paper on management question 3
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question_3.docxQuestion 3: Less than five percent of top executives in U.S. firms are women. What factor best explains this fact: women's education and job experience, discrimination against women by companies, preferences of women employees, different family roles and responsibilities between women and men, or something else? Why do you think so?
Please use the below lecture note to guide your response. Minimum of 2 academic references and 1 data for appendix, it could be a graph or table or piechart (2 and half pages NOT double spaces).
The Changing Face of the Workforce
Human beings differ from each other in many ways. Each person is unique, as is each employee within an organization. Individuals are also similar in many ways, some of which are more readily visible than others. The term diversity refers to variation in the important human characteristics that distinguish people from one another. The primary dimensions of diversity are age, ethnicity, gender, mental or physical abilities, race, and sexual orientation. The secondary dimensions of diversity are many; they include such characteristics as communication style, family status, and first language.2 Individuals’ distinguishing characteristics clearly impact their values, opportunities, and perceptions of themselves and others at work. Workforce diversity—diversity among employees—thus represents both a challenge and an opportunity for businesses.
At the beginning of the 21st century, the U.S. workforce is as diverse as it has ever been, and it is becoming even more so. Consider the following major trends:3
• More women are working than ever before. Married women, those with young children, and older women, in particular, have greatly increased their participation in the workforce. By 2012, the Bureau of Labor Statistics estimates that 47 percent of all workers will be women, nearly equal to their share of the population. One effect of this trend is that more employed men have wives who also work—changing the nature of their responsibilities within the family.
• Immigration has profoundly reshaped the workplace. Between 2000 and 2005, almost 8 million immigrants entered the United States—the largest number in any 5-year period in the nation’s history. The leading countries of origin are now Mexico, India, China, the Philippines, El Salvador, Brazil, and Vietnam. Immigrants now make up about 15 percent of U.S. workers, increasing linguistic and cultural diversity in many workplaces.4
• Ethnic and racial diversity is increasing. Hispanics (defined by the Census as persons of Spanish or Latin American ancestry), now about 13 percent of U.S. workers, are expected to comprise 15 percent by 2012. Asians are expected to be the fastest growing segment of the labor force. The proportion of African-Americans is expected to hold steady at around 12 percent. By 2012, the U.S. workforce is projected to be about 35 percent nonwhite (this category includes persons of Hispanic origin). In some states, such as California, these trends will be much more pronounced.
• The workforce will continue to get older. As the baby boom generation matures, birth rates drop, and people live longer and healthier lives, the population will age. Many of these older people will continue to work, whether out of necessity or choice. As one expert put it, “The American labor force will become somewhat more brown and black in the next twenty years, but its most pervasive new tint will be gray.”5 Employers will have to find new ways to accommodate retirement-aged workers.
Workforce diversity creates many new employee issues and problems. This chapter will consider the changing face of today’s workplace, and its implications for management. Laws and regulations clearly require that businesses provide equal opportunity and avoid discrimination and harassment. How to meet—and exceed—these mandates presents an ongoing challenge to businesses seeking to reap the benefits of a well-integrated, yet culturally diverse work population. We turn first to two important dimensions of workplace diversity: gender and race.
Gender and Race in the Workplace
Gender and race are important primary dimensions of workforce diversity. Women and persons of color have always worked, contributing both paid and unpaid labor to the economy. Yet the nature of their participation in the labor force has changed, posing new challenges to business.
One of the most significant changes in the past half-century has been the growing labor force participation of women. During the period following World War II, the proportion of women working outside the home rose dramatically, as shown in Figure 19.1. In 1950, about a third of adult women were employed. This proportion has risen almost steadily since, standing at 59 percent in 2004. Participation rates (the proportion of women in the workforce) have risen for all groups of women, but the most dramatic increases have been among married women, mothers of young children, and middle-class women, those who had earlier been most likely to stay at home. Men’s participation rates declined somewhat during this period; between 1950 and 2004, the proportion of adult men who worked fell from 86 percent to 73 percent.
Women have entered the labor force for many of the same reasons men do. They need income to support themselves and their families. Having a job with pay also gives a woman psychological independence and security. The high cost of living puts financial pressure on families, frequently pushing women into the labor force just to sustain an accustomed standard of living or to put children through college or care for aging parents. The inadequacies and uncertainties of retirement plans and health care programs frequently mean that women, as well as men, need to save, invest, and plan for the future. When women divorce, they often can no longer rely on a partner’s earnings for support.
The rapid rise of female labor force participation in the postwar years also reflects the expansion of segments of the economy that were major employers of women. In 1940, about one-third of all U.S. jobs were white-collar (not requiring manual labor); by 1980, over half were white-collar. Professional, technical, and service jobs also grew relative to the economy. The creation of many new positions in fields traditionally staffed by women produced what economists call a demand-side pull of women into the labor force. More “women’s jobs” meant more women working.
Labor force participation rates for minorities, unlike those of women, have always been high. For example, in 1970 about 62 percent of all African-Americans
(men and women combined) worked; the figure is about 67 percent today. Participation rates have also been consistently high for most other minority groups; for Asians, it is 67 percent; for Hispanics, 71 percent. The key change here has been the move of persons of color, in recent decades, into a wider range of jobs as barriers of discrimination and segregation have fallen. Minorities have become better represented in the ranks of managers, professionals, and the skilled trades. These trends will be further discussed later in this chapter.
The face of success in the United States is diverse, just as the workforce is. Consider Jenny Ming, president of the Old Navy division of Gap, Inc., from 1998 to 2006. Ming immigrated with her family from Macao (an island nation off the coast of China) when she was 9 years old. She later recalled in an interview that as a youngster, she loved everything about America, especially Halloween. After completing her education in the public university system, Ming took her first job as an assistant department manager for Mervyn’s. She moved up fast in the retail world, becoming a top executive at Old Navy when she was just 39. A profile in BusinessWeek attributed Ming’s success to her “uncanny knack for predicting which hip-looking clothes of the moment will appeal to the masses, then making big bets on producing the huge quantities needed to assure the chain a continual string of hits.”6
The Gender and Racial Pay Gap
One persistent feature of the working world is that women and persons of color on average receive lower pay than white men do. This disparity, called the pay gap, narrowed over the past three decades, as Figure 19.2 shows. But in 2004 black men and white women still earned only slightly more than three-fourths of white men’s pay; black women earned about 69 percent. (These data are based on full-time workers only.) The pay gap for Hispanic women declined by about 7 percent during the last two decades; and that for Hispanic men, only 1 percent. Recent research by two economists showed that the gender pay gap, now 77 percent, understates lifetime differences in earnings, because women work fewer hours and are more likely to take time off for child rearing. Over their prime working years, women make only 38 percent of what men earn, the study found.7
Experts disagree about the cause of the pay gap between women and men. Some believe the continuing gender disparity in pay is evidence of sex discrimination by employers; others believe the gap reflects women’s choices to pursue lower paying jobs or slower advancement because of time off for family responsibilities. Many observers agree, however, that the pay gap persists, in part, because of what is called occupational segregation. This term refers to the inequitable concentration of a group, such a minorities or women, in particular job categories. The large pay gap for Hispanic workers, for example, partly reflects their concentration in several low-paid occupations. Forty-four percent of meatpackers, 40 percent of grounds maintenance workers, 39 percent of farm workers, and 38 percent of private household cleaners are of Hispanic origin, according to the Census Bureau, although Hispanics make up only 13 percent of the workforce as a whole. Although women, for their part, have made great strides in entering occupations where they were formerly underrepresented, many remain concentrated in a few sex-typed jobs that some have called the “pink collar ghetto.” Women still make up 98 percent of preschool and kindergarten teachers, 92 percent of bookkeepers, 99 percent of dental hygienists, and 92 percent of receptionists, for example. Eliminating the pay gap will require, therefore, business programs and government policies that create opportunity for women and people of color to move out of more segregated jobs into ones where the pay and chances for upward mobility are greater.8
The most prestigious and highest-paying jobs in a corporation are in top management. Because most corporations are organized hierarchically, management jobs—particularly those at the top—are few. For that reason, only a small fraction of workers, of whatever gender or race, can hope to reach the upper levels in the
business world. White men have traditionally filled most of these desirable spots. Business’s mandate now is to broaden these high-level leadership opportunities for women and persons of color, a topic to which we turn next.
Where Women and Persons of Color Manage
About 9 million U.S. women were working as managers by the mid-2000s. As Figure 19.3 reveals, in 2004 more than 4 out of 10 managers—and a majority of managers in some categories—were women. Clearly, women have broken into management ranks. Women are more likely to be managers, though, in occupational areas where women are more numerous at lower levels, such as health care and education. Grouped by industry, women tend to be concentrated in service industries and in finance, insurance, real estate, and retail businesses. Women managers have also made gains in newer industries, such as biotechnology, where growth has created opportunity.
Where do persons of color manage? As is shown in Figure 19.3, African-Americans, Asians, and Hispanics are underrepresented in management ranks in the United States, making up just 7.0, 4.5, and 6.4 percent of managers, respectively. But they have approached parity in a few areas. Blacks make up 12.8 percent of education administrators (more than their 10.7 percent of the workforce), reflecting less discrimination and more opportunity in public schools. Asians are best represented in the ranks of computer and information systems managers; Hispanics are best represented in property management and real estate. Figure 19.3 shows the continuing underrepresentation of blacks, Asians, and Hispanics in other management categories.
Breaking the Glass Ceiling
A few exceptional women and persons of color have reached the pinnacles of power in corporate America. In 2006, Patricia A. Woertz, for example, became president and CEO of Archer Daniels Midland, the agribusiness giant, following a successful career at Chevron, where she had risen to executive vice president of refining and marketing, a $100 billion business.9 When Richard Parsons, an African-American, became chairman and chief executive of AOL Time Warner in 2002, it capped an extraordinary career rise from the streets of Bedford-Stuyvesant, a poor neighborhood in New York City, to head one of the best-known companies in the world.10
These high-achievers remain unusual, however. Although women and minorities are as competent as white men in managing people and organizations, they rarely attain the highest positions in corporations. Their ascent seems to be blocked by an invisible barrier, sometimes called a glass ceiling. According to Catalyst, an advocacy organization for female executives, in 2002 only 16 percent of the officers (and 1 percent of chief executives) of leading corporations were women.11 Less than 1 percent of Fortune 500 companies are headed by a person of color.12 In Europe, diversity in the top ranks is also rare. A 2005 study of 360 leading companies in the European Union and Scandinavia found that only one company, Vodafone, had a chief executive from a minority group (he was Arun Sarin, an American citizen born in India); only 3 companies were headed by a woman.13
Women and minorities are also scarce on corporate boards. A 2005 study reported that only 17 percent of board members of Fortune 100 firms were women, and only 15 percent were persons of color. A few companies stood out as exceptions; at Alcoa, IBM, Hewlett-Packard, and Wellpoint Health Networks, a majority of directors were women or minorities.14
In 2006, an unusual law promoting boardroom diversity went into effect in Norway. It mandated that, by 2008, 40 percent of corporate directors in large Norwegian companies be women. “Women will have a place where the power is,” said Norway’s minister of children and equality. “This . . . will set an example for other centers of society.” Opponents, including many in the
business community, complained that it would force many experienced men off corporate boards. Moreover, they said, it would violate the basic principle that shareholders should be able to vote for anyone they wanted. In the previous two years, female representation on corporate boards had climbed from 8 percent to 16 percent, in anticipation of the law’s implementation.15
Failure to attain the topmost jobs in some cases is due to lack of experience or inadequate education. Because gender and racial bias has kept women and minorities out of management until recent years, few have had time to acquire the years of experience that are typical of most high-ranking executives. Also, in earlier years women and minorities were discouraged from entering graduate schools of engineering, science, business, and law, the traditional pathways to top corporate management. Even as those barriers have been lowered, though, these groups remain underrepresented at executive levels.
What continues to hold women and minorities back? A study in the Harvard Business Review reported that the primary obstacle is glass walls: fewer opportunities to move sideways into jobs that lead to the top. Female and minority managers are often found in staff positions, such as public relations or human resources, rather than in line positions in such core areas as marketing, sales, or production where they can acquire the broad management skills necessary for promotion.16 Another problem is that in filling top positions, recruiters rely on word-of-mouth—the old boys’ network from which women and persons of color are often excluded. Other causes include a company’s lack of commitment to diversity and too little accountability at the top management level for equal employment opportunity. However, recent advances by both women and minorities in the executive suite suggest that the glass ceiling may finally be cracking.
Women and Minority Business Ownership
Some women and minorities have evaded the glass ceiling and risen to the top by founding or taking over their own businesses.
By 2006, over 10 million businesses—48 percent of all those in the United States—were owned or controlled by women, according to the Center for Women’s Business Research. Of these, about one in eight was owned by a woman of color.
An example of a successful female entrepreneur is Catherine Hughes, founder and chairperson of Radio One, a company that owns over 50 radio stations, mainly in urban markets. Hughes, who is black, started the business in 1980, when she was general manager at Howard University’s FM station, by buying a defunct R&B station. For several years, Hughes slept in the station, ran her own morning talk show, and pounded the pavement in the afternoon looking for advertisers. By the mid-1980s, the station was turning a healthy profit, and Hughes began acquiring other stations. By 2006, the company operated 70 radio stations and programmed five channels on the XM Satellite Radio system. “I was determined to make this work,” Hughes said.17
In recent years, women have formed new businesses at nearly twice the rate of men. Although most female-headed firms are small, collectively they employ over 19 million people in the United States and generate $2.5 trillion in sales.18
Persons of color have also used business ownership as a path to success. -According to the Small Business Administration, there were around 4.1 million minority-owned businesses in the United States in 2002. Within this group, Hispanic-owned businesses were the most numerous, followed by African-American and Asian-owned businesses.19 Immigrants were responsible for a good share of the entrepreneurial spirit in the minority community; nearly half of Hispanic business owners and more than two-thirds of Asian business owners were born outside of the United States, according to U.S. Census Bureau figures.
Government’s Role in Securing Equal Employment Opportunity
Eliminating workplace discrimination and ensuring equal job opportunity have been a major goal of public policy in the United States for four decades. This section reviews the major laws that govern business practices with respect to equal opportunity, affirmative action, and sexual and racial harassment.
Equal Employment Opportunity
Beginning on a major scale in the 1960s, U.S. presidents issued executive orders and Congress enacted laws intended to promote equal treatment of employees, that is, equal employment opportunity. These government rules apply to most businesses in the following ways:
• Discrimination based on race, color, religion, sex, national origin, physical or mental disability, or age is prohibited in all employment practices. This includes hiring, promotion, job classification, and assignment, compensation, and other conditions of work.
• Government contractors must have written affirmative action plans detailing how they are working positively to overcome past and present effects of discrimination in their workforce. However, affirmative action plans must be temporary and flexible, designed to correct past discrimination, and cannot result in reverse discrimination against whites or men.
• Women and men must receive equal pay for performing equal work, and employers may not discriminate on the basis of pregnancy.
Figure 19.4 outlines the major laws and one executive order that are intended to promote equal opportunity in the workplace. The provisions of the most recent equal employment opportunity law, the Americans with Disabilities Act, are further described in Exhibit 19.A. The major agency charged with enforcing equal employment opportunity laws and executive orders in the United States is the Equal Employment Opportunity Commission (EEOC). The EEOC was created in 1964 and given added enforcement powers in 1972 and 1990.
Companies that fail to follow the laws shown in Figure 19.4 often find themselves facing expensive lawsuits. One of the more sensational examples of a suit against racial discrimination in the workplace in recent years involved Texaco.
A number of African-American employees sued the big oil company, charging discrimination. In the course of investigating the case, these employees’ attorneys obtained a copy of a tape recording, apparently of top Texaco executives at a meeting to discuss how to respond to the lawsuit. The tape seemed to contain offensive racial epithets as well as discussion of destroying evidence that would be harmful to Texaco’s position. When a transcript of the tape was published, it was very embarrassing for the company. Texaco settled the lawsuit out of court, agreeing to pay $176.1 million over five years, then the largest settlement in the history of racial
discrimination suits in the United States. The company also created organizational programs promoting racial sensitivity at work.20
Potentially costly lawsuits can involve other forms of discrimination as well, such as those based on age, gender, or disability. A class-action lawsuit involving alleged discrimination against women at the nation’s largest private sector employer, Wal-Mart, is described in the discussion case at the end of this chapter.
Affirmative Action
One way to promote equal opportunity and remedy past discrimination is through affirmative action. Since the mid-1960s, major government contractors have been required by presidential executive order to adopt written affirmative action plans specifying goals, actions, and timetables for promoting greater on-the-job equality. Their purpose is to reduce job discrimination by encouraging companies to take positive (that is, affirmative) steps to overcome past employment practices and traditions that may have been discriminatory.
Affirmative action became increasingly controversial in the 1990s and 2000s. In some states, new laws (such as Proposition 209 in California) were passed banning or limiting affirmative action programs in public hiring and university admissions, and the issue was debated in Congress and in the courts. Backers of affirmative action argued that these programs provided an important tool for achieving equal opportunity. In this view, women and minorities continued to face discriminatory barriers and affirmative action was necessary to level the playing field. Some large corporations backed affirmative action programs, finding them helpful in monitoring their progress in providing equal job opportunity. General Electric, AT&T, and IBM, for example, have said that they would continue to use affirmative action goals and timetables even if they were not required by law.
Critics, however, argued that affirmative action was inconsistent with the principles of fairness and equality. Some pointed to instances of so-called reverse discrimination, which occurs when one group is unintentionally discriminated against in an effort to help another group. For example, if a more qualified white man were passed over for a job as a firefighter in favor of a less qualified Hispanic man to remedy past discrimination in a fire department, this might be unfair to the white candidate. Critics of affirmative action also argued that these programs could actually stigmatize or demoralize the very groups they were designed to help. For example, if a woman were hired for a top management post, other people might think she got the job just because of affirmative action preferences, even if she were truly the best qualified. This might undermine her effectiveness on the job or even cause her to question her own abilities. For this reason, some women and persons of color called for less emphasis on affirmative action, preferring to achieve personal success without preferential treatment.21
In 1995, the Supreme Court ruled in an important decision that affirmative action plans were legal but only if they were temporary and flexible, designed to correct past discrimination, and did not result in reverse discrimination. Under this ruling, quotas (for example, a hard-and-fast rule that 50 percent of all new positions would go to women, say, or African-Americans) would no longer be permitted in most situations. The court confirmed this general approach in 2003 when it ruled in a case involving admissions policies at the University of Michigan that a “holistic” approach that took race into consideration along with other factors in the admissions process, without using quotas, was legal. More than 60 corporations, including Boeing, Pfizer, Steelcase, and even MTV, had filed briefs in support of the university’s affirmative action program. In one such brief, General Motors said that “the future of American business and, in some measure, the future of the American economy” depended on diversity in higher education.22
Sexual and Racial Harassment
Government regulations ban both sexual and racial harassment. Of the two kinds, sexual harassment cases are more prevalent, and the law covering them is better efined. But racial harassment cases are a growing concern to employers.
d Sexual harassment at work occurs when any employee, woman or man, experiences repeated, unwanted sexual attention or when on-the-job conditions are hostile or threatening in a sexual way. It includes both physical conduct—for example, suggestive touching—as well as verbal harassment, such as sexual innuendoes, jokes, or propositions. Sexual harassment is not limited to overt acts of individual co-workers or supervisors; it can also occur if a company’s work climate is blatantly and offensively sexual or intimidating to employees. Women are the targets of most sexual harassment. Sexual harassment is illegal, and the U.S. Equal Employment Opportunity Commission (EEOC) is empowered to sue on behalf of victims. Such suits can be very costly to employers who tolerate a hostile work environment, as the following example shows.
North Country, a 2005 film starring Charlize Theron, was based on the true story of the first sexual harassment lawsuit to be certified as a class action. A group of women employed at a mine operated by Eveleth Taconite in northern Minnesota sued, charging they had been victims of brutal harassment. As portrayed in the film, male workers had called the women obscene names, grabbed and threatened them, and even knocked over a portable toilet when one woman was inside. The lawsuit was finally settled in 1998, when the company agreed to pay the plaintiffs $3.5 million. The case “put employers on notice that sexual harassment was going to be taken very seriously,” said the president of the National Partnership for Women and Families.23
Harassment can occur whether or not the targeted employee cooperates. It need not result in the victim’s firing, or cause severe psychological distress. The presence of a hostile or abusive workplace can itself be the basis for a successful suit. In an important legal case decided by the Supreme Court in 1993, a woman manager at a truck-leasing firm was subjected to repeated offensive comments by the company president. For example, he asked her in front of other employees if she used sex to get a particular account and suggested that the two of them “go to the Holiday Inn to negotiate [her] raise.” The manager quit her job and sued. The Supreme Court upheld her charges, saying that the president’s behavior would reasonably be perceived as hostile or abusive, even though it had not caused severe psychological injury or caused the woman to be unable to do her job.24 The court also ruled, in another case, that a company could be found guilty as a result of actions by a supervisor, even if the incident was never reported to top management.
Women employees regularly report that sexual harassment is common. From 38 to 60 percent of working women have told researchers they have been sexually harassed on the job. Managers and supervisors are the most frequent offenders, and female office workers and clerical workers are the main targets. As many as 90 percent of incidents of harassment are never reported. This kind of conduct is most likely to occur where jobs and occupations are (or have been) sex-segregated and where most supervisors and managers are men, as was the case at the mine portrayed in North Country.
In 2002, the European Union recognized sexual harassment as a form of gender discrimination and required its member states to bring their laws into compliance by 2005. Evolving norms about appropriate interactions at the workplace came as a shock to many, particularly in eastern and central Europe, where obscene jokes, suggestive remarks, and unwelcome advances at work were commonplace. One study found, for example, that 45 percent of Czech women had been sexually harassed, although most did not identify the behavior by this term. “Sexual harassment is something like folklore in the Czech Republic,” said one researcher.25
Racial harassment is also illegal, under Title VII of the Civil Rights Act. Under EEOC guidelines, ethnic slurs, derogatory comments, or other verbal or physical harassment based on race are against the law, if they create an
intimidating, hostile, or offensive working environment or interfere with an individual’s work performance. Although fewer racial than sexual harassment charges are filed, their numbers more than doubled during the 1990s (to about 9,000 a year), and employers have been liable for expensive settlements.26 For example, FedEx was sued by two ground drivers, both of Lebanese descent, who charged the company had created a hostile work environment. The drivers said in their lawsuit they had been called “terrorists,” “camel jockeys,” and other epithets by their terminal manager. In 2006, a jury awarded the men $61 million. The company said it would appeal a verdict it called “wrong and excessive.”27
What can companies do to combat sexual and racial harassment—and protect themselves from expensive lawsuits? In two important court cases in 1998, the Supreme Court helped clarify this question. The court said that companies could deflect lawsuits by taking two steps. First, they should develop a zero-tolerance policy on harassment and communicate it clearly to employees. Then, they should establish a complaint procedure—including ways to report incidents without retaliation—and act quickly to resolve any problems. Companies that took such steps, the court said, would be protected from suits by employees who claimed harassment but had failed to use the complaint procedure.
Developing mechanisms for preventing sexual and racial harassment is just one important action companies can take. Others positive steps by business are discussed in the following section.
What Business Can Do: Diversity Policies and Practices
All businesses, of course, are required to obey the laws mandating equal employment opportunity and prohibiting sexual and racial harassment; those that fail to do so risk expensive lawsuits and public disapproval. But it is not enough simply to follow the law. The best managed companies go beyond compliance; they implement a range of policies and practices to make the workplace welcoming, fair, and accommodating to all employees.
Companies that manage diversity effectively take a number of related actions, in addition to obeying all relevant laws. Research shows that these actions include the following.
Articulate a clear diversity mission, set objectives, and hold managers accountable.
An example of a company that has done so is mortgage lender Fannie Mae. The company’s overall mission is to increase the availability and affordability of housing for low, moderate, and middle income Americans. This means, of course, that the company works with a very diverse group of customers. Fannie Mae recognizes that one way to do this well, in the words of one of its written core commitments, is “to fully capitalize on the skills, talents, and potential of all our employees.” The company’s Office of Diversity and Work Life develops goals, conducts training, administers a mentoring program, and monitors compliance at all levels.28
Three-fourths of Fortune 500 companies have diversity programs, mostly _training designed to promote sensitivity and awareness. At United Parcel Service, senior-level managers are required to attend a one-month diversity and leadership course. Another important step is to reward managers. At Monsanto, for _example, a portion of all bonuses paid to “people managers” is based on how well their departments meet various diversity goals.29
Spread a wide net in recruitment, to find the most diverse possible pool of qualified candidates. Those in charge of both hiring and promotion need to seek all workers who may be qualified—both inside and outside the company. This often involves moving beyond word-of-mouth networks, which may produce a pool of applicants who are similar to people already working for the company or in particular jobs. One company’s successful effort to promote diversity in its hiring and promotion practices is described in the following example.
As part of an agreement to settle a sex-discrimination class action lawsuit, Home Depot, Inc., introduced a new innovation: a computerized hiring and promotion system called Job Preference Program, or JPP for short. The company installed computer kiosks in every store, where job applicants could take basic skills tests and fill out questionnaires about their experience and career goals. Existing employees were encouraged to register their long-term aspirations. The JPP computer then made suggestions about needed skills, forwarded resumes to managers seeking to fill positions, and told applicants about jobs they might not have thought about that matched their ambitions. In the first year after the system was introduced, the number of female managers at Home Depot increased by 30 percent, and the number of minority managers by 28 percent.30
Identify promising women and persons of color, and provide them with mentors and other kinds of support. What techniques work to shatter the glass ceiling? One study of a group of highly successful women executives found that most had been helped by top-level supporters and by multiple chances to gain critical skills. Some companies have promoted mobility by assigning mentors—more-senior counselors—to promising female and minority managers and by providing opportunities that include wide-ranging line management experience. At American Express, for example, managers are held accountable for developing diverse talent; in 2004, 2,000 women participated in the company’s mentoring program. Amex’s chairman and CEO, Kenneth Chenault, is African-American.31
Set up diversity councils to monitor the company’s goals and progress toward them. A diversity council is a group of managers and employees responsible for developing and implementing specific action plans to meet an organization’s diversity goals. Sometimes, a diversity council will be established for a corporation as a whole; sometimes, it will be established within particular business units. An example of a company that has used diversity councils effectively is Pitney Bowes, a maker of business communication machines. The company adopted a series of diversity strategic plans, each setting specific goals for the next five-year period. Diversity councils were set up in each business unit to implement programs to meet these objectives, and each year progress was assessed. A Corporate Responsibility Committee of the board oversaw the program as a whole. Pitney Bowes has repeatedly been named to lists of the best employers of women and persons of color.32
Businesses that manage diversity effectively enjoy a strategic advantage. While fundamental ethical principles, discussed in Chapters 5 and 6, dictate that all employees should be treated fairly and with respect for their basic human rights, there are also bottom-line benefits to doing so.
• Companies that promote equal employment opportunity generally do better at attracting and retaining workers from all backgrounds. This is increasingly important as the pool of skilled labor grows more diverse. Nortel, the telecommunications firm, has attributed its low turnover rates, relative to the industry, in part to its strong diversity policies. The company partners with
nonprofit organizations to develop and place talented minority students, sponsors networking groups for African-American and Latino employees, and works closely with minority and women-owned suppliers.33
• Businesses with employees from varied backgrounds can often more effectively serve customers who are themselves diverse. Explained Steve Reinemund, CEO of PepsiCo, “If we don’t have people from the front line up to the boardroom who represent the consumers we sell to, we’re not going to be successful.” He offered the following example: “We had an urban market where our market share was half of what we had in the suburban market. By changing the sales force for the urban population and changing some products, our market share went up. That demonstration helped us get a lot of traction [for diversity initiatives] within PepsiCo.”34
• The global marketplace demands a workforce with language skills, cultural sensitivity, and awareness of national and other differences across markets. For example, Maria Elena Lagomasino, senior managing director of Chase Manhattan’s Global Private Banking Group, credited her Cuban heritage with helping her do her job more effectively. “When I got into private banking with Latin American customers,” she commented, “I found my ability to understand their reality a great advantage.”35
Finally, companies with effective diversity programs can avoid costly lawsuits and damage to their corporate reputations from charges of discrimination or cultural insensitivity.
Another important step businesses can take to manage diversity effectively is to accommodate the wide range of family and other obligations employees have in their lives outside work. This subject is discussed in the next section.
Balancing Work and Life
The nature of families and family life has changed, both in the United States and in many other countries. The primary groups in which people live are just as diverse as the workforce itself. One of the most prominent of these changes is that dual-income families have become much more common. According to the latest U.S. Census data, in two-thirds of married couples with children (65 percent), both parents worked at least part-time. This was up from just a third of such families in 1976. (To round out the picture, in 30 percent of married couples with children, just the father worked; in 4 percent, just the mother worked. In the remainder, both parents were unemployed.)36 Families have adopted a wide range of strategies for combining full- and part-time work with the care of children, elderly relatives, and other dependents. Commented the president of the Work and Family Institute, speaking of dual-career families, “It’s time to move beyond, is it good, is it bad, and get to: how do we make it work?”37 How to help “make it work” for employees trying to balance the complex, multiple demands of work and family life has became a major challenge for business.
Child Care and Elder Care
One critical issue for business is supporting workers with responsibilities for children and elderly relatives.
The demand for child care is enormous and growing. Millions of children need daily care, especially the nearly 7 out of every 10 children whose mothers hold jobs. A major source of workplace stress for working parents is concern about their children; and problems with child care are a leading reason why employees fail to show up for work.
Business has found that child care programs, in addition to reducing absenteeism and tardiness, also improve productivity and aid recruiting by improving the company’s image and helping to retain talented employees. In 2003, 95 percent of large U.S. companies provided some type of child care assistance, including referral services, dependent-care accounts, and vouchers. One in 10 large companies provided on-site child care services. An example is Johnson Wax, a consumer products firm that cares for 400 children in a state-of-the-art center at its Racine, Wisconsin, headquarters. “This isn’t a benefit,” explained a company spokesperson. “It’s a good business decision because we want to attract the best.”38
In addition to caring for children, many of today’s families have responsibilities for elder care. Employees’ responsibilities for aging parents and other older relatives will become increasingly important to businesses in the coming decade as baby boomers pass through their forties and fifties, the prime years for caring for elderly family members. More than 1 in 5 adults in the United States now cares for an older person, and 59 percent of caregivers are currently employed.39 This is a concern for employers because 6 in 10 working caregivers have had to go to work late or leave early to attend to these duties.40
Many businesses have adopted programs to support workers caring for older relatives. Almost half of the large corporations surveyed by Hewitt Associates, a benefits company, offer some such assistance. The most common kind is providing information and referrals to services for the elderly. “It was great to have someone to talk to, someone who cared,” said a customer service representative for AT&T who used the company’s referral program to find help for her mother, who had Alzheimers and lived with her. Also available at many firms are dependent-care accounts, long-term care insurance, and emergency backup care. One of the best steps companies can take is to give people the time off they need to deal with the often unpredictable crises that occur in families caring for the elderly. In addition to its referral services, AT&T, for example, also has a policy that permits employees to take up to 12 months of unpaid leave in any 24-month period to care for an older relative.41
When a mother or father is granted time off when children are born or adopted and during the important early months of a child’s development, this is called a parental leave; when the care of elderly relatives is involved, this is called a family leave.Under the Family and Medical Leave Act (FMLA), passed in 1993, companies that employ 50 or more people must grant unpaid, job-protected leaves of up to 12 weeks to employees faced with serious family needs, including the birth or adoption of a baby. Smaller companies, not covered by the FMLA, usually do less for expectant and new parents and for those with ill family members.
Work Flexibility
Companies have also accommodated the changing roles of women and men by offering workers more flexibility through such options as flextime, part-time employment, job sharing, and working from home (sometimes called telecommuting because the employee keeps in touch with co-workers, customers, and others by phone or over the Internet). Abbott Laboratories, a global health care company, demonstrates the benefits of the many kinds of work flexibility for both business and employees.
Many of Abbott’s employees—men and women—work flextime schedules, beginning and quitting at different times of the day. Others share jobs, with each working half a week. Many jobs are held on a part-time basis, leaving the worker time to be at home with children or elderly parents. Other Abbott employees telecommute from their homes. “After my son got sick, I needed to . . . drop down to part time and work from home a few days a week,” said one manager. “Abbott gave me the flexibility I needed to take care of my family.” The company, whose work/life programs have been widely honored, says that its employees return the investment through their increased productivity, innovative thinking, and loyalty.42
Abbott is not the only corporation using these practices. One survey of large companies revealed that 71 percent offered some kind of flexible work schedules. Fifty percent allowed employees to telecommute or work from home, and 44 percent offered compressed workweek schedules.43
However, many observers believe that most careers are still structured for people who are prepared to put in 40 hours a week at the office—or 50 or 60—giving their full and undivided commitment to the organization. Many women and men have been reluctant to take advantage of various flexible work options, fearing that this would put them on a slower track, sometimes disparagingly called the Mommy track or Daddy track. In this view, businesses will need to undergo a cultural shift, to value the contributions of people who are prepared to make a serious, but less than full-time, commitment to their careers.
In the United Kingdom, the government’s Equal Opportunities Commission publishes an annual update called “Who Runs Britain.” Recent reports have shown little progress for women in entering top positions in business, politics, and other areas of public life. The problem, according to the government agency, is employers’ failure to accommodate women’s need to manage multiple responsibilities at home and work, a phenomenon that in the U.K. is sometimes called the “mummy track.” The commission called for adoption of more workplace practices that provided high-quality, highly paid flexible and part-time work for those who have caring responsibilities.44
What would such a cultural shift look like? Some have used the term family-friendly corporation to describe firms that would fully support both men and women in their efforts to balance work and family
responsibilities. Job advantages would not be granted or denied on the basis of gender. People would be hired, paid, evaluated, promoted, and extended benefits on the basis of their qualifications and ability to do the tasks assigned. The route to the top, or to satisfaction in any occupational category, would be open to anyone with the talent to take it. The company’s stakeholders, regardless of their gender, would be treated in a bias-free manner. All laws forbidding sex discrimination would be fully obeyed. Programs to provide leaves or financial support for child care, elder care, and other family responsibilities would support both men and women employees and help promote an equitable division of domestic work. And persons could seek, and achieve, career advancement without committing to a full-time schedule, year after year.45 An example of an executive who has taken the lead in promoting family-friendly policies is given in Exhibit 19.B.
An important step businesses can take is to recognize, and provide benefits to, nontraditional families. Some firms now offer domestic partner benefits to their gay and lesbian employees, extending health insurance and other benefits to the same-sex partners of employees. Although U.S. law does not explicitly bar discrimination based on sexual orientation, some local laws do; and many firms have found that extending health insurance and other benefits to the same-sex partners of employees is an effective strategy for recruiting and retaining valuable contributors. Domestic partner benefits are further described in Exhibit 19.C.
No other area of business illustrates the basic theme of this book better than the close connection between work and life. Our basic theme is that business and society are closely and unavoidably intertwined, so that what affects one also has an impact on the other. As the workforce has become more diverse, businesses have been challenged to accommodate their employees’ differences. When people go to work, they do not shed their identities at the office or factory door. When employees come from families where there are young children at home, or where elderly parents require care, companies must learn to support these roles. Businesses that help their employees achieve a balance between work and life and meet their obligations to their families and communities often reap rewards in greater productivity, loyalty, and commitment.
• The U.S. workforce is as diverse as it has ever been and is becoming more so. More women are working then ever before, many immigrants have entered the labor force, ethnic and racial diversity is increasing, and the workforce is aging.
• Women and persons of color have made great strides in entering all occupations, but they continue to be underrepresented in many business management roles, especially at top levels. Both groups face a continuing pay gap. The number of women-owned businesses has increased sharply, and many minorities, especially immigrants, also own their own businesses.
• Under U.S. law, businesses are required to provide equal opportunity to all, without regard to race, color, religion, sex, national origin, disability, or age. Sexual and racial harassment are illegal. Affirmative action plans remain legal, but only if they are temporary and flexible, designed to correct past discrimination, and do not result in reverse discrimination.
• Companies that manage diversity effectively have a strategic advantage because they are able to attract and retain talented workers from all backgrounds, serve a diverse customer base, and avoid expensive lawsuits and public embarrassment.
• Successful diversity management includes articulating a mission, recruiting widely, mentoring promising women and persons of color, and establishing mechanisms for assessing progress.
