BA 342 Exam 2 Study Guide
BA 342 Exam 2 Study Guide BA 342
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This 33 page Study Guide was uploaded by Lisa Thein on Tuesday March 29, 2016. The Study Guide belongs to BA 342 at Pennsylvania State University taught by Ronald Johnson in Winter 2016. Since its upload, it has received 59 views. For similar materials see Socially Responsible, Sustainable and Ethical Business Practice in Business Administration at Pennsylvania State University.
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BA 342 Exam 2 Notes Chapter 11 Business & Stakeholders – know all 5 Community General public Environmental groups Government Local State Federal Employees Unions Older employees Women Minorities Civil liberties activists Consumers Consumer activists Product liability threats Owners Corporate raiders Private citizens Institutional investors History of Gov’t & Business (Trust Acts) Trusts – organization that brought all the competitors under common control that then permitted them to eliminate remaining competition by price cutting Sherman Antitrust Act – outlawed trusts and prohibited monopolies Clayton Antitrust Act – outlawed price discrimination Federal Trade Commission was formed to protect consumers The Clash of Ethical Systems Business belief Individualistic ethic Maximum concession to selfinterest Minimizing the load of obligations society imposes on the individual (personal freedom) Emphasizes inequalities of individuals Government belief Collectivistic ethic Subordination of individual goals and selfinterest to group and group interests Maximizing the obligations assumed by the individual and discouraging selfinterest Emphasizes equality of individuals Historically the US Gov. has opted to minimize Gov involvement in business, but crises can always change that stance Business/Gov’t/Public interaction Government – business Gov influences business through regulation, taxation, and other forms of persuasion Business influences Gov through lobbying Public – Government Public uses political process of voting and electing officials Gov uses politicking, public policy formation, etc. Business – public Business influences public through advertising, public relations, and other communication Public influences business through marketplace or by forming special interest groups and protest groups Opinion on Gov’t (more or less) Who really determines what’s in the public interest? Should not assume government representation of the public occurs in a straightforward fashion NonRegulatory & Regulatory – Ways impact NonRegulatory Industrial Policy Every form of state intervention that affects industry as a distinct part of the economy Privatization Process of changing a public organization to private control or ownership to capture both the discipline of the free market and a spirit of entrepreneurial risktaking Other Government is one of the largest purchasers of goods and services produced in the private sector Influences business using subsidies Major competitor of business Loans and loan guarantees are influential as well Taxation Monetary policy Moral suasion – Gov attempt to persuade business to act in the public interest by taking or not taking a particular course of action Regulatory Defined & Reasons (know all reasons & theme) Regulation – the act of governing, directing according to rule, or bringing under the control of law or constituted authority Theme – market failure Reasons Controlling natural monopolies Controlling negative externalities Achieving social goals Other reasons Control excess profits Deal with excessive competition Types of Regulation (social/economic) Economic Exemplified by oldline regulatory bodies such as the Interstate Commerce Commission Regulate business behavior through controlling and influencing economic or market variables such as prices, entry to exit from markets, and types of services offered Major costs of economic regulation Finance and banking Industry specific regulations General business Social Focuses on furtherance of societal objectives rather than on markets and economic variables Focuses markets, social regulation focuses on business’s impacts on people Examples Economic regulations Social regulations Focus Market conditions, economic People in their roles as employees, consumers, variables (entry, exit, prices, and citizens services) Industries affected Selected (railroads, Virtually all industries aeronautics, communications) Examples Civil Aeronautics Board Equal Employment Opportunity Commission (CAB) (EEOC) Occupational Safety and Health Administration Federal Communications (OSHA) Commission (FCC) Consumer Product Safety Commission (CPSC) Environmental Protection Agency (EPA) Current Trend Reregulation (e.g., Financial Reregulation (e.g., Consumer Financial Stability Oversight Board) Protection Bureau) Civil rights act of 1964 Creation of occupational safety Cost of Regulation – (Big 3 – page 345) Direct costs most visible when we look at the number of new agencies created, aggregate expenditures, and growth patterns of the budgets of federal agencies responsible for regulation Indirect costs – forms, reports, and questionnaires Induced costs – cost of government regulation passed on to consumer in the form of higher prices Innovation may be affected New investments in plant and equipment may be affected Small business may be adversely affected Chapter 12 Ways Business Influences Gov’t Lobbying and political spending Participation of interest groups Power to drive the political agenda in Washington is now virtually unchecked Lobbying Spending Process of influencing public officials to promote or secure the passage or defeat of legislation Goal – promote legislation that is in their organizations’ interests and to defeat legislation that runs counter to that Types of Lobbying (umbrella, trade, company) Umbrella trade associations – represent collective business interests of the US Ex: Chamber of Commerce (US, State, City), National Association of Manufacturers (NAM), Business Roundtable, National Federation of Independent Businesses (NFIB), Broad base membership that represents businesses in several different industries of various sizes Sectoral trade associations – composed of many firms in a given industry or line of business Ex: National Automobile Dealer Association, National Association of Realtors, American Petroleum Institute American Trucking Association, National Association of Medical Equipment Suppliers, Tobacco Institute, Health Benefits Coalition, United States Telecom Association Company lobbying – individual firms working for their own benefit Ex: Washington and State Capital Offices, Law Firms Specializing in Lobbying, Public Affairs Committees (PACs), Grassroots Lobbying, CompanyBased Coalitions, Former Government Officials Other lobbying types (not that important) Ad hoc coalitions – companies form these to address a particular issue for a period Grassroots lobbying – process of mobilizing the individual citizens who might be most directly affected by legislative activity to political action Trade associations use this by asking members to contact their representatives Cyberadvocacy – computer based form of grassroots campaigning Astroturf lobbying – phony results that are orchestrated and funded by professional organizations Coalition – distinct groups or parties realize they have something in common that might warrant their joining forces at least temporarily for joint action What Business Lobbyists can do Drafting legislation, slick advertisements and direct mail campaigns Get access to key legislators (connections) Monitor legislation Establish communication channels with regulatory bodies Protect firms against surprise legislation Provide issue papers on anticipated effects of legislative activity Communicate sentiments of association or company on key issues Influence outcome of legislation (promote helpful, defeat harmful) Assist companies in coalition building around issues that various groups may have in common Help members of congress get reelected Organize grassroots efforts Pro/Con for political spending In addition to traditional PACs, companies can contribute corporate funds to trade associations and other tax exempt groups that will subsequently support a particular candidate or cause Pro Limiting a group’s right to political advocacy would violate the free speech of the people who belong to that group Con Corporations have access to large amounts of money and that creates a serious imbalance of power Possibility of agency problems as managers may promote their own interests rather than the shareholders’ interest or the interests of stakeholders, when promoting candidates or issues The golden rule of politics – he who has the gold, rules Political Spending (PACS) Committees organized to raise and spend money for political candidates, ballot initiatives, and proposed legislation Most have a political point of view but many simply focus on a specific issue FECA prohibits corporations from making direct contributions to candidates, so they form PACs Connected PACs – separate segregated fund, is associated with a specific group or organization and can only raise money from that group Nonconnected PAC – can accept funds from any individual or organization as well as from a connected PAC as long as those contributions are legal Typically formed around a specific issue Leadership PACs – nonconnected PACs formed by political leaders to support other candidates for office Super PACs (independent expenditure only committees) resulted from judicial decisions May raise unlimited amounts of money to support or oppose political candidates, but may not coordinate with or donate directly to a political candidate 1 Amendment Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances. Speaks directly to lobbying Corporate Political Activity Strategy (3 types) Managers must not only identify useful approaches but also address when and under what conditions these various approaches should be used or would be most effective Purpose of political strategy – to secure a position of advantage regarding a given regulation or piece of legislation, to gain control of an idea or a movement and deflect it from the firm, or to deal with a local community group or an issue of importance Information Strategy – providing information to policymakers through activities such as lobbying, research projects, position papers, and being an expert witness Financial Incentives Strategy – making direct financial contributions, providing desired services, reimbursing travel, or paying fees to policymakers Constituency Building Strategy – mobilizing grassroots or business cohorts to work together through public relations, political education, press conferences, and advertising Chapter 15 – Sustainability Foundations Big Topics o Leadership competencies o Ethical issues in business o Sustainability o Diversity o Corporate social responsibility o Responsible leadership Penn State strategic plan and presidential campaign theme – sustainability o Good stewardship = good business Triple “L” – learn, live, lead o Smeal strategic plan providing extraordinary education P&G CEO Bob McDonald P&G 2014 sustainability o 4 parts Power plants with 100% renewable products 0% of waste to landfills 100% renewable products Design products better for environment o Innovation and productivity o Waste stream – every type of waste Sustainability o Triple Bottom Line Profit – economic governance Plant – environment People – social o 20 years ago it was corporate social responsibility, today – sustainability o CSR – consulting and banking o Fortune 250 – 75% use the term sustainability Sustainability Intro Agenda o Sustainability Drivers – the why o Corporations data and examples o Smeal majors each has a role 1 Author to use Triple Bottom Line o John Elkington Chair of Volans Founder SustainAbility Professor Cranfield School of MGMT 1997 book Cannibals with Forks: the Triple Bottom Line of 21 century Business Kennametal’s Triple Bottom Line o Overview Transportation, aerospace/defense, energy, earth High quality tooling Latrobe, PA facility – dirty, dingy, lighting is a problem Fixed lighting $300K every 9 months savings o People Cleaner More ideas Decrease in injuries Increase in productivity Morale increase Higher retention Easier hiring o Profit Customers Cost of injury down $300K/9months Reducing cost Productivity increase Maintenance decrease PR o Planet Less waste Decrease carbon footprint Less energy Bruntland Commission Definition o Business that meets the needs of the present without compromising the ability of future generations to meet their own needs Sustainability Development Classical Definition o Development that meets the needs of the present without compromising the ability of future generations to meet all their needs Sustainability Points of View That Polarize o View #1 Earth video (different places on earth) Nature video (lots of animals) Environment should be sheltered at all points in time o View #2 Avatar video (destruction) Using up environment is occurring all over the world A Stronger Point of View o Stewardship Model – “the responsible management of resources” o How do you use resources responsibly o Responsibility – can you do the right thing Why Sustainability o Sustain – meet the needs of today and don’t compromise on needs of tomorrow Big Issues the Drive Sustainability o Population growth o Resource usage rate o Climate change o + Three Lenses – scientific, political, economic Sustainability Driver #1 – Population o World Population Billions Year Reached Years to This People Level 1 1805 Long Time 2 1927 122 3 1959 32 4 1974 15 5 1987 13 6 1998 11 7 2011 13 8 2025 14 9 2043 18 10 2083 40 o Population Bottom Line For Smeal Students Providing goods and services for 9 billion people by 2043 Thus a sustainability driver Sustainability Driver #2 – Intensity of Resource Use o Some people think it would require 5 earths to live equal to the US population o PSU thinks we use 1.5 earth’s worth of resources per year o UAE highest per capita use of resources o The emerging middle class Has access to normal resources Dramatic increases (largest in Asia) o Going up o Basket of goods Tragedy of the commons Garret Harden 1968 article Lots of common space – easy to get resources Everyone accessing resources in their own individual interests – burning through resources Middle class article Emerging middle class is a critical economic and social actor because of its potential as an engine of growth Middle classes support democracy and progressive but moderate political platforms Vulnerable since their consumption cannot be counted upon to drive national development o Identified a need for resources o Schuylkill Expressway Philadelphia Wanted to build it double the size Every town wants their own exit People start building and now its overcrowded and full of traffic o McKinsey Resource Revolution How are you going to sustain economic growth when you have these commodity prices Trends driven by industrial/environmental tech. Alternative fuels, natural gas production up Solar panel prices way down o How to Change the Intensity Equation 1. Conservation 2. Innovation o Bottom Line for Smeal Students Developing populations do and will increase the demand for resources. How can business assist in supplying greater utility with less resources Politically nations are in competition to get resources for their people Sustainability Driver #3 – Climate Change o Will have a massive impact on business o Climate Framing Scientific Political Economic COP 21 (Paris) – agreements between UN on climate change $100 billion to help developing world; limit 2°C; 5 year review tax, regulatory and incentive policies o Time Magazine 1973 thought an ice age was coming Warming until 1998 2014/2015 hottest years on record IPCC – intergovernmental panel on climate change Provide a scientific basis for governments at all levels to develop climate related policies 1880 – 2012: increase 1.53 degrees Big issue – CO2 and greenhouse gases Top GHGs – 1. Water vapor 2. CO 2 3. CH 4 4. N 2 5. O 3 6. CFCs Anthropogenic – human induced McKinsey: Climate Change Risks Article o Value chain risks Physical – Ex: tsunami in Japan shuts down production so parts for cars only made there couldn’t be produced Prices – Ex: if oil is $150 a barrel, if oil is $30 a barrel Product – Ex: your product can be knocked out because of climate change (fossil fuels) o External stakeholder risks Ratings – Ex: agencies rate companies on their sustainability Reputation – Ex: if you get low ratings you’re seen as not working towards sustainability Regulation – Ex: fuel standards, EPA Climate Summit 2014 video Climate Change Bottom Line for Smeal Students o Global governments have concluded that the world “must” address GHG emissions and climate change (think United Nations and IPCC) o Agreements to address this impacts global business leaders directly through incentives, regulation, tax policy, and public pressure Other Business Drivers for Sustainability o Top 3 – energy, water, waste o Innovation, government regulations, GHGs, public interest, nongov impact, operations, incentives, media SAS Company on Sustainability (multiple select question) o Excellent example of comprehensive approach to sustainability by a corporation o Energy, water, waste, buildings, innovation o Initiatives – solar farm to offset CO2 emissions, without cutting down trees, no concrete posts, SHEEP, provides hot water; regenerative drive elevators, LED, CFL, low flow toilet, reduced irrigation systems, native plants, vegetable scraps = compost, ECO advocates, recycle, following US green guidelines, construction materials contain recycled materials, use local supplies, reducing CO2 related to staff travel, reusable mugs; manage, measure, and record their green initiatives on website Geothermal Heating/Cooling o Uses ground’s constant temperature o Saves tremendous energy costs o SKF Example Leed platinum building Geothermal system Incentive ex: got a deal from Gov to get 30% of what they spent Reduces intensity of resource usage Who paid? SKF, fed Gov, state Gov, millennials IMB Structure of Typical Corp. Sustainability Journey platformh 3. efficiency 2. values based self regulation 1. legal and complianc e o 2. Start becoming better o 3. Realize they can make money from it o 4. Driving entire business through lens of sustainability PwC: Sustainability Maturity Pat Sustainability Business Case o Leadership – McKinsey study – 76% CEOs sustainability performance key to longterm growth o Point in Corporate Sustainability Maturity Curve Companies are rapidly starting to change over o The Sustainability Business Case Customers: McKinsey study – 87% customers concerned about environment o CEOs and Sustainability Reasons to Take Action o o Sustainability Importance By Organizational Group Group Very Important Not important important Board of directors 49% 45% 6% CSuite and Execs 46% 49% 5% Manager Level 26% 64% 10% Nonmanager 17% 62% 21% employees o Lighting and Sustainability LED – most energy efficient STD CFL LED Actual wattage 60 1315 68 Cost/bulb $.70 ea $1 ea $10 ea $21 for 30 bulbs $30 for 30 bulbs $300 for 30 bulbs Life span 2 years 10 years 20 years (3hrs/day) Light bulbs and Stakeholders Individuals o Cost/saving o Decrease choice o Replacement o Resistance to change o Disposal o Recycling Companies o Business model change o Maintenance decrease o Regulations o Atmosphere improves o Savings o PR o Vender issues o Competition Gov o Politics o Decrease in resource use o Regulation o Incentives o Systemic change Environment o Use less resources o Less waste o Disposal/issues (mercury) o Energy savings o Decrease pollution Sustainability Reporting o GRI How to measure it, global standards Mission is to empower decision makers everywhere, through our sustainability standards and multistakeholder network, to take action towards a more sustainable economy and world o Dow Jones Create standards and measure who’s best (for investing) Tracks the stock performance of the world’s largest companies in terms of economic, environmental, and social criteria o SASB Rules for reporting, governance and social factors Mission is to develop and disseminate sustainability accounting standards that help public corporations disclose material, decisionuseful information to investors. Accomplished through a rigorous process that includes evidencebased research and broad, balanced stakeholder participation o The thing that is going to drive sustainability is that we are reporting it LEED Certification US Green Building Council Leadership in Energy and Environmental Design o LEED standards – creates certification for your building o Real estate and sustainability One of the world trade center buildings = LEED gold o Facilities and LEED Video: Starbucks – each new store will save enough water for 2 US households o Philly Navel Yard and PSU Energy research st 1 LEED baseball stadium – PSU LEED ER – in existing buildings o Website Works for all buildings Certification earns points across several areas that address sustainability issues Resource efficient Smeal Majors and Sustainability Marketing o Product development o Sales o Research o Public relations o Reputation o Communication (external/internal) o Do NOT do “green washing” o Big Issue – innovation, product development and “green washing” o Ex: Scotts tubeless toilet paper Eliminate tube, slight premium price o Video: Adam Werbach Saatchi and Saatchi S Harvard Business Review Sustainability – meet needs of current environment without sacrificing needs of future generation How can it serve to protect environment, care about social responsibility, care about cultures, economic sustainability Transparency, engagement, networks Help develop better, more efficient lower cost products; engage employees – better retention, more productive; sell more products Accounting o FASB to SASB o Assurance and audit practices o AICPA sustainability task force o Dodd/Frank (must report conflict minerals) o GRI o Energy (carbon reporting) o Sustainability reports o Compliance o Big Issue – integrated reporting o Video: International Integrated Reporting – A4S Example of integrated accounting reporting for the future Value creation/preservation Transformation of corporate reporting was essential Companies make/implement agreements Accounting for sustainability founded by Prince Charles Need to fgure out how to report on environment and social 5 standards groups – GRI, Dow Jones, SASB, ISO, CDP Dow – for investors GRI – 1998 by Series; issues standards for what to report on – framework SASB – creating new set of accounting standards o Video – standards for companies to disclose their performance (10K form) Suppliers and Products and Consumers (ON EXAM!!!!) o Walmart and packaging – example of innovative work with suppliers for more responsible use of resources (Paige Cables) Getting rid of wooden reels for cables o Walmart sustainability report 3 main goals and the sustainability 360 information 1. Be supplied 100% by renewable energy 2. Create zero waste 3. Sell products that meet those same standards Supply Chain o Product design/development o Cradle to grave responsibility o Sustainable sourcing o Material selection o Supplier certifications o Manufacturing/operations o Distribution/transportation o Disposal (end of life) o Big Issue – sustainable sourcing Finance o Social impact investing (trillion dollars) o Investor demand o Regulation o DJSI o Carbon markets o Energy markets o Operations o Bottom line profit o Reputation o Big Issue – capital is life blood o Video – Sustainability Investing Common sense approach to investing Companies that implement sustainability out perform their counterparts o Video – IBM Summit on Sustainability Introduction on the new world of finance that brings together sustainability and finance Risk MGMT o Actuarial, enterprise, real estate and ins. o Environmental, social liability o Economic and political risk o Ecosystem (air, water, fish, forest, etc.) o Monitoring, reporting, and auditing o Directors and officers liability (governance) o Climate change o Litigation o NGOs o Big Issue – Environmental risk o Video – Risk Management Risk such as natural resource depletion ESG principles Addressing environmental aspects Management o Recruitment/retention o Training o Employee engagement o Community and social o PSP – personal impact o Governance o Human resources o Big Issue – Engaging Employees o Video – Green to Gold Example of role of leadership and sustainability (authors Daniel Etsy and Andrew Winston) o Video – Sopra Steria Green agents Use social media to inform employees about sustainable practices Getting excited about company/sustainability Ch. 19 Employment Discrimination pp 540 562 Fig. 193, 194, 1905 Case: Check out the Abcrombie Case p665 Chapter 15 Unilever Sustainable Living Plan Improving health and well being Reducing environmental impact Enhancing livelihoods Externality Side effects or byproducts of actions that are not intended and often disregarded Major issues in book pages 436 – 444 Climate change IPCC – 90% chance humans are creating climate change Energy Energy inefficiency – wasting of precious nonrenewable sources of energy Many states now mandate that utilities obtain a minimum percentage of their energy supply through renewable energy Water Biodiversity and land use Biodiversity continues to be lost at an unprecedented rate, thus threatening the capacity of the planet to provide the required goods and services Human population is facing land degradation Chemicals, toxins, and heavy metals Toxic substances – chemicals or compounds that may present an unreasonable threat to human health and the environment Air pollution Acid rain, global warming, smog, and depletion of the ozone layer Waste management Reduce, reuse, recycle Ozone depletion Vital in the stratosphere in blocking dangerous UV radiation from the sun Oceans and fisheries Instituting licenses, fishing seasons, and banning certain practices has helped the fish/shellfish population Same problems that plague our water system plague our oceans and fisheries Deforestation Adds to soil erosion problems and is a major cause of the greenhouse effect Accounts for 20% of global carbon emissions Green consumers, employees & investors p. 457 Consumers – actual and potential customers of retail firms, usually in the industrialized countries, who express preferences for products, services, and companies that are perceived to be more environmentfriendly than other competitive products, services, and firms Employees – many have assisted management in going beyond traditional concerns into areas such as pollution prevention, recycling, energy and environmental audits, and community environmental projects Investors – want to put their money where their environmental values are by identifying and utilizing financial instruments that are associated with environmentally oriented companies Ceres Principles – models for businesses to express and practice environmental sensitivity US Government (air, water, land, endangered species) Clean Air Act – primary standards: protect human health; secondary standards: protect property, vegetation, climate, and aesthetic values Emissions trading – intended to reduce a particular pollutant over an entire industrial region by treating all emission sources as if they were all beneath one bubble Clean Water Act – to achieve water quality consistent with protection of fish, shellfish, and wildlife; as well as ensure safe conditions for human recreation in and on the water Safe Drinking Water Act – maximum contamination levels for drinking water Resource Conservation and Recovery Act – federal regulatory system for tracking and reporting the generation, transportation, and eventual disposal of hazardous wastes by businesses responsible for creating these wastes Toxic Substances Control Act – requires manufacturing and distribution businesses in the chemical industry to identify any chemicals that pose “substantial risks” of human or other natural environment harm Superfund (CERCLA) – effort to clean up more than 2,000 hazardous waste dumps and spills around the country Endangered Species Act – responsibility of preventing harm to species considered endangered or threatened Walmart Sustainability – 3 Goals 100% renewable energy Sell sustainable products Produce zero waste WalMart Supplier Sustainability (home page) Have a scorecard for suppliers’ sustainability practices 15 questions for suppliers Have you measured your corporate greenhouse gas emissions? Have you opted to report your greenhouse gas emissions to the Carbon Disclosure Project? What are your total GHG emissions reported in your most recently completed report? Have you set publicly available GHG reduction targets? If yes, what are those targets? If measured, please report total amount of solid waste generated from the facilities that produce your product for Walmart inc for the most recent year measured Have you set publicly available solid waste reduction targets? If yes what are those targets? If measured, please report total water use from the facilities that produce your product for Walmart inc for the most recent year measured. Have you set publicly available water use reduction targets? If yeas, what are those targets? Do you know the country of origin for 100% of all materials or components that are purchased directly to make your final products? Have you established publicly available sustainability purchasing guidelines for your direct suppliers that address uses such as environmental compliance, employment practices, and product/ingredient safety Have you obtained 3 party certifications for any of the products that you sell to Walmart? If so from the list of certifications below, please select those for which any of your products are, or utilize materials that are currently certified. Do you know the location of 100% of the facilities that produce your product? Before beginning a business relationship with a manufacturing facility, do you evaluate their quality of production and capacity for production? Do you have a process for managing social compliance at the manufacturing level? Do you work with your supply base to resolve issues found during social compliance evaluations and also document specific corrections and improvements? Do you invest in community development activities in the markets you source from and/or operate within? Chapter 19 Wally Triplett story 1 black football player at PSU 1948 Cotton Bowl > origin of We Are cheer Boys to Young Men (why boys fail) case The Issues Need for higher level skills Socialization issue for college (60/40 window) Specialized skills (engineering, science; women encouraged to move here, or more men ready for college) Society’s expectations Loss of opportunity Higher crime In 1980s hit about 50/50 men and women in college Diversity/Women/Corporate Leadership case Issues Mentors/coaches/sponsors Child care responsibilities Work force and organizational design Flexible work arrangements Society’s attitudes Home responsibility 30percentclub (theme and 7 components) Theme – see it as a business issue, not just a women’s issue Growth through diversity 7 Components: Better diagnosis Education Early and midcareer pipeline Shareholders and corporate governance Measuring progress Global approach Public policy Chair and CEO leadership Triad #1 and Triad #2 Global – understand and manage diversity in other countries Traditional vs. Contemporary Traditional US Diversity – The Beginning Race Gender Traditional Race/Gender & Expanded Traditional Color Gender National origin Disability status Race Ethnicity Sexual orientation Age Religion Diversity definition Creating an environment where we recruit, develop, and leverage the best talent to achieve business goals profitability US & Race (3 Eras) Era #1 Mid 1500s – 1863 Approx. 300 years Slavery Era #2 1863 – 1964 Emancipation proclamation – war powers act Amendments 13 – free slaves 14 – citizenship th 15 voting Approx. 100 years Painful/slow change Era #3 1964 – today 50 years Civil rights and diversity and inclusion Diversity vs. Discrimination – history Cotton Gin impact Eli Whitney 1793 Mass production and interchangeable parts Benefits – speed, productivity Side effects – increase in slavery (more land, more people, more cotton) Plessy v Ferguson and Brown v Board of Education (discussion & video from class) Plessy v Ferguson 1896 Video – A history of US separate and unequal Plessy made segregation legal in public places Separate but equal Brown v Board Separating people based on race makes them feel unequal May 17, 1954 > read court decision – segregation is illegal Rosa Parks 1955 Civil rights movement is born Abercrombie case – discrimination CEO Michael Jeffries 2006 – “Candidly, we go after the cool kids. Attractive, AllAmerican kids… A lot of people don’t belong (in our clothes) and they can’t belong. Are we exclusionary? Absolutely.” Looksism – appearance based discrimination Federal Laws Title VII of the Civil Rights Act 1964 Prohibits discrimination in hiring, promotion, discharge, pay, fringe benefits, and other aspects of employment on the basis of race, color, religion, sex, or national origin Equal Pay Act of 1963 (race 1 , gender 2 )d Prohibits employers from discriminating between men and women on the basis of sex in the payment of wages Age Disc. In Employment Act 1967 Protects workers aged 40+ years from arbitrary age discrimination in hiring, discharge, pay, promotions, fringe benefits, and other aspects of employment Title I Amer. With Disabilities Act 1990 Prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, advancement, compensation, job training, and other terms, conditions, and privileges of employment Sec. 510 Rehabilitation Act 1973 Prohibits job discrimination on the basis of a disability Civil Rights Act of 1991 Provide increased financial damages and jury trials in cases of intentional discrimination relating to sex, religion, race, disability, and national origin EEOC – who are they – data Charge type 1997 2003 2009 2014 Race 36.2% 35.1% 36% 35% Sex 30.7% 30% 30% 29.3% Nat. origin 8.3% 10.4% 11.9% 10.8% Retaliation 22.6% 27.9% 36% 42.8% Age 19.6% 23.5% 24.4% 23.2% Disability 22.4% 18.9% 23% 28.6% 1997 – 80,680 cases, 2014 – 88,778 cases Note: typically 510% reasonable cause found Diversity Progression (past & present) Affirmative Action Taking positive steps to hire and promote people from groups previously discriminated against Comes from Pres. Johnson, executive order Provide equal opportunity and address discrimination Approaches Soft 1. Passive non discrimination 2. Pure affirmative action (most common) Hard 1. Affirmative action with preference hires 2. Hard quotas Valuing Differences (Diversity Training) A training approach Effective – communication and culture Less effective – attitude and bias Managing Diversity Holistic approach creating a corporate environment allowing all people to reach their full potential Addresses both traditional and contemporary issues Business leverage is the key to success Senior executive engagement is key Video – Novartis Pharmaceuticals Corporation DiversityInc 2015 #1 company for diversity Embracing diversity means valuing everyone’s perspective Key part – thinking style, different abilities, gender and race, Disparate Treatment vs. Disparate Impact (Fig 194) Disparate treatment – looking at individual and treat them differently Primary discrimination Different treatment Intentional discrimination Biased actions Different standards for different groups Disparate impact – look at group, create criteria that knocks them out Secondary discrimination Different results Unintentional discrimination Neutral actions, biased impact Different consequences for different groups Attitude vs. Behavior Can insist on behavior, cannot insist on internal attitude Population Data impacts Demographics are changing Growth percentages in US White – 8.7% Black – 51.7% Hispanic – 173.4% Asian – 196% Total – 39.6% Workforce ethnic composition % in 2050 White – 51% Black – 14% Hispanic – 24% Asian – 8% Aging Data impacts Either have to bring in immigrant workers or keep people working longer By 2030: Percent aged 2564 = 47.4% Percent aged 65+ = 20.2% Population Maps – know what they show Workforce is drawn from the place you’re in People tend to live where their ancestors lived Migration maps Black – around the southeast Latino – southwest and Florida Asian – east and west coast and Hawaii American Indian and Alaska – Arizona, New Mexico, Dakotas, Alaska, Oklahoma (where reservations are) Migration is often for jobs Silicon Valley & Diversity Today Venture capital, wall street, and silicon valley are the worst places for diversity Pure affirmative action – need to expand pool of applicants Workforce Census White 48% 52.5% Black 4% 6.7% Asian 40% 23.3% Hispanic 6% 23.5% Women 26% 50.4% Inclusion Definition Proactively working to insure all employee’s cultures are valued so everyone can contribute to their full potential (keeps doors open) Business Case for Diversity & Inclusion (Big 6): Foundation for D&I Employees Recruitment Development Retention Basic Impact Recruit/retain ERGs (Colgate and Women Globally) Ex: Dell – millennial ERG give product advice; Hispanic ERG meet with customers and translate Professional development (cisco – CEO recognition of ERG leaders, Wells Fargo stretch assignment lead ERG) Communicating to employees Cultural assimilation (J&J middle eastern ERG and acquisitions) Leverage (community outreach) Terms that apply to you Mentoring – advice on career Coaching – developing skills Sponsoring – looking for high potential people Video – J&J D&I Cisco Report on ERG Product development Marketing externally Communicating internally Gov relation and public policy HR policy and benefits Recruitment and retention Global development Community outreach Cultural assimilation Supplier diversity Example Turnover Hard turnover costs Separation Vacancy Replacement Training Other turnover costs Morale Productivity Relationships Society of human resources – turnover: $10,000 min cost to replace Customers (sales and innovation) Responsibility Sales New product development Forbes insights executive report Is diverse workforce crucial to gaining different perspectives to drive innovation? 85% say yes over next 3 years how will your focus change on leveraging diversity for business goals? 78% say increased focus Example – Frito Lay Dorito Wanted to create guacamole dip and consulted with Hispanic ERG Diversity and Innovation Cisco – IZone ERGs input redesigned platform for innovation Ford – Ride and Drive – ERGs to understand product design (Ex: race and disability) Macy’s – ERG and Hispanic gift card program increased sales Prudential – LGBT multicultural marketing committee impact entire program Mattel – doll line to African American girls Financials Buying power Financial performance Global markets Snapshot: Does Diversity Pay Columbia Study S&P 1500 top companies Increase in women diversity, average $42 million value increase. Innovation increased as well Diversity Top 50 stock Indexes 2013 study beat S&P by 1 year – 29% 3 year – 33% 5 year – 80% Decision Making Homogeneous vs. heterogeneous group Example Minority buying power increased from $2.4 billion to $4.4 billion from 2009 to 2015 Risk Lawsuits Public image Morale Top Ranked Companies for Diversity 1. Novartis Pharmaceuticals 2. Sodexo 3. Ernst and Young 4. Kaiser Permanente 5. PwC 6. MasterCard Worldwide 7. Procter and Gamble 8. Prudential Financial 9. Johnson and Johnson 10. AT&T Example – Campbell’s and Women Pursuing 3 goals – winning in the community, winning in the marketplace, and winning in the workplace Winning with women initiative From 5% women in management to 25% Mentoring is important for leadership development Example – Xerox and Diversity Recognition Diversity creates business opportunities Suppliers Sourcing Gov regulation Global MBE a
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