Organizational Evaluation Proposal

Ethical Priorities in Decision Making

Ethical values and moral priorities have guided decision making for thousands of years. Writings attributed to ancient Israel’s King Solomon describe six universal values that are still relevant today:1

1. Wisdom

2. Justice

3. Integrity

4. Compassion

5. Courage

6. Faith

Solomon’s wisdom directs leaders to engage in the decision-making process using a wider range of values than simply profit and/or performance. Furthermore, Solomon’s writings can also be seen as the “genesis” of the concept of prioritizing intrinsic values over extrinsic ones and rewards as the main motivating force for successful leaders. When leaders are overly focused on money, titles, power, and acclaim (extrinsic values), their decisions are more likely to be self-serving and ethically challenged. If, on the other hand, leaders are more focused on a calling to support social justice, self-improvement, insight, the good of the whole, transformation, service, consistency, fairness, and justice (intrinsic values), then their decisions are more likely to be ethical.

Properly prioritizing ethics is especially important for leaders because almost all decisions they make will have a moral component that will require grappling with complexities and balancing divergent needs of different people. Ultimately, experience facing these complex situations increases our capacity for ethical decision making.

Procedural Justice and Distributive Justice

One model for reviewing complex decision-making situations revolves around follower perceptions when it comes to justice. Justice is commonly defined as consistent fairness and accountability, as seen in leader and organizational process styles (procedures) and outcomes (distribution). 

Distributive justice refers to the perceived fairness of compensation, favors, access, and reward outcomes in general. 

Procedural justice relates to the perceived fairness of the decision-making process used to determine the rewards or outcomes.

When an unpopular decision is made, procedural justice tends to be an overwhelming focus of those impacted by the outcome, and the situation often requires a greater need for explanation and justification. For example, imagine your organization needs to cut salaries for a three-month period in order to reduce operational costs. This certainly would be considered an unpopular decision, resulting in detailed discussions with employees about the pay cut, how it will affect them, and the benefits in the long term of such a cut. Accordingly, a leader can expect a high level of scrutiny of all procedures, decision making, attention to detail, and due diligence taken to reach such an unpopular decision.

With follower comfort in the provision of information on procedural justice, trust in the authority/leader will positively impact employee/follower commitment to the leader and the organization as a whole. With popular decisions, distributive justice likely enjoys positive attention, and procedural justice is assumed to have been fair. Therefore, procedural justice tends not to be a main focus when it comes to decisions that are popular.

Rational and Intuitive Decision-Making Models

In this section we are going to review two decision-making models that can help leaders make effective decisions: the rational decision-making model and the intuitive decision-making model.

The Rational Decision-Making Model

The 

rational decision-making model

 is perhaps one of the most common models leaders use to make decisions. It consists of the eight steps shown here.

Graphic showing the eight steps of rational decision making connected with a large circular arrow. The steps are 1. Identify the problem, 2. Establish decision criteria, 3. Weigh decision criteria, 4. Generate alternatives, 5. Evaluate the alternatives, 6. Choose the best alternative, 7. Implement the decision, and 8. Evaluate the decision.

The eight steps of rational decision making.

Source: Simon, H. A. (1979). Rational decision making in business organizations. The American Economic Review , 69 (4), pp. 493–513.

As leaders, it is important to note that at times we may have to go through this decision-making process quickly. In fact, if you think about a simple decision such as what to make for dinner, you will realize you are ultimately using this same model. First, you identify the problem (I’m hungry! Time for dinner!). Second, you determine what criteria you will use to make your decision on what to eat (I have chicken in my refrigerator; I don’t want to go to the store). Then, you weigh the options (Although I don’t want to go to the store, I also really want a hamburger, which would require me to drive to the store but will make me happy). Next, after you weigh the pros and cons of the decision, you determine the “overall” scope of the decision (So, I can go to the store to get beef, or I can stay here and have chicken). Next, you make your selection. Once you have made it, you will act on it and then evaluate it (I am really glad I just had chicken at home; the traffic looks really bad).

Of course, this example is simplified to illustrate how often we utilize this decision-making model without realizing it. But as leaders, we may do the same thing. We are often faced with choices that must be made quickly, or, other times, we are faced with decisions where we can really consider all the alternatives over a period of time. When consideration is an option, we want to make sure to involve all the stakeholders in our decision-making process.

One thing to be concerned about when making a decision is a concept called 

analysis paralysis

. This occurs when we overthink a decision, spending so much time contemplating it that we never take action. The danger of analysis paralysis in a leadership role is missed opportunities. One of the more popular quotes on analysis paralysis comes from Ross Perot. Discussing what work was like at General Motors (GM), he said:

At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes, and then you discuss it for a couple of years. The most likely course of action is—nothing. You figure, the snake hasn’t bitten anybody yet, so you just let him crawl around on the factory floor. We need to build an environment where the first guy who sees the snake kills it.5

As a leader, there are a few ways you can deal with analysis paralysis:6

Expectation clarification. Make sure everyone on your team understands the clear expectations, goals, and outcomes of a decision. Of course, make sure you understand them yourself!

Checkpoints. Set realistic checkpoints and small goals. Sometimes even just considering a big decision (i.e., changing a marketing strategy) can be daunting. Making the decision in small steps can be a helpful way to overcome analysis paralysis.

Certainty of uncertainty. Understand—and make sure your team understands—that no decision will ever be 100 percent sure. Get comfortable with the fact that it may be 80 percent right, which means it may be the right decision to go with.

Trust and support. If you do not support your employees when they make bad decisions, they may no longer try to make any decision.

Intuitive Decision Making

Decision making based on intuition is not as favored as other decision models, but we feel it is worth mentioning since many organizational leaders utilize a combination of the rational decision-making model and intuitive decision making. Due to technology’s ability to provide numerous data points, charts, graphs, and information, making decisions based on intuition when combined with other methods can be an important part of the leadership toolbox.7 

Intuition

 is a complex form of reasoning based on past experience, patterns, concepts, and other useful knowledge a leader has accumulated.

Regardless of our decision-making style, any one of the models discussed can help us with decision making. Rationalizing in an ordered, step-by-step manner allows us to make decisions consistently and efficiently. Intuition helps us tap into feelings and experiences that can be valuable parts of the decision-making process. Regardless of our style, each of the models discussed can help us with decision making in any situation.

Managing Demographic and Cultural Diversity

Today’s global workforce is increasingly diverse. In 2020, women constituted 46.3 percent of the workforce in the United States, 8.3 percent in Yemen, and 52.3 percent in Mozambique.8 Further, 13 percent of U.S. employees are Black, 18 percent are Hispanic, and 6 percent are Asian.9 Employees also continue to work beyond retirement, introducing age diversity to the workforce.

Regardless of your gender, race, and age, you will need to work with, communicate with, and understand people different from you at school and at work. Understanding cultures different from your own is also becoming increasingly important due to the globalization of business. In the United States, 17.4 percent of domestic employees were foreign-born, indicating that even those who are not directly involved in international business may benefit from developing an appreciation for the differences and similarities between cultures.10

In the United States women make up about 46 percent of all employees, a level projected to stay fairly constant for the next few decades.

In the rest of this chapter, we will examine particular benefits and challenges of being part of a diverse workforce. We will also discuss ways in which you can increase your effectiveness when working in a diverse environment.

As we discuss differing environments faced by employees with diverse demographic traits, we’ll primarily concentrate on the legal environment in the United States. Please note that the way in which demographic diversity is treated legally and socially varies around the globe. For example, countries such as Canada and the United Kingdom have their own versions of equal employment legislation. Moreover, how women, employees of different races, older employees, employees of different religions, employees with disabilities, and LGBTQ+ employees are viewed and treated varies greatly based on the societal context.

Demographic Diversity and Inclusion

Diversity

 refers to compositional differences among people in a work unit.11 These differences lead people to perceive others as similar to or different from themselves. Diversity may be defined by any characteristic that varies within a particular work unit such as gender, race, age, education, tenure, or functional background (such as being an engineer versus being an accountant). In this text, our focus will be on diversity with respect to demographic, relatively stable, and visible characteristics: specifically race, sex, age, religion, disability status, sexual orientation, and gender identity.

Understanding how these characteristics affect organizational behavior is important. While many organizations publicly rave about the benefits of diversity, many find it challenging to develop an inclusive culture. This is evidenced by the number of complaints filed with the Equal Employment Opportunity Commission (EEOC) regarding discrimination. In the United States, the Age Discrimination Act of 1975 and Title VII of the Civil Rights Act of 1964 outlaw discrimination based on age, gender, race, national origin, or religion. The 1990 Americans with Disabilities Act prohibits discrimination against employees based on physical or mental disabilities who are able to perform the essential aspects of their jobs with or without accommodations. In 2019, over 72,000 individuals filed a complaint claiming that they were discriminated against based on protected characteristics.12

Of course, this number represents only the most extreme instances in which victims must have received visibly discriminatory treatment to justify filing a complaint. It is reasonable to assume that many instances of discrimination go unreported because they are more subtle and employees may not even be aware of inconsistencies such as pay discrimination. It seems that there is room for improvement when it comes to benefiting from diversity, understanding its pitfalls, and creating a work environment where people feel appreciated for their contributions regardless of who they are.

Benefits of Diversity and Inclusion

Effective management of diversity is simply the right thing to do. Diversity is also a fact of organizational life, and it is here to stay. The talent organizations need is diverse in race, age, sex, gender identity, religion, disability status, and any other number of dimensions. What are the benefits of diversity for groups and organizations? Research examining diversity in isolation (without considering it along with inclusion) actually paints a nuanced picture. Groups that are diverse tend to experience lower levels of cohesiveness, higher levels of conflict, lower levels of team performance, and higher levels of turnover. Human beings find it easier to communicate with each other when they interact with others who are similar. In other words, increasing levels of diversity are not always followed by desirable outcomes for organizations.

At the same time, when examined along with 

inclusion

, the potential benefits of diversity emerge. Inclusion involves allowing individuals to bring aspects of themselves that make them unique to a group, while also being treated as organizational insiders. Inclusive organizations ensure that (1) all individuals are allowed to fully participate in the organizational life, (2) all voices are heard, and (3) concerted efforts are made to remove barriers to the fair treatment of everyone.14 Research has shown that a climate of inclusion is necessary to turn diversity into an advantage for organizations.15

Thus, it is important to consider diversity and inclusion together: Simply having diversity does not mean that the organization is inclusive, and without inclusiveness, diversity is not sufficient to yield positive outcomes. As diversity consultant and advocate Vernā Myers notes, “Diversity is being invited to the party. Inclusion is being asked to dance.”16 In the next section, we summarize potential benefits of diversity and inclusion. So, when discussing the benefits of diversity, we need to treat diversity as a necessary first step but remember that it is insufficient without inclusion.

Higher Creativity in Decision Making

An important potential benefit of having a diverse workforce is the ability to make higher quality decisions. In a diverse work team, people will have different opinions and perspectives. In these teams, individuals are more likely to consider more alternatives and think outside the box when making decisions. When thinking about a problem, team members may identify novel solutions. Research shows that teams that are diverse with respect to values, thinking styles, knowledge, skills, and beliefs stimulate creativity in members.17 Therefore, having a diverse workforce may have a direct impact on a company’s bottom line by increasing creativity in decision making.

Better Understanding and Service of Customers

A company with a diverse workforce may create products or services that appeal to a broader customer base. PepsiCo Inc. planned and executed a successful diversification effort in the recent past. The company was able to increase the percentage of women and ethnic minorities in many levels of the company, including management. The company points out that in some years, about 1 percent of the company’s 8 percent revenue growth came from products that were inspired by the diversity efforts, such as guacamole-flavored Doritos chips and wasabi-flavored snacks.18 Companies with more women have been responsible for introducing innovative ideas to the market, such as the online subscription and personal shopping service Stitch Fix.

On a negative note, companies lacking diversity often introduce products that do not meet the needs of a particular segment of the population. For example, when Apple first introduced its Health app, the company came under fire for enabling users to track a wide variety of metrics including sodium intake while failing to include metrics relating to reproductive health. Similarly, the early failure of voice recognition software to recognize female voices or image recognition software failing to recognize Black individuals’ faces has been attributed to the lack of diversity in the technology industry.19 A company with a diverse workforce may understand the needs of particular groups of customers better, and customers may feel more at ease when they are dealing with a company that understands their needs.

More Satisfied Workforce

When employees feel that they are fairly treated, they tend to be more satisfied. On the other hand, when employees perceive that they are being discriminated against, they tend to be less attached to the company, less satisfied with their jobs, and experience more stress at work.20 Organizations where employees are satisfied often have lower turnover. Organizational practices aimed at creating a diverse and inclusive culture help employees develop trust in the organization and management, and have been shown to have advantages in facilitating employee engagement.21 In contrast, in organizations where people experience or observe discrimination, employees suffer from higher levels of stress and experience a sense of injustice, resulting in more negative outcomes.22

Higher Stock Prices

Companies that do a better job of creating and managing a diverse workforce are often rewarded in the stock market, indicating that investors use this information to judge how well a company is being managed. For example, companies that have greater levels of gender diversity in their board of directors have been shown to have higher stock returns following the initial public offering (IPO) of their stocks.23 Further, companies that receive an award from the U.S. Department of Labor for their diversity management programs show increases in their stock price in the days following the announcement. Conversely, companies that announce settlements for discrimination lawsuits often show a decline in stock prices afterward.24

Lower Litigation Expenses

Companies doing a particularly bad job in diversity management face costly litigations. When an employee or a group of employees feel that the company is violating EEOC laws, they may file a complaint. The EEOC acts as a mediator between the company and the person, and the company may choose to settle the case outside the court. If no settlement is reached, the EEOC may sue the company on behalf of the complainant or may provide the injured party with a right-to-sue letter.

Regardless of the outcome, these lawsuits are expensive and include attorney fees as well as the cost of the settlement or judgment, which may reach millions of dollars. The resulting poor publicity also has a cost to the company. For example, in 2018, the Seasons 52 restaurant, which is a brand owned by Darden Restaurants, was ordered to pay $2.85 million in an age discrimination lawsuit. The company had told applicants denied employment that they had too much experience, and that they were looking for “fresh” employees. In the same year, Ford was ordered to pay an ex-engineer of Middle Eastern descent $16.8 million due to harassment and creation of a hostile work environment.25 As you can see, effective management of diversity can lead to big cost savings by decreasing the probability of facing costly and embarrassing lawsuits.

Higher Company Performance

As a result of all these potential benefits, companies that manage diversity more effectively tend to outperform others. Research shows that in companies pursuing a growth strategy, there was a positive relationship between racial diversity of the company and company performance.26 Companies ranked in the Diversity 50 list created by  DiversityInc magazine performed better than their counterparts.27 And, in a survey of 500 large companies, those with the largest percentage of female executives performed better than those with the smallest percentage of female executives. Of course, correlation does not equal causation, and it is possible that the causal arrow goes the other way and strong organizations have the bandwidth to invest in diversity initiatives. The relationship, however, remains.

Diversity in the workplace is linked with many positive outcomes. When people feel that they aren’t judged for who they are but are appreciated for their contributions, group decision making, customer service, company value, and general satisfaction can improve.

Challenges to Achieving Diversity and Inclusion

If managing diversity effectively has the potential to increase company performance, increase creativity, and create a more satisfied workforce, why aren’t all companies doing a better job of encouraging diversity? Despite all the potential advantages, there are also a number of challenges associated with increased levels of diversity in the workforce.

Similarity-Attraction Phenomenon

One of the commonly observed phenomena in human interactions is the tendency for individuals to be attracted to similar individuals. This attraction influences interpersonal relationships as well as relations among groups.29 Research shows that individuals show a preference for people who are similar to them. They allocate greater resources to them when given the chance, show more positive attitudes toward them, and are more strongly drawn to them. They express greater levels of comfort around people similar to themselves, and display greater levels of confidence in homogeneous groups regardless of how they actually perform.30

The 

similarity-attraction phenomenon

 may explain some of the potentially unfair treatment based on demographic traits. If a hiring manager chooses someone who is similar over a more qualified candidate who is dissimilar in a characteristic such as sex, race, or age, the decision is unfair; it will also be a barrier to achieving diversity in the workplace. In other words, similarity-attraction may give the majority group an advantage in hiring and other human resource decisions because hiring managers will perceive greater chemistry and feel more comfortable with someone similar to them, jeopardizing the candidacy of someone who is different from the group composition.

Even when candidates from underrepresented groups are hired, they may receive different treatment within the organization. For example, research shows that one way in which employees may get ahead within organizations is through being mentored by a knowledgeable and powerful mentor. Yet when the company does not have a formal mentoring program in which people are assigned a specific mentor, people are more likely to develop a mentoring relationship with someone who is similar to them in demographic traits.31 This means that those who are not selected as protégés will not be able to benefit from the support and advice that would further their careers. Similarity-attraction may even affect the treatment people receive daily. If a male manager frequently invites a male employee to have lunch with him while a female employee is excluded from such interaction opportunities, the male employee over time may develop greater access to information, advice, or other intangible opportunities that are beneficial to one’s career.

Why are we more attracted to those who share our demographic attributes? Demographic traits are part of what makes up 

surface-level diversity

. Surface-level diversity includes traits that are highly visible to us and those around us, such as race, gender, and age. Researchers believe that people pay attention to surface-level diversity because they are assumed to be related to 

deep-level diversity

, which includes values, beliefs, and attitudes. We want to interact with those who share our values and attitudes, but when we meet people for the first time, we have no way of knowing whether they share similar values. As a result, we tend to use surface-level diversity to make judgments about deep-level diversity.

Research shows that surface-level traits affect our interactions with other people early in our acquaintance with them, but as we get to know people, the influence of surface-level traits is replaced by deep-level traits such as similarity in values and attitudes.32 Age, race, and gender dissimilarity are also stronger predictors of employee turnover during the first few weeks or months within a company. It seems that new employees may feel isolated during their early tenure when they are dissimilar to the rest of the team, but these effects tend to disappear as people stay longer and get to know other employees.

As you may see, while similarity-attraction may put some employees at a disadvantage, it is a tendency that can be managed by organizations. By paying attention to employees early in their tenure, having formal mentoring programs in which people are assigned mentors, and training managers to be aware of the similarity-attraction tendency, organizations can go a long way in dealing with potential diversity challenges.

Faultlines

A 

faultline

 is an attribute along which a group is split into subgroups. For example, in a group with three women and three men, gender may act as a faultline because the women may see themselves as separate from the men. Now imagine that the women of the same team are all over age 50 and the men are all under age 25. In this case, age and gender combine to further divide the group into two subgroups. Teams that are divided by faultlines experience a number of difficulties. For example, members of the different subgroups may avoid communicating with each other, reducing the overall cohesiveness of the team. Research shows that teams with faultlines experience more conflict, are less cohesive, and have less satisfaction and performance.33

Faultlines are more likely to emerge in diverse teams, but not all diverse teams have faultlines. Going back to our example, if the team has three men and three women as members, but if two of the women are older and one of the men is also older, then the composition of the team will have a much different effect on the team’s processes. In this case, age could be a bridging characteristic that brings together people divided across gender.

Research shows that even groups that have strong faultlines can perform well if they establish certain norms. When members of subgroups debate the decision topic among themselves before having a general group discussion, there seems to be less communication during the meeting on pros and cons of different alternatives. Having a norm stating that members should not discuss the issue under consideration before the actual meeting may be useful in increasing decision effectiveness.34 Further, the existence of an inclusive diversity climate reduced the negative effects of faultlines on loyal behaviors.35

Faultlines

A graphic representing two groups of people. The first group, three Asian women and three Caucasian men are disconnected from each other. The second group, an Asian man and two Asian women are connected to a Caucasian woman and two Caucasian men as follows: The Asian man and the two Caucasian men are connected and the two Asian women are connected to the Caucasian woman, thus forming one connected group.

The group on the top will likely suffer a strong faultline due to the lack of common ground. The group on the bottom will likely only suffer a weak faultline because the men and women of the different groups will likely identify with each other.

Clint McFarlin/Soomo Learning

Stereotypes and Unconscious Biases

An important challenge of managing a diverse workforce is the possibility that stereotypes and unconscious biases about different groups could lead to unfair decision making. 

Stereotypes

 are generalizations about a particular group of people. The assumption that women are more relationship oriented, while men are more assertive, is an example of a stereotype. 

Unconscious (or implicit) biases

 are stereotypes that are outside of conscious awareness. For example, a manager who is surprised that the technical employee clients are raving about is a woman may be demonstrating an unconscious bias.

The problem with stereotypes and unconscious biases is that individuals may rely on stereotypes when making decisions, instead of collecting actual data and verifying their assumptions. As a result, stereotypes may lead to unfair and inaccurate decision making. For example, a hiring manager holding the stereotype that men are more assertive may prefer a male candidate for a management position over a well-qualified female candidate. The assumption would be that management positions require assertiveness and the male candidate would be more assertive than the female candidate.

Research has affirmed that stereotypes and implicit biases affect hiring decisions. For example, in a laboratory experiment, when individuals were asked to hire someone for a job involving math abilities, they were twice as likely to hire a man. Even providing past performance information did not fully eliminate this male advantage. Such discrimination may be part of the puzzle for the underrepresentation of women in science and engineering.36 Further, stereotypes and prejudices are associated with more covert and interpersonal forms of discrimination, such as acting less warm and friendly toward the stigmatized person, being more rude toward this person, or cutting the interaction short.

Being aware of these stereotypes is the first step to preventing them from affecting decision making. Many organizations already take concrete steps to keep stereotypes and unconscious biases from influencing decisions. For example, orchestras in the United States saw a dramatic increase in female musicians after they started introducing “blind” auditions—auditions in which the candidate plays behind a screen.38 In 2006, France passed a law requiring employers with more than 50 employees to remove personal data that potentially signals an applicant’s race, religion, or ethnicity from résumés in order to prevent stereotypes from influencing who is hired.39 Such structural changes may help to systematically prevent stereotypes from affecting employment decisions.