A few years ago, Boeing was stunned to find itself among the companies that made headlines for some very high-profile ethical lapses. Several external reviews found that
Boeing’s ethical breaches were not part of a systemic problem. But the reviews found that weaknesses within the corporation’s culture permitted some employees to look the other way. Too many people who thought some- thing “didn’t feel right” failed to raise a red flag for a variety of reasons. They wanted to
Change competency
James McNerney, CEO of Boeing
win a contract, they feared retaliation, they just didn’t want to rock the boat, or they lacked the courage to speak up in a command-and- control culture.
Companies doing business with the U.S. gov- ernment are expected to adhere to the highest legal and ethical standards. I acknowledge that Boeing did not live up to those expectations in the cases addressed by the settlement we’re dis- cussing here today. We take full responsibility for the wrongful acts of the former employees who brought dishonor on a great company and caused harm to the U.S. government and its taxpayers.
Boeing is accountable for what occurred. And we have cooperated with the government throughout this process.
To strengthen the ethics of our culture, we are changing in a number of ways, several of which follow:
We are getting committed and getting
•
aligned. For example, every employee, each year, personally recommits to ethical and
compliant behavior three ways: by going through a thorough training regimen;
re-signing the Boeing Code of Conduct;
and participating in one of our Ethics Recommitment stand-downs with his or her business or function.
Boeing established a new organization—the
•
Office of Internal Governance (OIG)—which reports directly to me and has regular, and rou- tine, visibility with our board of directors. OIG’s role includes: (1) Acting as a strong check and balance for key functional disciplines. An example would be monitoring and tracking such things as potential conflicts of interest throughout hiring, transfer and proposal pro- cesses. (2) Providing significantly greater vis- ibility into—and oversight of—specific ethics and compliance concerns and cases for our top leaders. (3) Consolidating, in one orga- nization, our various investigative, audit and oversight resources. This way, we were able to identify potential problems and take corrective actions earlier.
We are opening up the culture. And this is
•
critical. We are creating a work environment that encourages people to talk about the tough issues and to make the right decisions when they find themselves at the crossroads between meeting a tough business com- mitment and doing the right thing. There simply can be no trade-offs between Boeing’s values and Boeing’s performance. We want people to know that it’s OK to question what happens around them, because that’s what surfaces problems early. Silence that ignores the misconduct of fellow workers is not acceptable.
We are driving ethics and compliance through
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our core leadership development model, not just off to the side of other things we do every day. At the end of the day, the char- acter of an organization—its culture—comes down to the behavior of its leaders. I believe this is key: Ethics and compliance must be—and must be seen to be—a central part of the whole system of training and devel- oping leaders, and of the whole process of evaluating, paying and promoting people.
To learn more about Boeing, go to www.boeing.com.
M. SPENCER GREEN/AP PHOTO
James McNerney, CEO of Boeing.
Diversity and Ethics
The diversity competency must be accompanied by an ethical foundation, as sug- gested in Chapter 1, to be meaningful.39 Just as importantly, the diversity competency needs to reflect proactive efforts by organizations and leaders to nurture positive and constructive diversity that is difficult to achieve in the absence of an ethical culture.40
There are varied and conflicting points of view on diver- sity.41 Individual employees may view diversity initiatives as a threat, an opportunity, a blow for justice, harmless fluff, a learning opportunity, a ploy of the disenfranchised, a source of discomfort, or a cultural learning experience.42
In the following section, we address several domains that are important to ethics and diversity.
Diversity and Ethical Cultures
Cultural diversity in an organization is embedded in its culture.
Role of Organizational Culture
Organizational culture reflects the shared and learned values, beliefs, and attitudes of its members.43 In a sense, organizational culture is the personality of the organization—difficult to fully express in words. Yet, most employees in the organization sense it and know it because it guides their day-to-day behaviors and decisions. Organizational cultures may vary from having a weak
ethical culture to a strong one. Recall the leadership initiatives of James McNerney, CEO of Boeing, in the Change Competency feature to strengthen the ethics of the organization’s culture.
Organizational culture appears to affect ethical behavior and diversity in several ways. For example, a culture that emphasizes ethical norms provides support for ethi- cal behavior. Top leadership plays a key role in fostering ethical behavior by exhibiting the correct behavior. A few of the organizations identified as having strong ethical cultures include Xerox, Canon, Medtronic, and the Mayo Clinic. Top leaders in these organizations nurture a culture that rewards ethical priorities and influences how employees behave. If lower level managers observe top-level leaders sexually harassing others, falsifying expense reports, diverting shipments to preferred customers, misrep- resenting the organization’s financial position, and other forms of unethical behavior, they assume that these behaviors will be acceptable, ignored, or possibly rewarded.
Thus, the presence or absence of ethical behavior in leaders’ actions both influences and reflects the culture. The organizational culture may promote taking responsibility for the consequences of actions, thereby increasing the probability that employees will behave ethically. Alternatively, the culture may diffuse responsibility for the conse- quences of unethical behavior, thereby making such behavior more likely.44
Increasing Diversity as Opportunity
Organizations have become increasingly diverse in terms of gender, race, ethnicity, and nationality. More than half of the U.S. workforce consists of women, minorities, and recent immigrants. The growing diversity of employees in many organizations may bring substantial benefits, such as more successful marketing strategies for different types of customers, improved decision making, and greater creativity and innovation.
The U.S. Department of Labor forecasts that 60 percent of all new employees entering the U.S. workforce during the period through 2010 will be women or people of color.
Learning Goal
3. Describe some ethics-based initiatives for fostering diversity in organizations.
Diversity Insight
We’re focused on maintaining a culture of diversity and inclusion, one that ben- efits our shareholders and customers. It also allows us to tap into the creativity and vitality of our workforce and suppli- ers. . . . We recognize that diversity is about everyone. So we’re creating an inclu- sive culture where the talents of every employee are maximized and everyone feels respected and valued.
Magda N. Yrzarry, Vice President, Workplace Culture, Diversity and Compliance, Verizon Communications, Inc.
Anne Mulcahy, the chairman of Xerox, comments on diversity as an opportunity:
Diversity is about more than race and gender. It’s about more than numbers. It’s about inclusion. Diversity means creating an environment where all employees can grow to their fullest potential. I’m convinced diversity is a key to success.
Experience tells us that the most diverse companies—companies ruled by a hierar- chy of imagination and filled with people of all ages, races, and backgrounds—are the most successful over time. Somehow, diversity breeds creativity. Maybe it’s because people with different backgrounds challenge each other’s underlying assumptions, freeing everybody from convention and orthodoxy. We provide a shining proof point that diversity in all its wonderful manifestations is good for business . . . good for our country . . . and good for people.45
Mulcahy’s remarks reflect several ethical principles: the organization interests prin- ciple, distributive justice principle, and golden rule principle. However, employee diversity does not automatically foster creativity, market share, or competitive advan- tage. Left unmanaged and with a weak ethical culture, increased employee diversity may well damage morale, increase turnover, and cause more communication problems and interpersonal conflict.46
Insights for Leaders
There are no easy answers to the challenges of fostering a culturally diverse workforce. There are some common characteristics in organizations, for example, AT&T, Motorola, and Campbell Soup Co., with an effective diversity culture. These characteristics include the following helpful insights:
Leaders and employees need to understand that a diverse workforce will have
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people with different perspectives and approaches to issues and problems at work and must truly value a variety of opinions and insights.
Leaders should recognize both the learning opportunities and the challenges that
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a culturally diverse workforce presents for the organization.
The organizational culture should create an expectation of high standards of per-
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formance and ethics from everyone.
The organizational culture should stimulate personal development and support
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openness to ideas.
The organizational culture should make workers feel valued.
• 47
Generation Diversity and Ethics
From a diversity perspective, a generation refers to an identifiable group that shares years of birth and significant historical and social life events at critical stages of their development.
Most researchers agree that there are four broad categories of generations, as follows:
Mature:
• born from 1925 through 1944.
Baby boomers:
• born from 1945 through 1964.
Generation X:
• born from 1965 through 1981.
Generation Y:
• born from 1982 through 2000.
There are considerable differences as to the relevance of generation diversity in general and ethics in particular. In one study published by the Center for Creative Leadership, the researcher found 10 commonalities among generations that challenge generational stereotypes. Six of the commonalities are summarized as follows48: 1. All generations have similar values. In fact, they all value family the most. They
also attach importance to integrity, achievement, love, and competence.
2. Everyone wants respect; they just define it differently.
3. Trust matters. Distrust of the organization and in upper management is prevalent among all age groups.
4. All generations want leaders who are credible and trustworthy. They also want them to listen, be farsighted and encouraging.
5. Organizational politics are a problem. Employees of all ages know that political savvy is a critical component in career advancement and upper-level management.
6. No one really likes change. Resistance to change has nothing to do with age; it is all about how much one has to gain or lose with the change.
We are not claiming there are no differences between the generations. Rather, on a number of important workplace issues, the presumed conflicts and differences are more stereotypes than real. In later chapters, we address some of the differences that appear to exist among generations. For now, we note several ethics results from the 2008 World of Work report49:
Generation Y respondents
• think that 22 percent of their Gen Y coworkers as a group are ethical, 33 percent of Gen X coworkers as a group are ethical, 38 percent of baby boomer coworkers as a group are ethical, and 44 percent of mature cowork- ers as a group are ethical. Clearly, the Generation Y respondents did not think highly of the ethics of their coworkers. In contrast, 58 percent of Gen Y respon- dents perceived themselves as ethical, which is greater but still troubling.
Generation X respondents
• think that 36 percent of their coworkers as a group are ethical, 28 percent of Gen Y coworkers as a group are ethical, 41 percent of baby boomer coworkers as a group are ethical, and 50 percent of mature coworkers as a group are ethical. In contrast, 71 percent of Gen X respondents perceived themselves as ethical. Once again, a significant gap exists between self-perception of being ethical and the perceptions of coworkers’ ethics in the four generations.
Baby boomer respondents
• think that 56 percent of baby boomer coworkers as a group are ethical, 16 percent of Gen Y coworkers as a group are ethical, 29 percent of Gen X coworkers as a group are ethical, and 61 percent of mature coworkers as a group are ethical. In contrast, 78 percent of baby boomers describe themselves as ethical.
There is a substantial gap between baby boomers perceiving most (61 percent) of their coworkers as ethical versus Gen Y coworkers (only 16 percent).
The Gen Y employees, by definition, are newest to their organizations. They have not had as much opportunity to demonstrate that they are ethical and their peers may be presumed as unethical because of generation gap stereotypes. Also, consider the concept of small numbers bias, which refers to the tendency to view a few incidents, cases, or experiences with individuals as representative of a larger population. For example, observations of unethical conduct by a few Gen Y coworkers may be seen as applying to the supermajority of them and fits the popular stereotype of this generation as not being very ethical as a whole. The contrasting interpretation is that the findings for Gen Y are accurate, which would be a sobering generality.
A recent study of ethics of U.S. high school students (Gen Y), who will be employ- ees within several years, presents mixed messages. The data were gathered through a national sample of almost 30,000 respondents in public and private high schools.50 The attitudes and intentions expressed are ethical. In brief, (1) 98 percent said “It’s important for me to be a person with good character”; (2) 96 percent said, “It’s impor- tant to me that people trust me”; (3) 93 percent agreed with the statement “In busi- ness and the workplace, trust and honesty are essential”; (4) 91 percent said, “People should play by the rules even if it means they lose”; and (5) 84 percent affirmed, “It’s not worth it to lie or cheat because it hurts your character.”
In contrast, a large majority of the high school respondents (Gen Y) admitted personal behaviors that did match their ethical aspirations and attitudes. Perhaps this
is influenced by the 59 percent of respondents who agreed with the following survey statement: “In the real world, successful people do what they have to do to win, even if others consider it cheating.”
Most of the users of this text are members of Gen Y. If the data presented are representative, the vast majority of Gen Y respondents did not characterize their coworkers as a group to be ethical. In addition, only 28 percent of Gen X respondents and 16 percent of baby boomer respondents perceived their Gen Y coworkers as a group to be ethical.
Sexual Harassment
Sexual harassment is one of the many categories of harassment that may occur in the workplace. Harassment refers to verbal or physical conduct that denigrates or shows hostility or aversion toward an individual because of that person’s race, skin color, religion, gender, national origin, age, or disability. Harassment can also occur if conduct is directed toward a person’s relatives, friends, or associates.51 Harassment does one or more of the following:
Has the purpose or effect of creating an intimidating, hostile, or offensive work
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environment.
Has the purpose or effect of unreasonably interfering with an individual’s work
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performance.
Otherwise adversely affects an individual’s employment opportunities.
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Harassment in its more serious and aggressive forms, such as sexual harassment, reflects (1) the obedience and punishment stage of moral development; (2) the absence of moral intelligence; (3) the absence or lack of consideration of ethical intensity; (4) the use of the self-serving hedonist and might-equals-right principles; (5) violation of all balancing interests principles—means–end, utilitarian, and professional standards; and (6) violation of all concern-for-others principles—disclosure, distributive justice, and golden rule.
Sexual harassment generally refers to unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature.52 Sexual harassment consists of two types of prohibited conduct in the United States: (1) quid pro quo—in which submission to harassment is used as the basis for employment decisions, and (2) hostile environment—in which harassment creates an offensive working environment. Consider these basic questions from a legal perspective in the United States:
If an employee “voluntarily” has sex with a manager, does this mean that she (or
•
he) has not been sexually harassed? Not necessarily. If an employee by her or his conduct shows that sexual advances are unwelcome, it does not matter that she (or he) eventually “voluntarily” succumbs to the harassment. In deciding whether the sexual advances are “unwelcome,” the courts will often allow evidence concern- ing the employee’s dress, behavior, and language as indications of whether the employee “welcomed” the advances.
Is an employer liable for
• quid pro quo harassment engaged in by its managers? In
general, an employer is held to be strictly liable when a manager engages in quid pro quo harassment.
What is hostile environment harassment? A
• hostile work environment occurs
when an employee is subjected to comments of a sexual nature, offensive sexual materials, or unwelcome physical contact as a regular part of the work environment. In general, a single isolated incident will not be considered evidence of hostile environment harass- ment unless it is extremely outrageous and egregious conduct. The courts look to see whether the conduct is both serious and frequent. Courts are more likely to find a hostile work environment as being present when the workplace includes sexual propositions, pornography, extremely vulgar language, sexual touching, degrading comments, or embarrassing questions or jokes. Supervisors, managers, coworkers, and even customers can be responsible for creating a hostile environment.
Is an employer liable for hostile environment harassment? It depends on who
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has created the hostile environment. The employer is liable when supervisors or managers are responsible for the hostile environment, unless the employer can prove that it exercised reasonable care to prevent and promptly correct sexually harassing behavior and that the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.
Any harassment policy, including one on sexual harassment, should contain (1) a definition of the harassment, (2) a harassment prohibition statement, (3) a description of the organization’s complaint procedure, (4) a description of disciplinary measures for such harassment, and (5) a statement of protection against retaliation.53
All individuals need a clear understanding of harassment. California has a fairly well-developed law on the dimensions that constitute sexual harassment. The law reflects the ethical concepts and principles we noted previously. Organizations with strong ethical cultures that embrace diversity incorporate these provisions both for- mally and informally. The core provisions with examples of unacceptable behaviors include the following54:
Verbal harassment:
• epithets, derogatory comments or slurs. Examples: Name-calling, belittling, sexually explicit or degrading words to describe an individual, sexu- ally explicit jokes, comments about an employee’s anatomy and/or dress, sexually oriented noises or remarks, questions about a person’s sexual practices, use of patron- izing terms or remarks, verbal abuse, graphic verbal commentaries about the body.
Physical harassment:
• assault, impeding or blocking movement, or any physical inter- ference with normal work or movement, when directed at an individual. Examples:
Touching, pinching, patting, grabbing, brushing against or poking another employee’s body, requiring an employee to wear sexually suggestive clothing.
Visual harassment:
• derogatory posters, cartoons, or drawings. Examples: Displaying sexual pictures, writings, or objects, obscene letters or invitations, staring at an employee’s anatomy, leering, sexually oriented gestures, mooning, unwanted love letters or notes.
Sexual favors:
• unwanted sexual advances that condition an employment benefit on an exchange of sexual favors. Examples: Continued requests for dates, any threats of demotion, termination, etc., if requested sexual favors are not given, making or threatening reprisals after a negative response to sexual advances, propositioning an individual.
Sexual harassment continues to be a problem in the United States.55 In a review of a number of studies of the incidence of sexual harassment in the United States, it was found that 58 percent of the women respondents reported having experienced potentially harassing behaviors, and 24 percent report having experienced sexual harassment at work.56 Sexual harassment represents a serious form of workplace aggression. Leaders have a strong responsibility to do everything in their power to prevent sexual harassment from occurring. When it does occur, it needs to be dealt with quickly and firmly.57
Insights for Leaders
Diversity programs and initiatives often run into unanticipated problems. Diversity awareness training programs may backfire if they seem to reinforce stereotypes or highlight differences that employees have tried to minimize in order to fit into the organization’s culture. Special diversity programs offered only to some groups may feed the belief that they are gaining an unfair advantage. Employees assigned to work in markets that match their individual diversity-based differences may view that as limiting rather than maximizing the contributions that they can make. Affirmative action programs implemented with a heavy hand may create a stigma for all members of groups targeted to benefit. As a result, even the best qualified people are presumed to have acquired their positions because of their demographic attributes rather than