision of a competent authority, prepare an
appropriate environmental impact assessment.
4. Consistent with the scientific and technical understanding of the risks, where there are threats
of serious damage to the environment, taking also into account human health and safety, not use

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the lack of full scientific certainty as a reason for postponing cost-effective measures to prevent
or minimize such damage.
5. Maintain contingency plans for preventing, mitigating, and controlling serious environmental
and health damage from their operations, including accidents and emergencies; and mechanisms
for immediate reporting to the competent authorities.
6. Continually seek to improve corporate environmental performance, by encouraging, where
appropriate, such activities as:
a) Adoption of technologies and operating procedures in all parts of the enterprise that reflect
standards concerning environmental performance in the best performing part of the enterprise;
b) Development and provision of products or services that have no undue environmental
impacts; are safe in their intended use; are efficient in their consumption of energy and natural
resources; can be reused, recycled, or disposed of safely;
c) Promoting higher levels of awareness among customers of the environmental implications of
using the products and services of the enterprise; and
d) Research on ways of improving the environmental performance of the enterprise over the
longer term.
7. Provide adequate education and training to employees in environmental health and safety
matters, including the handling of hazardous materials and the prevention of environmental
accidents, as well as more general environmental management areas, such as environmental
impact assessment procedures, public relations, and environmental technologies.
8. Contribute to the development of environmentally meaningful and economically efficient
public policy, for example, by means of partnerships or initiatives that will enhance
environmental awareness and protection.
5.5 WHY ENTERPRISES CHANGE ENVIRONMENTAL ATTITUDES
The top reason cited for environmental problems is ―Consumers are more interested in the
convenience many products provide than in the effect they have on the environment. So while there
has been an overall increase in companies who report they are buying green themselves, these
companies believe that consumers as a group are not willing to sacrifice for environmental
protection. Enterprises have become savvier about both environment problems and solutions; they do
not scapegoat business while letting consumers off the hook. Again, this suggests an opening for
messages emphasizing shared responsibility between business and consumers.

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Chapter summary

Changes, even small ones, inevitably involve a range of people, from the positive to the negative,
from the influential to the powerless, from the interested to those who really don’t care.
Regardless of their position, you need to manage the situation, and the various people who can
and will affect your outcome, if you want to be able to deliver change on time and in full.
Stakeholders are defined as anyone who could or should have an interest in what you are trying
to achieve. They are individuals, groups or organizations that stand to lose or win as a result of
your success or failure. A business firm is an open system. It gets resources from the
environment and supplies its goods and services to the environment. There are different levels of
environmental forces. Some are close and internal forces whereas others are external forces.
External forces may be related to national level, regional level or international level.
All the systems are subsystems of other system in the nature except the supra-system or cosmos.
We individually are also the part of our family. Formal organization or business is made of group
of people for specific purpose. A business firm exists in two level of business environment a)
Internal and b) External. Internal business environment comprises internal structure, system,
culture, staff, and resources of the organization.
Companies should develop a policy with an idea of “We will be good neighbors in our
communities by insuring that our facilities do not pose unreasonable risks, and by participating

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in community activities related to Environment, Health & Safety (EHS). In all our activities, we
will comply with all applicable laws”.
Organizations around the world, as well as their stakeholders, are becoming increasingly aware
of the need for environmental management, socially responsible behavior, and sustainable
growth and development. ISO has a multi-faceted approach to meeting the needs of all
stakeholders from business, industry, governmental authorities and nongovernmental
organizations, as well as consumers, in the field of the environment.

CHAPTER SIX
MANAGING GENDER AND FAMILY ISSUES IN THE WORKPLACE
INTRODUCTION
Dear learners! Diversity and, in particular, gender diversity is currently the subject of much
public debate. It’s what some people might describe as a “hot” topic.
Corporate strategies are increasingly recognized as being critical to the achievement of gender
equality in the workplace. Promoting equality sensitive approach to human resource management
remains, however, a major challenge for companies and policy makers.
In this chapter, we will try to analyze what is meant by gender and family issues in the
workplace and their implications in ethical management of organizations.
Objectives:
On the successful completion of this unit, you will be able to:
● define and understand gender equality.
● describe family issues in a workplace
● explain the implications of gender and family issues in the workplace.
6.1 DEFINING GENDER EQUALITY IN THE WORKPLACE
The definitions found in the European Commission’s glossary on equal opportunities (European
Commission, 1998a) include:
GENDER EQUALITY: The concepts that all human beings are free to develop their personal
abilities and make choices without limitations set by strict gender roles; and that the different
behaviors, aspirations and needs of women and men are considered, valued and favored equally.

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GENDER EQUITY: Fairness of treatment on the basis of gender, which could mean either
equal treatment or treatment that, is different but considered equivalent in terms of rights,
benefits, obligations and opportunities.
EQUAL OPPORTUNITIES FOR WOMEN AND MEN: The absence of barriers to
economic, political and social participation on grounds of sex.
EQUAL TREATMENT FOR WOMEN AND MEN: The absence of discrimination on
grounds of sex, either directly or indirectly.
Taken together, these definitions emphasize the importance of both not discriminating and
enabling all women and men to reach their full potential in the workplace. This does not, of
course, mean that all women and men employees should be treated the same.
It is inevitable that men and women of different ages, backgrounds, areas of specialization and so
on, will – for example – require access to different training and development in order to reach
their potential.
• Equality is not just an ethical issue. Equality action at company level can benefit women, men
and the organization as a whole.
• Equality actions in organizations are often marginalized, with the result that ownership and
responsibility for equality on the part of all employees is low, and the impact of equality action
on the whole organization is limited.
• Monitoring, assessing and measuring the impact of equality action on women, men and the
organization as a whole is often a neglected area.
• Organizational change provides a potential opportunity for overcoming gender segregation,
provided that equality is explicitly considered in planning and implementing change. In some
organizations, however, it can also pose a threat to equality budgets, action and progress as a
result of merging, restructuring, downsizing and so on.
6.2 MANAGING GENDER AND FAMILY ISSUES IN WORKPLACE
Overview:
Dear learner! This section will give you a brief discussion on the management of gender equality
and family issues in a workplace. It also will discuss about the levels and/or bases of benefits of
gender equality in the workplace, mainstreaming, and gender equality legislations, policies and
programs.
6.2.1 GENDER EQUALITY IN THE WORKPLACE

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The issue of gender equality in the workplace has been debated for many years. Different bases
have been put by the various proponents but, in essence, when viewed as a whole, the arguments
focus on benefits at three levels – the individual level, the enterprise level and the national level.
At an individual level, the case put that gender equality is a matter of fairness and equity. Why
shouldn’t women be allowed to reach their full potential in the workplace? As a parent, do you
believe it is right that your daughter doesn’t have the same opportunities as your son?
At the national level, the arguments are essentially economic. The World Economic Forum has
found a strong correlation between a country’s competitiveness and how it educates and utilizes
its female talent:
“…empowering women means a more efficient use of a nation’s human talent endowment and…
reducing gender inequality enhances productivity and economic growth. Over time, therefore, a
nation’s competitiveness depends, among other things, on whether and how it educates and
utilizes its female talent.”
As US Secretary of State, Hilary Clinton, so succinctly put it:
“With economic models straining in every corner of the world, none of us can afford to
perpetuate the barriers facing women in the workforce. Because, by increasing women’s
participation in the economy as well as enhancing their efficiency and productivity, we can bring
about a dramatic impact on the competitiveness and growth of our economies. Because when
everyone has a chance to participate in the economic life of a nation, we can all be richer. More
of us can contribute to the global GDP.”
At the enterprise level, the arguments are more complex, and the bases are more equivocal.
There is a range of work that suggests a correlation between better gender diversity at the top of
organizations and improved financial performance.
The journey to gender equality in the workplace has been long and still has a long way to go. The
case is clear and it’s time for concerted action. Well-meaning talk which is not tied to tangible
actions and outcomes threatens to taint the issue and consign it to history as a failure. We need to
recognize and build on past achievements in this area with urgency.
Employers have met many different challenges over the years but, strangely, seem unable to
“come to grips” with gender equality. They seem unable to “normalize” gender to become
“gender-blind” and to fully recognize that it’s capability that matters.

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The current legislative requirements around gender equality in the workplace are relatively
benign and are designed to work hand-in-hand with voluntary efforts by employers. If progress
stalls, more prescriptive legislation (e.g. the imposition of quotas for women in board and
management positions) is a realistic possibility.
In many respects, our workplaces still reflect an era long since gone. There are many workplace
practices that represent stereotypes not compatible with how we live today. The needs and
aspirations of employees have changed and employers have an obligation to understand these
needs and aspirations and do what they can to accommodate them. Indeed, employers who
ignore this reality do so at their own peril. It is always better to be “ahead of the pack” rather
than have change forced upon you in an unplanned way.
The position of women
An overview of the situation of women in EU labor markets highlights both good and bad news
(European Commission, 2000a).
• Women appear to be the main beneficiaries of the employment created in 1999. Female
employment rates in the EU reached 52.5% in 1999, compared to 71.5% for men. The gender
gap has therefore shrunk to 19% compared with 24.5% at the start of the 1980s.
• Women’s average educational level is tending to increase faster than men’s. Some 26% of
women aged 25-29 had a university degree or equivalent in 1999, as against only 22.5% of men.
• Women’s employment starts to decrease when they have young children; whereas men aged
20-44 are more likely to be in employment when there is a child in the household.
• Gender segregation remains a core problem. This is the case even in those countries that have
achieved relatively high female employment rates (e.g. Finland, Sweden and Denmark).
• It should be noted, however, that female employment remains concentrated in a few sectors:
over 60% of women work in just six sectors, which have been expanding in the past few years.
Women appear to outnumber men in higher-skilled occupations (e.g. as professionals and
technicians), but the number of men in supervisory activities still remains higher.
• Evidence suggests that women tend to be in less senior positions than men within broad
occupational groups, and they therefore tend to progress less far in their careers. This is
supported by evidence from Euro stat’s Structure of earnings survey for 1999, which indicates
that the gap between men’s and women’s income is particularly pronounced at the top end of the
scale, among men and women with the highest earnings (European Commission, 2000b).

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This appears to confirm the much-quoted view that there is a ‘glass ceiling’ restricting women’s
career prospects relative to men’s, preventing them from attaining equal levels of seniority,
responsibility and pay.
• Women are paid less than men: there is still a 15% gap in average earnings. The gap is greater
(25%) in the private sector than (9%) in the public sector (European Commission, 1998a).
FIVE SECRETS TO MANAGE A GENDER-DIVERSE ENVIRONMENT

1. Woman-to-woman mentoring. One successful approach is to create a woman-to-woman

networking program. In such a program, a more senior woman in the organization provides
mentoring guidance to more junior female employees. The role of the mentor is to provide
advice on career paths, to help navigate organizational politics, to be a sounding board about
office politics, to prevent isolation at work, and to help create a culture that better supports
gender diversity. Intel is one example of a company that has implemented a successful mentoring
program for women employees.
2. Empathy vs. advice. Often when a female colleague discusses a problem with a male
colleague, she is seeking empathy (someone to listen to her) rather than looking for a solution to
her problem. For men, remember that the primary goal for women in communication is to make
a connection. Women feel connected to others when they feel their feelings are acknowledged
and genuinely understood. For women, remember that male colleagues are looking for bottom-
line results. Men want solutions to problems, not empathy from you.
3. Anger management. As my colleague, Kate Driesen advises men, “When you lose control
with anger and rage, you lose, period.” Anger is one of the primary male reactions to stress.
However, when male managers blow up at work, it makes them look unprofessional to their
supervisors and damages their relationships with female colleagues. For women, when male
colleagues express their anger, it is important to realize that, yes, male anger does scare you. This
is part of the hardwiring of the female brain at work. After the angry incident, get out of the
situation as soon as you can and go to a quiet place, take a few deep breaths, and reassure
yourself that the display you witnessed is your male colleague’s inappropriate reaction to stress.
4. Working through problems. When men hear women talk about their problems, men often
hear “whining” and “complaining.” Men see this as counterproductive, because they want to
solve problems and get results. When faced with difficult emotional problems at work, it is better
for a woman to discuss her feelings with a trusted female colleague. For men, recognize that

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withdrawing and not addressing conflict is perceived by work colleagues as a sign of emotional
immaturity and a lack of social awareness. It is important to communicate openly with male and
female colleagues at work.
5. Creating a healthy meadow. In the mid-1990s, Don Coyhis of the Mohican Nation was
asked by his tribal elders to describe his work with corporate cultures. He was asked what would
happen if you planted a healthy tree in a sick forest. Coyhis replied that if you plant a healthy
tree in a sick forest, the new tree will become sick as well because it is fed by the same nutrients
from the soil, the same water, and the same air as the unhealthy trees. He counseled that in order
for the newly planted healthy tree to survive and thrive, a healthy meadow would need to be
created, where the good nutrients and clean water and air can feed all the trees in the healthy
meadow.
6.2.1.1 MAINSTREAMING (MEADLE-OF-THE-ROAD)
In analyzing the process for implementing gender equality action, the relationship between
gender equality, HRM and core organizational strategy should be emphasized. HRM is important
in ensuring both the appropriate policies and procedures in place to support gender equality
goals, and that gender equality is linked to core organizational strategy. The latter is emerged as
critical to ensuring that gender equality remains on the corporate agenda during periods of
change.
The European definition of mainstreaming emphasizes the need to embed gender equality in all
policies. The European Commission’s Communication on mainstreaming of 1992 states that:
‘Gender mainstreaming involves not restricting efforts to promote equality to the implementation
of specific measures to help women, but mobilizing all general policies and measures
specifically for the purpose of achieving equality by actively and openly taking into account at
the planning stage their possible effects on the respective situation of men and women (having
therefore a gender perspective). This means systematically examining measures and policies and
taking into account such possible effects when defining and implementing them.’
It specifies that:
‘The promotion of equality must not be confused with the simple objective of balancing the
statistics: it is a question of promoting long-lasting changes in (various areas of life and whole
society so to ensure) demography and pluralism.’ (European Commission, 1996c)

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It is clear that the term ‘mainstreaming’ is being used to describe quite different approaches and
practices, leading to very different equality outcomes. Piecing together the information, we
propose that the main features of a comprehensive mainstreaming approach should include:
• Transversal equality action applied to different segments of a diverse workforce. New priorities
such as race or multiculturalism should complement and not take the place of gender equality or
cause gender equality action to fade away. The equality action should also ensure a focus on
behavioral and cultural change.
• A continuous equality process where:
— The organization’s commitment to equality is declared and supported;
— The business case for equality is continuously affirmed;
— Monitoring represents a key step for ensuring continuous incremental improvements (this
demands that results are monitored by means of both qualitative and quantitative indicators and
that they are communicated to everyone).
• Explicit awareness that (a) introducing gender equality is an organization-wide change process;
and (b) other changes in the organization of work can have an impact on the achievement of
gender equality objectives. Gender equality should therefore be explicitly integrated into the
organization’s strategic planning process.
6.2.1.2 EQUALITY LEGISLATION AND PROGRAMS
Equality legislation and national equality programs were seen to play a powerful role in initiating
and facilitating gender equality action in the workplace. It is important to provide organizations
with opportunities to exchange experiences, as well as to ensure publicity for their progress, and
this should continue to be supported.
A weakness of the legislation and programs, however, is their often short-term and limited
approach. Additional action is required to identify complementary initiatives and operational
tools that will help to broaden their scope and shift the focus to the medium and long-term
sustainability of equality action.
Steps that could help overcome the current weakness and ensure that equality action is ongoing
include introducing annual reporting or a fresh approach (that of the ‘learning organization’) to
the monitoring/assessment of projects receiving public funding and/or technical assistance;
and/or recommending transversal action and a comprehensive process of change management.
Equality labels and awards

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Where funding or awards for equality action are granted, the selection criteria should include an
assessment of the organization’s ability to ensure that the action is ongoing and includes the
whole organization, again through regular internal monitoring and an assessment of cultural
change, for example.
Presenting the legislation positively
For equality legislation to have the desired effect, it needs to be perceived by companies as an
opportunity rather than a constraint. This can be achieved by disseminating examples of good
practice and demonstrating how the legislative requirements can also help fulfill business needs.
The wider equality agenda
As the equality agenda widens to include race, age, sexuality and religion, there is a danger that
different inequalities may become emphasized as politically important at different times, to the
detriment of others. In the workplace this is particularly likely when the motives for equality
action are mainly legal or ethical. This can result in attention and resources being moved from
one equality issue to another, instead of a comprehensive approach being adopted.
Switching focus and resources between equality issues is highly inappropriate, since they are all
important and are all interrelated. For example, women are not a homogenous group, and their
experiences in the workplace may be influenced not only by gender, but also by age, race,
sexuality and religion.
Therefore, as the equality agenda expands, there is a need to understand the similarities and
differences between the various groups’ experiences; the different bases for discrimination; and
what methods and tools can be applied to achieve improvements. While it is highly likely that
each area of discrimination will continue to require specific research and action, various equality
issues will also need to be addressed collectively, and strategies developed accordingly.
To promote action in each equality area, the different pieces of legislation should be clear and
complementary. Also, research and the development of tools to help organizations to address a
range of equality issues should be a priority. An example would be a monitoring tool to
encompass multiple equality issues. This would lend support to the widening of equality policy
and legislation, and help to bridge the gap between policy and practice in the workplace.
The role of the social partners
Since employer and employee associations have a significant influence on policy, the need to
mainstream gender equality within them should be emphasized. Such organizations must monitor

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their own progress in the area, particularly as regards issues like cultural change and the balanced
participation of women and men in key decision-making, consultation and negotiating roles.
THE NEW EUROPEAN UNION EQUALITY STRATEGY
Unlike previous Community Actions on equal opportunities, future work on gender equality will
take the form of a comprehensive strategy which:
‘Will embrace all Community policies in its efforts to promote gender equality, either by
adjusting policies (proactive intervention: gender mainstreaming) and/or by implementing
concrete actions designed to improve the situation of women in society (reactive intervention:
specific action).’ (European Commission, 2000a)
In its efforts to bring about the structural change required to achieve gender equality, the
Commission has identified five interrelated fields of intervention for its framework strategy:
• Economic life;
• Equal participation and representation;
• Social rights;
• Civil life;
• Gender roles and stereotypes.
Within each of these areas a range of operational objectives and related actions are highlighted,
so as to ‘chart the course towards gender equality over the next five years’. Some of these are
likely to have a direct impact on equality in the workplace, including:
• improving the use of structural funds to promote gender equality (e.g. improving the
‘mainstreaming’ of gender equality and supporting the desegregation of the labor market via
Community initiatives such as Equal);
• developing strategies to encourage gender mainstreaming in all policies that have an impact on
the position of women in the economy (developing social dialogue with senior management in
European companies on their contribution to gender equality; creating an equality label or prize
for companies that have developed good practice in promoting gender equality);
• improving the gender balance in economic and social life (monitoring and evaluating the
transition from education and training to working life; recruiting and developing women as
potential senior managers; establishing and monitoring statistics on women in decision making
roles in business, industry, social partner organizations and major NGOs);
• Improving knowledge and monitoring as regards the relevant legislation in the social sphere;

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• Overcoming gender stereotypes.

FROM POLICY TO ACTION: the need for a pathway

The key challenge facing gender equality in the workplace is to build a clear pathway between
policy aspirations and practical outcomes on the ground. The path between policy and practice is
inevitably a complex one. As already outlined above, the pace of change facing organizations is
rapid, and the competitive challenges are great. There is a need to ensure that gender equality is
made central to all. It therefore has to be reflected in discussions, policy making and the
development of European programs and strategies.
Social partnership at European level has a significant role to play here in ensuring that two
fundamental elements are covered: firstly, that the mechanisms are in place for disseminating
good practice and fuelling discussion and exchange between and within groups of policy makers
and equality practitioners; and secondly, that tools (e.g. models, programs and training) that can
achieve practical improvements as regards key problematic issues are developed and
implemented.
6.2.2 FAMILY ISSUES IN THE WORKPLACE
The challenges of integrating work and family life are part of everyday reality for the majority of
working families. While the particulars may vary depending on income, occupation, or stage in
life, these challenges cut across all socioeconomic levels and are felt directly by both women and
men. As families contribute more hours to the paid labor force, problems have intensified,
bringing broad recognition that steps are needed to adjust to the changed realities of today’s
families and work.
Most workers today, regardless of gender, have family responsibilities, and most married
workers, regardless of gender, have an employed spouse. But jobs are still designed as if workers
have no family responsibilities. The culture and organization of paid work, domestic care work,
and community organizations remain predicated on the breadwinner-homemaker model. Thus,
jobs, schools, medical services, and many other aspects of contemporary life operate on the
assumption that someone (a wife) is available during the typical workday to care for children
after school, during the summer, or on snow days, to take family members to the doctor, or to
have the refrigerator fixed.

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The problems this mismatch causes working families and the economy will not go away, nor will
they be solved if each of the key institutions that share responsibilities for addressing them
continues their current pattern of working separately, on sometimes parallel and sometimes
conflicting paths. Nor will we return to the idealized image of work and family life of the past.
6.2.2.1 KEY ACTORS OF FAMILY ISSUES IN WORKPLACE
The new global economy, with its focus on 24/7 availability and long work hours, only worsens
the problems generated by the lag in the organization of paid work, as if workers were without
personal interests or domestic care concerns. It is estimated that less than one-quarter of
American families adopt the traditional division of labor in which a man provides financial
support and a woman attends to family and community responsibilities. Our basic premise is
quite simple and straightforward: Integrating work and family life today requires a well-informed
collaborative effort on the part of all the key actors that share interests and responsibilities for
these issues. Employers, unions, professional associations and advocacy groups, government,
and communities all have roles to play in integrating work and family life, but none of them
can solve this problem acting alone. Each must recognize and reexamine the prevailing
assumption that an “ideal worker” is one who can subordinate all other elements of life to the
requirements of the job. Then all the players must engage in an ongoing dialogue over how to
close the gap between today’s work and family realities and the policies and practices that
govern their interrelationships.
I. Employers have a major stake in work and family issues. Industry faces a long-term
labor shortage at the same time that the talents of many well-educated people are
underutilized because they do not fit the ideal worker model that is built into
organizational policies and reinforced by workplace cultures. But employers cannot
significantly improve this situation by simply enacting more formal family-friendly
policies. Employees must be brought into the process of designing and implementing
flexible schedules, and practices and firms will need to work with the other actors
involved to ensure that each party’s efforts complement and build on the initiatives of
the others. By doing so, the participants can jointly address the dual agenda of
restructuring work and careers to meet both the organization’s needs and employees’
personal and family needs and responsibilities. Even with such initiatives, employers
alone cannot succeed in solving these problems: More generous employers would be

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penalized by high benefit costs and women would suffer since there would be added
incentives for employers to discriminate in hiring and promotions.
II. Unions and professional associations, community groups, and other employee or
family advocacy groups are becoming more focused and active on work and family
issues. But by definition, advocacy groups need to engage and gain support from the
private and public actors that control the resources needed to address this problem.
III. Government response is needed, but it must be informed by what the private actors
closest to the problems are already doing to integrate work and family life. Public
policy makers at the local, state, and national levels need to become catalysts for
innovation and change and facilitators of the collaborative model envisioned here.
Moreover, labor law must be reformed to enhance worker voice and improve
flexibility for both employers and employees.
• Reluctance to recognize that the problems of work and family are societal has relegated
responsibility for dealing with these issues to individuals and families to solve on their own.
This is not to say that families cannot take action: Women are already active participants in the
workforce and men are slowly increasing their participation in housework and child care. These
issues clearly require the efforts of both men and women. But successful integration of work and
family can only be achieved by engaging the energies and changing the practices of the full set
of institutions affecting work and family relationships.
Now is the time for change. Women and men are struggling to adapt to the new realities and
there is ample research evidence to draw on to help penetrate the full dimension of the problem
and alternatives for addressing it. What is needed is the public discourse, leadership, and
collective will to get on with the task.
6.2.2.2 CAUSES AND CONSEQUENCES OF STRESSED FAMILIES
Work and family life have always been interdependent, but the increased employment of
mothers, rising family hours of work, today’s service intensive globalizing economy, and the
trend toward long work hours for some and inadequate family income for others have rendered
this interdependence both more visible and more problematic. The increased number of hours
family members both individually and in total are contributing to the paid workforce means that
both work and personal lives are not only under stress, but have changed in ways not anticipated
by the assumptions, policies, and institutions that have previously shaped experiences in both

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work and family life. Below are the causes and consequences of stressed families in connection
with workplace.
A. CAUSES
Workplaces continue to be structured around the image of an ideal worker who starts to work in
early adulthood and continues uninterrupted for forty years, taking no time off for child bearing
or child rearing, supported by a spouse or family member who takes primary responsibility for
family and community. In the last half century, we have moved from a division of labor
depending generally on men as breadwinners and women as family caregivers to a way of life in
which both men and women are breadwinners. But we have done so without redesigning work or
occupational career paths and without making new provisions for family care. The result is a
policy lag that has produced a care crisis and a career dilemma. Men as well as women
increasingly feel caught in the mismatch between employer expectations and the traditions of
family care. Paid work and career paths remain structured for the “unencumbered” worker, as if
workers still had wives or someone at home to manage the domestic side of their lives. This
crisis is exacerbated by an increase in working hours among men and women.
These changes are driven by a powerful combination of cultural, economic, and political
developments. Together, they make it imperative to reexamine existing legislation and corporate
policies, as well as received assumptions about paid work, families, careers, gender, and care
work that permeate governmental, corporate, labor, and community institutions and strategies.
i. Cultural Forces: The women’s movement successfully expanded women’s claim to
equality from equal protection of formal legal and political rights to equal educational
and economic opportunity and political voice—conceptions that have motivated
women to engage in all kinds of activities outside the home, including paid work. But
in practice this means that women have greater opportunities to pursue the male ideal
worker template of unencumbered work, even though few women and increasingly
fewer men are, in fact, “unencumbered.”
ii. Economic Forces: Two decades of real wage declines for men required large
numbers of women to enter the workplace and men and women to increase their
hours of paid work to maintain middle- and working-class living standards. The
breakdown of the traditional social contract at work that traded loyalty and
commitment for long-term job security means that seniority no longer enhances job

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security. Workers across the full occupational spectrum now must deal with greater
uncertainty regarding their future, which leads some to put in long hours as evidence
of their commitment and others to work overtime today for fear of their jobs may not
be available tomorrow.
iii. Political Forces: There has been an overall retrenchment regarding the role of
government in general and the federal government in particular. Both electoral parties
have agreed that the size of the federal government should be reduced and many of its
historical responsibilities passed to states and municipalities.
B. CONSEQUENCES
The stresses that result from these new realities affect families at all income levels and at all life
stages.
• The most obvious implication for workers and families is the increasing time squeeze, which
means that many working adults, particularly single parents and those in dual-earner families,
have difficulty providing the ordinary daily attention needed for the well-being of family
members, including themselves. Time to care for children, as well as for the increasing
population of aging relatives, is becoming a serious concern. Such time pressures also make it
difficult to deal with family emergencies or periods of special need, such as the birth or adoption
of a child.
• For many, the time squeeze is accompanied by financial pressures. Women who are mothers
as well as employees earn less than other women, and when they are single parents, the result
can be serious privation for both them and their children. Two parent families in poverty also
face difficulties, since parents at work must often leave children alone, with serious
consequences for safety, health, learning, supervision, and nurturance. Well into the middle
class, working parents have insufficient income to pay for all the care they cannot provide
themselves; and even those who can afford it, face an inadequate supply of stable, quality help.
• Because of these limitations on family resources and the historic devaluing of care work, there
is a low wage ceiling for paid care providers, resulting, in turn, in an unstable and inadequately
trained care labor force.
• Family stresses inevitably spill over into places not designed nor sufficiently funded to deal
with them—schools, social service agencies, and police, and courts, religious institutions—
creating institutional overload and additional stressors for their employees.

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• Employers with workers facing difficulties at home experience the high costs of turnover,
absenteeism, and lost investments in human resources as workers seek more accommodating
arrangements or even leave the workforce altogether.
Ultimately, the economy and society pay the price of this underutilization of human resources in
both a lower standard of living and a reduced quality of life.
JOB STRESS FROM FAMILY ISSUES AND RELATED CAUSES

What is Job Stress? Job stress is something we all face as workers -- and we all handle it
differently. There is no getting around it. But, not all stress is bad, and learning how to deal with
and manage stress is critical to our maximizing our job performance, staying safe on the job, and
maintaining our physical and mental health. Some jobs, by definition, tend to be higher stress --
such as ones that are in dangerous settings (fire, police), that deal with demanding customers
(service providers), that have demanding time pressures (healthcare), and that have repetitive
detailed work (manufacturing) -- but stress is not limited to any one in particular job or industry.

Symptoms & Warning Signs of Job Stress: While the causes can be something other than job
stress, here are the most common symptoms and early warning signs of job stress and burnout:

 Apathy
 Negativism/cynicism
 Low morale
 Boredom
 Anxiety
 Frustration
 Fatigue
 Depression
 Alienation
 Anger/irritability
 Physical problems (headaches, stomach problems)
 Absenteeism

Causes of Job Stress: There are two schools of thought on the causes of job stress.

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According to one theory, differences in individual characteristics, such as personality and coping
style, are best at predicting what will stress one person but not another. The focus then becomes
on developing prevention strategies that help workers find ways to cope with demanding job
conditions.

The other theory proposes that certain working conditions are inherently stress-inducing, such as
fear of job loss, excessive workload demands, lack of control or clear direction, poor or
dangerous physical working conditions, inflexible work hours, and conflicting job expectations.
The focus then becomes on eliminating or reducing those work environments as the way to
reducing job stress.

Strategies for Managing Job Stress: While many of the methods of preventing job stress need
to be developed and supported by the organization, there are things that workers can do to help
you better manage job stress.

Here are 10 tips for dealing with the stress from your job:

1. Put it in perspective. Jobs are disposable. Your friends, families, and health are not. If
your employer expects too much of you, and it's starting to take its toll on you, start
looking for a new job/new employer.
2. Modify your job situation. If you really like your employer, but the job has become too
stressful (or too boring), ask about tailoring your job to your skills. And if you got
promoted into a more stressful position that you just are not able to handle, ask about a
lateral transfer -- or even a transfer back to your old job (if that's what you want).
3. Get time away. If you feel the stress building, take a break. Walk away from the situation,
perhaps walking around the block, sitting on a park bench, taking in a little meditative
time. Exercise does wonders for the psyche. But even just finding a quiet place and
listening to your iPod can reduce stress.
4. Fight through the clutter. Taking the time to organization your desk or workspace can
help ease the sense of losing control that comes from too much clutter. Keeping a to-do
list -- and then crossing things off it -- also helps.

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5. Talk it out. Sometimes the best stress-reducer is simply sharing your stress with someone
close to you. The act of talking it out – and getting support and empathy from someone
else -- is often an excellent way of blowing of steam and reducing stress. Have a support
system of trusted people.
6. Cultivate allies at work. Just knowing you have one or more co-workers who are willing
to assist you in times of stress will reduce your stress level. Just remember to reciprocate
and help them when they are in need.
7. Find humor in the situation. When you – or the people around you -- start taking things
too seriously, find a way to break through with laughter. Share a joke or funny story.
8. Have realistic expectations. While Americans are working longer hours, we can still only
fit so much work into one day. Having unrealistic expectations for what you can
accomplish sets you up for failure -- and increased stress.
9. Nobody is perfect. If you are one of those types that obsess over every detail and
micromanage to make sure "everything is perfect," you need to stop. Change your motto
to performing your best, and leave perfection to the gods.
10. Maintain a positive attitude (and avoid those without one). Negativism sucks the energy
and motivation out of any situation, so avoid it whenever possible. Instead, develop a
positive attitude -- and learn to reward yourself for little accomplishments (even if no one
else does).

Chapter Summary
Corporate strategies are increasingly recognized as being critical to the achievement of gender
equality in the workplace. Promoting equality sensitive approach to human resource management
remains, however, a major challenge for companies and policy makers.
Equal treatment for men and women emphasize the importance of both not discriminating and
enabling all women and men to reach their full potential in the workplace. This does not, of
course, mean that all women and men employees should be treated the same.
The issue of gender equality in the workplace has been debated for many years. Different bases
have been put by the various proponents but, in essence, when viewed as a whole, the arguments
focus on benefits at three levels – the individual level, the enterprise level and the national level.

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Mainstreaming emphasizes the need to embed gender equality in all policies. The European
Commission’s Communication on mainstreaming of 1992 states that: ‘Gender mainstreaming
involves not restricting efforts to promote equality to the implementation of specific measures to
help women, but mobilizing all general policies and measures specifically for the purpose of
achieving equality by actively and openly taking into account at the planning stage their possible
effects on the respective situation of men and women (having therefore a gender perspective).
This means systematically examining measures and policies and taking into account such
possible effects when defining and implementing them.’
The challenges of integrating work and family life are part of everyday reality for the majority of
working families. While the particulars may vary depending on income, occupation, or stage in
life, these challenges cut across all socioeconomic levels and are felt directly by both women and
men. Employers, unions, professional associations and advocacy groups, government, and
communities all have roles to play in integrating work and family life, but none of them can
solve this problem acting alone. Each must recognize and reexamine the prevailing assumption
that an “ideal worker” is one who can subordinate all other elements of life to the requirements
of the job.
Job stress is something we all face as workers -- and we all handle it differently. There is no
getting around it. But, not all stress is bad, and learning how to deal with and manage stress is
critical to our maximizing our job performance, staying safe on the job, and maintaining our
physical and mental health.

CHAPTER SEVEN

ETHICAL MARKETING

7.1 OVERVIEW OF ETHICAL MARKETING

Ethical marketing is about whether a firm’s marketing decision is morally right or wrong. The
morality of the marketing decision can encompass any part of marketing from advertising to the
pricing of their product or service, to the sourcing of their raw materials. Ethical Marketing is an
honest and factual representation of our services and the business model, delivered in a
framework of cultural and social values for the consumer.

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In today’s corporate world ethical marketing is playing a larger role in marketing strategy. An
increasing number of consumers are buying products/services because they feel that the
products, services or organizations responsible for those are ethical. In response to this consumer
demand organizations have increased their focus on ethical marketing. When companies are
reviewing marketing strategies they need to consider whether the marketing decisions that they
are making are ethical and reflect consumer and market expectations.

An individual’s view of ethics and morality is influenced by a variety of things including their
culture, background, experience, upbringing/family, peers, community, religion and country.

After a company has decided to implement ethical marketing it will need to make the following
decisions:

1. Define what is ethical.

2. Which branch of ethics will they subscribe to?
3. How will the ethical approach to marketing be implemented?
4. In which areas of the firm’s operations should ethical marketing be implemented e.g.
employees, suppliers, consumers/clients, production techniques, distribution or the whole value
chain.

The question of ethical is whether the firm’s decisions are right or wrong. A number of questions
a firm must ask itself include: Should the firm employ children to their products? Do the firm’s
suppliers use child labour? Does the firm know today, child labour is a very big issue; does your
firm want to associate itself with this? Does the firm exaggerate the benefits of its products on its
packaging? Are claims overstated? Many firms do make bold claims. The company needs to
make sure these claims are fully supported. Does the firm conduct in high pressurized selling
techniques or focus on customer groups that are vulnerable e.g. pensioners? With markets very
competitive obtaining customer loyalty is becoming very difficult. High pressurized selling
techniques could result in the firms loosing reputation within its market. Does the firm squeeze
even more margins out of their supplier to the extent that it impacts on the suppliers’ profit
margin and may well have an impact on the quality of the products sold to you? Many

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supermarkets have been accused of such a practice. The introduction of the fair trade policy does
much to deal with this.

Ethical marketing is based around making the right moral decisions. Balancing ethics and
remaining competitive can be difficult. You can argue that as consumer attitudes shift having an
ethical strategy will make a firm more competitive.

10 Principles for Ethical Marketing Practices

1. be truthful and never knowingly relay false information

2. Full disclosure — including employment and affiliations.

3. Respect all community guidelines [set by bloggers and community managers].

4. Never ask a blogger to lie.

5. Take extra care when dealing with bloggers that appeal to minors.

6. No manipulation of advertising or affiliate programs to impact blogger income.

7. Refrain from using automated systems for distributing messages.

8. Full disclosure of incentives and payments given.

9. Sending a product to a blogger does not guarantee coverage.

10. Request that bloggers reveal the source of products they review.

7.1.1 ENVIRONMENTAL MARKETING

Introduction

An increased focus on environmental issues, has contributed to a rise in the demand for
environmentally friendly products and services (EFS).
EFS marketing strategy takes into account additional factors which aren’t usually part of the
marketing mix. Such a deviation from the academic acceptance of the “marketing mix”
components has led Learn marketing to develop the ‘environmental marketing mix.’

7.1.1.1 ENVIRONMENTAL PRODUCT STRATEGIES

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There are a large number of environmental issues impacting on the production of goods and
products. For example: What is the impact of production, sourcing of materials and packaging on
the environment? Environmentally friendly production may increase costs for organizations and
their suppliers but this may be offset by lower fuel bills through energy efficiency measures or an
increase in sales caused by a positive product image.
An organization may able to pass increases in production costs (caused by EFS) to consumers.
However this will depend on the level of increase, type of consumer, competitor prices for the
same type of product and the strength of the economy. For example during times of recession
consumers will place price above many if not all of the factors making up the marketing mix.
7.1.1.2 ENVIRONMENTAL PLACE STRATEGIES

All organizations will need to “carefully” time when their product reaches consumers; exact time
of distribution will depend on the product or service being distributed. Such timing may have an
environmental implication. Some products will need to reach the consumer shortly after
production for example fresh food in order to retain freshness, taste or nutritional value. The
fastest method of distribution may damage the environment. Conversely a more environmentally
friendly method e.g. via canals may impact on speed of distribution and consequently quality of
the product. A method of distribution that combines speed with “environmentally friendliness”
may increase distribution costs as some of these processes are still under development e.g.
electric vehicles.
In addition to the type of transport used for distribution, an organization will need to review
distribution techniques; For example timing deliveries so that they occur during off peak hours

And do not contribute to congestion. Some organizations attempt to make fewer deliveries,
whilst others promote concentrated products (e.g. fabric conditioner) as they increase the number
of products that can carried in each delivery vehicle.
Even if “environmentally friendly distribution” is not at the top of an organization’s list of
priorities, government policies may elevate it to the top. Congestion charging and low emission
zones have been introduced in the London. Apart from the obvious increase in costs emanating
from observance of such policies, a failure to observe environmentally friendly rules and
regulations will lead to fines and sanctions and consequently negative publicity.
After reviewing internal distribution methods an organization will need to review supplier and

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subcontractor distribution as consumers and the media expect organizations claiming

environmental credentials to only liaise with other environmentally friendly organizations. For
example do the subcontractors use Bio-fuel? Are the subcontractors actively managing their
“carbon footprint” or energy use?

Chapter Summary

Ethical Marketing is an honest and factual representation of our services and the business model,
delivered in a framework of cultural and social values for the consumer. Ethical marketing is
based around making the right moral decisions. Balancing ethics and remaining competitive can
be difficult. You can argue that as consumer attitudes shift having an ethical strategy will make a
firm more competitive.

EFS marketing strategy takes into account additional factors which aren’t usually part of the
marketing mix. Such a deviation from the academic acceptance of the “marketing mix”
components has led Learn marketing to develop the ‘environmental marketing mix.’
Environmentally friendly products can increase and decrease production costs; environmentally
friendly production may increase costs for organizations and their suppliers but this may be
offset by lower fuel bills through energy efficiency measures or an increase in sales caused by a
positive product image.

All organizations will need to “carefully” time when their product reaches consumers; exact time
of distribution will depend on the product or service being distributed. Such timing may have an
environmental implication. In addition to the type of transport used for distribution, an
organization will need to review distribution techniques; For example timing deliveries so that
they occur during off peak hours and do not contribute to congestion.

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