A New Look at Diversity

A New Look at Diversity

van Dijk, H., van Engen, M., & Paauwe, J. (2012). Reframing the Business Case for Diversity: A Values and Virtues Perspective. Journal of Business Ethics, 111, PP. 73-84

This article addresses the concerns of discrimination in the work place with respect to recruitment and selection as well as performance management (Dijk, Engen, & Paauwe, 2012). The reason that this issue is so important is that diversity in the work place empowers minority groups and mitigates inequalities (Noon, 2007), and empirical studies are more frequently supporting  the benefits of diversity in the work place (Kochan et al., 2003). This article first discusses the equality case and the business case for diversity and how they tend to be mutually exclusive (Dijk, Engen, & Paauwe, 2012). It then discusses diversity skepticism and diversity opportunism (Dijk, Engen, & Paauwe, 2012). Diversity can be used as a tool and tossed aside quickly when the advantages wane (Derry, 1996).

Dijk, Engen, and Paauwe then a moral perspective known as virtue ethics (Dijk, Engen, & Paauwe, 2012). In order to avoid discrimination in recruitment and selection, the focus on virtues desired in a candidate, for the specific job, need to be listed (Dijk, Engen, & Paauwe, 2012). Then identifiers that will be used to evaluate candidates need to be listed (Dijk, Engen, & Paauwe, 2012). The article describes how performance management also tends to be biased against minorities in how standards are set by the majority therefore tending to favor the majority (Dijk, Engen, & Paauwe, 2012). As a result, establishing the prime virtues for each job and appropriate indicators that indicate the mastering of virtues for performing the job and development goals (Dijk, Engen, & Paauwe, 2012).

Finally, the article stresses the need for firms to express equality is one of its core values (Dijk, Engen, & Paauwe, 2012). They also stress that the values and virtues perspective does not need to replace policies that already promote and express their concern for equality (Dijk, Engen, & Paauwe, 2012).

Managers should heed these suggestions in that following these policies can increase the firm’s social acceptance and increase employee loyalty (Dijk, Engen, & Paauwe, 2012).

References:

Derry, R. (1996). Toward a feminist firm: Comments on John Dobson and Judith White. Business Ethics Quarterly, 6, PP.101-109.

Kochan, T., Bezrukova, K., Ely, R., Jackson, S., Joshi, A., Jehn, K., et al. (2003). The effects of diversity on business performance: Report of the diversity research network. Human Resource Management, 42, PP. 3-21.

Noon, M. (2007), The fatal flaws of diversity and the business case for ethnic minorities. Work, Employment & Society, 21, PP. 773-784.

van Dijk, H., van Engen, M., & Paauwe, J. (2012). Reframing the Business Case for Diversity: A Values and Virtues Perspective. Journal of Business Ethics, 111, PP. 73-84.

The Effects of Leader-Member Exchange on Whistle Blowing

Bhal, K., & Dadhich, A. (2011). Impact of Ethical Leadership and Leader-Member Exchange on Whistle Blowing: The Moderating Impact of the Moral Intensity of the Issue. Journal of Business Ethics, 103(3), 485-496. doi:10.1007/s10551-011-0876-z

 

Corporate governance has become even more complex after the mandatory requirements of the Sarbanes –Oxley Act -2002 were implemented.   Along with extra accounting and reporting requirements, corporations were also required to establish a system for fraud reporting (whistleblowing) (Bhal and Dadhich, 2011). Bhal and Dadhich present a hypothesis testing study that explores the factors that support whistleblowing and how they impact the corporate systems established. The article presents three experimental studies conducted on post graduate engineers in India, which tests ethical leadership and quality of leader-member exchange (LMX) and the morale intensity as in relates to the magnitude of the consequences (MOC) of fraudulent behavior.  Interpersonal interactions or coworkers and the support and encouragement of immediate ethical leaders have a significant impact on the decision to report fraudulent behavior. 

The authors present the following hypotheses:

·         “H1 Ethical leader behavior will be positively related to whistleblowing by the subordinates” (Bhal and Dadhich, 2011, p. 487).

·         “H2 Leader-member exchange quality will be positively related to whistle blowing by subordinates” (Bhal and Dadhich, 2011, p. 487).

·         “H3 Whistleblowing will be highest for ethical leaders in situations with high magnitude of consequences” (Bhal and Dadhich, 2011, p. 488).

·         “H4 The positive relationship between high quality leader-membership exchange and whistle blowing would be stronger for situations with high magnitude of (negative) consequences” (Bhal and Dadhich, 2011, p. 488).

The first study designed around presenting scenarios and asking participants to indicate the level of ethical leadership, high or low and the LMX as low or high. The dependent variable, whistle blowing, was used in a measure of willingness to report without fear and comfort level of delivering bad news of ethical wrong doing. The results of the first study showed that both ethical leadership and the leader-member exchange were successful in predicting whistleblowing (Bhal and Dadhich, 2011).

The second study involved the testing of hypothesis three using vignette scenarios again and crossed the ethical and unethical leadership with low and high magnitude of consequences. The results showed that the effects of ethical leadership and MOC are significant. Moreover, that the interaction between leadership and MOC significantly predicts whistleblowing.

The third study involved the testing of hypothesis 4 (H4), estimating the marginal means for whistleblowing where ethical leadership and MOC were independent variables and whistle blowing as the dependent variable. The results of testing illustrated that the interaction between LMX and whistleblowing is most significant when the magnitude of consequences is also high (Bhal and Dadhich, 2011).

The authors explain limitations in the testing with consideration that engineers were used in the study as participants. In fact, all of the participants were from India, which brings up the concern that India’s culture is characterized by collectivism where relationships are more personal than professional, making reporting more difficult. Additionally, regulations in India concerning fraudulent behavior are considerably weak. Another weakness in the study, not noted as such, is that the average age of the study participants is 26. The post-graduate student engineers most likely had little work experience. A selection of a wider cross-section of participants would add credibility to the well-thought out study.

Practical implications for managers regarding these findings are that the more likely the organization encourages ethical behavior and high consequences along with encouragement for reporting without retaliation, the more likely the corporation will prevent unethical behavior from occurring in the first place.

 

Prophet Whistleblower Link?

Stephanos, A., & Roberts, J. (2012). Whistleblowers in Organisations: Prophets at Work? J Bus Ethics (20120, 110:71-84

This article attempts to link the works of the Hebrew prophets to understanding whistleblowers’ motives in today’s work force (Stephanos & Roberts, 2012). The significance of the article is supporting the theory that there is a moral and ethical basis for the action of whistleblowers beyond just a legal reason (Stephanos & Roberts, 2012).

This article discusses the reason for ancient Hebrew prophets to report on immoral or unethical actions by people in ancient society (Stephanos & Roberts, 2012). The article then begins a discussion on the motivation of modern day whistleblowers (Stephanos & Roberts, 2012). At the conclusion, the article ties the two together through how each challenged society, how each held concern for society, and how each desired to change society (Stephanos & Roberts, 2012).

This article uses the biblical scholars’ studies of the prophets’ motivations to compare with sociologists’ studies of modern day whistleblowers’ motivations to show a relation between the two (Stephanos & Roberts, 2012). Managers, today, can use the comparison to understand that society has concerns, that people with concerns will challenge society, and while there exists a desire to change society, there will exist those who will attempt to change society.

Do Voluntary Management Standards Really Improve Company Performance?

Voluntary management standards (e.g., ISO14001, Forest Stewardship Council, and Certified Organic) have grown significantly in the last 10 years as a way to self regulate rather than be regulated so intently from government and industry. (Simpson, D., Power, D., & Klassen, R. 2012)

However as Simpson, et al explain, some standards are failing to affect improved performance in the companies that adopt them. Some voluntary management industry-  and product-based standards fail to improve internal organization performance because, too often, they are either too narrow or too encompassing to fit within some companies. Additionally, external pressures to adopt certain management standards cause some companies to focus only on the extrinsic reasons to adopt the standard.  They put forth a minimal effort to establish the processes that will satisfy the requirements of certification rather than making actual internal improvements that will benefit the company in the long run. Coincidentally, the purpose of establishing a standard is to encourage performance improvement and self-governance toward a specific social or industry standard. This topic is important because companies spend a great amount of resources in adopting voluntary standards and often do not benefit in performance from their purpose. Both companies who adopt and organizations that develop the standards should take consider the proposals offered in the article.

Simpson, et al contributed five proposals, three that are based on the existing environment concerning adoption of standards, and two proposals that may indeed improve the business environment concerning the standards.

“H1a Voluntary management standards limit the capabilities of over-fit firms where their existing capabilities significantly exceed institutional requirements for performance improvement.” (Simpson, et al, p.90)

“H1b Voluntary management standards fail to improve the capabilities of under-fit firms where the institutional requirements for performance improvement significantly exceed firms’ existing capabilities.” (Simpson, et al, p.90)

“H1c No-fit firms fail to adopt voluntary management standards because of low institutional pressure to do so and limited related capabilities.” (Simpson, et al, p.91)

According to Simpson, et all, companies can be classified into four categories with regard to compatibility to the standards they seek to adopt. They are fit, over-fit and under-fit, and no-fit. These categories describe the compatibility of the standard requirements to the company’s capabilities. For example, when the requirements exceed the capabilities of the firm, the standards do not improve company performance and the company priority is to seeking association with the standard. On the other hand, in the situation of a leader firm, company capabilities usually exceed the standard requirements and if adopted the standards would reduce firm performance. And, in the case where the firm does not fit the standards at all, the firm is usually so small or operates in a relatively small environment and poses low pressure to consider adoption of the standards. (Simpson, et al, 2012)

“H2a Improving fit of management standards may require a tailoring or moderating of requirements to increase their value to firms.” (Simpson, et al, p.91)

 

“H2b Improving fit of management standards may require strengthening of requirements to increase the participation of firms.” (Simpson, et al, p.92)

Standards with governance that is too restrictive can be costly to adopt and could force smaller companies out of a particular standard. Standards that have been more successful (e.g., ISO standards and USDA organic) were developed using a cooperative process and incorporating the requirements of both industry and the stakeholders. The authors propose a model that integrates the company’s existing capabilities along with the standard requirements in addition to solutions that will prevent failure. (Simpson, et al, 2012)

 

Implications for managers are to recognize standards that do not fit their operations and also consider the long-term benefits of adopting a particular standard that result in an improved performance, not just standard adoption based on external pressure. Modification of standards could improve the compatibility and fit with some companies, resulting in improved performance within the operations.

Simpson, D., Power, D., & Klassen, R. (2012). When One Size Does Not Fit All: A Problem of Fit Rather than Failure for Voluntary Management Standards. Journal Of Business Ethics, 110(1), 85-95. doi:10.1007/s10551-011-1149-6 (Business Source Complete, Sep 17, 2012)

Simpson, D., Power, D., & Klassen, R. (2012). When One Size Does Not Fit All: A Problem of Fit Rather than Failure for Voluntary Management Standards