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# Integers
## Multiply and Divide Integers
### Multiply Integers
Since multiplication is mathematical shorthand for repeated addition, our counter model can easily be applied to show multiplication of integers. Let’s look at this concrete model to see what patterns we notice. We will use the same examples that we used for addition and subtraction.
We remember that means add times. Here, we are using the model shown in just to help us discover the pattern.
Now consider what it means to multiply by It means subtract times. Looking at subtraction as taking away, it means to take away times. But there is nothing to take away, so we start by adding neutral pairs as shown in .
In both cases, we started with neutral pairs. In the case on the left, we took away times and the result was To multiply we took away times and the result was So we found that
Notice that for multiplication of two signed numbers, when the signs are the same, the product is positive, and when the signs are different, the product is negative.
When we multiply a number by the result is the same number. What happens when we multiply a number by Let’s multiply a positive number and then a negative number by to see what we get.
Each time we multiply a number by we get its opposite.
### Divide Integers
Division is the inverse operation of multiplication. So, because In words, this expression says that can be divided into groups of each because adding five three times gives If we look at some examples of multiplying integers, we might figure out the rules for dividing integers.
Division of signed numbers follows the same rules as multiplication. When the signs are the same, the quotient is positive, and when the signs are different, the quotient is negative.
Remember, you can always check the answer to a division problem by multiplying.
Just as we saw with multiplication, when we divide a number by the result is the same number. What happens when we divide a number by Let’s divide a positive number and then a negative number by to see what we get.
When we divide a number by, we get its opposite.
### Simplify Expressions with Integers
Now we’ll simplify expressions that use all four operations–addition, subtraction, multiplication, and division–with integers. Remember to follow the order of operations.
### Evaluate Variable Expressions with Integers
Now we can evaluate expressions that include multiplication and division with integers. Remember that to evaluate an expression, substitute the numbers in place of the variables, and then simplify.
### Translate Word Phrases to Algebraic Expressions
Once again, all our prior work translating words to algebra transfers to phrases that include both multiplying and dividing integers. Remember that the key word for multiplication is product and for division is quotient.
### Key Concepts
1. Multiplication of Signed Numbers
2. Division of Signed Numbers
3. Multiplication by
4. Division by
### Practice Makes Perfect
Multiply Integers
In the following exercises, multiply each pair of integers.
Divide Integers
In the following exercises, divide.
Simplify Expressions with Integers
In the following exercises, simplify each expression.
Evaluate Variable Expressions with Integers
In the following exercises, evaluate each expression.
Translate Word Phrases to Algebraic Expressions
In the following exercises, translate to an algebraic expression and simplify if possible.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# Integers
## Solve Equations Using Integers; The Division Property of Equality
### Determine Whether a Number is a Solution of an Equation
In Solve Equations with the Subtraction and Addition Properties of Equality, we saw that a solution of an equation is a value of a variable that makes a true statement when substituted into that equation. In that section, we found solutions that were whole numbers. Now that we’ve worked with integers, we’ll find integer solutions to equations.
The steps we take to determine whether a number is a solution to an equation are the same whether the solution is a whole number or an integer.
### Solve Equations with Integers Using the Addition and Subtraction Properties of Equality
In Solve Equations with the Subtraction and Addition Properties of Equality, we solved equations similar to the two shown here using the Subtraction and Addition Properties of Equality. Now we can use them again with integers.
When you add or subtract the same quantity from both sides of an equation, you still have equality.
### Model the Division Property of Equality
All of the equations we have solved so far have been of the form or We were able to isolate the variable by adding or subtracting the constant term. Now we’ll see how to solve equations that involve division.
We will model an equation with envelopes and counters in .
Here, there are two identical envelopes that contain the same number of counters. Remember, the left side of the workspace must equal the right side, but the counters on the left side are “hidden” in the envelopes. So how many counters are in each envelope?
To determine the number, separate the counters on the right side into groups of the same size. So counters divided into groups means there must be counters in each group (since
What equation models the situation shown in ? There are two envelopes, and each contains counters. Together, the two envelopes must contain a total of counters. So the equation that models the situation is
We can divide both sides of the equation by as we did with the envelopes and counters.
We found that each envelope contains Does this check? We know so it works. Three counters in each of two envelopes does equal six.
shows another example.
Now we have identical envelopes and How many counters are in each envelope? We have to separate the into Since there must be in each envelope. See .
The equation that models the situation is We can divide both sides of the equation by
Does this check? It does because
### Solve Equations Using the Division Property of Equality
The previous examples lead to the Division Property of Equality. When you divide both sides of an equation by any nonzero number, you still have equality.
### Translate to an Equation and Solve
In the past several examples, we were given an equation containing a variable. In the next few examples, we’ll have to first translate word sentences into equations with variables and then we will solve the equations.
### Key Concepts
1. How to determine whether a number is a solution to an equation.
2. Properties of Equalities
3. Division Property of Equality
### Section Exercises
### Practice Makes Perfect
Determine Whether a Number is a Solution of an Equation
In the following exercises, determine whether each number is a solution of the given equation.
Solve Equations Using the Addition and Subtraction Properties of Equality
In the following exercises, solve for the unknown.
Model the Division Property of Equality
In the following exercises, write the equation modeled by the envelopes and counters and then solve it.
Solve Equations Using the Division Property of Equality
In the following exercises, solve each equation using the division property of equality and check the solution.
Translate to an Equation and Solve
In the following exercises, translate and solve.
Mixed Practice
In the following exercises, solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Introduction to Integers
Locate Positive and Negative Numbers on the Number Line
In the following exercises, locate and label the integer on the number line.
Order Positive and Negative Numbers
In the following exercises, order each of the following pairs of numbers, using or
Find Opposites
In the following exercises, find the opposite of each number.
In the following exercises, simplify.
In the following exercises, evaluate.
Simplify Absolute Values
In the following exercises, simplify.
In the following exercises, evaluate.
In the following exercises, fill in for each of the following pairs of numbers.
In the following exercises, simplify.
Translate Phrases to Expressions with Integers
In the following exercises, translate each of the following phrases into expressions with positive or negative numbers.
### Add Integers
Model Addition of Integers
In the following exercises, model the following to find the sum.
Simplify Expressions with Integers
In the following exercises, simplify each expression.
Evaluate Variable Expressions with Integers
In the following exercises, evaluate each expression.
Translate Word Phrases to Algebraic Expressions
In the following exercises, translate each phrase into an algebraic expression and then simplify.
Add Integers in Applications
In the following exercises, solve.
### Subtract Integers
Model Subtraction of Integers
In the following exercises, model the following.
Simplify Expressions with Integers
In the following exercises, simplify each expression.
Evaluate Variable Expressions with Integers
In the following exercises, evaluate each expression.
Translate Phrases to Algebraic Expressions
In the following exercises, translate each phrase into an algebraic expression and then simplify.
Subtract Integers in Applications
In the following exercises, solve the given applications.
### Multiply and Divide Integers
Multiply Integers
In the following exercises, multiply.
Divide Integers
In the following exercises, divide.
Simplify Expressions with Integers
In the following exercises, simplify each expression.
Evaluate Variable Expressions with Integers
In the following exercises, evaluate each expression.
Translate Word Phrases to Algebraic Expressions
In the following exercises, translate to an algebraic expression and simplify if possible.
### Solve Equations using Integers; The Division Property of Equality
Determine Whether a Number is a Solution of an Equation
In the following exercises, determine whether each number is a solution of the given equation.
Using the Addition and Subtraction Properties of Equality
In the following exercises, solve.
Model the Division Property of Equality
In the following exercises, write the equation modeled by the envelopes and counters. Then solve it.
Solve Equations Using the Division Property of Equality
In the following exercises, solve each equation using the division property of equality and check the solution.
Translate to an Equation and Solve.
In the following exercises, translate and solve.
### Everyday Math
### Chapter Practice Test
In the following exercises, compare the numbers, using
In the following exercises, find the opposite of each number.
In the following exercises, simplify.
In the following exercises, evaluate.
In the following exercises, translate each phrase into an algebraic expression and then simplify, if possible.
In the following exercises, solve.
In the following exercises, solve.
In the following exercises, translate and solve. |
# Fractions
## Introduction to Fractions
Often in life, whole amounts are not exactly what we need. A baker must use a little more than a cup of milk or part of a teaspoon of sugar. Similarly a carpenter might need less than a foot of wood and a painter might use part of a gallon of paint. In this chapter, we will learn about numbers that describe parts of a whole. These numbers, called fractions, are very useful both in algebra and in everyday life. You will discover that you are already familiar with many examples of fractions! |
# Fractions
## Visualize Fractions
### Understand the Meaning of Fractions
Andy and Bobby love pizza. On Monday night, they share a pizza equally. How much of the pizza does each one get? Are you thinking that each boy gets half of the pizza? That’s right. There is one whole pizza, evenly divided into two parts, so each boy gets one of the two equal parts.
In math, we write to mean one out of two parts.
On Tuesday, Andy and Bobby share a pizza with their parents, Fred and Christy, with each person getting an equal amount of the whole pizza. How much of the pizza does each person get? There is one whole pizza, divided evenly into four equal parts. Each person has one of the four equal parts, so each has of the pizza.
On Wednesday, the family invites some friends over for a pizza dinner. There are a total of people. If they share the pizza equally, each person would get of the pizza.
A fraction is a way to represent parts of a whole. The denominator represents the number of equal parts the whole has been divided into, and the numerator represents how many parts are included. The denominator, cannot equal zero because division by zero is undefined.
In , the circle has been divided into three parts of equal size. Each part represents of the circle. This type of model is called a fraction circle. Other shapes, such as rectangles, can also be used to model fractions.
What does the fraction represent? The fraction means two of three equal parts.
In and , we used circles and rectangles to model fractions. Fractions can also be modeled as manipulatives called fraction tiles, as shown in . Here, the whole is modeled as one long, undivided rectangular tile. Beneath it are tiles of equal length divided into different numbers of equally sized parts.
We’ll be using fraction tiles to discover some basic facts about fractions. Refer to to answer the following questions:
It takes twenty-fourths, so
This leads us to the Property of One.
What if we have more fraction pieces than we need for whole? We’ll look at this in the next example.
### Model Improper Fractions and Mixed Numbers
In (b), you had eight equal fifth pieces. You used five of them to make one whole, and you had three fifths left over. Let us use fraction notation to show what happened. You had eight pieces, each of them one fifth, so altogether you had eight fifths, which we can write as The fraction is one whole, plus three fifths, or which is read as one and three-fifths.
The number is called a mixed number. A mixed number consists of a whole number and a fraction.
Fractions such as and are called improper fractions. In an improper fraction, the numerator is greater than or equal to the denominator, so its value is greater than or equal to one. When a fraction has a numerator that is smaller than the denominator, it is called a proper fraction, and its value is less than one. Fractions such as and are proper fractions.
### Convert between Improper Fractions and Mixed Numbers
In , we converted the improper fraction to the mixed number using fraction circles. We did this by grouping six sixths together to make a whole; then we looked to see how many of the pieces were left. We saw that made one whole group of six sixths plus five more sixths, showing that
The division expression (which can also be written as ) tells us to find how many groups of are in To convert an improper fraction to a mixed number without fraction circles, we divide.
In , we changed to an improper fraction by first seeing that the whole is a set of five fifths. So we had five fifths and four more fifths.
Where did the nine come from? There are nine fifths—one whole (five fifths) plus four fifths. Let us use this idea to see how to convert a mixed number to an improper fraction.
### Model Equivalent Fractions
Let’s think about Andy and Bobby and their favorite food again. If Andy eats of a pizza and Bobby eats of the pizza, have they eaten the same amount of pizza? In other words, does We can use fraction tiles to find out whether Andy and Bobby have eaten equivalent parts of the pizza.
Fraction tiles serve as a useful model of equivalent fractions. You may want to use fraction tiles to do the following activity. Or you might make a copy of and extend it to include eighths, tenths, and twelfths.
Start with a tile. How many fourths equal one-half? How many of the tiles exactly cover the tile?
Since two tiles cover the tile, we see that is the same as or
How many of the tiles cover the tile?
Since three tiles cover the tile, we see that is the same as
So, The fractions are equivalent fractions.
### Find Equivalent Fractions
We used fraction tiles to show that there are many fractions equivalent to For example, and are all equivalent to When we lined up the fraction tiles, it took four of the tiles to make the same length as a tile. This showed that See .
We can show this with pizzas, too. (a) shows a single pizza, cut into two equal pieces with shaded. (b) shows a second pizza of the same size, cut into eight pieces with shaded.
This is another way to show that is equivalent to
How can we use mathematics to change into How could you take a pizza that is cut into two pieces and cut it into eight pieces? You could cut each of the two larger pieces into four smaller pieces! The whole pizza would then be cut into eight pieces instead of just two. Mathematically, what we’ve described could be written as:
These models lead to the Equivalent Fractions Property, which states that if we multiply the numerator and denominator of a fraction by the same number, the value of the fraction does not change.
When working with fractions, it is often necessary to express the same fraction in different forms. To find equivalent forms of a fraction, we can use the Equivalent Fractions Property. For example, consider the fraction one-half.
So, we say that and are equivalent fractions.
### Locate Fractions and Mixed Numbers on the Number Line
Now we are ready to plot fractions on a number line. This will help us visualize fractions and understand their values.
Let us locate and on the number line.
We will start with the whole numbers and because they are the easiest to plot.
The proper fractions listed are and We know proper fractions have values less than one, so and are located between the whole numbers and The denominators are both so we need to divide the segment of the number line between and into five equal parts. We can do this by drawing four equally spaced marks on the number line, which we can then label as and
Now plot points at and
The only mixed number to plot is Between what two whole numbers is Remember that a mixed number is a whole number plus a proper fraction, so Since it is greater than but not a whole unit greater, is between and We need to divide the portion of the number line between and into three equal pieces (thirds) and plot at the first mark.
Finally, look at the improper fractions and Locating these points will be easier if you change each of them to a mixed number.
Here is the number line with all the points plotted.
In Introduction to Integers, we defined the opposite of a number. It is the number that is the same distance from zero on the number line but on the opposite side of zero. We saw, for example, that the opposite of is and the opposite of is
Fractions have opposites, too. The opposite of is It is the same distance from on the number line, but on the opposite side of
Thinking of negative fractions as the opposite of positive fractions will help us locate them on the number line. To locate on the number line, first think of where is located. It is an improper fraction, so we first convert it to the mixed number and see that it will be between and on the number line. So its opposite, will be between and on the number line.
### Order Fractions and Mixed Numbers
We can use the inequality symbols to order fractions. Remember that means that is to the right of on the number line. As we move from left to right on a number line, the values increase.
### Key Concepts
1. Property of One
2. Mixed Numbers
3. Proper and Improper Fractions
4. Convert an improper fraction to a mixed number.
5. Convert a mixed number to an improper fraction.
6. Equivalent Fractions Property
### Practice Makes Perfect
In the following exercises, name the fraction of each figure that is shaded.
In the following exercises, shade parts of circles or squares to model the following fractions.
In the following exercises, use fraction circles to make wholes using the following pieces.
In the following exercises, name the improper fractions. Then write each improper fraction as a mixed number.
In the following exercises, draw fraction circles to model the given fraction.
In the following exercises, rewrite the improper fraction as a mixed number.
In the following exercises, rewrite the mixed number as an improper fraction.
In the following exercises, use fraction tiles or draw a figure to find equivalent fractions.
In the following exercises, find three fractions equivalent to the given fraction. Show your work, using figures or algebra.
In the following exercises, plot the numbers on a number line.
In the following exercises, order each of the following pairs of numbers, using or
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Fractions
## Multiply and Divide Fractions
### Simplify Fractions
In working with equivalent fractions, you saw that there are many ways to write fractions that have the same value, or represent the same part of the whole. How do you know which one to use? Often, we’ll use the fraction that is in simplified form.
A fraction is considered simplified if there are no common factors, other than in the numerator and denominator. If a fraction does have common factors in the numerator and denominator, we can reduce the fraction to its simplified form by removing the common factors.
For example,
1. is simplified because there are no common factors of and
2. is not simplified because is a common factor of and
The process of simplifying a fraction is often called reducing the fraction. In the previous section, we used the Equivalent Fractions Property to find equivalent fractions. We can also use the Equivalent Fractions Property in reverse to simplify fractions. We rewrite the property to show both forms together.
Notice that is a common factor in the numerator and denominator. Anytime we have a common factor in the numerator and denominator, it can be removed.
To simplify a negative fraction, we use the same process as in . Remember to keep the negative sign.
After simplifying a fraction, it is always important to check the result to make sure that the numerator and denominator do not have any more factors in common. Remember, the definition of a simplified fraction: a fraction is considered simplified if there are no common factors in the numerator and denominator.
When we simplify an improper fraction, there is no need to change it to a mixed number.
Sometimes it may not be easy to find common factors of the numerator and denominator. A good idea, then, is to factor the numerator and the denominator into prime numbers. (You may want to use the factor tree method to identify the prime factors.) Then divide out the common factors using the Equivalent Fractions Property.
We can also simplify fractions containing variables. If a variable is a common factor in the numerator and denominator, we remove it just as we do with an integer factor.
### Multiply Fractions
A model may help you understand multiplication of fractions. We will use fraction tiles to model To multiply and think of
Start with fraction tiles for three-fourths. To find one-half of three-fourths, we need to divide them into two equal groups. Since we cannot divide the three tiles evenly into two parts, we exchange them for smaller tiles.
We see is equivalent to Taking half of the six tiles gives us three tiles, which is
Therefore,
Look at the result we got from the model in . We found that Do you notice that we could have gotten the same answer by multiplying the numerators and multiplying the denominators?
This leads to the definition of fraction multiplication. To multiply fractions, we multiply the numerators and multiply the denominators. Then we write the fraction in simplified form.
When multiplying fractions, the properties of positive and negative numbers still apply. It is a good idea to determine the sign of the product as the first step. In Example 4.26 we will multiply two negatives, so the product will be positive.
When multiplying a fraction by an integer, it may be helpful to write the integer as a fraction. Any integer, can be written as So, for example.
### Find Reciprocals
The fractions and are related to each other in a special way. So are and Do you see how? Besides looking like upside-down versions of one another, if we were to multiply these pairs of fractions, the product would be
Such pairs of numbers are called reciprocals.
To find the reciprocal of a fraction, we invert the fraction. This means that we place the numerator in the denominator and the denominator in the numerator.
To get a positive result when multiplying two numbers, the numbers must have the same sign. So reciprocals must have the same sign.
To find the reciprocal, keep the same sign and invert the fraction. The number zero does not have a reciprocal. Why? A number and its reciprocal multiply to Is there any number so that No. So, the number does not have a reciprocal.
In a previous chapter, we worked with opposites and absolute values. compares opposites, absolute values, and reciprocals.
### Divide Fractions
Why is We previously modeled this with counters. How many groups of counters can be made from a group of counters?
There are groups of counters. In other words, there are four s in So,
What about dividing fractions? Suppose we want to find the quotient: We need to figure out how many s there are in We can use fraction tiles to model this division. We start by lining up the half and sixth fraction tiles as shown in . Notice, there are three tiles in so
Let’s use money to model in another way. We often read as a ‘quarter’, and we know that a quarter is one-fourth of a dollar as shown in . So we can think of as, “How many quarters are there in two dollars?” One dollar is quarters, so dollars would be quarters. So again,
Using fraction tiles, we showed that Notice that also. How are and related? They are reciprocals. This leads us to the procedure for fraction division.
We need to say and to be sure we don’t divide by zero.
### Key Concepts
1. Equivalent Fractions Property
2. Simplify a fraction.
3. Fraction Multiplication
4. Reciprocal
5. Fraction Division
### Practice Makes Perfect
Simplify Fractions
In the following exercises, simplify each fraction. Do not convert any improper fractions to mixed numbers.
Multiply Fractions
In the following exercises, use a diagram to model.
In the following exercises, multiply, and write the answer in simplified form.
Find Reciprocals
In the following exercises, find the reciprocal.
Divide Fractions
In the following exercises, model each fraction division.
In the following exercises, divide, and write the answer in simplified form.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Fractions
## Multiply and Divide Mixed Numbers and Complex Fractions
### Multiply and Divide Mixed Numbers
In the previous section, you learned how to multiply and divide fractions. All of the examples there used either proper or improper fractions. What happens when you are asked to multiply or divide mixed numbers? Remember that we can convert a mixed number to an improper fraction. And you learned how to do that in Visualize Fractions.
### Translate Phrases to Expressions with Fractions
The words quotient and ratio are often used to describe fractions. In Subtract Whole Numbers, we defined quotient as the result of division. The quotient of and is the result you get from dividing by or Let’s practice translating some phrases into algebraic expressions using these terms.
### Simplify Complex Fractions
Our work with fractions so far has included proper fractions, improper fractions, and mixed numbers. Another kind of fraction is called complex fraction, which is a fraction in which the numerator or the denominator contains a fraction.
Some examples of complex fractions are:
To simplify a complex fraction, remember that the fraction bar means division. So the complex fraction can be written as
### Simplify Expressions with a Fraction Bar
Where does the negative sign go in a fraction? Usually, the negative sign is placed in front of the fraction, but you will sometimes see a fraction with a negative numerator or denominator. Remember that fractions represent division. The fraction could be the result of dividing a negative by a positive, or of dividing a positive by a negative. When the numerator and denominator have different signs, the quotient is negative.
If both the numerator and denominator are negative, then the fraction itself is positive because we are dividing a negative by a negative.
Fraction bars act as grouping symbols. The expressions above and below the fraction bar should be treated as if they were in parentheses. For example, means The order of operations tells us to simplify the numerator and the denominator first—as if there were parentheses—before we divide.
We’ll add fraction bars to our set of grouping symbols from Use the Language of Algebra to have a more complete set here.
### Key Concepts
1. Multiply or divide mixed numbers.
2. Simplify a complex fraction.
3. Placement of negative sign in a fraction.
4. Simplify an expression with a fraction bar.
### Practice Makes Perfect
Multiply and Divide Mixed Numbers
In the following exercises, multiply and write the answer in simplified form.
In the following exercises, divide, and write your answer in simplified form.
Translate Phrases to Expressions with Fractions
In the following exercises, translate each English phrase into an algebraic expression.
Simplify Complex Fractions
In the following exercises, simplify the complex fraction.
Simplify Expressions with a Fraction Bar
In the following exercises, identify the equivalent fractions.
In the following exercises, simplify.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Fractions
## Add and Subtract Fractions with Common Denominators
### Model Fraction Addition
How many quarters are pictured? One quarter plus quarters equals quarters.
Remember, quarters are really fractions of a dollar. Quarters are another way to say fourths. So the picture of the coins shows that
Let’s use fraction circles to model the same example,
So again, we see that
### Add Fractions with a Common Denominator
shows that to add the same-size pieces—meaning that the fractions have the same denominator—we just add the number of pieces.
### Model Fraction Subtraction
Subtracting two fractions with common denominators is much like adding fractions. Think of a pizza that was cut into slices. Suppose five pieces are eaten for dinner. This means that, after dinner, there are seven pieces (or of the pizza) left in the box. If Leonardo eats of these remaining pieces (or of the pizza), how much is left? There would be pieces left (or of the pizza).
Let’s use fraction circles to model the same example,
Start with seven pieces. Take away two pieces. How many twelfths are left?
Again, we have five twelfths,
### Subtract Fractions with a Common Denominator
We subtract fractions with a common denominator in much the same way as we add fractions with a common denominator.
Now lets do an example that involves both addition and subtraction.
### Key Concepts
1. Fraction Addition
2. Fraction Subtraction
### Practice Makes Perfect
Model Fraction Addition
In the following exercises, use a model to add the fractions. Show a diagram to illustrate your model.
Add Fractions with a Common Denominator
In the following exercises, find each sum.
Model Fraction Subtraction
In the following exercises, use a model to subtract the fractions. Show a diagram to illustrate your model.
Subtract Fractions with a Common Denominator
In the following exercises, find the difference.
Mixed Practice
In the following exercises, perform the indicated operation and write your answers in simplified form.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# Fractions
## Add and Subtract Fractions with Different Denominators
### Find the Least Common Denominator
In the previous section, we explained how to add and subtract fractions with a common denominator. But how can we add and subtract fractions with unlike denominators?
Let’s think about coins again. Can you add one quarter and one dime? You could say there are two coins, but that’s not very useful. To find the total value of one quarter plus one dime, you change them to the same kind of unit—cents. One quarter equals cents and one dime equals cents, so the sum is cents. See .
Similarly, when we add fractions with different denominators we have to convert them to equivalent fractions with a common denominator. With the coins, when we convert to cents, the denominator is Since there are cents in one dollar, cents is and cents is So we add to get which is cents.
You have practiced adding and subtracting fractions with common denominators. Now let’s see what you need to do with fractions that have different denominators.
First, we will use fraction tiles to model finding the common denominator of and
We’ll start with one tile and tile. We want to find a common fraction tile that we can use to match both and exactly.
If we try the pieces, of them exactly match the piece, but they do not exactly match the piece.
If we try the pieces, they do not exactly cover the piece or the piece.
If we try the pieces, we see that exactly of them cover the piece, and exactly of them cover the piece.
If we were to try the pieces, they would also work.
Even smaller tiles, such as and would also exactly cover the piece and the piece.
The denominator of the largest piece that covers both fractions is the least common denominator (LCD) of the two fractions. So, the least common denominator of and is
Notice that all of the tiles that cover and have something in common: Their denominators are common multiples of and the denominators of and The least common multiple (LCM) of the denominators is and so we say that is the least common denominator (LCD) of the fractions and
To find the LCD of two fractions, we will find the LCM of their denominators. We follow the procedure we used earlier to find the LCM of two numbers. We only use the denominators of the fractions, not the numerators, when finding the LCD.
To find the LCD of two fractions, find the LCM of their denominators. Notice how the steps shown below are similar to the steps we took to find the LCM.
### Convert Fractions to Equivalent Fractions with the LCD
Earlier, we used fraction tiles to see that the LCD of when is We saw that three pieces exactly covered and two pieces exactly covered so
We say that and are equivalent fractions and also that and are equivalent fractions.
We can use the Equivalent Fractions Property to algebraically change a fraction to an equivalent one. Remember, two fractions are equivalent if they have the same value. The Equivalent Fractions Property is repeated below for reference.
To add or subtract fractions with different denominators, we will first have to convert each fraction to an equivalent fraction with the LCD. Let’s see how to change and to equivalent fractions with denominator without using models.
### Add and Subtract Fractions with Different Denominators
Once we have converted two fractions to equivalent forms with common denominators, we can add or subtract them by adding or subtracting the numerators.
When we use the Equivalent Fractions Property, there is a quick way to find the number you need to multiply by to get the LCD. Write the factors of the denominators and the LCD just as you did to find the LCD. The “missing” factors of each denominator are the numbers you need.
The LCD, has factors of and factors of
Twelve has two factors of but only one of —so it is ‘missing‘ one We multiplied the numerator and denominator of by to get an equivalent fraction with denominator
Eighteen is missing one factor of —so you multiply the numerator and denominator by to get an equivalent fraction with denominator We will apply this method as we subtract the fractions in the next example.
In the next example, one of the fractions has a variable in its numerator. We follow the same steps as when both numerators are numbers.
### Identify and Use Fraction Operations
By now in this chapter, you have practiced multiplying, dividing, adding, and subtracting fractions. The following table summarizes these four fraction operations. Remember: You need a common denominator to add or subtract fractions, but not to multiply or divide fractions
### Use the Order of Operations to Simplify Complex Fractions
In Multiply and Divide Mixed Numbers and Complex Fractions, we saw that a complex fraction is a fraction in which the numerator or denominator contains a fraction. We simplified complex fractions by rewriting them as division problems. For example,
Now we will look at complex fractions in which the numerator or denominator can be simplified. To follow the order of operations, we simplify the numerator and denominator separately first. Then we divide the numerator by the denominator.
### Evaluate Variable Expressions with Fractions
We have evaluated expressions before, but now we can also evaluate expressions with fractions. Remember, to evaluate an expression, we substitute the value of the variable into the expression and then simplify.
### Key Concepts
1. Find the least common denominator (LCD) of two fractions.
2. Equivalent Fractions Property
3. Convert two fractions to equivalent fractions with their LCD as the common denominator.
4. Add or subtract fractions with different denominators.
5. Summary of Fraction Operations
6. Simplify complex fractions.
### Practice Makes Perfect
Find the Least Common Denominator (LCD)
In the following exercises, find the least common denominator (LCD) for each set of fractions.
Convert Fractions to Equivalent Fractions with the LCD
In the following exercises, convert to equivalent fractions using the LCD.
Add and Subtract Fractions with Different Denominators
In the following exercises, add or subtract. Write the result in simplified form.
Identify and Use Fraction Operations
In the following exercises, perform the indicated operations. Write your answers in simplified form.
Use the Order of Operations to Simplify Complex Fractions
In the following exercises, simplify.
Mixed Practice
In the following exercises, simplify.
In the following exercises, evaluate the given expression. Express your answers in simplified form, using improper fractions if necessary.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After looking at the checklist, do you think you are well prepared for the next section? Why or why not?
|
# Fractions
## Add and Subtract Mixed Numbers
### Model Addition of Mixed Numbers with a Common Denominator
So far, we’ve added and subtracted proper and improper fractions, but not mixed numbers. Let’s begin by thinking about addition of mixed numbers using money.
If Ron has dollar and quarter, he has dollars.
If Don has dollars and quarter, he has dollars.
What if Ron and Don put their money together? They would have dollars and quarters. They add the dollars and add the quarters. This makes dollars. Because two quarters is half a dollar, they would have and a half dollars, or dollars.
When you added the dollars and then added the quarters, you were adding the whole numbers and then adding the fractions.
We can use fraction circles to model this same example:
### Add Mixed Numbers
Modeling with fraction circles helps illustrate the process for adding mixed numbers: We add the whole numbers and add the fractions, and then we simplify the result, if possible.
In , the sum of the fractions was a proper fraction. Now we will work through an example where the sum is an improper fraction.
An alternate method for adding mixed numbers is to convert the mixed numbers to improper fractions and then add the improper fractions. This method is usually written horizontally.
compares the two methods of addition, using the expression as an example. Which way do you prefer?
### Model Subtraction of Mixed Numbers
Let’s think of pizzas again to model subtraction of mixed numbers with a common denominator. Suppose you just baked a whole pizza and want to give your brother half of the pizza. What do you have to do to the pizza to give him half? You have to cut it into at least two pieces. Then you can give him half.
We will use fraction circles (pizzas!) to help us visualize the process.
Start with one whole.
Algebraically, you would write:
What if we start with more than one whole? Let’s find out.
In the next example, we’ll subtract more than one whole.
What if you start with a mixed number and need to subtract a fraction? Think about this situation: You need to put three quarters in a parking meter, but you have only a bill and one quarter. What could you do? You could change the dollar bill into quarters. The value of quarters is the same as one dollar bill, but the quarters are more useful for the parking meter. Now, instead of having a bill and one quarter, you have quarters and can put quarters in the meter.
This models what happens when we subtract a fraction from a mixed number. We subtracted three quarters from one dollar and one quarter.
We can also model this using fraction circles, much like we did for addition of mixed numbers.
### Subtract Mixed Numbers with a Common Denominator
Now we will subtract mixed numbers without using a model. But it may help to picture the model in your mind as you read the steps.
Just as we did with addition, we could subtract mixed numbers by converting them first to improper fractions. We should write the answer in the form it was given, so if we are given mixed numbers to subtract we will write the answer as a mixed number.
### Add and Subtract Mixed Numbers with Different Denominators
To add or subtract mixed numbers with different denominators, we first convert the fractions to equivalent fractions with the LCD. Then we can follow all the steps we used above for adding or subtracting fractions with like denominators.
### Key Concepts
1. Add mixed numbers with a common denominator.
2. Subtract mixed numbers with common denominators.
3. Subtract mixed numbers with common denominators as improper fractions.
### Practice Makes Perfect
Model Addition of Mixed Numbers
In the following exercises, use a model to find the sum. Draw a picture to illustrate your model.
Add Mixed Numbers with a Common Denominator
In the following exercises, add.
Model Subtraction of Mixed Numbers
In the following exercises, use a model to find the difference. Draw a picture to illustrate your model.
Subtract Mixed Numbers with a Common Denominator
In the following exercises, find the difference.
Add and Subtract Mixed Numbers with Different Denominators
In the following exercises, write the sum or difference as a mixed number in simplified form.
Mixed Practice
In the following exercises, perform the indicated operation and write the result as a mixed number in simplified form.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Fractions
## Solve Equations with Fractions
### Determine Whether a Fraction is a Solution of an Equation
As we saw in Solve Equations with the Subtraction and Addition Properties of Equality and Solve Equations Using Integers; The Division Property of Equality, a solution of an equation is a value that makes a true statement when substituted for the variable in the equation. In those sections, we found whole number and integer solutions to equations. Now that we have worked with fractions, we are ready to find fraction solutions to equations.
The steps we take to determine whether a number is a solution to an equation are the same whether the solution is a whole number, an integer, or a fraction.
### Solve Equations with Fractions using the Addition, Subtraction, and Division Properties of Equality
In Solve Equations with the Subtraction and Addition Properties of Equality and Solve Equations Using Integers; The Division Property of Equality, we solved equations using the Addition, Subtraction, and Division Properties of Equality. We will use these same properties to solve equations with fractions.
We used the Subtraction Property of Equality in . Now we’ll use the Addition Property of Equality.
The next example may not seem to have a fraction, but let’s see what happens when we solve it.
### Solve Equations with Fractions Using the Multiplication Property of Equality
Consider the equation We want to know what number divided by gives So to “undo” the division, we will need to multiply by The Multiplication Property of Equality will allow us to do this. This property says that if we start with two equal quantities and multiply both by the same number, the results are equal.
Let’s use the Multiplication Property of Equality to solve the equation
### Solve Equations with a Coefficient of
Look at the equation Does it look as if is already isolated? But there is a negative sign in front of so it is not isolated.
There are three different ways to isolate the variable in this type of equation. We will show all three ways in .
### Solve Equations with a Fraction Coefficient
When we have an equation with a fraction coefficient we can use the Multiplication Property of Equality to make the coefficient equal to
For example, in the equation:
The coefficient of is To solve for we need its coefficient to be Since the product of a number and its reciprocal is our strategy here will be to isolate by multiplying by the reciprocal of We will do this in .
### Translate Sentences to Equations and Solve
Now we have covered all four properties of equality—subtraction, addition, division, and multiplication. We’ll list them all together here for easy reference.
When you add, subtract, multiply or divide the same quantity from both sides of an equation, you still have equality.
In the next few examples, we’ll translate sentences into equations and then solve the equations. It might be helpful to review the translation table in Evaluate, Simplify, and Translate Expressions.
### Key Concepts
1. Determine whether a number is a solution to an equation.
2. Addition, Subtraction, and Division Properties of Equality
3. The Multiplication Property of Equality
### Section Exercises
### Practice Makes Perfect
Determine Whether a Fraction is a Solution of an Equation
In the following exercises, determine whether each number is a solution of the given equation.
Solve Equations with Fractions using the Addition, Subtraction, and Division Properties of Equality
In the following exercises, solve.
Solve Equations with Fractions Using the Multiplication Property of Equality
In the following exercises, solve.
Mixed Practice
In the following exercises, solve.
Translate Sentences to Equations and Solve
In the following exercises, translate to an algebraic equation and solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Visualize Fractions
In the following exercises, name the fraction of each figure that is shaded.
In the following exercises, name the improper fractions. Then write each improper fraction as a mixed number.
In the following exercises, convert the improper fraction to a mixed number.
In the following exercises, convert the mixed number to an improper fraction.
In the following exercises, locate the numbers on a number line.
In the following exercises, order each pair of numbers, using or
### Multiply and Divide Fractions
In the following exercises, simplify.
In the following exercises, multiply.
In the following exercises, find the reciprocal.
In the following exercises, divide.
### Multiply and Divide Mixed Numbers and Complex Fractions
In the following exercises, perform the indicated operation.
In the following exercises, translate the English phrase into an algebraic expression.
In the following exercises, simplify the complex fraction
In the following exercises, simplify.
### Add and Subtract Fractions with Common Denominators
In the following exercises, add.
In the following exercises, subtract.
### Add and Subtract Fractions with Different Denominators
In the following exercises, find the least common denominator.
In the following exercises, change to equivalent fractions using the given LCD.
In the following exercises, perform the indicated operations and simplify.
In the following exercises, evaluate.
### Add and Subtract Mixed Numbers
In the following exercises, perform the indicated operation.
### Solve Equations with Fractions
In the following exercises, determine whether the each number is a solution of the given equation.
In the following exercises, solve the equation.
In the following exercises, translate and solve.
### Chapter Practice Test
Convert the improper fraction to a mixed number.
Convert the mixed number to an improper fraction.
Locate the numbers on a number line.
In the following exercises, simplify.
Evaluate.
In the following exercises, solve the equation. |
# Decimals
## Introduction to Decimals
Gasoline price changes all the time. They might go down for a period of time, but then they usually rise again. One thing that stays the same is that the price is not usually a whole number. Instead, it is shown using a decimal point to describe the cost in dollars and cents. We use decimal numbers all the time, especially when dealing with money. In this chapter, we will explore decimal numbers and how to perform operations using them. |
# Decimals
## Decimals
### Name Decimals
You probably already know quite a bit about decimals based on your experience with money. Suppose you buy a sandwich and a bottle of water for lunch. If the sandwich costs , the bottle of water costs , and the total sales tax is , what is the total cost of your lunch?
The total is Suppose you pay with a bill and pennies. Should you wait for change? No, and pennies is the same as
Because each penny is worth of a dollar. We write the value of one penny as since
Writing a number with a decimal is known as decimal notation. It is a way of showing parts of a whole when the whole is a power of ten. In other words, decimals are another way of writing fractions whose denominators are powers of ten. Just as the counting numbers are based on powers of ten, decimals are based on powers of ten. shows the counting numbers.
How are decimals related to fractions? shows the relation.
When we name a whole number, the name corresponds to the place value based on the powers of ten. In Whole Numbers, we learned to read as ten thousand. Likewise, the names of the decimal places correspond to their fraction values. Notice how the place value names in relate to the names of the fractions from .
Notice two important facts shown in .
1. The “th” at the end of the name means the number is a fraction. “One thousand” is a number larger than one, but “one thousandth” is a number smaller than one.
2. The tenths place is the first place to the right of the decimal, but the tens place is two places to the left of the decimal.
Remember that lunch? We read as five dollars and three cents. Naming decimals (those that don’t represent money) is done in a similar way. We read the number as five and three hundredths.
We sometimes need to translate a number written in decimal notation into words. As shown in , we write the amount on a check in both words and numbers.
The number is read fifteen and sixty-eight hundredths.
### Write Decimals
Now we will translate the name of a decimal number into decimal notation. We will reverse the procedure we just used.
Let’s start by writing the number six and seventeen hundredths:
The second bullet in Step 2 is needed for decimals that have no whole number part, like ‘nine thousandths’. We recognize them by the words that indicate the place value after the decimal – such as ‘tenths’ or ‘hundredths.’ Since there is no whole number, there is no ‘and.’ We start by placing a zero to the left of the decimal and continue by filling in the numbers to the right, as we did above.
Before we move on to our next objective, think about money again. We know that is the same as The way we write depends on the context. In the same way, integers can be written as decimals with as many zeros as needed to the right of the decimal.
### Convert Decimals to Fractions or Mixed Numbers
We often need to rewrite decimals as fractions or mixed numbers. Let’s go back to our lunch order to see how we can convert decimal numbers to fractions. We know that means dollars and cents. Since there are cents in one dollar, cents means of a dollar, so
We convert decimals to fractions by identifying the place value of the farthest right digit. In the decimal the is in the hundredths place, so is the denominator of the fraction equivalent to
For our lunch, we can write the decimal as a mixed number.
Notice that when the number to the left of the decimal is zero, we get a proper fraction. When the number to the left of the decimal is not zero, we get a mixed number.
### Locate Decimals on the Number Line
Since decimals are forms of fractions, locating decimals on the number line is similar to locating fractions on the number line.
### Order Decimals
Which is larger, or
If you think of this as money, you know that (forty cents) is greater than (four cents). So,
In previous chapters, we used the number line to order numbers.
Where are and located on the number line?
We see that is to the right of So we know
How does compare to This doesn’t translate into money to make the comparison easy. But if we convert and to fractions, we can tell which is larger.
Because we know that Therefore,
Notice what we did in converting to a fraction—we started with the fraction and ended with the equivalent fraction Converting back to a decimal gives So is equivalent to Writing zeros at the end of a decimal does not change its value.
If two decimals have the same value, they are said to be equivalent decimals.
We say and are equivalent decimals.
Remember, writing zeros at the end of a decimal does not change its value.
When we order negative decimals, it is important to remember how to order negative integers. Recall that larger numbers are to the right on the number line. For example, because lies to the right of on the number line, we know that Similarly, smaller numbers lie to the left on the number line. For example, because lies to the left of on the number line, we know that
If we zoomed in on the interval between and we would see in the same way that
### Round Decimals
In the United States, gasoline prices are usually written with the decimal part as thousandths of a dollar. For example, a gas station might post the price of unleaded gas at per gallon. But if you were to buy exactly one gallon of gas at this price, you would pay , because the final price would be rounded to the nearest cent. In Whole Numbers, we saw that we round numbers to get an approximate value when the exact value is not needed. Suppose we wanted to round to the nearest dollar. Is it closer to or to What if we wanted to round to the nearest ten cents; is it closer to or to The number lines in can help us answer those questions.
Can we round decimals without number lines? Yes! We use a method based on the one we used to round whole numbers.
### Key Concepts
1. Name a decimal number.
2. Write a decimal number from its name.
3. Convert a decimal number to a fraction or mixed number.
4. Order decimals.
5. Round a decimal.
### Practice Makes Perfect
Name Decimals
In the following exercises, name each decimal.
Write Decimals
In the following exercises, translate the name into a decimal number.
Convert Decimals to Fractions or Mixed Numbers
In the following exercises, convert each decimal to a fraction or mixed number.
Locate Decimals on the Number Line
In the following exercises, locate each number on a number line.
Order Decimals
In the following exercises, order each of the following pairs of numbers, using
Round Decimals
In the following exercises, round each number to the nearest tenth.
In the following exercises, round each number to the nearest hundredth.
In the following exercises, round each number to the nearest ⓐ hundredth ⓑ tenth ⓒ whole number.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Decimals
## Decimal Operations
### Add and Subtract Decimals
Let’s take one more look at the lunch order from the start of Decimals, this time noticing how the numbers were added together.
All three items (sandwich, water, tax) were priced in dollars and cents, so we lined up the dollars under the dollars and the cents under the cents, with the decimal points lined up between them. Then we just added each column, as if we were adding whole numbers. By lining up decimals this way, we can add or subtract the corresponding place values just as we did with whole numbers.
How much change would you get if you handed the cashier a bill for a purchase? We will show the steps to calculate this in the next example.
### Multiply Decimals
Multiplying decimals is very much like multiplying whole numbers—we just have to determine where to place the decimal point. The procedure for multiplying decimals will make sense if we first review multiplying fractions.
Do you remember how to multiply fractions? To multiply fractions, you multiply the numerators and then multiply the denominators.
So let’s see what we would get as the product of decimals by converting them to fractions first. We will do two examples side-by-side in . Look for a pattern.
There is a pattern that we can use. In A, we multiplied two numbers that each had one decimal place, and the product had two decimal places. In B, we multiplied a number with one decimal place by a number with two decimal places, and the product had three decimal places.
How many decimal places would you expect for the product of If you said “five”, you recognized the pattern. When we multiply two numbers with decimals, we count all the decimal places in the factors—in this case two plus three—to get the number of decimal places in the product—in this case five.
Once we know how to determine the number of digits after the decimal point, we can multiply decimal numbers without converting them to fractions first. The number of decimal places in the product is the sum of the number of decimal places in the factors.
The rules for multiplying positive and negative numbers apply to decimals, too, of course.
When you multiply signed decimals, first determine the sign of the product and then multiply as if the numbers were both positive. Finally, write the product with the appropriate sign.
In the next example, we’ll need to add several placeholder zeros to properly place the decimal point.
### Multiply by Powers of
In many fields, especially in the sciences, it is common to multiply decimals by powers of Let’s see what happens when we multiply by some powers of
Look at the results without the final zeros. Do you notice a pattern?
The number of places that the decimal point moved is the same as the number of zeros in the power of ten. summarizes the results.
We can use this pattern as a shortcut to multiply by powers of ten instead of multiplying using the vertical format. We can count the zeros in the power of and then move the decimal point that same of places to the right.
So, for example, to multiply by move the decimal point places to the right.
Sometimes when we need to move the decimal point, there are not enough decimal places. In that case, we use zeros as placeholders. For example, let’s multiply by We need to move the decimal point places to the right. Since there is only one digit to the right of the decimal point, we must write a in the hundredths place.
### Divide Decimals
Just as with multiplication, division of decimals is very much like dividing whole numbers. We just have to figure out where the decimal point must be placed.
To understand decimal division, let’s consider the multiplication problem
Remember, a multiplication problem can be rephrased as a division problem. So we can write
We can think of this as “If we divide 8 tenths into four groups, how many are in each group?” shows that there are four groups of two-tenths in eight-tenths. So
Using long division notation, we would write
Notice that the decimal point in the quotient is directly above the decimal point in the dividend.
To divide a decimal by a whole number, we place the decimal point in the quotient above the decimal point in the dividend and then divide as usual. Sometimes we need to use extra zeros at the end of the dividend to keep dividing until there is no remainder.
In everyday life, we divide whole numbers into decimals—money—to find the price of one item. For example, suppose a case of water bottles cost To find the price per water bottle, we would divide by and round the answer to the nearest cent (hundredth).
### Divide a Decimal by Another Decimal
So far, we have divided a decimal by a whole number. What happens when we divide a decimal by another decimal? Let’s look at the same multiplication problem we looked at earlier, but in a different way.
Remember, again, that a multiplication problem can be rephrased as a division problem. This time we ask, “How many times does go into Because we can say that goes into four times. This means that divided by is
We would get the same answer, if we divide by both whole numbers. Why is this so? Let’s think about the division problem as a fraction.
We multiplied the numerator and denominator by and ended up just dividing by To divide decimals, we multiply both the numerator and denominator by the same power of to make the denominator a whole number. Because of the Equivalent Fractions Property, we haven’t changed the value of the fraction. The effect is to move the decimal points in the numerator and denominator the same number of places to the right.
We use the rules for dividing positive and negative numbers with decimals, too. When dividing signed decimals, first determine the sign of the quotient and then divide as if the numbers were both positive. Finally, write the quotient with the appropriate sign.
It may help to review the vocabulary for division:
Now we will divide a whole number by a decimal number.
### Use Decimals in Money Applications
We often apply decimals in real life, and most of the applications involving money. The Strategy for Applications we used in The Language of Algebra gives us a plan to follow to help find the answer. Take a moment to review that strategy now.
Be careful to follow the order of operations in the next example. Remember to multiply before you add.
### Key Concepts
1. Add or subtract decimals.
2. Multiply decimal numbers.
3. Multiply a decimal by a power of 10.
4. Divide a decimal by a whole number.
5. Divide decimal numbers.
6. Strategy for Applications
### Practice Makes Perfect
Add and Subtract Decimals
In the following exercises, add or subtract.
Multiply Decimals
In the following exercises, multiply.
Divide Decimals
In the following exercises, divide.
Mixed Practice
In the following exercises, simplify.
Use Decimals in Money Applications
In the following exercises, use the strategy for applications to solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Decimals
## Decimals and Fractions
### Convert Fractions to Decimals
In Decimals, we learned to convert decimals to fractions. Now we will do the reverse—convert fractions to decimals. Remember that the fraction bar indicates division. So can be written or This means that we can convert a fraction to a decimal by treating it as a division problem.
### Repeating Decimals
So far, in all the examples converting fractions to decimals the division resulted in a remainder of zero. This is not always the case. Let’s see what happens when we convert the fraction to a decimal. First, notice that is an improper fraction. Its value is greater than The equivalent decimal will also be greater than
We divide by
No matter how many more zeros we write, there will always be a remainder of and the threes in the quotient will go on forever. The number is called a repeating decimal. Remember that the “…” means that the pattern repeats.
How do you know how many ‘repeats’ to write? Instead of writing we use a shorthand notation by placing a line over the digits that repeat. The repeating decimal is written The line above the tells you that the repeats endlessly. So
For other decimals, two or more digits might repeat. shows some more examples of repeating decimals.
It is useful to convert between fractions and decimals when we need to add or subtract numbers in different forms. To add a fraction and a decimal, for example, we would need to either convert the fraction to a decimal or the decimal to a fraction.
### Order Decimals and Fractions
In Decimals, we compared two decimals and determined which was larger. To compare a decimal to a fraction, we will first convert the fraction to a decimal and then compare the decimals.
When ordering negative numbers, remember that larger numbers are to the right on the number line and any positive number is greater than any negative number.
### Simplify Expressions Using the Order of Operations
The order of operations introduced in Use the Language of Algebra also applies to decimals. Do you remember what the phrase “Please excuse my dear Aunt Sally” stands for?
### Find the Circumference and Area of Circles
The properties of circles have been studied for over years. All circles have exactly the same shape, but their sizes are affected by the length of the radius, a line segment from the center to any point on the circle. A line segment that passes through a circle’s center connecting two points on the circle is called a diameter. The diameter is twice as long as the radius. See .
The size of a circle can be measured in two ways. The distance around a circle is called its circumference.
Archimedes discovered that for circles of all different sizes, dividing the circumference by the diameter always gives the same number. The value of this number is pi, symbolized by Greek letter (pronounced pie). However, the exact value of cannot be calculated since the decimal never ends or repeats (we will learn more about numbers like this in The Properties of Real Numbers.)
If we want the exact circumference or area of a circle, we leave the symbol in the answer. We can get an approximate answer by substituting as the value of We use the symbol to show that the result is approximate, not exact.
Since the diameter is twice the radius, another way to find the circumference is to use the formula
Suppose we want to find the exact area of a circle of radius inches. To calculate the area, we would evaluate the formula for the area when inches and leave the answer in terms of
We write after the So the exact value of the area is square inches.
To approximate the area, we would substitute
Remember to use square units, such as square inches, when you calculate the area.
### Approximate with a Fraction
Convert the fraction to a decimal. If you use your calculator, the decimal number will fill up the display and show But if we round that number to two decimal places, we get the decimal approximation of When we have a circle with radius given as a fraction, we can substitute for instead of And, since is also an approximation of we will use the symbol to show we have an approximate value.
### Key Concepts
1. Convert a Fraction to a Decimal To convert a fraction to a decimal, divide the numerator of the fraction by the denominator of the fraction.
2. Properties of Circles
is the length of the radius
is the length of the diameter
The circumference is .
The area is .
### Practice Makes Perfect
Convert Fractions to Decimals
In the following exercises, convert each fraction to a decimal.
In the following exercises, simplify the expression.
Order Decimals and Fractions
In the following exercises, order each pair of numbers, using or
In the following exercises, write each set of numbers in order from least to greatest.
Simplify Expressions Using the Order of Operations
In the following exercises, simplify.
Mixed Practice
In the following exercises, simplify. Give the answer as a decimal.
Find the Circumference and Area of Circles
In the following exercises, approximate the ⓐ circumference and ⓑ area of each circle. If measurements are given in fractions, leave answers in fraction form.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Decimals
## Solve Equations with Decimals
### Determine Whether a Decimal is a Solution of an Equation
Solving equations with decimals is important in our everyday lives because money is usually written with decimals. When applications involve money, such as shopping for yourself, making your family’s budget, or planning for the future of your business, you’ll be solving equations with decimals.
Now that we’ve worked with decimals, we are ready to find solutions to equations involving decimals. The steps we take to determine whether a number is a solution to an equation are the same whether the solution is a whole number, an integer, a fraction, or a decimal. We’ll list these steps here again for easy reference.
### Solve Equations with Decimals
In previous chapters, we solved equations using the Properties of Equality. We will use these same properties to solve equations with decimals.
When you add, subtract, multiply or divide the same quantity from both sides of an equation, you still have equality.
### Translate to an Equation and Solve
Now that we have solved equations with decimals, we are ready to translate word sentences to equations and solve. Remember to look for words and phrases that indicate the operations to use.
### Key Concepts
1. Determine whether a number is a solution to an equation.
2. Properties of Equality
### Practice Makes Perfect
Determine Whether a Decimal is a Solution of an Equation
In the following exercises, determine whether each number is a solution of the given equation.
Solve Equations with Decimals
In the following exercises, solve the equation.
Mixed Practice
In the following exercises, solve the equation. Then check your solution.
Translate to an Equation and Solve
In the following exercises, translate and solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# Decimals
## Averages and Probability
One application of decimals that arises often is finding the average of a set of numbers. What do you think of when you hear the word average? Is it your grade point average, the average rent for an apartment in your city, the batting average of a player on your favorite baseball team? The average is a typical value in a set of numerical data. Calculating an average sometimes involves working with decimal numbers. In this section, we will look at three different ways to calculate an average.
### Calculate the Mean of a Set of Numbers
The mean is often called the arithmetic average. It is computed by dividing the sum of the values by the number of values. Students want to know the mean of their test scores. Climatologists report that the mean temperature has, or has not, changed. City planners are interested in the mean household size.
Suppose Ethan’s first three test scores were To find the mean score, he would add them and divide by
His mean test score is points.
Did you notice that in the last example, while all the numbers were whole numbers, the mean was a number with one decimal place? It is customary to report the mean to one more decimal place than the original numbers. In the next example, all the numbers represent money, and it will make sense to report the mean in dollars and cents.
### Find the Median of a Set of Numbers
When Ann, Bianca, Dora, Eve, and Francine sing together on stage, they line up in order of their heights. Their heights, in inches, are shown in .
Dora is in the middle of the group. Her height, is the median of the girls’ heights. Half of the heights are less than or equal to Dora’s height, and half are greater than or equal. The median is the middle value.
What if Carmen, the pianist, joins the singing group on stage? Carmen is inches tall, so she fits in the height order between Bianca and Dora. Now the data set looks like this:
There is no single middle value. The heights of the six girls can be divided into two equal parts.
Statisticians have agreed that in cases like this the median is the mean of the two values closest to the middle. So the median is the mean of The median height is inches.
Notice that when the number of girls was the median was the third height, but when the number of girls was the median was the mean of the third and fourth heights. In general, when the number of values is odd, the median will be the one value in the middle, but when the number is even, the median is the mean of the two middle values.
### Identify the Mode of a Set of Numbers
The average is one number in a set of numbers that is somehow typical of the whole set of numbers. The mean and median are both often called the average. Yes, it can be confusing when the word average refers to two different numbers, the mean and the median! In fact, there is a third number that is also an average. This average is the mode. The mode of a set of numbers is the number that occurs the most. The frequency, is the number of times a number occurs. So the mode of a set of numbers is the number with the highest frequency.
Suppose Jolene kept track of the number of miles she ran since the start of the month, as shown in .
If we list the numbers in order it is easier to identify the one with the highest frequency.
Jolene ran miles three times, and every other distance is listed only once. So the mode of the data is miles.
Some data sets do not have a mode because no value appears more than any other. And some data sets have more than one mode. In a given set, if two or more data values have the same highest frequency, we say they are all modes.
### Use the Basic Definition of Probability
The probability of an event tells us how likely that event is to occur. We usually write probabilities as fractions or decimals.
For example, picture a fruit bowl that contains five pieces of fruit - three bananas and two apples.
If you want to choose one piece of fruit to eat for a snack and don’t care what it is, there is a probability you will choose a banana, because there are three bananas out of the total of five pieces of fruit. The probability of an event is the number of favorable outcomes divided by the total number of outcomes.
Converting the fraction to a decimal, we would say there is a probability of choosing a banana.
This basic definition of probability assumes that all the outcomes are equally likely to occur. If you study probabilities in a later math class, you’ll learn about several other ways to calculate probabilities.
### Key Concepts
1. Calculate the mean of a set of numbers.
2. Find the median of a set of numbers.
3. Identify the mode of a set of numbers.
### Practice Makes Perfect
Calculate the Mean of a Set of Numbers
In the following exercises, find the mean.
Find the Median of a Set of Numbers
In the following exercises, find the median.
Identify the Mode of a Set of Numbers
In the following exercises, identify the mode.
Use the Basic Definition of Probability
In the following exercises, express the probability as both a fraction and a decimal. (Round to three decimal places, if necessary.)
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After looking at the checklist, do you think you are well prepared for the next section? Why or why not?
|
# Decimals
## Ratios and Rate
### Write a Ratio as a Fraction
When you apply for a mortgage, the loan officer will compare your total debt to your total income to decide if you qualify for the loan. This comparison is called the debt-to-income ratio. A ratio compares two quantities that are measured with the same unit. If we compare and , the ratio is written as
In this section, we will use the fraction notation. When a ratio is written in fraction form, the fraction should be simplified. If it is an improper fraction, we do not change it to a mixed number. Because a ratio compares two quantities, we would leave a ratio as instead of simplifying it to so that we can see the two parts of the ratio.
### Ratios Involving Decimals
We will often work with ratios of decimals, especially when we have ratios involving money. In these cases, we can eliminate the decimals by using the Equivalent Fractions Property to convert the ratio to a fraction with whole numbers in the numerator and denominator.
For example, consider the ratio We can write it as a fraction with decimals and then multiply the numerator and denominator by to eliminate the decimals.
Do you see a shortcut to find the equivalent fraction? Notice that and The least common denominator of and is By multiplying the numerator and denominator of by we ‘moved’ the decimal two places to the right to get the equivalent fraction with no decimals. Now that we understand the math behind the process, we can find the fraction with no decimals like this:
You do not have to write out every step when you multiply the numerator and denominator by powers of ten. As long as you move both decimal places the same number of places, the ratio will remain the same.
Some ratios compare two mixed numbers. Remember that to divide mixed numbers, you first rewrite them as improper fractions.
### Applications of Ratios
One real-world application of ratios that affects many people involves measuring cholesterol in blood. The ratio of total cholesterol to HDL cholesterol is one way doctors assess a person's overall health. A ratio of less than to is considered good.
### Ratios of Two Measurements in Different Units
To find the ratio of two measurements, we must make sure the quantities have been measured with the same unit. If the measurements are not in the same units, we must first convert them to the same units.
We know that to simplify a fraction, we divide out common factors. Similarly in a ratio of measurements, we divide out the common unit.
### Write a Rate as a Fraction
Frequently we want to compare two different types of measurements, such as miles to gallons. To make this comparison, we use a rate. Examples of rates are miles in hours, words in minutes, and dollars per ounces.
When writing a fraction as a rate, we put the first given amount with its units in the numerator and the second amount with its units in the denominator. When rates are simplified, the units remain in the numerator and denominator.
### Find Unit Rates
In the last example, we calculated that Bob was driving at a rate of This tells us that every three hours, Bob will travel miles. This is correct, but not very useful. We usually want the rate to reflect the number of miles in one hour. A rate that has a denominator of unit is referred to as a unit rate.
Unit rates are very common in our lives. For example, when we say that we are driving at a speed of miles per hour we mean that we travel miles in hour. We would write this rate as miles/hour (read miles per hour). The common abbreviation for this is mph. Note that when no number is written before a unit, it is assumed to be
So miles/hour really means
Two rates we often use when driving can be written in different forms, as shown:
Another example of unit rate that you may already know about is hourly pay rate. It is usually expressed as the amount of money earned for one hour of work. For example, if you are paid for each hour you work, you could write that your hourly (unit) pay rate is (read per hour.)
To convert a rate to a unit rate, we divide the numerator by the denominator. This gives us a denominator of
### Find Unit Price
Sometimes we buy common household items ‘in bulk’, where several items are packaged together and sold for one price. To compare the prices of different sized packages, we need to find the unit price. To find the unit price, divide the total price by the number of items. A unit price is a unit rate for one item.
Unit prices are very useful if you comparison shop. The better buy is the item with the lower unit price. Most grocery stores list the unit price of each item on the shelves.
Notice in that we rounded the unit price to the nearest cent. Sometimes we may need to carry the division to one more place to see the difference between the unit prices.
### Translate Phrases to Expressions with Fractions
Have you noticed that the examples in this section used the comparison words ratio of, to, per, in, for, on, and from? When you translate phrases that include these words, you should think either ratio or rate. If the units measure the same quantity (length, time, etc.), you have a ratio. If the units are different, you have a rate. In both cases, you write a fraction.
### Practice Makes Perfect
Write a Ratio as a Fraction
In the following exercises, write each ratio as a fraction.
Write a Rate as a Fraction
In the following exercises, write each rate as a fraction.
Find Unit Rates
In the following exercises, find the unit rate. Round to two decimal places, if necessary.
Find Unit Price
In the following exercises, find the unit price. Round to the nearest cent.
In the following exercises, find each unit price and then identify the better buy. Round to three decimal places.
Translate Phrases to Expressions with Fractions
In the following exercises, translate the English phrase into an algebraic expression.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Decimals
## Simplify and Use Square Roots
### Simplify Expressions with Square Roots
To start this section, we need to review some important vocabulary and notation.
Remember that when a number is multiplied by itself, we can write this as which we read aloud as For example, is read as
We call the square of because Similarly, is the square of because
### Modeling Squares
Do you know why we use the word square? If we construct a square with three tiles on each side, the total number of tiles would be nine.
This is why we say that the square of three is nine.
The number is called a perfect square because it is the square of a whole number.
The chart shows the squares of the counting numbers through You can refer to it to help you identify the perfect squares.
What happens when you square a negative number?
When we multiply two negative numbers, the product is always positive. So, the square of a negative number is always positive.
The chart shows the squares of the negative integers from to
Did you notice that these squares are the same as the squares of the positive numbers?
### Square Roots
Sometimes we will need to look at the relationship between numbers and their squares in reverse. Because we say is the square of We can also say that is a square root of
Notice also, so is also a square root of Therefore, both and are square roots of
So, every positive number has two square roots: one positive and one negative.
What if we only want the positive square root of a positive number? The radical sign, stands for the positive square root. The positive square root is also called the principal square root.
We can also use the radical sign for the square root of zero. Because Notice that zero has only one square root.
The chart shows the square roots of the first perfect square numbers.
Every positive number has two square roots and the radical sign indicates the positive one. We write If we want to find the negative square root of a number, we place a negative in front of the radical sign. For example,
### Square Root of a Negative Number
Can we simplify Is there a number whose square is
None of the numbers that we have dealt with so far have a square that is Why? Any positive number squared is positive, and any negative number squared is also positive. In the next chapter we will see that all the numbers we work with are called the real numbers. So we say there is no real number equal to If we are asked to find the square root of any negative number, we say that the solution is not a real number.
### Square Roots and the Order of Operations
When using the order of operations to simplify an expression that has square roots, we treat the radical sign as a grouping symbol. We simplify any expressions under the radical sign before performing other operations.
Notice the different answers in parts ⓐ and ⓑ of . It is important to follow the order of operations correctly. In ⓐ , we took each square root first and then added them. In ⓑ , we added under the radical sign first and then found the square root.
### Estimate Square Roots
So far we have only worked with square roots of perfect squares. The square roots of other numbers are not whole numbers.
We might conclude that the square roots of numbers between and will be between and and they will not be whole numbers. Based on the pattern in the table above, we could say that is between and Using inequality symbols, we write
### Approximate Square Roots with a Calculator
There are mathematical methods to approximate square roots, but it is much more convenient to use a calculator to find square roots. Find the or key on your calculator. You will to use this key to approximate square roots. When you use your calculator to find the square root of a number that is not a perfect square, the answer that you see is not the exact number. It is an approximation, to the number of digits shown on your calculator’s display. The symbol for an approximation is and it is read approximately.
Suppose your calculator has a display. Using it to find the square root of will give This is the approximate square root of When we report the answer, we should use the “approximately equal to” sign instead of an equal sign.
You will seldom use this many digits for applications in algebra. So, if you wanted to round to two decimal places, you would write
How do we know these values are approximations and not the exact values? Look at what happens when we square them.
The squares are close, but not exactly equal, to
### Simplify Variable Expressions with Square Roots
Expressions with square root that we have looked at so far have not had any variables. What happens when we have to find a square root of a variable expression?
Consider where Can you think of an expression whose square is
When we use a variable in a square root expression, for our work, we will assume that the variable represents a non-negative number. In every example and exercise that follows, each variable in a square root expression is greater than or equal to zero.
### Use Square Roots in Applications
As you progress through your college courses, you’ll encounter several applications of square roots. Once again, if we use our strategy for applications, it will give us a plan for finding the answer!
### Square Roots and Area
We have solved applications with area before. If we were given the length of the sides of a square, we could find its area by squaring the length of its sides. Now we can find the length of the sides of a square if we are given the area, by finding the square root of the area.
If the area of the square is square units, the length of a side is units. See .
### Square Roots and Gravity
Another application of square roots involves gravity. On Earth, if an object is dropped from a height of feet, the time in seconds it will take to reach the ground is found by evaluating the expression For example, if an object is dropped from a height of feet, we can find the time it takes to reach the ground by evaluating
It would take seconds for an object dropped from a height of feet to reach the ground.
### Square Roots and Accident Investigations
Police officers investigating car accidents measure the length of the skid marks on the pavement. Then they use square roots to determine the speed, in miles per hour, a car was going before applying the brakes. According to some formulas, if the length of the skid marks is feet, then the speed of the car can be found by evaluating
### Key Concepts
1. Square Root Notation is read ‘the square root of ’
If , then , for .
2. Use a strategy for applications with square roots.
### Section Exercises
### Practice Makes Perfect
Simplify Expressions with Square Roots
In the following exercises, simplify.
Estimate Square Roots
In the following exercises, estimate each square root between two consecutive whole numbers.
Approximate Square Roots with a Calculator
In the following exercises, use a calculator to approximate each square root and round to two decimal places.
Simplify Variable Expressions with Square Roots
In the following exercises, simplify. (Assume all variables are greater than or equal to zero.)
Use Square Roots in Applications
In the following exercises, solve. Round to one decimal place.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Decimals
Name Decimals
In the following exercises, name each decimal.
Write Decimals
In the following exercises, write as a decimal.
Convert Decimals to Fractions or Mixed Numbers
In the following exercises, convert each decimal to a fraction. Simplify the answer if possible.
Locate Decimals on the Number Line
Order Decimals
In the following exercises, order each of the following pairs of numbers, using or
Round Decimals
In the following exercises, round each number to the nearest: ⓐ hundredth ⓑ tenth ⓒ whole number.
### Decimal Operations
Add and Subtract Decimals
In the following exercises, add or subtract.
Multiply Decimals
In the following exercises, multiply.
Divide Decimals
In the following exercises, divide.
Use Decimals in Money Applications
In the following exercises, use the strategy for applications to solve.
### Decimals and Fractions
Convert Fractions to Decimals
In the following exercises, convert each fraction to a decimal.
Order Decimals and Fractions
In the following exercises, order each pair of numbers, using or
In the following exercises, write each set of numbers in order from least to greatest.
Simplify Expressions Using the Order of Operations
In the following exercises, simplify
Find the Circumference and Area of Circles
In the following exercises, approximate the ⓐ circumference and ⓑ area of each circle.
### Solve Equations with Decimals
Determine Whether a Decimal is a Solution of an Equation
In the following exercises, determine whether the each number is a solution of the given equation.
Solve Equations with Decimals
In the following exercises, solve.
Translate to an Equation and Solve
In the following exercises, translate and solve.
### Averages and Probability
Find the Mean of a Set of Numbers
In the following exercises, find the mean of the numbers.
Find the Median of a Set of Numbers
In the following exercises, find the median.
Find the Mode of a Set of Numbers
In the following exercises, identify the mode of the numbers.
Use the Basic Definition of Probability
In the following exercises, solve. (Round decimals to three places.)
### Ratios and Rate
Write a Ratio as a Fraction
In the following exercises, write each ratio as a fraction. Simplify the answer if possible.
Write a Rate as a Fraction
In the following exercises, write each rate as a fraction. Simplify the answer if possible.
Find Unit Rates
In the following exercises, find the unit rate.
Find Unit Price
In the following exercises, find the unit price.
In the following exercises, find each unit price and then determine the better buy.
Translate Phrases to Expressions with Fractions
In the following exercises, translate the English phrase into an algebraic expression.
### Simplify and Use Square Roots
Simplify Expressions with Square Roots
In the following exercises, simplify.
Estimate Square Roots
In the following exercises, estimate each square root between two consecutive whole numbers.
Approximate Square Roots
In the following exercises, approximate each square root and round to two decimal places.
Simplify Variable Expressions with Square Roots
In the following exercises, simplify. (Assume all variables are greater than or equal to zero.)
Use Square Roots in Applications
In the following exercises, solve. Round to one decimal place.
### Chapter Practice Test
In the following exercises, simplify each expression.
In the following exercises, solve.
In the following exercises, simplify. |
# Percents
## Introduction to Percents
When you deposit money in a savings account at a bank, it earns additional money. Figuring out how your money will grow involves understanding and applying concepts of percents. In this chapter, we will find out what percents are and how we can use them to solve problems. |
# Percents
## Understand Percent
### Use the Definition of Percent
How many cents are in one dollar? There are cents in a dollar. How many years are in a century? There are years in a century. Does this give you a clue about what the word “percent” means? It is really two words, “per cent,” and means per one hundred. A percent is a ratio whose denominator is We use the percent symbol to show percent.
According to data from the American Association of Community Colleges about of community college students are female. This means out of every community college students are female, as shows. Out of the squares on the grid, are shaded, which we write as the ratio
Similarly, means a ratio of means a ratio of and means a ratio of In words, "one hundred percent" means the total is and since we see that means whole.
### Convert Percents to Fractions and Decimals
Since percents are ratios, they can easily be expressed as fractions. Remember that percent means per so the denominator of the fraction is
The previous example shows that a percent can be greater than We saw that means or These are improper fractions, and their values are greater than one.
In Decimals, we learned how to convert fractions to decimals. To convert a percent to a decimal, we first convert it to a fraction and then change the fraction to a decimal.
Let's summarize the results from the previous examples in , and look for a pattern we could use to quickly convert a percent number to a decimal number.
Do you see the pattern?
To convert a percent number to a decimal number, we move the decimal point two places to the left and remove the sign. (Sometimes the decimal point does not appear in the percent number, but just like we can think of the integer as we can think of as ) Notice that we may need to add zeros in front of the number when moving the decimal to the left.
uses the percents in and shows visually how to convert them to decimals by moving the decimal point two places to the left.
### Convert Decimals and Fractions to Percents
To convert a decimal to a percent, remember that percent means per hundred. If we change the decimal to a fraction whose denominator is it is easy to change that fraction to a percent.
To convert a mixed number to a percent, we first write it as an improper fraction.
Let's summarize the results from the previous examples in so we can look for a pattern.
Do you see the pattern? To convert a decimal to a percent, we move the decimal point two places to the right and then add the percent sign.
uses the decimal numbers in and shows visually to convert them to percents by moving the decimal point two places to the right and then writing the sign.
In Decimals, we learned how to convert fractions to decimals. Now we also know how to change decimals to percents. So to convert a fraction to a percent, we first change it to a decimal and then convert that decimal to a percent.
Sometimes when changing a fraction to a decimal, the division continues for many decimal places and we will round off the quotient. The number of decimal places we round to will depend on the situation. If the decimal involves money, we round to the hundredths place. For most other cases in this book we will round the number to the nearest thousandth, so the percent will be rounded to the nearest tenth.
When we first looked at fractions and decimals, we saw that some fractions converted to a repeating decimal. For example, when we converted the fraction to a decimal, we wrote the answer as We will use this same notation, as well as fraction notation, when we convert fractions to percents in the next example.
### Key Concepts
1. Convert a percent to a fraction.
2.
Convert a percent to a decimal.
3.
Convert a decimal to a percent.
4.
Convert a fraction to a percent.
### Practice Makes Perfect
Use the Definition of Percents
In the following exercises, write each percent as a ratio.
In the following exercises, write as
Convert Percents to Fractions and Decimals
In the following exercises, convert each percent to a fraction and simplify all fractions.
In the following exercises, convert each percent to a decimal.
In the following exercises, convert each percent to
Convert Decimals and Fractions to Percents
In the following exercises, convert each decimal to a percent.
In the following exercises, convert each fraction to a percent.
In the following exercises, convert each fraction to a percent.
In the following exercises, convert each fraction to a percent.
In the following exercises, complete the table.
### Everyday Math
Amelio is shopping for textbooks online. He found three sellers that are offering a book he needs for the same price, including shipping. To decide which seller to buy from he is comparing their customer satisfaction ratings. The ratings are given in the chart.
Use the chart to answer the following questions
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Percents
## Solve General Applications of Percent
### Translate and Solve Basic Percent Equations
We will solve percent equations by using the methods we used to solve equations with fractions or decimals. In the past, you may have solved percent problems by setting them up as proportions. That was the best method available when you did not have the tools of algebra. Now as a prealgebra student, you can translate word sentences into algebraic equations, and then solve the equations.
We'll look at a common application of percent—tips to a server at a restaurant—to see how to set up a basic percent application.
When Aolani and her friends ate dinner at a restaurant, the bill came to They wanted to leave a tip. What amount would the tip be?
To solve this, we want to find what amount is of The is called the base. The amount of the tip would be or See . To find the amount of the tip, we multiplied the percent by the base.
In the next examples, we will find the amount. We must be sure to change the given percent to a decimal when we translate the words into an equation.
In the next examples, we are asked to find the base.
In the next examples, we will solve for the percent.
### Solve Applications of Percent
Many applications of percent occur in our daily lives, such as tips, sales tax, discount, and interest. To solve these applications we'll translate to a basic percent equation, just like those we solved in the previous examples in this section. Once you translate the sentence into a percent equation, you know how to solve it.
We will update the strategy we used in our earlier applications to include equations now. Notice that we will translate a sentence into an equation.
Now that we have the strategy to refer to, and have practiced solving basic percent equations, we are ready to solve percent applications. Be sure to ask yourself if your final answer makes sense—since many of the applications we'll solve involve everyday situations, you can rely on your own experience.
### Find Percent Increase and Percent Decrease
People in the media often talk about how much an amount has increased or decreased over a certain period of time. They usually express this increase or decrease as a percent.
To find the percent increase, first we find the amount of increase, which is the difference between the new amount and the original amount. Then we find what percent the amount of increase is of the original amount.
Finding the percent decrease is very similar to finding the percent increase, but now the amount of decrease is the difference between the original amount and the final amount. Then we find what percent the amount of decrease is of the original amount.
### Key Concepts
1. Solve an application.
2. Find percent increase.
3. Find percent decrease.
### Practice Makes Perfect
Translate and Solve Basic Percent Equations
In the following exercises, translate and solve.
Solve Applications of Percents
In the following exercises, solve the applications of percents.
Find Percent Increase and Percent Decrease
In the following exercises, find the percent increase or percent decrease.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Percents
## Solve Sales Tax, Commission, and Discount Applications
### Solve Sales Tax Applications
Sales tax and commissions are applications of percent in our everyday lives. To solve these applications, we will follow the same strategy we used in the section on decimal operations. We show it again here for easy reference.
Remember that whatever the application, once we write the sentence with the given information (Step 2), we can translate it to a percent equation and then solve it.
Do you pay a tax when you shop in your city or state? In many parts of the United States, sales tax is added to the purchase price of an item. See . The sales tax is determined by computing a percent of the purchase price.
To find the sales tax multiply the purchase price by the sales tax rate. Remember to convert the sales tax rate from a percent to a decimal number. Once the sales tax is calculated, it is added to the purchase price. The result is the total cost—this is what the customer pays.
### Solve Commission Applications
Sales people often receive a commission, or percent of total sales, for their sales. Their income may be just the commission they earn, or it may be their commission added to their hourly wages or salary. The commission they earn is calculated as a certain percent of the price of each item they sell. That percent is called the rate of commission.
To find the commission on a sale, multiply the rate of commission by the total sales. Just as we did for computing sales tax, remember to first convert the rate of commission from a percent to a decimal.
### Solve Discount Applications
Applications of discount are very common in retail settings . When you buy an item on sale, the original price of the item has been reduced by some dollar amount. The discount rate, usually given as a percent, is used to determine the amount of the discount. To determine the amount of discount, we multiply the discount rate by the original price. We summarize the discount model in the box below.
The sale price should always be less than the original price. In some cases, the amount of discount is a fixed dollar amount. Then we just find the sale price by subtracting the amount of discount from the original price.
In , the amount of discount was a set amount, In the discount is given as a percent of the original price.
There may be times when you buy something on sale and want to know the discount rate. The next example will show this case.
### Solve Mark-up Applications
Applications of mark-up are very common in retail settings. The price a retailer pays for an item is called the wholesale price. The retailer then adds a mark-up to the wholesale price to get the list price, the price he sells the item for. The mark-up is usually calculated as a percent of the wholesale price. The percent is called the mark-up rate. To determine the amount of mark-up, multiply the mark-up rate by the wholesale price. We summarize the mark-up model in the box below.
The list price should always be more than the wholesale price.
### Key Concepts
1. Sales Tax The sales tax is a percent of the purchase price.
2. Commission A commission is a percentage of total sales as determined by the rate of commission.
3. Discount An amount of discount is a percent off the original price, determined by the discount rate.
4. Mark-up The mark-up is the amount added to the wholesale price, determined by the mark-up rate.
### Practice Makes Perfect
Solve Sales Tax Applications
In the following exercises, find ⓐ the sales tax and ⓑ the total cost.
In the following exercises, find the sales tax rate.
Solve Commission Applications
In the following exercises, find the commission.
In the following exercises, find the rate of commission.
Solve Discount Applications
In the following exercises, find the sale price.
In the following exercises, find ⓐ the amount of discount and ⓑ the sale price.
In the following exercises, find ⓐ the amount of discount and ⓑ the discount rate. (Round to the nearest tenth of a percent if needed.)
Solve Mark-up Applications
In the following exercises, find ⓐ the amount of the mark-up and ⓑ the list price.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Percents
## Solve Simple Interest Applications
### Use the Simple Interest Formula
Do you know that banks pay you to let them keep your money? The money you put in the bank is called the principal, and the bank pays you interest, The interest is computed as a certain percent of the principal; called the rate of interest, The rate of interest is usually expressed as a percent per year, and is calculated by using the decimal equivalent of the percent. The variable for time, represents the number of years the money is left in the account.
The formula we use to calculate simple interest is To use the simple interest formula we substitute in the values for variables that are given, and then solve for the unknown variable. It may be helpful to organize the information by listing all four variables and filling in the given information.
In the next example, we will use the simple interest formula to find the principal.
Now we will solve for the rate of interest.
### Solve Simple Interest Applications
Applications with simple interest usually involve either investing money or borrowing money. To solve these applications, we continue to use the same strategy for applications that we have used earlier in this chapter. The only difference is that in place of translating to get an equation, we can use the simple interest formula.
We will start by solving a simple interest application to find the interest.
There may be times when you know the amount of interest earned on a given principal over a certain length of time, but you don't know the rate. For instance, this might happen when family members lend or borrow money among themselves instead of dealing with a bank. In the next example, we'll show how to solve for the rate.
There may be times when you take a loan for a large purchase and the amount of the principal is not clear. This might happen, for instance, in making a car purchase when the dealer adds the cost of a warranty to the price of the car. In the next example, we will solve a simple interest application for the principal.
In the simple interest formula, the rate of interest is given as an annual rate, the rate for one year. So the units of time must be in years. If the time is given in months, we convert it to years.
### Key Concepts
1. Simple interest
### Practice Makes Perfect
Use the Simple Interest Formula
In the following exercises, use the simple interest formula to fill in the missing information.
In the following exercises, solve the problem using the simple interest formula.
Solve Simple Interest Applications
In the following exercises, solve the problem using the simple interest formula.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# Percents
## Solve Proportions and their Applications
### Use the Definition of Proportion
In the section on Ratios and Rates we saw some ways they are used in our daily lives. When two ratios or rates are equal, the equation relating them is called a proportion.
The equation is a proportion because the two fractions are equal. The proportion is read is to as is to
If we compare quantities with units, we have to be sure we are comparing them in the right order. For example, in the proportion we compare the number of students to the number of teachers. We put students in the numerators and teachers in the denominators.
Look at the proportions and From our work with equivalent fractions we know these equations are true. But how do we know if an equation is a proportion with equivalent fractions if it contains fractions with larger numbers?
To determine if a proportion is true, we find the cross products of each proportion. To find the cross products, we multiply each denominator with the opposite numerator (diagonally across the equal sign). The results are called a cross product because of the cross formed. If, and only if, the given proportion is true, that is, the two sides are equal, then the cross products of a proportion will be equal.
Cross products can be used to test whether a proportion is true. To test whether an equation makes a proportion, we find the cross products. If they are both equal, we have a proportion.
### Solve Proportions
To solve a proportion containing a variable, we remember that the proportion is an equation. All of the techniques we have used so far to solve equations still apply. In the next example, we will solve a proportion by multiplying by the Least Common Denominator (LCD) using the Multiplication Property of Equality.
When the variable is in a denominator, we’ll use the fact that the cross products of a proportion are equal to solve the proportions.
We can find the cross products of the proportion and then set them equal. Then we solve the resulting equation using our familiar techniques.
### Solve Applications Using Proportions
The strategy for solving applications that we have used earlier in this chapter, also works for proportions, since proportions are equations. When we set up the proportion, we must make sure the units are correct—the units in the numerators match and the units in the denominators match.
### Write Percent Equations As Proportions
Previously, we solved percent equations by applying the properties of equality we have used to solve equations throughout this text. Some people prefer to solve percent equations by using the proportion method. The proportion method for solving percent problems involves a percent proportion. A percent proportion is an equation where a percent is equal to an equivalent ratio.
For example, and we can simplify Since the equation shows a percent equal to an equivalent ratio, we call it a percent proportion. Using the vocabulary we used earlier:
If we restate the problem in the words of a proportion, it may be easier to set up the proportion:
We could also say:
First we will practice translating into a percent proportion. Later, we’ll solve the proportion.
### Translate and Solve Percent Proportions
Now that we have written percent equations as proportions, we are ready to solve the equations.
In the next example, the percent is more than which is more than one whole. So the unknown number will be more than the base.
Percents with decimals and money are also used in proportions.
### Key Concepts
1. Proportion
2. Cross Products of a Proportion
3. Percent Proportion
### Section Exercises
### Practice Makes Perfect
Use the Definition of Proportion
In the following exercises, write each sentence as a proportion.
In the following exercises, determine whether each equation is a proportion.
Solve Proportions
In the following exercises, solve each proportion.
Solve Applications Using Proportions
In the following exercises, solve the proportion problem.
Write Percent Equations as Proportions
In the following exercises, translate to a proportion.
Translate and Solve Percent Proportions
In the following exercises, translate and solve using proportions.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Understand Percent
In the following exercises, write each percent as a ratio.
In the following exercises, write as a ratio and then as a percent.
In the following exercises, convert each percent to a fraction.
In the following exercises, convert each percent to a decimal.
In the following exercises, convert each percent to ⓐ a simplified fraction and ⓑ a decimal.
In the following exercises, convert each decimal to a percent.
In the following exercises, convert each fraction to a percent.
In the following exercises, translate and solve.
### Solve General Applications of Percents
In the following exercises, solve.
In the following exercises, solve.
### Solve Sales Tax, Commission, and Discount Applications
In the following exercises, find ⓐ the sales tax ⓑ the total cost.
In the following exercises, find the sales tax rate.
In the following exercises, find the commission.
In the following exercises, find the rate of commission.
In the following exercises, find the sale price.
In the following exercises, find ⓐ the amount of discount and ⓑ the sale price.
In the following exercises, find ⓐ the amount of discount ⓑ the discount rate. (Round to the nearest tenth of a percent if needed.)
In the following exercises, find
### Solve Simple Interest Applications
In the following exercises, solve the simple interest problem.
### Solve Proportions and their Applications
In the following exercises, write each sentence as a proportion.
In the following exercises, determine whether each equation is a proportion.
In the following exercises, solve each proportion.
In the following exercises, solve the proportion problem.
In the following exercises, translate to a proportion.
In the following exercises, translate and solve using proportions.
In the following exercises, convert each percent to ⓐ a decimal ⓑ a simplified fraction.
In the following exercises, convert each fraction to a percent. (Round to decimal places if needed.)
In the following exercises, solve the percent problem. |
# The Properties of Real Numbers
## Introduction to the Properties of Real Numbers
A quilt is formed by sewing many different pieces of fabric together. The pieces can vary in color, size, and shape. The combinations of different kinds of pieces provide for an endless possibility of patterns. Much like the pieces of fabric, mathematicians distinguish among different types of numbers. The kinds of numbers in an expression provide for an endless possibility of outcomes. We have already described counting numbers, whole numbers, and integers. In this chapter, we will learn about other types of numbers and their properties. |
# The Properties of Real Numbers
## Rational and Irrational Numbers
### Identify Rational Numbers and Irrational Numbers
Congratulations! You have completed the first six chapters of this book! It's time to take stock of what you have done so far in this course and think about what is ahead. You have learned how to add, subtract, multiply, and divide whole numbers, fractions, integers, and decimals. You have become familiar with the language and symbols of algebra, and have simplified and evaluated algebraic expressions. You have solved many different types of applications. You have established a good solid foundation that you need so you can be successful in algebra.
In this chapter, we'll make sure your skills are firmly set. We'll take another look at the kinds of numbers we have worked with in all previous chapters. We'll work with properties of numbers that will help you improve your number sense. And we'll practice using them in ways that we'll use when we solve equations and complete other procedures in algebra.
We have already described numbers as counting numbers, whole numbers, and integers. Do you remember what the difference is among these types of numbers?
### Rational Numbers
What type of numbers would you get if you started with all the integers and then included all the fractions? The numbers you would have form the set of rational numbers. A rational number is a number that can be written as a ratio of two integers.
All fractions, both positive and negative, are rational numbers. A few examples are
Each numerator and each denominator is an integer.
We need to look at all the numbers we have used so far and verify that they are rational. The definition of rational numbers tells us that all fractions are rational. We will now look at the counting numbers, whole numbers, integers, and decimals to make sure they are rational.
Are integers rational numbers? To decide if an integer is a rational number, we try to write it as a ratio of two integers. An easy way to do this is to write it as a fraction with denominator one.
Since any integer can be written as the ratio of two integers, all integers are rational numbers. Remember that all the counting numbers and all the whole numbers are also integers, and so they, too, are rational.
What about decimals? Are they rational? Let's look at a few to see if we can write each of them as the ratio of two integers. We've already seen that integers are rational numbers. The integer could be written as the decimal So, clearly, some decimals are rational.
Think about the decimal Can we write it as a ratio of two integers? Because means we can write it as an improper fraction, So is the ratio of the integers and It is a rational number.
In general, any decimal that ends after a number of digits (such as or is a rational number. We can use the reciprocal (or multiplicative inverse) of the place value of the last digit as the denominator when writing the decimal as a fraction.
Let's look at the decimal form of the numbers we know are rational. We have seen that every integer is a rational number, since for any integer, We can also change any integer to a decimal by adding a decimal point and a zero.
We have also seen that every fraction is a rational number. Look at the decimal form of the fractions we just considered.
What do these examples tell you? Every rational number can be written both as a ratio of integers and as a decimal that either stops or repeats. The table below shows the numbers we looked at expressed as a ratio of integers and as a decimal.
### Irrational Numbers
Are there any decimals that do not stop or repeat? Yes. The number (the Greek letter pi, pronounced ‘pie’), which is very important in describing circles, has a decimal form that does not stop or repeat.
Similarly, the decimal representations of square roots of whole numbers that are not perfect squares never stop and never repeat. For example,
A decimal that does not stop and does not repeat cannot be written as the ratio of integers. We call this kind of number an irrational number.
Let's summarize a method we can use to determine whether a number is rational or irrational.
If the decimal form of a number
1. stops or repeats, the number is rational.
2. does not stop and does not repeat, the number is irrational.
Let's think about square roots now. Square roots of perfect squares are always whole numbers, so they are rational. But the decimal forms of square roots of numbers that are not perfect squares never stop and never repeat, so these square roots are irrational.
### Classify Real Numbers
We have seen that all counting numbers are whole numbers, all whole numbers are integers, and all integers are rational numbers. Irrational numbers are a separate category of their own. When we put together the rational numbers and the irrational numbers, we get the set of real numbers.
illustrates how the number sets are related.
Does the term “real numbers” seem strange to you? Are there any numbers that are not “real”, and, if so, what could they be? For centuries, the only numbers people knew about were what we now call the real numbers. Then mathematicians discovered the set of imaginary numbers. You won't encounter imaginary numbers in this course, but you will later on in your studies of algebra.
### Key Concepts
1. Real numbers
### Practice Makes Perfect
Rational Numbers
In the following exercises, write as the ratio of two integers.
In the following exercises, determine which of the given numbers are rational and which are irrational.
In the following exercises, identify whether each number is rational or irrational.
Classifying Real Numbers
In the following exercises, determine whether each number is whole, integer, rational, irrational, and real.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# The Properties of Real Numbers
## Commutative and Associative Properties
In the next few sections, we will take a look at the properties of real numbers. Many of these properties will describe things you already know, but it will help to give names to the properties and define them formally. This way we’ll be able to refer to them and use them as we solve equations in the next chapter.
### Use the Commutative and Associative Properties
Think about adding two numbers, such as and
The results are the same.
Notice, the order in which we add does not matter. The same is true when multiplying and
Again, the results are the same! The order in which we multiply does not matter.
These examples illustrate the commutative properties of addition and multiplication.
The commutative properties have to do with order. If you change the order of the numbers when adding or multiplying, the result is the same.
What about subtraction? Does order matter when we subtract numbers? Does give the same result as
Since changing the order of the subtraction did not give the same result, we can say that subtraction is not commutative.
Let’s see what happens when we divide two numbers. Is division commutative?
Since changing the order of the division did not give the same result, division is not commutative.
Addition and multiplication are commutative. Subtraction and division are not commutative.
Suppose you were asked to simplify this expression.
How would you do it and what would your answer be?
Some people would think and then Others might start with and then
Both ways give the same result, as shown in . (Remember that parentheses are grouping symbols that indicate which operations should be done first.)
When adding three numbers, changing the grouping of the numbers does not change the result. This is known as the Associative Property of Addition.
The same principle holds true for multiplication as well. Suppose we want to find the value of the following expression:
Changing the grouping of the numbers gives the same result, as shown in .
When multiplying three numbers, changing the grouping of the numbers does not change the result. This is known as the Associative Property of Multiplication.
If we multiply three numbers, changing the grouping does not affect the product.
You probably know this, but the terminology may be new to you. These examples illustrate the Associative Properties.
Besides using the associative properties to make calculations easier, we will often use it to simplify expressions with variables.
### Evaluate Expressions using the Commutative and Associative Properties
The commutative and associative properties can make it easier to evaluate some algebraic expressions. Since order does not matter when adding or multiplying three or more terms, we can rearrange and re-group terms to make our work easier, as the next several examples illustrate.
Let’s do one more, this time with multiplication.
### Simplify Expressions Using the Commutative and Associative Properties
When we have to simplify algebraic expressions, we can often make the work easier by applying the Commutative or Associative Property first instead of automatically following the order of operations. Notice that in part ⓑ was easier to simplify than part ⓐ because the opposites were next to each other and their sum is Likewise, part ⓑ in was easier, with the reciprocals grouped together, because their product is In the next few examples, we’ll use our number sense to look for ways to apply these properties to make our work easier.
Now we will see how recognizing reciprocals is helpful. Before multiplying left to right, look for reciprocals—their product is
In expressions where we need to add or subtract three or more fractions, combine those with a common denominator first.
When adding and subtracting three or more terms involving decimals, look for terms that combine to give whole numbers.
No matter what you are doing, it is always a good idea to think ahead. When simplifying an expression, think about what your steps will be. The next example will show you how using the Associative Property of Multiplication can make your work easier if you plan ahead.
When simplifying expressions that contain variables, we can use the commutative and associative properties to re-order or regroup terms, as shown in the next pair of examples.
In The Language of Algebra, we learned to combine like terms by rearranging an expression so the like terms were together. We simplified the expression by rewriting it as and then simplified it to We were using the Commutative Property of Addition.
### Key Concepts
1. Commutative Properties
2. Associative Properties
### Practice Makes Perfect
Use the Commutative and Associative Properties
In the following exercises, use the commutative properties to rewrite the given expression.
In the following exercises, use the associative properties to rewrite the given expression.
Evaluate Expressions using the Commutative and Associative Properties
In the following exercises, evaluate each expression for the given value.
Simplify Expressions Using the Commutative and Associative Properties
In the following exercises, simplify.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# The Properties of Real Numbers
## Distributive Property
### Simplify Expressions Using the Distributive Property
Suppose three friends are going to the movies. They each need that is, dollars and quarter. How much money do they need all together? You can think about the dollars separately from the quarters.
They need times so and times quarter, so cents. In total, they need
If you think about doing the math in this way, you are using the Distributive Property.
Back to our friends at the movies, we could show the math steps we take to find the total amount of money they need like this:
In algebra, we use the Distributive Property to remove parentheses as we simplify expressions. For example, if we are asked to simplify the expression the order of operations says to work in the parentheses first. But we cannot add and since they are not like terms. So we use the Distributive Property, as shown in .
Some students find it helpful to draw in arrows to remind them how to use the Distributive Property. Then the first step in would look like this:
The distributive property can be used to simplify expressions that look slightly different from Here are two other forms.
Do you remember how to multiply a fraction by a whole number? We’ll need to do that in the next two examples.
Using the Distributive Property as shown in the next example will be very useful when we solve money applications later.
In the next example we’ll multiply by a variable. We’ll need to do this in a later chapter.
The next example will use the ‘backwards’ form of the Distributive Property,
When you distribute a negative number, you need to be extra careful to get the signs correct.
In the next example, we will show how to use the Distributive Property to find the opposite of an expression. Remember,
Sometimes we need to use the Distributive Property as part of the order of operations. Start by looking at the parentheses. If the expression inside the parentheses cannot be simplified, the next step would be multiply using the distributive property, which removes the parentheses. The next two examples will illustrate this.
### Evaluate Expressions Using the Distributive Property
Some students need to be convinced that the Distributive Property always works.
In the examples below, we will practice evaluating some of the expressions from previous examples; in part ⓐ , we will evaluate the form with parentheses, and in part ⓑ we will evaluate the form we got after distributing. If we evaluate both expressions correctly, this will show that they are indeed equal.
### Key Concepts
1. Distributive Property:
### Practice Makes Perfect
Simplify Expressions Using the Distributive Property
In the following exercises, simplify using the distributive property.
Evaluate Expressions Using the Distributive Property
In the following exercises, evaluate both expressions for the given value.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# The Properties of Real Numbers
## Properties of Identity, Inverses, and Zero
### Recognize the Identity Properties of Addition and Multiplication
What happens when we add zero to any number? Adding zero doesn’t change the value. For this reason, we call the additive identity.
For example,
What happens when you multiply any number by one? Multiplying by one doesn’t change the value. So we call the multiplicative identity.
For example,
### Use the Inverse Properties of Addition and Multiplication
Notice that in each case, the missing number was the opposite of the number.
We call the additive inverse of The opposite of a number is its additive inverse. A number and its opposite add to which is the additive identity.
What number multiplied by gives the multiplicative identity, In other words, two-thirds times what results in
What number multiplied by gives the multiplicative identity, In other words two times what results in
Notice that in each case, the missing number was the reciprocal of the number.
We call the multiplicative inverse of The reciprocal of a number is its multiplicative inverse. A number and its reciprocal multiply to which is the multiplicative identity.
We’ll formally state the Inverse Properties here:
### Use the Properties of Zero
We have already learned that zero is the additive identity, since it can be added to any number without changing the number’s identity. But zero also has some special properties when it comes to multiplication and division.
### Multiplication by Zero
What happens when you multiply a number by Multiplying by makes the product equal zero. The product of any real number and is
### Dividing with Zero
What about dividing with Think about a real example: if there are no cookies in the cookie jar and three people want to share them, how many cookies would each person get? There are cookies to share, so each person gets cookies.
Remember that we can always check division with the related multiplication fact. So, we know that
Zero divided by any real number except zero is zero.
Now let’s think about dividing a number by zero. What is the result of dividing by Think about the related multiplication fact. Is there a number that multiplied by gives
Since any real number multiplied by equals there is no real number that can be multiplied by to obtain We can conclude that there is no answer to and so we say that division by zero is undefined.
Division by zero is undefined.
We summarize the properties of zero.
### Simplify Expressions using the Properties of Identities, Inverses, and Zero
We will now practice using the properties of identities, inverses, and zero to simplify expressions.
All the properties of real numbers we have used in this chapter are summarized in .
### Key Concepts
1. Identity Properties
2. Inverse Properties
3. Properties of Zero
### Practice Makes Perfect
Recognize the Identity Properties of Addition and Multiplication
In the following exercises, identify whether each example is using the identity property of addition or multiplication.
Use the Inverse Properties of Addition and Multiplication
In the following exercises, find the multiplicative inverse.
Use the Properties of Zero
In the following exercises, simplify using the properties of zero.
Simplify Expressions using the Properties of Identities, Inverses, and Zero
In the following exercises, simplify using the properties of identities, inverses, and zero.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# The Properties of Real Numbers
## Systems of Measurement
In this section we will see how to convert among different types of units, such as feet to miles or kilograms to pounds. The basic idea in all of the unit conversions will be to use a form of the multiplicative identity, to change the units but not the value of a quantity.
### Make Unit Conversions in the U.S. System
There are two systems of measurement commonly used around the world. Most countries use the metric system. The United States uses a different system of measurement, usually called the U.S. system. We will look at the U.S. system first.
The U.S. system of measurement uses units of inch, foot, yard, and mile to measure length and pound and ton to measure weight. For capacity, the units used are cup, pint, quart and gallons. Both the U.S. system and the metric system measure time in seconds, minutes, or hours.
The equivalencies among the basic units of the U.S. system of measurement are listed in . The table also shows, in parentheses, the common abbreviations for each measurement.
In many real-life applications, we need to convert between units of measurement. We will use the identity property of multiplication to do these conversions. We’ll restate the Identity Property of Multiplication here for easy reference.
To use the identity property of multiplication, we write in a form that will help us convert the units. For example, suppose we want to convert inches to feet. We know that foot is equal to inches, so we can write as the fraction When we multiply by this fraction, we do not change the value but just change the units.
But also equals How do we decide whether to multiply by or We choose the fraction that will make the units we want to convert from divide out. For example, suppose we wanted to convert inches to feet. If we choose the fraction that has inches in the denominator, we can eliminate the inches.
On the other hand, if we wanted to convert feet to inches, we would choose the fraction that has feet in the denominator.
We treat the unit words like factors and ‘divide out’ common units like we do common factors.
When we use the Identity Property of Multiplication to convert units, we need to make sure the units we want to change from will divide out. Usually this means we want the conversion fraction to have those units in the denominator.
Sometimes to convert from one unit to another, we may need to use several other units in between, so we will need to multiply several fractions.
### Use Mixed Units of Measurement in the U.S. System
Performing arithmetic operations on measurements with mixed units of measures requires care. Be sure to add or subtract like units.
### Make Unit Conversions in the Metric System
In the metric system, units are related by powers of The root words of their names reflect this relation. For example, the basic unit for measuring length is a meter. One kilometer is meters; the prefix kilo- means thousand. One centimeter is of a meter, because the prefix centi- means one one-hundredth (just like one cent is of one dollar).
The equivalencies of measurements in the metric system are shown in . The common abbreviations for each measurement are given in parentheses.
To make conversions in the metric system, we will use the same technique we did in the U.S. system. Using the identity property of multiplication, we will multiply by a conversion factor of one to get to the correct units.
Have you ever run a or race? The lengths of those races are measured in kilometers. The metric system is commonly used in the United States when talking about the length of a race.
Since the metric system is based on multiples of ten, conversions involve multiplying by multiples of ten. In Decimal Operations, we learned how to simplify these calculations by just moving the decimal.
To multiply by we move the decimal to the right places, respectively. To multiply by we move the decimal to the left places respectively.
We can apply this pattern when we make measurement conversions in the metric system.
In , we changed grams to kilograms by multiplying by This is the same as moving the decimal places to the left.
### Use Mixed Units of Measurement in the Metric System
Performing arithmetic operations on measurements with mixed units of measures in the metric system requires the same care we used in the U.S. system. But it may be easier because of the relation of the units to the powers of We still must make sure to add or subtract like units.
### Convert Between U.S. and Metric Systems of Measurement
Many measurements in the United States are made in metric units. A drink may come in bottles, calcium may come in capsules, and we may run a race. To work easily in both systems, we need to be able to convert between the two systems.
shows some of the most common conversions.
We make conversions between the systems just as we do within the systems—by multiplying by unit conversion factors.
The conversion factors in are not exact, but the approximations they give are close enough for everyday purposes. In , we rounded the number of fluid ounces to the nearest tenth.
### Convert Between Fahrenheit and Celsius Temperatures
Have you ever been in a foreign country and heard the weather forecast? If the forecast is for What does that mean?
The U.S. and metric systems use different scales to measure temperature. The U.S. system uses degrees Fahrenheit, written The metric system uses degrees Celsius, written shows the relationship between the two systems.
If we know the temperature in one system, we can use a formula to convert it to the other system.
### Section Exercises
### Practice Makes Perfect
Make Unit Conversions in the U.S. System
In the following exercises, convert the units.
Use Mixed Units of Measurement in the U.S. System
In the following exercises, solve and write your answer in mixed units.
Make Unit Conversions in the Metric System
In the following exercises, convert the units.
Use Mixed Units of Measurement in the Metric System
In the following exercises, solve and write your answer in mixed units.
Convert Between U.S. and Metric Systems
In the following exercises, make the unit conversions. Round to the nearest tenth.
Convert between Fahrenheit and Celsius
In the following exercises, convert the Fahrenheit temperature to degrees Celsius. Round to the nearest tenth.
In the following exercises, convert the Celsius temperatures to degrees Fahrenheit. Round to the nearest tenth.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next chapter? Why or why not?
### Chapter Review Exercises
### Rational and Irrational Numbers
In the following exercises, write as the ratio of two integers.
In the following exercises, determine which of the numbers is rational.
In the following exercises, identify whether each given number is rational or irrational.
In the following exercises, list the ⓐ whole numbers, ⓑ integers, ⓒ rational numbers, ⓓ irrational numbers, ⓔ real numbers for each set of numbers.
### Commutative and Associative Properties
In the following exercises, use the commutative property to rewrite the given expression.
In the following exercises, use the associative property to rewrite the given expression.
In the following exercises, evaluate each expression for the given value.
In the following exercises, simplify using the commutative and associative properties.
### Distributive Property
In the following exercises, simplify using the distributive property.
In the following exercises, evaluate using the distributive property.
### Properties of Identities, Inverses, and Zero
In the following exercises, identify whether each example is using the identity property of addition or multiplication.
In the following exercises, find the additive inverse.
In the following exercises, find the multiplicative inverse.
In the following exercises, simplify.
### Systems of Measurement
In the following exercises, convert between U.S. units. Round to the nearest tenth.
In the following exercises, solve, and state your answer in mixed units.
In the following exercises, convert between metric units.
In the following exercises, solve.
In the following exercises, convert between U.S. and metric units. Round to the nearest tenth.
In the following exercises, convert the Fahrenheit temperatures to degrees Celsius. Round to the nearest tenth.
In the following exercises, convert the Celsius temperatures to degrees Fahrenheit. Round to the nearest tenth.
### Chapter Practice Test
In the following exercises, simplify the given expression.
In the following exercises, solve using the appropriate unit conversions. |
# Solving Linear Equations
## Introduction to Solving Linear Equations
Teetering high above the floor, this amazing mobile remains aloft thanks to its carefully balanced mass. Any shift in either direction could cause the mobile to become lopsided, or even crash downward. In this chapter, we will solve equations by keeping quantities on both sides of an equal sign in perfect balance. |
# Solving Linear Equations
## Solve Equations Using the Subtraction and Addition Properties of Equality
We are now ready to “get to the good stuff.” You have the basics down and are ready to begin one of the most important topics in algebra: solving equations. The applications are limitless and extend to all careers and fields. Also, the skills and techniques you learn here will help improve your critical thinking and problem-solving skills. This is a great benefit of studying mathematics and will be useful in your life in ways you may not see right now.
### Solve Equations Using the Subtraction and Addition Properties of Equality
We began our work solving equations in previous chapters. It has been a while since we have seen an equation, so we will review some of the key concepts before we go any further.
We said that solving an equation is like discovering the answer to a puzzle. The purpose in solving an equation is to find the value or values of the variable that make each side of the equation the same. Any value of the variable that makes the equation true is called a solution to the equation. It is the answer to the puzzle.
In the earlier sections, we listed the steps to determine if a value is a solution. We restate them here.
We introduced the Subtraction and Addition Properties of Equality in Solving Equations Using the Subtraction and
Addition Properties of Equality. In that section, we modeled how these properties work and then applied them to solving equations with whole numbers. We used these properties again each time we introduced a new system of numbers. Let’s review those properties here.
When you add or subtract the same quantity from both sides of an equation, you still have equality.
We introduced the Subtraction Property of Equality earlier by modeling equations with envelopes and counters. models the equation
The goal is to isolate the variable on one side of the equation. So we ‘took away’ from both sides of the equation and found the solution
Some people picture a balance scale, as in , when they solve equations.
The quantities on both sides of the equal sign in an equation are equal, or balanced. Just as with the balance scale, whatever you do to one side of the equation you must also do to the other to keep it balanced.
Let’s review how to use Subtraction and Addition Properties of Equality to solve equations. We need to isolate the variable on one side of the equation. And we check our solutions by substituting the value into the equation to make sure we have a true statement.
In the original equation in the previous example, was added to the , so we subtracted to ‘undo’ the addition. In the next example, we will need to ‘undo’ subtraction by using the Addition Property of Equality.
Now let’s review solving equations with fractions.
In Solve Equations with Decimals, we solved equations that contained decimals. We’ll review this next.
### Solve Equations That Need to Be Simplified
In the examples up to this point, we have been able to isolate the variable with just one operation. Many of the equations we encounter in algebra will take more steps to solve. Usually, we will need to simplify one or both sides of an equation before using the Subtraction or Addition Properties of Equality. You should always simplify as much as possible before trying to isolate the variable.
### Translate an Equation and Solve
In previous chapters, we translated word sentences into equations. The first step is to look for the word (or words) that translate(s) to the equal sign. reminds us of some of the words that translate to the equal sign.
Let’s review the steps we used to translate a sentence into an equation.
Now we are ready to try an example.
### Translate and Solve Applications
In most of the application problems we solved earlier, we were able to find the quantity we were looking for by simplifying an algebraic expression. Now we will be using equations to solve application problems. We’ll start by restating the problem in just one sentence, assign a variable, and then translate the sentence into an equation to solve. When assigning a variable, choose a letter that reminds you of what you are looking for.
### Key Concepts
1. Determine whether a number is a solution to an equation.
If it is true, the number is a solution.
If it is not true, the number is not a solution.
2. Subtraction and Addition Properties of Equality
3. Translate a word sentence to an algebraic equation.
4. Problem-solving strategy
### Practice Makes Perfect
Solve Equations Using the Subtraction and Addition Properties of Equality
In the following exercises, determine whether the given value is a solution to the equation.
In the following exercises, solve each equation.
Solve Equations that Need to be Simplified
In the following exercises, solve each equation.
Translate to an Equation and Solve
In the following exercises, translate to an equation and then solve.
Translate and Solve Applications
In the following exercises, translate into an equation and solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Solving Linear Equations
## Solve Equations Using the Division and Multiplication Properties of Equality
### Solve Equations Using the Division and Multiplication Properties of Equality
We introduced the Multiplication and Division Properties of Equality in Solve Equations Using Integers; The Division Property of Equality and Solve Equations with Fractions. We modeled how these properties worked using envelopes and counters and then applied them to solving equations (See Solve Equations Using Integers; The Division Property of Equality). We restate them again here as we prepare to use these properties again.
When you divide or multiply both sides of an equation by the same quantity, you still have equality.
Let’s review how these properties of equality can be applied in order to solve equations. Remember, the goal is to ‘undo’ the operation on the variable. In the example below the variable is multiplied by so we will divide both sides by to ‘undo’ the multiplication.
In the previous example, to ‘undo’ multiplication, we divided. How do you think we ‘undo’ division?
### Solve Equations That Need to be Simplified
Many equations start out more complicated than the ones we’ve just solved. First, we need to simplify both sides of the equation as much as possible
### Key Concepts
1. Division and Multiplication Properties of Equality
### Practice Makes Perfect
Solve Equations Using the Division and Multiplication Properties of Equality
In the following exercises, solve each equation for the variable using the Division Property of Equality and check the solution.
In the following exercises, solve each equation for the variable using the Multiplication Property of Equality and check the solution.
Solve Equations That Need to be Simplified
In the following exercises, solve the equation.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Solving Linear Equations
## Solve Equations with Variables and Constants on Both Sides
### Solve an Equation with Constants on Both Sides
You may have noticed that in all the equations we have solved so far, all the variable terms were on only one side of the equation with the constants on the other side. This does not happen all the time—so now we’ll see how to solve equations where the variable terms and/or constant terms are on both sides of the equation.
Our strategy will involve choosing one side of the equation to be the variable side, and the other side of the equation to be the constant side. Then, we will use the Subtraction and Addition Properties of Equality, step by step, to get all the variable terms together on one side of the equation and the constant terms together on the other side.
By doing this, we will transform the equation that started with variables and constants on both sides into the form We already know how to solve equations of this form by using the Division or Multiplication Properties of Equality.
### Solve an Equation with Variables on Both Sides
What if there are variables on both sides of the equation? We will start like we did above—choosing a variable side and a constant side, and then use the Subtraction and Addition Properties of Equality to collect all variables on one side and all constants on the other side. Remember, what you do to the left side of the equation, you must do to the right side too.
### Solve Equations with Variables and Constants on Both Sides
The next example will be the first to have variables and constants on both sides of the equation. As we did before, we’ll collect the variable terms to one side and the constants to the other side.
We’ll summarize the steps we took so you can easily refer to them.
It is a good idea to make the variable side the one in which the variable has the larger coefficient. This usually makes the arithmetic easier.
To solve an equation with fractions, we still follow the same steps to get the solution.
We follow the same steps when the equation has decimals, too.
### Solve Equations Using a General Strategy
Each of the first few sections of this chapter has dealt with solving one specific form of a linear equation. It’s time now to lay out an overall strategy that can be used to solve any linear equation. We call this the general strategy. Some equations won’t require all the steps to solve, but many will. Simplifying each side of the equation as much as possible first makes the rest of the steps easier.
In many applications, we will have to solve equations with decimals. The same general strategy will work for these equations.
### Key Concepts
1. Solve an equation with variables and constants on both sides
2. General strategy for solving linear equations
### Practice Makes Perfect
Solve an Equation with Constants on Both Sides
In the following exercises, solve the equation for the variable.
Solve an Equation with Variables on Both Sides
In the following exercises, solve the equation for the variable.
Solve an Equation with Variables and Constants on Both Sides
In the following exercises, solve the equations for the variable.
Solve an Equation Using the General Strategy
In the following exercises, solve the linear equation using the general strategy.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Solving Linear Equations
## Solve Equations with Fraction or Decimal Coefficients
### Solve Equations with Fraction Coefficients
Let’s use the General Strategy for Solving Linear Equations introduced earlier to solve the equation
This method worked fine, but many students don’t feel very confident when they see all those fractions. So we are going to show an alternate method to solve equations with fractions. This alternate method eliminates the fractions.
We will apply the Multiplication Property of Equality and multiply both sides of an equation by the least common denominator of all the fractions in the equation. The result of this operation will be a new equation, equivalent to the first, but with no fractions. This process is called clearing the equation of fractions. Let’s solve the same equation again, but this time use the method that clears the fractions.
Notice in that once we cleared the equation of fractions, the equation was like those we solved earlier in this chapter. We changed the problem to one we already knew how to solve! We then used the General Strategy for Solving Linear Equations.
In the next example, we’ll have variables and fractions on both sides of the equation.
In , we’ll start by using the Distributive Property. This step will clear the fractions right away!
Many times, there will still be fractions, even after distributing.
### Solve Equations with Decimal Coefficients
Some equations have decimals in them. This kind of equation will occur when we solve problems dealing with money and percent. But decimals are really another way to represent fractions. For example, and So, when we have an equation with decimals, we can use the same process we used to clear fractions—multiply both sides of the equation by the least common denominator.
The next example uses an equation that is typical of the ones we will see in the money applications in the next chapter. Notice that we will distribute the decimal first before we clear all decimals in the equation.
### Key Concepts
1. Solve equations with fraction coefficients by clearing the fractions.
### Section Exercises
### Practice Makes Perfect
Solve equations with fraction coefficients
In the following exercises, solve the equation by clearing the fractions.
Solve Equations with Decimal Coefficients
In the following exercises, solve the equation by clearing the decimals.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Solve Equations using the Subtraction and Addition Properties of Equality
In the following exercises, determine whether the given number is a solution to the equation.
In the following exercises, solve the equation using the Subtraction Property of Equality.
In the following exercises, solve the equation using the Addition Property of Equality.
In the following exercises, solve the equation.
In the following exercises, translate each English sentence into an algebraic equation and then solve it.
In the following exercises, translate into an algebraic equation and solve.
### Solve Equations using the Division and Multiplication Properties of Equality
In the following exercises, solve each equation using the Division Property of Equality.
In the following exercises, solve each equation using the Multiplication Property of Equality.
In the following exercises, solve each equation.
### Solve Equations with Variables and Constants on Both Sides
In the following exercises, solve the equations with constants on both sides.
In the following exercises, solve the equations with variables on both sides.
In the following exercises, solve the equations with constants and variables on both sides.
In the following exercises, solve each linear equation using the general strategy.
### Solve Equations with Fraction or Decimal Coefficients
In the following exercises, solve each equation by clearing the fractions.
In the following exercises, solve each equation by clearing the decimals.
### Chapter Practice Test
In the following exercises, solve each equation. |
# Math Models and Geometry
## Introduction
We are surrounded by all sorts of geometry. Architects use geometry to design buildings. Artists create vivid images out of colorful geometric shapes. Street signs, automobiles, and product packaging all take advantage of geometric properties. In this chapter, we will begin by considering a formal approach to solving problems and use it to solve a variety of common problems, including making decisions about money. Then we will explore geometry and relate it to everyday situations, using the problem-solving strategy we develop. |
# Math Models and Geometry
## Use a Problem Solving Strategy
### Approach Word Problems with a Positive Attitude
The world is full of word problems. How much money do I need to fill the car with gas? How much should I tip the server at a restaurant? How many socks should I pack for vacation? How big a turkey do I need to buy for Thanksgiving dinner, and what time do I need to put it in the oven? If my sister and I buy our mother a present, how much will each of us pay?
Now that we can solve equations, we are ready to apply our new skills to word problems. Do you know anyone who has had negative experiences in the past with word problems? Have you ever had thoughts like the student in ?
When we feel we have no control, and continue repeating negative thoughts, we set up barriers to success. We need to calm our fears and change our negative feelings.
Start with a fresh slate and begin to think positive thoughts like the student in . Read the positive thoughts and say them out loud.
If we take control and believe we can be successful, we will be able to master word problems.
Think of something that you can do now but couldn't do three years ago. Whether it's driving a car, snowboarding, cooking a gourmet meal, or speaking a new language, you have been able to learn and master a new skill. Word problems are no different. Even if you have struggled with word problems in the past, you have acquired many new math skills that will help you succeed now!
### Use a Problem-solving Strategy for Word Problems
In earlier chapters, you translated word phrases into algebraic expressions, using some basic mathematical vocabulary and symbols. Since then you've increased your math vocabulary as you learned about more algebraic procedures, and you've had more practice translating from words into algebra.
You have also translated word sentences into algebraic equations and solved some word problems. The word problems applied math to everyday situations. You had to restate the situation in one sentence, assign a variable, and then write an equation to solve. This method works as long as the situation is familiar to you and the math is not too complicated.
Now we'll develop a strategy you can use to solve any word problem. This strategy will help you become successful with word problems. We'll demonstrate the strategy as we solve the following problem.
Let's use this approach with another example.
In Solve Sales Tax, Commission, and Discount Applications, we learned how to translate and solve basic percent equations and used them to solve sales tax and commission applications. In the next example, we will apply our Problem Solving Strategy to more applications of percent.
### Solve Number Problems
Now we will translate and solve number problems. In number problems, you are given some clues about one or more numbers, and you use these clues to build an equation. Number problems don't usually arise on an everyday basis, but they provide a good introduction to practicing the Problem Solving Strategy. Remember to look for clue words such as difference, of, and and.
Some number word problems ask you to find two or more numbers. It may be tempting to name them all with different variables, but so far we have only solved equations with one variable. We will define the numbers in terms of the same variable. Be sure to read the problem carefully to discover how all the numbers relate to each other.
Consecutive integers are integers that immediately follow each other. Some examples of consecutive integers are:
Notice that each number is one more than the number preceding it. So if we define the first integer as the next consecutive integer is The one after that is one more than so it is or
### Key Concepts
1. Problem Solving Strategy
### Practice Makes Perfect
Use a Problem-solving Strategy for Word Problems
In the following exercises, use the problem-solving strategy for word problems to solve. Answer in complete sentences.
Solve Number Problems
In the following exercises, solve each number word problem.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Math Models and Geometry
## Solve Money Applications
### Solve Coin Word Problems
Imagine taking a handful of coins from your pocket or purse and placing them on your desk. How would you determine the value of that pile of coins?
If you can form a step-by-step plan for finding the total value of the coins, it will help you as you begin solving coin word problems.
One way to bring some order to the mess of coins would be to separate the coins into stacks according to their value. Quarters would go with quarters, dimes with dimes, nickels with nickels, and so on. To get the total value of all the coins, you would add the total value of each pile.
How would you determine the value of each pile? Think about the dime pile—how much is it worth? If you count the number of dimes, you'll know how many you have—the number of dimes.
But this does not tell you the value of all the dimes. Say you counted dimes, how much are they worth? Each dime is worth —that is the value of one dime. To find the total value of the pile of dimes, multiply by to get This is the total value of all dimes.
You could continue this process for each type of coin, and then you would know the total value of each type of coin. To get the total value of all the coins, add the total value of each type of coin.
Let's look at a specific case. Suppose there are quarters, dimes, nickels, and pennies. We'll make a table to organize the information – the type of coin, the number of each, and the value.
The total value of all the coins is Notice how helped us organize all the information. Let's see how this method is used to solve a coin word problem.
### Solve Ticket and Stamp Word Problems
The strategies we used for coin problems can be easily applied to some other kinds of problems too. Problems involving tickets or stamps are very similar to coin problems, for example. Like coins, tickets and stamps have different values; so we can organize the information in tables much like we did for coin problems.
Now we'll do one where we fill in the table all at once.
### Key Concepts
1. Finding the Total Value for Coins of the Same Type
2. Solve a Coin Word Problem
3.
### Practice Makes Perfect
Solve Coin Word Problems
In the following exercises, solve the coin word problems.
Solve Ticket and Stamp Word Problems
In the following exercises, solve the ticket and stamp word problems.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Math Models and Geometry
## Use Properties of Angles, Triangles, and the Pythagorean Theorem
So far in this chapter, we have focused on solving word problems, which are similar to many real-world applications of algebra. In the next few sections, we will apply our problem-solving strategies to some common geometry problems.
### Use the Properties of Angles
Are you familiar with the phrase ‘do a It means to turn so that you face the opposite direction. It comes from the fact that the measure of an angle that makes a straight line is degrees. See .
An angle is formed by two rays that share a common endpoint. Each ray is called a side of the angle and the common endpoint is called the vertex. An angle is named by its vertex. In , is the angle with vertex at point The measure of is written
We measure angles in degrees, and use the symbol to represent degrees. We use the abbreviation for the measure of an angle. So if is we would write
If the sum of the measures of two angles is then they are called supplementary angles. In , each pair of angles is supplementary because their measures add to Each angle is the supplement of the other.
If the sum of the measures of two angles is then the angles are complementary angles. In , each pair of angles is complementary, because their measures add to Each angle is the complement of the other.
In this section and the next, you will be introduced to some common geometry formulas. We will adapt our Problem Solving Strategy for Geometry Applications. The geometry formula will name the variables and give us the equation to solve.
In addition, since these applications will all involve geometric shapes, it will be helpful to draw a figure and then label it with the information from the problem. We will include this step in the Problem Solving Strategy for Geometry Applications.
The next example will show how you can use the Problem Solving Strategy for Geometry Applications to answer questions about supplementary and complementary angles.
Did you notice that the words complementary and supplementary are in alphabetical order just like and are in numerical order?
### Use the Properties of Triangles
What do you already know about triangles? Triangle have three sides and three angles. Triangles are named by their vertices. The triangle in is called read ‘triangle ’. We label each side with a lower case letter to match the upper case letter of the opposite vertex.
The three angles of a triangle are related in a special way. The sum of their measures is
### Right Triangles
Some triangles have special names. We will look first at the right triangle. A right triangle has one angle, which is often marked with the symbol shown in .
If we know that a triangle is a right triangle, we know that one angle measures so we only need the measure of one of the other angles in order to determine the measure of the third angle.
In the examples so far, we could draw a figure and label it directly after reading the problem. In the next example, we will have to define one angle in terms of another. So we will wait to draw the figure until we write expressions for all the angles we are looking for.
### Similar Triangles
When we use a map to plan a trip, a sketch to build a bookcase, or a pattern to sew a dress, we are working with similar figures. In geometry, if two figures have exactly the same shape but different sizes, we say they are similar figures. One is a scale model of the other. The corresponding sides of the two figures have the same ratio, and all their corresponding angles have the same measures.
The two triangles in are similar. Each side of is four times the length of the corresponding side of and their corresponding angles have equal measures.
The length of a side of a triangle may be referred to by its endpoints, two vertices of the triangle. For example, in
We will often use this notation when we solve similar triangles because it will help us match up the corresponding side lengths.
### Use the Pythagorean Theorem
The Pythagorean Theorem is a special property of right triangles that has been used since ancient times. It is named after the Greek philosopher and mathematician Pythagoras who lived around BCE.
Remember that a right triangle has a angle, which we usually mark with a small square in the corner. The side of the triangle opposite the angle is called the hypotenuse, and the other two sides are called the legs. See .
The Pythagorean Theorem tells how the lengths of the three sides of a right triangle relate to each other. It states that in any right triangle, the sum of the squares of the two legs equals the square of the hypotenuse.
To solve problems that use the Pythagorean Theorem, we will need to find square roots. In Simplify and Use Square Roots we introduced the notation and defined it in this way:
For example, we found that is because
We will use this definition of square roots to solve for the length of a side in a right triangle.
### Key Concepts
1. Supplementary and Complementary Angles
2. Solve Geometry Applications
3. Sum of the Measures of the Angles of a Triangle
4. Right Triangle
5. Properties of Similar Triangles
### Practice Makes Perfect
Use the Properties of Angles
In the following exercises, find ⓐ the supplement and ⓑ the complement of the given angle.
In the following exercises, use the properties of angles to solve.
Use the Properties of Triangles
In the following exercises, solve using properties of triangles.
Find the Length of the Missing Side
In the following exercises, is similar to Find the length of the indicated side.
On a map, San Francisco, Las Vegas, and Los Angeles form a triangle whose sides are shown in the figure below. The actual distance from Los Angeles to Las Vegas is miles.
Use the Pythagorean Theorem
In the following exercises, use the Pythagorean Theorem to find the length of the hypotenuse.
Find the Length of the Missing Side
In the following exercises, use the Pythagorean Theorem to find the length of the missing side. Round to the nearest tenth, if necessary.
In the following exercises, solve. Approximate to the nearest tenth, if necessary.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Math Models and Geometry
## Use Properties of Rectangles, Triangles, and Trapezoids
In this section, we’ll continue working with geometry applications. We will add some more properties of triangles, and we’ll learn about the properties of rectangles and trapezoids.
### Understand Linear, Square, and Cubic Measure
When you measure your height or the length of a garden hose, you use a ruler or tape measure (). A tape measure might remind you of a line—you use it for linear measure, which measures length. Inch, foot, yard, mile, centimeter and meter are units of linear measure.
When you want to know how much tile is needed to cover a floor, or the size of a wall to be painted, you need to know the area, a measure of the region needed to cover a surface. Area is measured is square units. We often use square inches, square feet, square centimeters, or square miles to measure area. A square centimeter is a square that is one centimeter (cm) on each side. A square inch is a square that is one inch on each side ().
shows a rectangular rug that is feet long by feet wide. Each square is foot wide by foot long, or square foot. The rug is made of squares. The area of the rug is square feet.
When you measure how much it takes to fill a container, such as the amount of gasoline that can fit in a tank, or the amount of medicine in a syringe, you are measuring volume. Volume is measured in cubic units such as cubic inches or cubic centimeters. When measuring the volume of a rectangular solid, you measure how many cubes fill the container. We often use cubic centimeters, cubic inches, and cubic feet. A cubic centimeter is a cube that measures one centimeter on each side, while a cubic inch is a cube that measures one inch on each side ().
Suppose the cube in measures inches on each side and is cut on the lines shown. How many little cubes does it contain? If we were to take the big cube apart, we would find little cubes, with each one measuring one inch on all sides. So each little cube has a volume of cubic inch, and the volume of the big cube is cubic inches.
Many geometry applications will involve finding the perimeter or the area of a figure. There are also many applications of perimeter and area in everyday life, so it is important to make sure you understand what they each mean.
Picture a room that needs new floor tiles. The tiles come in squares that are a foot on each side—one square foot. How many of those squares are needed to cover the floor? This is the area of the floor.
Next, think about putting new baseboard around the room, once the tiles have been laid. To figure out how many strips are needed, you must know the distance around the room. You would use a tape measure to measure the number of feet around the room. This distance is the perimeter.
shows a square tile that is inch on each side. If an ant walked around the edge of the tile, it would walk inches. This distance is the perimeter of the tile.
Since the tile is a square that is inch on each side, its area is one square inch. The area of a shape is measured by determining how many square units cover the shape.
### Use the Properties of Rectangles
A rectangle has four sides and four right angles. The opposite sides of a rectangle are the same length. We refer to one side of the rectangle as the length, and the adjacent side as the width, See .
The perimeter, of the rectangle is the distance around the rectangle. If you started at one corner and walked around the rectangle, you would walk units, or two lengths and two widths. The perimeter then is
What about the area of a rectangle? Remember the rectangular rug from the beginning of this section. It was feet long by feet wide, and its area was square feet. See . Since we see that the area, is the length, times the width, so the area of a rectangle is
For easy reference as we work the examples in this section, we will restate the Problem Solving Strategy for Geometry Applications here.
In the next example, the width is defined in terms of the length. We’ll wait to draw the figure until we write an expression for the width so that we can label one side with that expression.
### Use the Properties of Triangles
We now know how to find the area of a rectangle. We can use this fact to help us visualize the formula for the area of a triangle. In the rectangle in , we’ve labeled the length and the width so it’s area is
We can divide this rectangle into two congruent triangles (). Triangles that are congruent have identical side lengths and angles, and so their areas are equal. The area of each triangle is one-half the area of the rectangle, or This example helps us see why the formula for the area of a triangle is
The formula for the area of a triangle is where is the base and is the height.
To find the area of the triangle, you need to know its base and height. The base is the length of one side of the triangle, usually the side at the bottom. The height is the length of the line that connects the base to the opposite vertex, and makes a angle with the base. shows three triangles with the base and height of each marked.
### Isosceles and Equilateral Triangles
Besides the right triangle, some other triangles have special names. A triangle with two sides of equal length is called an isosceles triangle. A triangle that has three sides of equal length is called an equilateral triangle. shows both types of triangles.
### Use the Properties of Trapezoids
A trapezoid is four-sided figure, a quadrilateral, with two sides that are parallel and two sides that are not. The parallel sides are called the bases. We call the length of the smaller base and the length of the bigger base The height, of a trapezoid is the distance between the two bases as shown in .
The formula for the area of a trapezoid is:
Splitting the trapezoid into two triangles may help us understand the formula. The area of the trapezoid is the sum of the areas of the two triangles. See .
The height of the trapezoid is also the height of each of the two triangles. See .
The formula for the area of a trapezoid is
If we distribute, we get,
### Key Concepts
1. Properties of Rectangles
2. Triangle Properties
### Practice Makes Perfect
Understand Linear, Square, and Cubic Measure
In the following exercises, determine whether you would measure each item using linear, square, or cubic units.
In the following exercises, find the ⓐ perimeter and ⓑ area of each figure. Assume each side of the square is cm.
Use the Properties of Rectangles
In the following exercises, find the ⓐ perimeter and ⓑ area of each rectangle.
In the following exercises, solve.
Use the Properties of Triangles
In the following exercises, solve using the properties of triangles.
Use the Properties of Trapezoids
In the following exercises, solve using the properties of trapezoids.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# Math Models and Geometry
## Solve Geometry Applications: Circles and Irregular Figures
In this section, we’ll continue working with geometry applications. We will add several new formulas to our collection of formulas. To help you as you do the examples and exercises in this section, we will show the Problem Solving Strategy for Geometry Applications here.
Problem Solving Strategy for Geometry Applications
### Use the Properties of Circles
Do you remember the properties of circles from Decimals and Fractions Together? We’ll show them here again to refer to as we use them to solve applications.
Remember, that we approximate with or depending on whether the radius of the circle is given as a decimal or a fraction. If you use the key on your calculator to do the calculations in this section, your answers will be slightly different from the answers shown. That is because the key uses more than two decimal places.
We usually see the formula for circumference in terms of the radius of the circle:
But since the diameter of a circle is two times the radius, we could write the formula for the circumference in terms
We will use this form of the circumference when we’re given the length of the diameter instead of the radius.
### Find the Area of Irregular Figures
So far, we have found area for rectangles, triangles, trapezoids, and circles. An irregular figure is a figure that is not a standard geometric shape. Its area cannot be calculated using any of the standard area formulas. But some irregular figures are made up of two or more standard geometric shapes. To find the area of one of these irregular figures, we can split it into figures whose formulas we know and then add the areas of the figures.
### Key Concepts
1. Problem Solving Strategy for Geometry Applications
2. Properties of Circles
### Practice Makes Perfect
Use the Properties of Circles
In the following exercises, solve using the properties of circles.
In the following exercises, find the radius of the circle with given circumference.
Find the Area of Irregular Figures
In the following exercises, find the area of the irregular figure. Round your answers to the nearest hundredth.
In the following exercises, solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After looking at the checklist, do you think you are well prepared for the next section? Why or why not?
|
# Math Models and Geometry
## Solve Geometry Applications: Volume and Surface Area
In this section, we will finish our study of geometry applications. We find the volume and surface area of some three-dimensional figures. Since we will be solving applications, we will once again show our Problem-Solving Strategy for Geometry Applications.
2. Read the problem and make sure you understand all the words and ideas. Draw the figure and label it with the given information.
3. Identify what you are looking for.
4. Name what you are looking for. Choose a variable to represent that quantity.
5. Translate into an equation by writing the appropriate formula or model for the situation. Substitute in the given information.
6. Solve the equation using good algebra techniques.
7. Check the answer in the problem and make sure it makes sense.
8. Answer the question with a complete sentence.
### Find Volume and Surface Area of Rectangular Solids
A cheerleading coach is having the squad paint wooden crates with the school colors to stand on at the games. (See ). The amount of paint needed to cover the outside of each box is the surface area, a square measure of the total area of all the sides. The amount of space inside the crate is the volume, a cubic measure.
Each crate is in the shape of a rectangular solid. Its dimensions are the length, width, and height. The rectangular solid shown in has length units, width units, and height units. Can you tell how many cubic units there are altogether? Let’s look layer by layer.
Altogether there are cubic units. Notice that is the
The volume, of any rectangular solid is the product of the length, width, and height.
We could also write the formula for volume of a rectangular solid in terms of the area of the base. The area of the base, is equal to
We can substitute for in the volume formula to get another form of the volume formula.
We now have another version of the volume formula for rectangular solids. Let’s see how this works with the rectangular solid we started with. See .
To find the surface area of a rectangular solid, think about finding the area of each of its faces. How many faces does the rectangular solid above have? You can see three of them.
Notice for each of the three faces you see, there is an identical opposite face that does not show.
The surface area of the rectangular solid shown in is square units.
In general, to find the surface area of a rectangular solid, remember that each face is a rectangle, so its area is the product of its two dimensions, either length and width, length and height, or width and height (see ). Find the area of each face that you see and then multiply each area by two to account for the face on the opposite side.
### Volume and Surface Area of a Cube
A cube is a rectangular solid whose length, width, and height are equal. See Volume and Surface Area of a Cube, below. Substituting, s for the length, width and height into the formulas for volume and surface area of a rectangular solid, we get:
So for a cube, the formulas for volume and surface area are and
### Find the Volume and Surface Area of Spheres
A sphere is the shape of a basketball, like a three-dimensional circle. Just like a circle, the size of a sphere is determined by its radius, which is the distance from the center of the sphere to any point on its surface. The formulas for the volume and surface area of a sphere are given below.
Showing where these formulas come from, like we did for a rectangular solid, is beyond the scope of this course. We will approximate with
### Find the Volume and Surface Area of a Cylinder
If you have ever seen a can of soda, you know what a cylinder looks like. A cylinder is a solid figure with two parallel circles of the same size at the top and bottom. The top and bottom of a cylinder are called the bases. The height of a cylinder is the distance between the two bases. For all the cylinders we will work with here, the sides and the height, , will be perpendicular to the bases.
Rectangular solids and cylinders are somewhat similar because they both have two bases and a height. The formula for the volume of a rectangular solid, , can also be used to find the volume of a cylinder.
For the rectangular solid, the area of the base, , is the area of the rectangular base, length × width. For a cylinder, the area of the base, is the area of its circular base, compares how the formula is used for rectangular solids and cylinders.
To understand the formula for the surface area of a cylinder, think of a can of vegetables. It has three surfaces: the top, the bottom, and the piece that forms the sides of the can. If you carefully cut the label off the side of the can and unroll it, you will see that it is a rectangle. See .
The distance around the edge of the can is the circumference of the cylinder’s base it is also the length of the rectangular label. The height of the cylinder is the width of the rectangular label. So the area of the label can be represented as
To find the total surface area of the cylinder, we add the areas of the two circles to the area of the rectangle.
The surface area of a cylinder with radius and height is
### Find the Volume of Cones
The first image that many of us have when we hear the word ‘cone’ is an ice cream cone. There are many other applications of cones (but most are not as tasty as ice cream cones). In this section, we will see how to find the volume of a cone.
In geometry, a cone is a solid figure with one circular base and a vertex. The height of a cone is the distance between its base and the vertex.The cones that we will look at in this section will always have the height perpendicular to the base. See .
Earlier in this section, we saw that the volume of a cylinder is We can think of a cone as part of a cylinder. shows a cone placed inside a cylinder with the same height and same base. If we compare the volume of the cone and the cylinder, we can see that the volume of the cone is less than that of the cylinder.
In fact, the volume of a cone is exactly one-third of the volume of a cylinder with the same base and height. The volume of a cone is
Since the base of a cone is a circle, we can substitute the formula of area of a circle, , for to get the formula for volume of a cone.
In this book, we will only find the volume of a cone, and not its surface area.
### Summary of Geometry Formulas
The following charts summarize all of the formulas covered in this chapter.
### Key Concepts
1. Volume and Surface Area of a Rectangular Solid
2. Volume and Surface Area of a Cube
3. Volume and Surface Area of a Sphere
4. Volume and Surface Area of a Cylinder
5. Volume of a Cone
### Practice Makes Perfect
Find Volume and Surface Area of Rectangular Solids
In the following exercises, find ⓐ the volume and ⓑ the surface area of the rectangular solid with the given dimensions.
In the following exercises, solve.
In the following exercises, find ⓐ the volume and ⓑ the surface area of the cube with the given side length.
In the following exercises, solve.
Find the Volume and Surface Area of Spheres
In the following exercises, find ⓐ the volume and ⓑ the surface area of the sphere with the given radius. Round answers to the nearest hundredth.
In the following exercises, solve. Round answers to the nearest hundredth.
Find the Volume and Surface Area of a Cylinder
In the following exercises, find ⓐ the volume and ⓑ the surface area of the cylinder with the given radius and height. Round answers to the nearest hundredth.
In the following exercises, solve. Round answers to the nearest hundredth.
Find the Volume of Cones
In the following exercises, find the volume of the cone with the given dimensions. Round answers to the nearest hundredth.
In the following exercises, solve. Round answers to the nearest hundredth.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Math Models and Geometry
## Solve a Formula for a Specific Variable
### Use the Distance, Rate, and Time Formula
One formula you’ll use often in algebra and in everyday life is the formula for distance traveled by an object moving at a constant speed. The basic idea is probably already familiar to you. Do you know what distance you travel if you drove at a steady rate of miles per hour for hours? (This might happen if you use your car’s cruise control while driving on the Interstate.) If you said miles, you already know how to use this formula!
The math to calculate the distance might look like this:
In general, the formula relating distance, rate, and time is
Notice that the units we used above for the rate were miles per hour, which we can write as a ratio Then when we multiplied by the time, in hours, the common units ‘hour’ divided out. The answer was in miles.
### Solve a Formula for a Specific Variable
In this chapter, you became familiar with some formulas used in geometry. Formulas are also very useful in the sciences and social sciences—fields such as chemistry, physics, biology, psychology, sociology, and criminal justice. Healthcare workers use formulas, too, even for something as routine as dispensing medicine. The widely used spreadsheet program Microsoft ExcelTM relies on formulas to do its calculations. Many teachers use spreadsheets to apply formulas to compute student grades. It is important to be familiar with formulas and be able to manipulate them easily.
In and , we used the formula This formula gives the value of when you substitute in the values of and But in , we had to find the value of We substituted in values of and and then used algebra to solve to If you had to do this often, you might wonder why there isn’t a formula that gives the value of when you substitute in the values of and We can get a formula like this by solving the formula for
To solve a formula for a specific variable means to get that variable by itself with a coefficient of on one side of the equation and all the other variables and constants on the other side. We will call this solving an equation for a specific variable in general. This process is also called solving a literal equation. The result is another formula, made up only of variables. The formula contains letters, or literals.
Let’s try a few examples, starting with the distance, rate, and time formula we used above.
In Solve Simple Interest Applications, we used the formula to calculate simple interest, where is interest, is principal, is rate as a decimal, and is time in years.
Later in this class, and in future algebra classes, you’ll encounter equations that relate two variables, usually and You might be given an equation that is solved for and need to solve it for or vice versa. In the following example, we’re given an equation with both and on the same side and we’ll solve it for To do this, we will follow the same steps that we used to solve a formula for a specific variable.
In the previous examples, we used the numbers in part (a) as a guide to solving in general in part (b). Do you think you’re ready to solve a formula in general without using numbers as a guide?
### Key Concepts
1. Distance, Rate, and Time
### Section Exercises
### Practice Makes Perfect
Use the Distance, Rate, and Time Formula
In the following exercises, solve.
Solve a Formula for a Specific Variable
In the following exercises, use the formula.
In the following exercises, use the formula
In the following exercises, use the formula
In the following exercises, solve.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Use a Problem Solving Strategy
Approach Word Problems with a Positive Attitude
In the following exercises, solve.
Use a Problem Solving Strategy for Word Problems
In the following exercises, solve using the problem-solving strategy for word problems. Remember to write a complete sentence to answer each question.
Solve Number Problems
In the following exercises, solve each number word problem.
### Solve Money Applications
Solve Coin Word Problems
In the following exercises, solve each coin word problem.
Solve Ticket and Stamp Word Problems
In the following exercises, solve each ticket or stamp word problem.
### Use Properties of Angles, Triangles, and the Pythagorean Theorem
Use Properties of Angles
In the following exercises, solve using properties of angles.
Use Properties of Triangles
In the following exercises, solve using properties of triangles.
In the following exercises, is similar to Find the length of the indicated side.
Use the Pythagorean Theorem
In the following exercises, use the Pythagorean Theorem to find the length of the missing side. Round to the nearest tenth, if necessary.
In the following exercises, solve. Approximate to the nearest tenth, if necessary.
### Use Properties of Rectangles, Triangles, and Trapezoids
Understand Linear, Square, Cubic Measure
In the following exercises, would you measure each item using linear, square, or cubic measure?
In the following exercises, find
Use Properties of Rectangles
In the following exercises, find the ⓐ perimeter ⓑ area of each rectangle
In the following exercises, solve.
Use Properties of Triangles
In the following exercises, solve using the properties of triangles.
Use Properties of Trapezoids
In the following exercises, solve using the properties of trapezoids.
### Solve Geometry Applications: Circles and Irregular Figures
Use Properties of Circles
In the following exercises, solve using the properties of circles. Round answers to the nearest hundredth.
Find the Area of Irregular Figures
In the following exercises, find the area of each shaded region.
### Solve Geometry Applications: Volume and Surface Area
Find Volume and Surface Area of Rectangular Solids
In the following exercises, find the
Find Volume and Surface Area of Spheres
In the following exercises, find the
Find Volume and Surface Area of Cylinders
In the following exercises, find the
Find Volume of Cones
In the following exercises, find the volume of the cone.
### Solve a Formula for a Specific Variable
Use the Distance, Rate, and Time Formula
In the following exercises, solve using the formula for distance, rate, and time.
Solve a Formula for a Specific Variable
In the following exercises, use the formula
In the following exercises, use the formula
In the following exercises, use the formula
In the following exercises, solve.
### Chapter Practice Test
|
# Polynomials
## Introduction to Polynomials
Expressions known as polynomials are used widely in algebra. Applications of these expressions are essential to many careers, including economists, engineers, and scientists. In this chapter, we will find out what polynomials are and how to manipulate them through basic mathematical operations. |
# Polynomials
## Add and Subtract Polynomials
### Identify Polynomials, Monomials, Binomials, and Trinomials
In Evaluate, Simplify, and Translate Expressions, you learned that a term is a constant or the product of a constant and one or more variables. When it is of the form where is a constant and is a whole number, it is called a monomial. A monomial, or a sum and/or difference of monomials, is called a polynomial.
Notice the roots:
1. poly- means many
2. mono- means one
3. bi- means two
4. tri- means three
Here are some examples of polynomials:
Notice that every monomial, binomial, and trinomial is also a polynomial. They are special members of the family of polynomials and so they have special names. We use the words ‘monomial’, ‘binomial’, and ‘trinomial’ when referring to these special polynomials and just call all the rest ‘polynomials’.
### Determine the Degree of Polynomials
In this section, we will work with polynomials that have only one variable in each term. The degree of a polynomial and the degree of its terms are determined by the exponents of the variable.
A monomial that has no variable, just a constant, is a special case. The degree of a constant is —it has no variable.
Let's see how this works by looking at several polynomials. We'll take it step by step, starting with monomials, and then progressing to polynomials with more terms.
Remember: Any base written without an exponent has an implied exponent of
Working with polynomials is easier when you list the terms in descending order of degrees. When a polynomial is written this way, it is said to be in standard form. Look back at the polynomials in . Notice that they are all written in standard form. Get in the habit of writing the term with the highest degree first.
### Add and Subtract Monomials
In The Language of Algebra, you simplified expressions by combining like terms. Adding and subtracting monomials is the same as combining like terms. Like terms must have the same variable with the same exponent. Recall that when combining like terms only the coefficients are combined, never the exponents.
### Add and Subtract Polynomials
Adding and subtracting polynomials can be thought of as just adding and subtracting like terms. Look for like terms—those with the same variables with the same exponent. The Commutative Property allows us to rearrange the terms to put like terms together. It may also be helpful to underline, circle, or box like terms.
Parentheses are grouping symbols. When we add polynomials as we did in , we can rewrite the expression without parentheses and then combine like terms. But when we subtract polynomials, we must be very careful with the signs.
### Evaluate a Polynomial for a Given Value
In The Language of Algebra we evaluated expressions. Since polynomials are expressions, we'll follow the same procedures to evaluate polynomials—substitute the given value for the variable into the polynomial, and then simplify.
### Practice Makes Perfect
Identify Polynomials, Monomials, Binomials and Trinomials
In the following exercises, determine if each of the polynomials is a monomial, binomial, trinomial, or other polynomial.
Determine the Degree of Polynomials
In the following exercises, determine the degree of each polynomial.
Add and Subtract Monomials
In the following exercises, add or subtract the monomials.
Add and Subtract Polynomials
In the following exercises, add or subtract the polynomials.
Evaluate a Polynomial for a Given Value
In the following exercises, evaluate each polynomial for the given value.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Polynomials
## Use Multiplication Properties of Exponents
### Simplify Expressions with Exponents
Remember that an exponent indicates repeated multiplication of the same quantity. For example, means to multiply four factors of so means This format is known as exponential notation.
In the expression the exponent tells us how many times we use the base as a factor.
Before we begin working with variable expressions containing exponents, let’s simplify a few expressions involving only numbers.
### Simplify Expressions Using the Product Property of Exponents
You have seen that when you combine like terms by adding and subtracting, you need to have the same base with the same exponent. But when you multiply and divide, the exponents may be different, and sometimes the bases may be different, too. We’ll derive the properties of exponents by looking for patterns in several examples. All the exponent properties hold true for any real numbers, but right now we will only use whole number exponents.
First, we will look at an example that leads to the Product Property.
The base stayed the same and we added the exponents. This leads to the Product Property for Exponents.
An example with numbers helps to verify this property.
We can extend the Product Property of Exponents to more than two factors.
### Simplify Expressions Using the Power Property of Exponents
Now let’s look at an exponential expression that contains a power raised to a power. See if you can discover a general property.
We multiplied the exponents. This leads to the Power Property for Exponents.
An example with numbers helps to verify this property.
### Simplify Expressions Using the Product to a Power Property
We will now look at an expression containing a product that is raised to a power. Look for a pattern.
The exponent applies to each of the factors. This leads to the Product to a Power Property for Exponents.
An example with numbers helps to verify this property:
### Simplify Expressions by Applying Several Properties
We now have three properties for multiplying expressions with exponents. Let’s summarize them and then we’ll do some examples that use more than one of the properties.
### Multiply Monomials
Since a monomial is an algebraic expression, we can use the properties for simplifying expressions with exponents to multiply the monomials.
### Key Concepts
1. Exponential Notation
This is read
2. Product Property of Exponents
3. Power Property for Exponents
4. Product to a Power Property for Exponents
### Practice Makes Perfect
Simplify Expressions with Exponents
In the following exercises, simplify each expression with exponents.
Simplify Expressions Using the Product Property of Exponents
In the following exercises, simplify each expression using the Product Property of Exponents.
Simplify Expressions Using the Power Property of Exponents
In the following exercises, simplify each expression using the Power Property of Exponents.
Simplify Expressions Using the Product to a Power Property
In the following exercises, simplify each expression using the Product to a Power Property.
Simplify Expressions by Applying Several Properties
In the following exercises, simplify each expression.
Multiply Monomials
In the following exercises, multiply the following monomials.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Polynomials
## Multiply Polynomials
### Multiply a Polynomial by a Monomial
In Distributive Property you learned to use the Distributive Property to simplify expressions such as You multiplied both terms in the parentheses, by to get With this chapter's new vocabulary, you can say you were multiplying a binomial, by a monomial, Multiplying a binomial by a monomial is nothing new for you!
Multiplying a monomial by a trinomial works in much the same way.
Now we will have the monomial as the second factor.
### Multiply a Binomial by a Binomial
Just like there are different ways to represent multiplication of numbers, there are several methods that can be used to multiply a binomial times a binomial.
### Using the Distributive Property
We will start by using the Distributive Property. Look again at .
Notice that before combining like terms, we had four terms. We multiplied the two terms of the first binomial by the two terms of the second binomial—four multiplications.
Be careful to distinguish between a sum and a product.
Now we'll see how to multiply binomials where the variable has a coefficient.
In the previous examples, the binomials were sums. When there are differences, we pay special attention to make sure the signs of the product are correct.
Up to this point, the product of two binomials has been a trinomial. This is not always the case.
### Using the FOIL Method
Remember that when you multiply a binomial by a binomial you get four terms. Sometimes you can combine like terms to get a trinomial, but sometimes there are no like terms to combine. Let's look at the last example again and pay particular attention to how we got the four terms.
Where did the first term, come from?
It is the product of the first terms in
The next term, is the product of the two outer terms.
The third term, is the product of the two inner terms.
And the last term, came from multiplying the two last terms.
We abbreviate “First, Outer, Inner, Last” as FOIL. The letters stand for ‘First, Outer, Inner, Last’. The word FOIL is easy to remember and ensures we find all four products. We might say we use the FOIL method to multiply two binomials.
Let's look at again. Now we will work through an example where we use the FOIL pattern to multiply two binomials.
We summarize the steps of the FOIL method below. The FOIL method only applies to multiplying binomials, not other polynomials!
### Using the Vertical Method
The FOIL method is usually the quickest method for multiplying two binomials, but it works only for binomials. You can use the Distributive Property to find the product of any two polynomials. Another method that works for all polynomials is the Vertical Method. It is very much like the method you use to multiply whole numbers. Look carefully at this example of multiplying two-digit numbers.
You start by multiplying by to get
Then you multiply by lining up the partial product in the correct columns.
Last, you add the partial products.
Now we'll apply this same method to multiply two binomials.
We have now used three methods for multiplying binomials. Be sure to practice each method, and try to decide which one you prefer. The three methods are listed here to help you remember them.
### Multiply a Trinomial by a Binomial
We have multiplied monomials by monomials, monomials by polynomials, and binomials by binomials. Now we're ready to multiply a trinomial by a binomial. Remember, the FOIL method will not work in this case, but we can use either the Distributive Property or the Vertical Method. We first look at an example using the Distributive Property.
Now let's do this same multiplication using the Vertical Method.
### Key Concepts
1. Use the FOIL method for multiplying two binomials.
2. Multiplying Two Binomials: To multiply binomials, use the:
3. Multiplying a Trinomial by a Binomial: To multiply a trinomial by a binomial, use the:
### Practice Makes Perfect
Multiply a Polynomial by a Monomial
In the following exercises, multiply.
Multiply a Binomial by a Binomial
In the following exercises, multiply the following binomials using: ⓐ the Distributive Property ⓑ the FOIL method ⓒ the Vertical method
In the following exercises, multiply the following binomials. Use any method.
Multiply a Trinomial by a Binomial
In the following exercises, multiply using ⓐ the Distributive Property and ⓑ the Vertical Method.
In the following exercises, multiply. Use either method.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Polynomials
## Divide Monomials
### Simplify Expressions Using the Quotient Property of Exponents
Earlier in this chapter, we developed the properties of exponents for multiplication. We summarize these properties here.
Now we will look at the exponent properties for division. A quick memory refresher may help before we get started. In Fractions you learned that fractions may be simplified by dividing out common factors from the numerator and denominator using the Equivalent Fractions Property. This property will also help us work with algebraic fractions—which are also quotients.
As before, we'll try to discover a property by looking at some examples.
Notice that in each case the bases were the same and we subtracted the exponents.
1. When the larger exponent was in the numerator, we were left with factors in the numerator and in the denominator, which we simplified.
2. When the larger exponent was in the denominator, we were left with factors in the denominator, and in the numerator, which could not be simplified.
We write:
A couple of examples with numbers may help to verify this property.
When we work with numbers and the exponent is less than or equal to we will apply the exponent. When the exponent is greater than , we leave the answer in exponential form.
### Simplify Expressions with Zero Exponents
A special case of the Quotient Property is when the exponents of the numerator and denominator are equal, such as an expression like From earlier work with fractions, we know that
In words, a number divided by itself is So for any (), since any number divided by itself is
The Quotient Property of Exponents shows us how to simplify when and when by subtracting exponents. What if ?
Now we will simplify in two ways to lead us to the definition of the zero exponent.
Consider first which we know is
We see simplifies to a and to . So .
In this text, we assume any variable that we raise to the zero power is not zero.
Now that we have defined the zero exponent, we can expand all the Properties of Exponents to include whole number exponents.
What about raising an expression to the zero power? Let's look at We can use the product to a power rule to rewrite this expression.
This tells us that any non-zero expression raised to the zero power is one.
### Simplify Expressions Using the Quotient to a Power Property
Now we will look at an example that will lead us to the Quotient to a Power Property.
Notice that the exponent applies to both the numerator and the denominator.
We see that is
This leads to the Quotient to a Power Property for Exponents.
An example with numbers may help you understand this property:
### Simplify Expressions by Applying Several Properties
We'll now summarize all the properties of exponents so they are all together to refer to as we simplify expressions using several properties. Notice that they are now defined for whole number exponents.
### Divide Monomials
We have now seen all the properties of exponents. We'll use them to divide monomials. Later, you'll use them to divide polynomials.
When we divide monomials with more than one variable, we write one fraction for each variable.
Once you become familiar with the process and have practiced it step by step several times, you may be able to simplify a fraction in one step.
In all examples so far, there was no work to do in the numerator or denominator before simplifying the fraction. In the next example, we'll first find the product of two monomials in the numerator before we simplify the fraction.
### Key Concepts
1. Equivalent Fractions Property
2. Zero Exponent
3. Quotient Property for Exponents
4. Quotient to a Power Property for Exponents
### Practice Makes Perfect
Simplify Expressions Using the Quotient Property of Exponents
In the following exercises, simplify.
Simplify Expressions with Zero Exponents
In the following exercises, simplify.
Simplify Expressions Using the Quotient to a Power Property
In the following exercises, simplify.
Simplify Expressions by Applying Several Properties
In the following exercises, simplify.
Divide Monomials
In the following exercises, divide the monomials.
### Mixed Practice
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
|
# Polynomials
## Integer Exponents and Scientific Notation
### Use the Definition of a Negative Exponent
The Quotient Property of Exponents, introduced in Divide Monomials, had two forms depending on whether the exponent in the numerator or denominator was larger.
What if we just subtract exponents, regardless of which is larger? Let’s consider
We subtract the exponent in the denominator from the exponent in the numerator.
We can also simplify by dividing out common factors:
This implies that and it leads us to the definition of a negative exponent.
The negative exponent tells us to re-write the expression by taking the reciprocal of the base and then changing the sign of the exponent. Any expression that has negative exponents is not considered to be in simplest form. We will use the definition of a negative exponent and other properties of exponents to write an expression with only positive exponents.
When simplifying any expression with exponents, we must be careful to correctly identify the base that is raised to each exponent.
We must be careful to follow the order of operations. In the next example, parts ⓐ and ⓑ look similar, but we get different results.
When a variable is raised to a negative exponent, we apply the definition the same way we did with numbers.
When there is a product and an exponent we have to be careful to apply the exponent to the correct quantity. According to the order of operations, expressions in parentheses are simplified before exponents are applied. We’ll see how this works in the next example.
Now that we have defined negative exponents, the Quotient Property of Exponents needs only one form, where and m and n are integers.
When the exponent in the denominator is larger than the exponent in the numerator, the exponent of the quotient will be negative. If the result gives us a negative exponent, we will rewrite it by using the definition of negative exponents,
### Simplify Expressions with Integer Exponents
All the exponent properties we developed earlier in this chapter with whole number exponents apply to integer exponents, too. We restate them here for reference.
In the next two examples, we’ll start by using the Commutative Property to group the same variables together. This makes it easier to identify the like bases before using the Product Property of Exponents.
If the monomials have numerical coefficients, we multiply the coefficients, just as we did in Integer Exponents and Scientific Notation.
In the next two examples, we’ll use the Power Property and the Product to a Power Property.
To simplify a fraction, we use the Quotient Property.
### Convert from Decimal Notation to Scientific Notation
Remember working with place value for whole numbers and decimals? Our number system is based on powers of We use tens, hundreds, thousands, and so on. Our decimal numbers are also based on powers of tens—tenths, hundredths, thousandths, and so on.
Consider the numbers and We know that means and means If we write the as a power of ten in exponential form, we can rewrite these numbers in this way:
When a number is written as a product of two numbers, where the first factor is a number greater than or equal to one but less than and the second factor is a power of written in exponential form, it is said to be in scientific notation.
It is customary in scientific notation to use as the multiplication sign, even though we avoid using this sign elsewhere in algebra.
Scientific notation is a useful way of writing very large or very small numbers. It is used often in the sciences to make calculations easier.
If we look at what happened to the decimal point, we can see a method to easily convert from decimal notation to scientific notation.
In both cases, the decimal was moved places to get the first factor, by itself.
1. The power of is positive when the number is larger than
2. The power of is negative when the number is between and
### Convert Scientific Notation to Decimal Form
How can we convert from scientific notation to decimal form? Let’s look at two numbers written in scientific notation and see.
If we look at the location of the decimal point, we can see an easy method to convert a number from scientific notation to decimal form.
In both cases the decimal point moved 4 places. When the exponent was positive, the decimal moved to the right. When the exponent was negative, the decimal point moved to the left.
### Multiply and Divide Using Scientific Notation
We use the Properties of Exponents to multiply and divide numbers in scientific notation.
### Key Concepts
1. Summary of Exponent Properties
2. Convert from Decimal Notation to Scientific Notation: To convert a decimal to scientific notation:
3. Convert Scientific Notation to Decimal Form: To convert scientific notation to decimal form:
### Practice Makes Perfect
Use the Definition of a Negative Exponent
In the following exercises, simplify.
Simplify Expressions with Integer Exponents
In the following exercises, simplify.
Convert from Decimal Notation to Scientific Notation
In the following exercises, write each number in scientific notation.
Convert Scientific Notation to Decimal Form
In the following exercises, convert each number to decimal form.
Multiply and Divide Using Scientific Notation
In the following exercises, multiply or divide and write your answer in decimal form.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After looking at the checklist, do you think you are well prepared for the next section? Why or why not?
|
# Polynomials
## Introduction to Factoring Polynomials
### Find the Greatest Common Factor of Two or More Expressions
Earlier we multiplied factors together to get a product. Now, we will be reversing this process; we will start with a product and then break it down into its factors. Splitting a product into factors is called factoring.
In The Language of Algebra we factored numbers to find the least common multiple (LCM) of two or more numbers. Now we will factor expressions and find the greatest common factor of two or more expressions. The method we use is similar to what we used to find the LCM.
First we will find the greatest common factor of two numbers.
In the previous example, we found the greatest common factor of constants. The greatest common factor of an algebraic expression can contain variables raised to powers along with coefficients. We summarize the steps we use to find the greatest common factor.
In the examples so far, the greatest common factor was a constant. In the next two examples we will get variables in the greatest common factor.
### Factor the Greatest Common Factor from a Polynomial
Just like in arithmetic, where it is sometimes useful to represent a number in factored form (for example, as in algebra it can be useful to represent a polynomial in factored form. One way to do this is by finding the greatest common factor of all the terms. Remember that you can multiply a polynomial by a monomial as follows:
Here, we will start with a product, like and end with its factors, To do this we apply the Distributive Property “in reverse”.
The form on the left is used to multiply. The form on the right is used to factor.
So how do we use the Distributive Property to factor a polynomial? We find the GCF of all the terms and write the polynomial as a product!
Notice that in , we used the word factor as both a noun and a verb:
The expressions in the next example have several factors in common. Remember to write the GCF as the product of all the common factors.
Now we’ll factor the greatest common factor from a trinomial. We start by finding the GCF of all three terms.
In the next example, we factor a variable from a binomial.
When there are several common factors, as we’ll see in the next two examples, good organization and neat work helps!
When the leading coefficient, the coefficient of the first term, is negative, we factor the negative out as part of the GCF.
Pay close attention to the signs of the terms in the next example.
### Key Concepts
1. Find the greatest common factor.
2. Distributive Property
3. Factor the greatest common factor from a polynomial.
### Section Exercises
### Practice Makes Perfect
Find the Greatest Common Factor of Two or More Expressions
In the following exercises, find the greatest common factor.
Factor the Greatest Common Factor from a Polynomial
In the following exercises, factor the greatest common factor from each polynomial.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ Overall, after looking at the checklist, do you think you are well-prepared for the next Chapter? Why or why not?
### Chapter Review Exercises
### Add and Subtract Polynomials
Identify Polynomials, Monomials, Binomials and Trinomials
In the following exercises, determine if each of the following polynomials is a monomial, binomial, trinomial, or other polynomial.
Determine the Degree of Polynomials
In the following exercises, determine the degree of each polynomial.
Add and Subtract Monomials
In the following exercises, add or subtract the monomials.
Add and Subtract Polynomials
In the following exercises, add or subtract the polynomials.
Evaluate a Polynomial for a Given Value of the Variable
In the following exercises, evaluate each polynomial for the given value.
### Use Multiplication Properties of Exponents
Simplify Expressions with Exponents
In the following exercises, simplify.
Simplify Expressions Using the Product Property of Exponents
In the following exercises, simplify each expression.
Simplify Expressions Using the Power Property of Exponents
In the following exercises, simplify each expression.
Simplify Expressions Using the Product to a Power Property
In the following exercises, simplify each expression.
Simplify Expressions by Applying Several Properties
In the following exercises, simplify each expression.
Multiply Monomials
In the following exercises, multiply the monomials.
### Multiply Polynomials
Multiply a Polynomial by a Monomial
In the following exercises, multiply.
Multiply a Binomial by a Binomial
In the following exercises, multiply the binomials using various methods.
Multiply a Trinomial by a Binomial
In the following exercises, multiply using any method.
### Divide Monomials
Simplify Expressions Using the Quotient Property of Exponents
In the following exercises, simplify.
Simplify Expressions with Zero Exponents
In the following exercises, simplify.
Simplify Expressions Using the Quotient to a Power Property
In the following exercises, simplify.
Simplify Expressions by Applying Several Properties
In the following exercises, simplify.
Divide Monomials
In the following exercises, divide the monomials.
### Integer Exponents and Scientific Notation
Use the Definition of a Negative Exponent
In the following exercises, simplify.
Simplify Expressions with Integer Exponents
In the following exercises, simplify.
Convert from Decimal Notation to Scientific Notation
In the following exercises, write each number in scientific notation.
Convert Scientific Notation to Decimal Form
In the following exercises, convert each number to decimal form.
Multiply and Divide Using Scientific Notation
In the following exercises, multiply and write your answer in decimal form.
### Introduction to Factoring Polynomials
Find the Greatest Common Factor of Two or More Expressions
In the following exercises, find the greatest common factor.
Factor the Greatest Common Factor from a Polynomial
In the following exercises, factor the greatest common factor from each polynomial.
### Chapter Practice Test
In the following exercises, simplify each expression.
In the following exercises, factor the greatest common factor from each polynomial.
In the following exercises, simplify, and write your answer in decimal form. |
# Graphs
## Graphs
Which cyclist will win the race? What will the winning time be? How many seconds will separate the winner from the runner-up? One way to summarize the information from the race is by creating a graph. In this chapter, we will discuss the basic concepts of graphing. The applications of graphing go far beyond races. They are used to present information in almost every field, including healthcare, business, and entertainment. |
# Graphs
## Use the Rectangular Coordinate System
### Plot Points on a Rectangular Coordinate System
Many maps, such as the Campus Map shown in , use a grid system to identify locations. Do you see the numbers and across the top and bottom of the map and the letters A, B, C, and D along the sides? Every location on the map can be identified by a number and a letter.
For example, the Student Center is in section 2B. It is located in the grid section above the number and next to the letter B. In which grid section is the Stadium? The Stadium is in section 4D.
Just as maps use a grid system to identify locations, a grid system is used in algebra to show a relationship between two variables in a rectangular coordinate system. To create a rectangular coordinate system, start with a horizontal number line. Show both positive and negative numbers as you did before, using a convenient scale unit. This horizontal number line is called the .
Now, make a vertical number line passing through the at Put the positive numbers above and the negative numbers below See . This vertical line is called the .
Vertical grid lines pass through the integers marked on the Horizontal grid lines pass through the integers marked on the The resulting grid is the rectangular coordinate system.
The rectangular coordinate system is also called the plane, the coordinate plane, or the Cartesian coordinate system (since it was developed by a mathematician named René Descartes.)
The and the form the rectangular coordinate system. These axes divide a plane into four areas, called quadrants. The quadrants are identified by Roman numerals, beginning on the upper right and proceeding counterclockwise. See .
In the rectangular coordinate system, every point is represented by an ordered pair. The first number in the ordered pair is the x-coordinate of the point, and the second number is the y-coordinate of the point.
So how do the coordinates of a point help you locate a point on the plane?
Let’s try locating the point . In this ordered pair, the -coordinate is and the -coordinate is .
We start by locating the value, on the Then we lightly sketch a vertical line through as shown in .
Now we locate the value, on the -axis and sketch a horizontal line through . The point where these two lines meet is the point with coordinates We plot the point there, as shown in .
How do the signs affect the location of the points?
You may have noticed some patterns as you graphed the points in the two previous examples.
For each point in Quadrant IV, what do you notice about the signs of the coordinates?
What about the signs of the coordinates of the points in the third quadrant? The second quadrant? The first quadrant?
Can you tell just by looking at the coordinates in which quadrant the point (−2, 5) is located? In which quadrant is (2, −5) located?
We can summarize sign patterns of the quadrants as follows. Also see .
What if one coordinate is zero? Where is the point located? Where is the point located? The point is on the y-axis and the point is on the x-axis.
### Identify Points on a Graph
In algebra, being able to identify the coordinates of a point shown on a graph is just as important as being able to plot points. To identify the of a point on a graph, read the number on the directly above or below the point. To identify the of a point, read the number on the directly to the left or right of the point. Remember, to write the ordered pair using the correct order
### Verify Solutions to an Equation in Two Variables
All the equations we solved so far have been equations with one variable. In almost every case, when we solved the equation we got exactly one solution. The process of solving an equation ended with a statement such as Then we checked the solution by substituting back into the equation.
Here’s an example of a linear equation in one variable, and its one solution.
But equations can have more than one variable. Equations with two variables can be written in the general form An equation of this form is called a linear equation in two variables.
Notice that the word “line” is in linear.
Here is an example of a linear equation in two variables, and
Is a linear equation? It does not appear to be in the form But we could rewrite it in this form.
By rewriting as we can see that it is a linear equation in two variables because it can be written in the form
Linear equations in two variables have infinitely many solutions. For every number that is substituted for there is a corresponding value. This pair of values is a solution to the linear equation and is represented by the ordered pair When we substitute these values of and into the equation, the result is a true statement because the value on the left side is equal to the value on the right side.
### Complete a Table of Solutions to a Linear Equation
In the previous examples, we substituted the of a given ordered pair to determine whether or not it was a solution to a linear equation. But how do we find the ordered pairs if they are not given? One way is to choose a value for and then solve the equation for Or, choose a value for and then solve for
We’ll start by looking at the solutions to the equation we found in . We can summarize this information in a table of solutions.
To find a third solution, we’ll let and solve for
The ordered pair is a solution to . We will add it to the table.
We can find more solutions to the equation by substituting any value of or any value of and solving the resulting equation to get another ordered pair that is a solution. There are an infinite number of solutions for this equation.
### Find Solutions to Linear Equations in Two Variables
To find a solution to a linear equation, we can choose any number we want to substitute into the equation for either or We could choose or any other value we want. But it’s a good idea to choose a number that’s easy to work with. We’ll usually choose as one of our values.
We said that linear equations in two variables have infinitely many solutions, and we’ve just found one of them. Let’s find some other solutions to the equation
Let’s find some solutions to another equation now.
### Key Concepts
1. Sign Patterns of the Quadrants
2. Coordinates of Zero
### Practice Makes Perfect
Plot Points on a Rectangular Coordinate System
In the following exercises, plot each point on a coordinate grid.
In the following exercises, plot each point on a coordinate grid and identify the quadrant in which the point is located.
In the following exercises, plot each point on a coordinate grid.
Identify Points on a Graph
In the following exercises, name the ordered pair of each point shown.
Verify Solutions to an Equation in Two Variables
In the following exercises, determine which ordered pairs are solutions to the given equation.
Find Solutions to Linear Equations in Two Variables
In the following exercises, complete the table to find solutions to each linear equation.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ If most of your checks were:
…confidently. Congratulations! You have achieved the objectives in this section. Reflect on the study skills you used so that you can continue to use them. What did you do to become confident of your ability to do these things? Be specific.
…with some help. This must be addressed quickly because topics you do not master become potholes in your road to success. In math, every topic builds upon previous work. It is important to make sure you have a strong foundation before you move on. Whom can you ask for help? Your fellow classmates and instructor are good resources. Is there a place on campus where math tutors are available? Can your study skills be improved?
…no—I don’t get it! This is a warning sign and you must not ignore it. You should get help right away or you will quickly be overwhelmed. See your instructor as soon as you can to discuss your situation. Together you can come up with a plan to get you the help you need. |
# Graphs
## Graphing Linear Equations
### Recognize the Relation Between the Solutions of an Equation and its Graph
In Use the Rectangular Coordinate System, we found a few solutions to the equation . They are listed in the table below. So, the ordered pairs , , , , are some solutions to the equation. We can plot these solutions in the rectangular coordinate system as shown on the graph at right.
Notice how the points line up perfectly? We connect the points with a straight line to get the graph of the equation . Notice the arrows on the ends of each side of the line. These arrows indicate the line continues.
Every point on the line is a solution of the equation. Also, every solution of this equation is a point on this line. Points not on the line are not solutions!
Notice that the point whose coordinates are is on the line shown in . If you substitute and into the equation, you find that it is a solution to the equation.
So is not a solution to the equation . Therefore the point is not on the line.
This is an example of the saying,” A picture is worth a thousand words.” The line shows you all the solutions to the equation. Every point on the line is a solution of the equation. And, every solution of this equation is on this line. This line is called the graph of the equation .
### Graph a Linear Equation by Plotting Points
There are several methods that can be used to graph a linear equation. The method we used at the start of this section to graph is called plotting points, or the Point-Plotting Method.
Let’s graph the equation by plotting points.
We start by finding three points that are solutions to the equation. We can choose any value for or and then solve for the other variable.
Since is isolated on the left side of the equation, it is easier to choose values for We will use and for for this example. We substitute each value of into the equation and solve for
We can organize the solutions in a table. See .
Now we plot the points on a rectangular coordinate system. Check that the points line up. If they did not line up, it would mean we made a mistake and should double-check all our work. See .
Draw the line through the three points. Extend the line to fill the grid and put arrows on both ends of the line. The line is the graph of
It is true that it only takes two points to determine a line, but it is a good habit to use three points. If you plot only two points and one of them is incorrect, you can still draw a line but it will not represent the solutions to the equation. It will be the wrong line. If you use three points, and one is incorrect, the points will not line up. This tells you something is wrong and you need to check your work. See .
When an equation includes a fraction as the coefficient of we can substitute any numbers for But the math is easier if we make ‘good’ choices for the values of This way we will avoid fraction answers, which are hard to graph precisely.
So far, all the equations we graphed had given in terms of Now we’ll graph an equation with and on the same side.
In the previous example, the three points we found were easy to graph. But this is not always the case. Let’s see what happens in the equation If is what is the value of
The solution is the point This point has a fraction for the -coordinate. While we could graph this point, it is hard to be precise graphing fractions. Remember in the example we carefully chose values for so as not to graph fractions at all. If we solve the equation for it will be easier to find three solutions to the equation.
Now we can choose values for that will give coordinates that are integers. The solutions for and are shown.
### Graph Vertical and Horizontal Lines
Can we graph an equation with only one variable? Just and no or just without an How will we make a table of values to get the points to plot?
Let’s consider the equation The equation says that is always equal to so its value does not depend on No matter what is, the value of is always
To make a table of solutions, we write for all the values. Then choose any values for Since does not depend on you can chose any numbers you like. But to fit the size of our coordinate graph, we’ll use and for the -coordinates as shown in the table.
Then plot the points and connect them with a straight line. Notice in that the graph is a vertical line.
What if the equation has but no ? Let’s graph the equation This time the -value is a constant, so in this equation does not depend on
To make a table of solutions, write for all the values and then choose any values for
We’ll use and for the -values.
Plot the points and connect them, as shown in . This graph is a horizontal line passing through the at
The equations for vertical and horizontal lines look very similar to equations like What is the difference between the equations and
The equation has both and The value of depends on the value of The changes according to the value of
The equation has only one variable. The value of is constant. The is always It does not depend on the value of
The graph shows both equations.
Notice that the equation gives a slanted line whereas gives a horizontal line.
### Key Concepts
1. Graph a linear equation by plotting points.
2. Graph of a Linear Equation:The graph of a linear equation is a straight line.
### Practice Makes Perfect
Recognize the Relation Between the Solutions of an Equation and its Graph
In each of the following exercises, an equation and its graph is shown. For each ordered pair, decide
Graph a Linear Equation by Plotting Points
In the following exercises, graph by plotting points.
Graph Vertical and Horizontal lines
In the following exercises, graph the vertical and horizontal lines.
In the following exercises, graph each pair of equations in the same rectangular coordinate system.
Mixed Practice
In the following exercises, graph each equation.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ After reviewing this checklist, what will you do to become confident for all objectives?
|
# Graphs
## Graphing with Intercepts
### Identify the Intercepts on a Graph
Every linear equation has a unique line that represents all the solutions of the equation. When graphing a line by plotting points, each person who graphs the line can choose any three points, so two people graphing the line might use different sets of points.
At first glance, their two lines might appear different since they would have different points labeled. But if all the work was done correctly, the lines will be exactly the same line. One way to recognize that they are indeed the same line is to focus on where the line crosses the axes. Each of these points is called an intercept of the line.
Let’s look at the graph of the lines shown in .
First, notice where each of these lines crosses the x- axis:
Do you see a pattern?
For each row, the y- coordinate of the point where the line crosses the x- axis is zero. The point where the line crosses the x- axis has the form ; and is called the x-intercept of the line. The x- intercept occurs when y is zero.
Now, let's look at the points where these lines cross the y-axis.
### Find the Intercepts from an Equation of a Line
Recognizing that the occurs when is zero and that the occurs when is zero gives us a method to find the intercepts of a line from its equation. To find the let and solve for To find the let and solve for
### Graph a Line Using the Intercepts
To graph a linear equation by plotting points, you can use the intercepts as two of your three points. Find the two intercepts, and then a third point to ensure accuracy, and draw the line. This method is often the quickest way to graph a line.
### Choose the Most Convenient Method to Graph a Line
While we could graph any linear equation by plotting points, it may not always be the most convenient method. This table shows six of equations we’ve graphed in this chapter, and the methods we used to graph them.
What is it about the form of equation that can help us choose the most convenient method to graph its line?
Notice that in equations #1 and #2, y is isolated on one side of the equation, and its coefficient is 1. We found points by substituting values for x on the right side of the equation and then simplifying to get the corresponding y- values.
Equations #3 and #4 each have just one variable. Remember, in this kind of equation the value of that one variable is constant; it does not depend on the value of the other variable. Equations of this form have graphs that are vertical or horizontal lines.
In equations #5 and #6, both x and y are on the same side of the equation. These two equations are of the form . We substituted and to find the x- and y- intercepts, and then found a third point by choosing a value for x or y.
This leads to the following strategy for choosing the most convenient method to graph a line.
### Key Concepts
1. Intercepts
2. Find the
3. Graph a line using the intercepts
4. Choose the most convenient method to graph a line
### Practice Makes Perfect
Identify the Intercepts on a Graph
In the following exercises, find the and intercepts.
Find the
In the following exercises, find the intercepts.
Graph a Line Using the Intercepts
In the following exercises, graph using the intercepts.
Choose the Most Convenient Method to Graph a Line
In the following exercises, identify the most convenient method to graph each line.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ What does this checklist tell you about your mastery of this section? What steps will you take to improve?
|
# Graphs
## Understand Slope of a Line
As we’ve been graphing linear equations, we’ve seen that some lines slant up as they go from left to right and some lines slant down. Some lines are very steep and some lines are flatter. What determines whether a line slants up or down, and if its slant is steep or flat?
The steepness of the slant of a line is called the slope of the line. The concept of slope has many applications in the real world. The pitch of a roof and the grade of a highway or wheelchair ramp are just some examples in which you literally see slopes. And when you ride a bicycle, you feel the slope as you pump uphill or coast downhill.
### Use Geoboards to Model Slope
In this section, we will explore the concepts of slope.
Using rubber bands on a geoboard gives a concrete way to model lines on a coordinate grid. By stretching a rubber band between two pegs on a geoboard, we can discover how to find the slope of a line. And when you ride a bicycle, you feel the slope as you pump uphill or coast downhill.
We’ll start by stretching a rubber band between two pegs to make a line as shown in .
Does it look like a line?
Now we stretch one part of the rubber band straight up from the left peg and around a third peg to make the sides of a right triangle as shown in . We carefully make a angle around the third peg, so that one side is vertical and the other is horizontal.
To find the slope of the line, we measure the distance along the vertical and horizontal legs of the triangle. The vertical distance is called the and the horizontal distance is called the , as shown in .
To help remember the terms, it may help to think of the images shown in .
On our geoboard, the rise is units because the rubber band goes up spaces on the vertical leg. See .
What is the run? Be sure to count the spaces between the pegs rather than the pegs themselves! The rubber band goes across spaces on the horizontal leg, so the run is units.
The slope of a line is the ratio of the rise to the run. So the slope of our line is In mathematics, the slope is always represented by the letter
What is the slope of the line on the geoboard in ?
When we work with geoboards, it is a good idea to get in the habit of starting at a peg on the left and connecting to a peg to the right. Then we stretch the rubber band to form a right triangle.
If we start by going up the rise is positive, and if we stretch it down the rise is negative. We will count the run from left to right, just like you read this paragraph, so the run will be positive.
Since the slope formula has rise over run, it may be easier to always count out the rise first and then the run.
Notice that in the first example, the slope is positive and in the second example the slope is negative. Do you notice any difference in the two lines shown in .
As you read from left to right, the line in Figure A, is going up; it has positive slope. The line Figure B is going down; it has negative slope.
### Find the Slope of a Line from its Graph
Now we’ll look at some graphs on a coordinate grid to find their slopes. The method will be very similar to what we just modeled on our geoboards.
To find the slope, we must count out the rise and the run. But where do we start?
We locate any two points on the line. We try to choose points with coordinates that are integers to make our calculations easier. We then start with the point on the left and sketch a right triangle, so we can count the rise and run.
The lines in the previous examples had -intercepts with integer values, so it was convenient to use the as one of the points we used to find the slope. In the next example, the -intercept is a fraction. The calculations are easier if we use two points with integer coordinates.
### Find the Slope of Horizontal and Vertical Lines
Do you remember what was special about horizontal and vertical lines? Their equations had just one variable.
1. horizontal line all the -coordinates are the same.
2. vertical line all the -coordinates are the same.
So how do we find the slope of the horizontal line One approach would be to graph the horizontal line, find two points on it, and count the rise and the run. Let’s see what happens in . We’ll use the two points and to count the rise and run.
The slope of the horizontal line is
All horizontal lines have slope . When the -coordinates are the same, the rise is .
Now we’ll consider a vertical line, such as the line , shown in . We’ll use the two points and to count the rise and run.
But we can’t divide by Division by is undefined. So we say that the slope of the vertical line is undefined. The slope of all vertical lines is undefined, because the run is
### Use the Slope Formula to find the Slope of a Line between Two Points
Sometimes we need to find the slope of a line between two points and we might not have a graph to count out the rise and the run. We could plot the points on grid paper, then count out the rise and the run, but there is a way to find the slope without graphing.
Before we get to it, we need to introduce some new algebraic notation. We have seen that an ordered pair gives the coordinates of a point. But when we work with slopes, we use two points. How can the same symbol be used to represent two different points?
Mathematicians use subscripts to distinguish between the points. A subscript is a small number written to the right of, and a little lower than, a variable.
1.
2.
We will use to identify the first point and to identify the second point. If we had more than two points, we could use and so on.
To see how the rise and run relate to the coordinates of the two points, let’s take another look at the slope of the line between the points and in .
Since we have two points, we will use subscript notation.
On the graph, we counted the rise of The rise can also be found by subtracting the of the points.
We counted a run of The run can also be found by subtracting the
We’ve shown that is really another version of We can use this formula to find the slope of a line when we have two points on the line.
Say the formula to yourself to help you remember it:
Doing the Manipulative Mathematics activity “Slope of Lines Between Two Points” will help you develop a better understanding of how to find the slope of a line between two points.
How do we know which point to call #1 and which to call #2? Let’s find the slope again, this time switching the names of the points to see what happens. Since we will now be counting the run from right to left, it will be negative.
The slope is the same no matter which order we use the points.
### Graph a Line Given a Point and the Slope
In this chapter, we graphed lines by plotting points, by using intercepts, and by recognizing horizontal and vertical lines.
Another method we can use to graph lines is the point-slope method. Sometimes, we will be given one point and the slope of the line, instead of its equation. When this happens, we use the definition of slope to draw the graph of the line.
### Solve Slope Applications
At the beginning of this section, we said there are many applications of slope in the real world. Let’s look at a few now.
Have you ever thought about the sewage pipes going from your house to the street? Their slope is an important factor in how they take waste away from your house.
### Key Concepts
1. Find the slope from a graph
2. Slope of a Horizontal Line
3. Slope of a Vertical Line
4. Slope Formula
5. Graph a line given a point and a slope.
### Section Exercises
### Practice Makes Perfect
Use Geoboards to Model Slope
In the following exercises, find the slope modeled on each geoboard.
In the following exercises, model each slope. Draw a picture to show your results.
Find the Slope of a Line from its Graph
In the following exercises, find the slope of each line shown.
Find the Slope of Horizontal and Vertical Lines
In the following exercises, find the slope of each line.
Use the Slope Formula to find the Slope of a Line between Two Points
In the following exercises, use the slope formula to find the slope of the line between each pair of points.
Graph a Line Given a Point and the Slope
In the following exercises, graph the line given a point and the slope.
Solve Slope Applications
In the following exercises, solve these slope applications.
### Everyday Math
### Writing Exercises
### Self Check
ⓐ After completing the exercises, use this checklist to evaluate your mastery of the objectives of this section.
ⓑ On a scale of 1–10, how would you rate your mastery of this section in light of your responses on the checklist? How can you improve this?
### Chapter Review Exercises
### Use the Rectangular Coordinate System
Plot Points in a Rectangular Coordinate System
In the following exercises, plot each point in a rectangular coordinate system.
In the following exercises, plot each point in a rectangular coordinate system and identify the quadrant in which the point is located.
Identify Points on a Graph
In the following exercises, name the ordered pair of each point shown in the rectangular coordinate system.
Verify Solutions to an Equation in Two Variables
In the following exercises, find the ordered pairs that are solutions to the given equation.
Complete a Table of Solutions to a Linear Equation in Two Variables
In the following exercises, complete the table to find solutions to each linear equation.
Find Solutions to a Linear Equation in Two Variables
In the following exercises, find three solutions to each linear equation.
### Graphing Linear Equations
Recognize the Relation Between the Solutions of an Equation and its Graph
In each of the following exercises, an equation and its graph is shown. For each ordered pair, decide
Graph a Linear Equation by Plotting Points
In the following exercises, graph by plotting points.
Graph Vertical and Horizontal lines
In the following exercises, graph the vertical or horizontal lines.
### Graphing with Intercepts
Identify the Intercepts on a Graph
In the following exercises, find the and
Find the Intercepts from an Equation of a Line
In the following exercises, find the intercepts.
Graph a Line Using the Intercepts
In the following exercises, graph using the intercepts.
Choose the Most Convenient Method to Graph a Line
In the following exercises, identify the most convenient method to graph each line.
### Understand Slope of a Line
Use Geoboards to Model Slope
In the following exercises, find the slope modeled on each geoboard.
In the following exercises, model each slope. Draw a picture to show your results.
Find the Slope of a Line from its Graph
In the following exercises, find the slope of each line shown.
Find the Slope of Horizontal and Vertical Lines
In the following exercises, find the slope of each line.
Use the Slope Formula to find the Slope of a Line between Two Points
In the following exercises, use the slope formula to find the slope of the line between each pair of points.
Graph a Line Given a Point and the Slope
In the following exercises, graph the line given a point and the slope.
Solve Slope Applications
In the following exercise, solve the slope application.
### Chapter Practice Test
In the following exercises, find three solutions to each equation and then graph each line.
In the following exercises, find the slope of each line. |
# Why Ethics Matter
## Introduction
Ethics consists of the standards of behavior to which we hold ourselves in our personal and professional lives. It establishes the levels of honesty, empathy, and trustworthiness and other virtues by which we hope to identify our personal behavior and our public reputation. In our personal lives, our ethics sets norms for the ways in which we interact with family and friends. In our professional lives, ethics guides our interactions with customers, clients, colleagues, employees, and shareholders affected by our business practices ().
Should we care about ethics in our lives? In our practices in business and the professions? That is the central question we will examine in this chapter and throughout the book. Our goal is to understand why the answer is yes.
Whatever hopes you have for your future, you almost certainly want to be successful in whatever career you choose. But what does success mean to you, and how will you know you have achieved it? Will you measure it in terms of wealth, status, power, or recognition? Before blindly embarking on a quest to achieve these goals, which society considers important, stop and think about what a successful career means to you personally. Does it include a blameless reputation, colleagues whose good opinion you value, and the ability to think well of yourself? How might ethics guide your decision-making and contribute to your achievement of these goals? |
# Why Ethics Matter
## Being a Professional of Integrity
### Learning Objectives
By the end of this section, you will be able to:
1. Describe the role of ethics in a business environment
2. Explain what it means to be a professional of integrity
3. Distinguish between ethical and legal responsibilities
4. Describe three approaches for examining the ethical nature of a decision
Whenever you think about the behavior you expect of yourself in your personal life and as a professional, you are engaging in a philosophical dialogue with yourself to establish the standards of behavior you choose to uphold, that is, your ethics. You may decide you should always tell the truth to family, friends, customers, clients, and shareholders, and if that is not possible, you should have very good reasons why you cannot. You may also choose never to defraud or mislead your business partners. You may decide, as well, that while you are pursuing profit in your business, you will not require that all the money on the table come your way. Instead, there might be some to go around to those who are important because they are affected one way or another by your business. These are your stakeholders.
### Acting with Integrity
Clients, customers, suppliers, investors, retailers, employees, the media, the government, members of the surrounding community, competitors, and even the environment are stakeholders in a business; that is, they are individuals and entities affected by the business’s decisions (). Stakeholders typically value a leadership team that chooses the ethical way to accomplish the company’s legitimate for-profit goals. For example, Patagonia expresses its commitment to environmentalism via its “1% for the Planet” program, which donates 1 percent of all sales to help save the planet. In part because of this program, Patagonia has become a market leader in outdoor gear.
Being successful at work may therefore consist of much more than simply earning money and promotions. It may also mean treating our employees, customers, and clients with honesty and respect. It may come from the sense of pride we feel about engaging in honest transactions, not just because the law demands it but because we demand it of ourselves. It may lie in knowing the profit we make does not come from shortchanging others. Thus, business ethics guides the conduct by which companies and their agents abide by the law and respect the rights of their stakeholders, particularly their customers, clients, employees, and the surrounding community and environment. Ethical business conduct permits us to sleep well at night.
Nearly all systems of religious belief stress the building blocks of engaging others with respect, empathy, and honesty. These foundational beliefs, in turn, prepare us for the codes of ethical behavior that serve as ideal guides for business and the professions. Still, we need not subscribe to any religious faith to hold that ethical behavior in business is still necessary. Just by virtue of being human, we all share obligations to one another, and principal among these is the requirement that we treat others with fairness and dignity, including in our commercial transactions.
For this reason, we use the words ethics and morals interchangeably in this book, though some philosophers distinguish between them. We hold that “an ethical person” conveys the same sense as “a moral person,” and we do not regard religious belief as a requirement for acting ethically in business and the professions. Because we are all humans and in the same world, we should extend the same behavior to all. It is the right way to behave, but it also burnishes our own professional reputation as business leaders of integrity.
Integrity—that is, unity between what we say and what we do—is a highly valued trait. But it is more than just consistency of character. Acting with integrity means we adhere strongly to a code of ethics, so it implies trustworthiness and incorruptibility. Being a professional of integrity means consistently striving to be the best person you can be in all your interactions with others. It means you practice what you preach, walk the talk, and do what you believe is right based upon reason. Integrity in business brings many advantages, not the least of which is that it is a critical factor in allowing business and society to function properly.
Successful corporate leaders and the companies they represent will take pride in their enterprise if they engage in business with honesty and fair play. To treat customers, clients, employees, and all those affected by a firm with dignity and respect is ethical. In addition, laudable business practices serve the long-term interests of corporations. Why? Because customers, clients, employees, and society at large will much more willingly patronize a business and work hard on its behalf if that business is perceived as caring about the community it serves. And what type of firm has long-term customers and employees? One whose track record gives evidence of honest business practice.
Many people confuse legal and ethical compliance. They are, however, totally different and call for different standards of behavior. The concepts are not interchangeable in any sense of the word. The law is needed to establish and maintain a functioning society. Without it, our society would be in chaos. Compliance with these legal standards is strictly mandatory: If we violate these standards, we are subject to punishment as established by the law. Therefore, compliance in terms of business ethics generally refers to the extent to which a company conducts its business operations in accordance with applicable regulations, statutes, and laws. Yet this represents only a baseline minimum. Ethical observance builds on this baseline and reveals the principles of an individual business leader or a specific organization. Ethical acts are generally considered voluntary and personal—often based on our perception of or stand on right and wrong.
Some professions, such as medicine and the law, have traditional codes of ethics. The Hippocratic Oath, for example, is embraced by most professionals in health care today as an appropriate standard always owed to patients by physicians, nurses, and others in the field. This obligation traces its lineage to ancient Greece and the physician Hippocrates. Business is different in not having a mutually shared standard of ethics. This is changing, however, as evidenced by the array of codes of conduct and mission statements many companies have adopted over the past century. These have many points in common, and their shared content may eventually produce a code universally claimed by business practitioners. What central point might constitute such a code? Essentially, a commitment to treat with honesty and integrity customers, clients, employees, and others affiliated with a business.
The law is typically indebted to tradition and precedence, and compelling reasons are needed to support any change. Ethical reasoning often is more topical and reflects the changes in consciousness that individuals and society undergo. Often, ethical thought precedes and sets the stage for changes in the law.
Behaving ethically requires that we meet the mandatory standards of the law, but that is not enough. For example, an action may be legal that we personally consider unacceptable. Companies today need to be focused not only on complying with the letter of the law but also on going above and beyond that basic mandatory requirement to consider their stakeholders and do what is right.
### Ends, Means, and Character in Business
How, then, should we behave? Philosophy and science help us answer this question. From philosophy, three different perspectives help us assess whether our decisions are ethical on the basis of reason. These perspectives are called normative ethical theories and focus on how people ought to behave; we discuss them in this chapter and in later chapters. In contrast, descriptive ethical theories are based on scientific evidence, primarily in the field of psychology, and describe how people tend to behave within a particular context; however, they are not the subject of this book.
The first normative approach is to examine the ends, or consequences, a decision produces in order to evaluate whether those ends are ethical. Variations on this approach include utilitarianism, teleology, and consequentialism. For example, utilitarianism suggests that an ethical action is one whose consequence achieves the greatest good for the greatest number of people. So if we want to make an ethical decision, we should ask ourselves who is helped and who is harmed by it. Focusing on consequences in this way generally does not require us to take into account the means of achieving that particular end, however. That fact leads us to the second normative theory about what constitutes ethical conduct.
The second approach does examine the means, or actions, we use to carry out a business decision. An example of this approach is deontology, which essentially suggests that it is the means that lend nobility to the ends. Deontology contends that each of us owes certain duties to others (deon is a Greek word for duty or obligation) and that certain universal rules apply to every situation and bind us to these duties. In this view, whether our actions are ethical depends only on whether we adhere to these rules. Thus, the means we use is the primary determinant of ethical conduct. The thinker most closely associated with deontology is the eighteenth-century German philosopher Immanuel Kant ().
The third normative approach, typically called virtue theory, focuses on the character of the decision-maker—a character that reflects the training we receive growing up. In this view, our ethical analysis of a decision is intimately connected with the person we choose to be. It is through the development of habits, the routine actions in which we choose to engage, that we are able to create a character of integrity and make ethical decisions. Put differently, if a two-year-old is taught to take care of and return borrowed toys even though this runs contrary to every instinct they have, they may continue to perfect their ethical behavior so that at age forty, they can be counted on to safeguard the tens of millions of dollars investors have entrusted to their care in brokerages.
Virtue theory has its roots in the Greek philosophical tradition, whose followers sought to learn how to live a flourishing life through study, teaching, and practice. The cardinal virtues to be practiced were courage, self-control, justice, and wisdom. Socrates was often cited as a sage and a role model, whose conduct in life was held in high regard.
### Summary
Ethics sets the standards that govern our personal and professional behavior. To conduct business ethically, we must choose to be a professional of integrity. The first steps are to ask ourselves how we define success and to understand that integrity calls on us to act in a way that is consistent with our words. There is a distinct difference between legal compliance and ethical responsibility, and the law does not fully address all ethical dilemmas that businesses face. Sound ethical practice meets the company’s culture, mission, or policies above and beyond legal responsibilities. The three normative theories of ethical behavior allow us to apply reason to business decisions as we examine the result (utilitarianism), the means of achieving it (deontology), and whether our choice will help us develop a virtuous character (virtue ethics).
### Assessment Questions
### Endnotes
|
# Why Ethics Matter
## Ethics and Profitability
### Learning Objectives
By the end of this section, you will be able to:
1. Differentiate between short-term and long-term perspectives
2. Differentiate between stockholder and stakeholder
3. Discuss the relationship among ethical behavior, goodwill, and profit
4. Explain the concept of corporate social responsibility
Few directives in business can override the core mission of maximizing shareholder wealth, and today that particularly means increasing quarterly profits. Such an intense focus on one variable over a short time (i.e., a short-term perspective) leads to a short-sighted view of what constitutes business success.
Measuring true profitability, however, requires taking a long-term perspective. We cannot accurately measure success within a quarter of a year; a longer time is often required for a product or service to find its market and gain traction against competitors, or for the effects of a new business policy to be felt. Satisfying consumers’ demands, going green, being socially responsible, and acting above and beyond the basic requirements all take time and money. However, the extra cost and effort will result in profits in the long run. If we measure success from this longer perspective, we are more likely to understand the positive effect ethical behavior has on all who are associated with a business.
### Profitability and Success: Thinking Long Term
Decades ago, some management theorists argued that a conscientious manager in a for-profit setting acts ethically by emphasizing solely the maximization of earnings. Today, most commentators contend that ethical business leadership is grounded in doing right by all stakeholders directly affected by a firm’s operations, including, but not limited to, stockholders, or those who own shares of the company’s stock. That is, business leaders do right when they give thought to what is best for all who have a stake in their companies. Not only that, firms actually reap greater material success when they take such an approach, especially over the long run.
Nobel Prize–winning economist Milton Friedman stated in a now-famous New York Times Magazine article in 1970 that the only “social responsibility of a business is to increase its profits.” This concept took hold in business and even in business school education. However, although it is certainly permissible and even desirable for a company to pursue profitability as a goal, managers must also have an understanding of the context within which their business operates and of how the wealth they create can add positive value to the world. The context within which they act is society, which permits and facilitates a firm’s existence.
Thus, a company enters a social contract with society as whole, an implicit agreement among all members to cooperate for social benefits. Even as a company pursues the maximizing of stockholder profit, it must also acknowledge that all of society will be affected to some extent by its operations. In return for society’s permission to incorporate and engage in business, a company owes a reciprocal obligation to do what is best for as many of society’s members as possible, regardless of whether they are stockholders. Therefore, when applied specifically to a business, the social contract implies that a company gives back to the society that permits it to exist, benefiting the community at the same time it enriches itself.
In addition to taking this more nuanced view of profits, managers must also use a different time frame for obtaining them. Wall Street’s focus on periodic (i.e., quarterly and annual) earnings has led many managers to adopt a short-term perspective, which fails to take into account effects that require a longer time to develop. For example, charitable donations in the form of corporate assets or employees’ volunteered time may not show a return on investment until a sustained effort has been maintained for years. A long-term perspective is a more balanced view of profit maximization that recognizes that the impacts of a business decision may not manifest for a longer time.
As an example, consider the business practices of Toyota when it first introduced its vehicles for sale in the United States in 1957. For many years, Toyota was content to sell its cars at a slight loss because it was accomplishing two business purposes: It was establishing a long-term relationship of trust with those who eventually would become its loyal U.S. customers, and it was attempting to disabuse U.S. consumers of their belief that items made in Japan were cheap and unreliable. The company accomplished both goals by patiently playing its long game, a key aspect of its operational philosophy, “The Toyota Way,” which includes a specific emphasis on long-term business goals, even at the expense of short-term profit.
What contributes to a corporation’s positive image over the long term? Many factors contribute, including a reputation for treating customers and employees fairly and for engaging in business honestly. Companies that act in this way may emerge from any industry or country. Examples include Fluor, the large U.S. engineering and design firm; illycaffè, the Italian food and beverage purveyor; Marriott, the giant U.S. hotelier; and Nokia, the Finnish telecommunications retailer. The upshot is that when consumers are looking for an industry leader to patronize and would-be employees are seeking a firm to join, companies committed to ethical business practices are often the first to come to mind.
Why should stakeholders care about a company acting above and beyond the ethical and legal standards set by society? Simply put, being ethical is simply good business. A business is profitable for many reasons, including expert management teams, focused and happy employees, and worthwhile products and services that meet consumer demand. One more and very important reason is that they maintain a company philosophy and mission to do good for others.
Year after year, the nation’s most admired companies are also among those that had the highest profit margins. Going green, funding charities, and taking a personal interest in employee happiness levels adds to the bottom line! Consumers want to use companies that care for others and our environment. During the years 2008 and 2009, many unethical companies went bankrupt. However, those companies that avoided the “quick buck,” risky and unethical investments, and other unethical business practices often flourished. If nothing else, consumer feedback on social media sites such as Yelp and Facebook can damage an unethical company’s prospects.
### Stockholders, Stakeholders, and Goodwill
Earlier in this chapter, we explained that stakeholders are all the individuals and groups affected by a business’s decisions. Among these stakeholders are stockholders (or shareholders), individuals and institutions that own stock (or shares) in a corporation. Understanding the impact of a business decision on the stockholder and various other stakeholders is critical to the ethical conduct of business. Indeed, prioritizing the claims of various stakeholders in the company is one of the most challenging tasks business professionals face. Considering only stockholders can often result in unethical decisions; the impact on all stakeholders must be considered and rationally assessed.
Managers do sometimes focus predominantly on stockholders, especially those holding the largest number of shares, because these powerful individuals and groups can influence whether managers keep their jobs or are dismissed (e.g., when they are held accountable for the company’s missing projected profit goals). And many believe the sole purpose of a business is, in fact, to maximize stockholders’ short-term profits. However, considering only stockholders and short-term impacts on them is one of the most common errors business managers make. It is often in the long-term interests of a business not to accommodate stockowners alone but rather to take into account a broad array of stakeholders and the long-term and short-term consequences for a course of action.
Here is a simple strategy for considering all your stakeholders in practice. Divide your screen or page into three columns; in the first column, list all stakeholders in order of perceived priority (). Some individuals and groups play more than one role. For instance, some employees may be stockholders, some members of the community may be suppliers, and the government may be a customer of the firm. In the second column, list what you think each stakeholder group’s interests and goals are. For those that play more than one role, choose the interests most directly affected by your actions. In the third column, put the likely impact of your business decision on each stakeholder. This basic spreadsheet should help you identify all your stakeholders and evaluate your decision’s impact on their interests. If you would like to add a human dimension to your analysis, try assigning some of your colleagues to the role of stakeholders and reexamine your analysis.
The positive feeling stakeholders have for any particular company is called goodwill, which is an important component of almost any business entity, even though it is not directly attributable to the company’s assets and liabilities. Among other intangible assets, goodwill might include the worth of a business’s reputation, the value of its brand name, the intellectual capital and attitude of its workforce, and the loyalty of its established customer base. Even being socially responsible generates goodwill. The ethical behavior of managers will have a positive influence on the value of each of those components. Goodwill cannot be earned or created in a short time, but it can be the key to success and profitability.
A company’s name, its corporate logo, and its trademark will necessarily increase in value as stakeholders view that company in a more favorable light. A good reputation is essential for success in the modern business world, and with information about the company and its actions readily available via mass media and the Internet (e.g., on public rating sites such as Yelp), management’s values are always subject to scrutiny and open debate. These values affect the environment outside and inside the company. The corporate culture, for instance, consists of shared beliefs, values, and behaviors that create the internal or organizational context within which managers and employees interact. Practicing ethical behavior at all levels—from CEO to upper and middle management to general employees—helps cultivate an ethical corporate culture and ethical employee relations.
Positive goodwill generated by ethical business practices, in turn, generates long-term business success. As recent studies have shown, the most ethical and enlightened companies in the United States consistently outperform their competitors. Thus, viewed from the proper long-term perspective, conducting business ethically is a wise business decision that generates goodwill for the company among stakeholders, contributes to a positive corporate culture, and ultimately supports profitability.
You can test the validity of this claim yourself. When you choose a company with which to do business, what factors influence your choice? Let us say you are looking for a financial advisor for your investments and retirement planning, and you have found several candidates whose credentials, experience, and fees are approximately the same. Yet one of these firms stands above the others because it has a reputation, which you discover is well earned, for telling clients the truth and recommending investments that seemed centered on the clients’ benefit and not on potential profit for the firm. Wouldn’t this be the one you would trust with your investments?
Or suppose one group of financial advisors has a long track record of giving back to the community of which it is part. It donates to charitable organizations in local neighborhoods, and its members volunteer service hours toward worthy projects in town. Would this group not strike you as the one worthy of your investments? That it appears to be committed to building up the local community might be enough to persuade you to give it your business. This is exactly how a long-term investment in community goodwill can produce a long pipeline of potential clients and customers.
### A Brief Introduction to Corporate Social Responsibility
If you truly appreciate the positions of your various stakeholders, you will be well on your way to understanding the concept of corporate social responsibility (CSR). CSR is the practice by which a business views itself within a broader context, as a member of society with certain implicit social obligations and environmental responsibilities. As previously stated, there is a distinct difference between legal compliance and ethical responsibility, and the law does not fully address all ethical dilemmas that businesses face. CSR ensures that a company is engaging in sound ethical practices and policies in accordance with the company’s culture and mission, above and beyond any mandatory legal standards. A business that practices CSR cannot have maximizing shareholder wealth as its sole purpose, because this goal would necessarily infringe on the rights of other stakeholders in the broader society. For instance, a mining company that disregards its corporate social responsibility may infringe on the right of its local community to clean air and water if it pursues only profit. In contrast, CSR places all stakeholders within a proper contextual framework.
An additional perspective to take concerning CSR is that ethical business leaders opt to do good at the same time that they do well. This is a simplistic summation, but it speaks to how CSR plays out within any corporate setting. The idea is that a corporation is entitled to make money, but it should not only make money. It should also be a good civic neighbor and commit itself to the general prospering of society as a whole. It ought to make the communities of which it is part better at the same time it pursues legitimate profit goals. These ends are not mutually exclusive, and it is possible—indeed, praiseworthy—to strive for both. When a company approaches business in this fashion, it is engaging in a commitment to corporate social responsibility.
### Summary
A long-term view of business success is critical for accurately measuring profitability. All the company’s stakeholders benefit from managers’ ethical conduct, which also increases a business’s goodwill and, in turn, supports profitability. Customers and clients tend to trust a business that gives evidence of its commitment to a positive long-term impact. By exercising corporate social responsibility, or CSR, a business views itself within a broader context, as a member of society with certain implicit social obligations and responsibility for its own effects on environmental and social well-being.
### Assessment Questions
### Endnotes
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# Why Ethics Matter
## Multiple versus Single Ethical Standards
### Learning Objectives
By the end of this section, you will be able to:
1. Analyze ethical norms and values as they relate to business standards
2. Explain the doctrine of ethical relativism and why it is problematic
3. Evaluate the claim that having a single ethical standard makes behaving consistently easier
Business people sometimes apply different ethical standards in different contexts, especially if they are working in a culture different from the one in which they were raised or with coworkers from other traditions. If we look outside ourselves for ethical guidance, relying on the context in which we find ourselves, we can grow confused about what is ethical business behavior. Stakeholders then observe that the messages we send via our conduct lack a consistent ethical core, which can harm our reputation and that of the business. To avoid falling back on ethical relativism, a philosophy according to which there is no right or wrong and what is ethical depends solely on the context, we must choose a coherent standard we can apply to all our interactions with others.
Some people who adopt multiple ethical standards may choose to exhibit the highest standards with their families, because these are the people they most revere. In a business setting, however, this same person may choose to be an unethical actor whose sole goal is the ruthless accumulation of wealth by any means. Because work and family are not the only two settings in which we live our lives, such a person may behave according to yet another standard to competitors in a sporting event, to strangers on the street, or to those in his or her religious community.
Although the ethical standard we adopt is always a choice, certain life experiences can have more profound effects on our choice than others. Among the most formative experiences are family upbringing and cultural traditions, broadly defined here to include religious and ethnic norms, the standard patterns of behavior within the context in which we live. Culture and family also influence each other because the family exists in and responds to its cultural context, as well as providing us with the bedrock for our deepest values. Regardless of this initial coding, however, we can choose the ethical standards we apply in the business context.
Why should we choose a single ethical code for all the contexts in which we live? The Greek philosophers and later proponents of the normative ethical theories we discussed earlier would say that if you apply your reason to determine how to behave, it makes rational sense to abide by a single ethical code for all interactions with all persons in all contexts. By doing so, you maximize your ethical behavior no matter who the other party is. Furthermore, you have an internally consistent behavior for all family, friends, customers, clients, and anyone else with whom you interact. Thus, we need not choose different values in different contexts, and when people see us in different situations, they are more likely to trust us because they see we uphold the same values regardless of the context.
Indeed, proponents of all the normative ethical theories would insist that the only rational choice is to have a single ethical standard. A deontologist would argue that you should adhere to particular duties in performing your actions, regardless of the parties with whom you interact. A utilitarian would say that any act you take should result in the greatest good for the greatest number. A virtue ethicist would state that you cannot be virtuous if you lack integrity in your behavior toward all.
Adopting a consistent ethical standard is both selfless and in the manager’s self-interest. That is, would-be customers and clients are more likely to seek out a business that treats all with whom it interacts with honesty and fairness, believing that they themselves will be treated likewise by that firm. Similarly, business leaders who treat everyone in a trustworthy manner need never worry that they might not have impressed a potential customer, because they always engage in honorable commercial practices. A single standard of business behavior that emphasizes respect and good service appeals to all.
Normative ethics is about discovering right and delineating it from wrong; it is a way to develop the rules and norms we use to guide meaningful decision-making. The ethics in our single code are not relative to the time, person, or place. In this world, we all wear different hats as we go about our daily lives as employees, parents, leaders, students. Being a truly ethical person requires that no matter what hat we wear, we exhibit a single ethical code and that it includes, among others, such universal principles of behavior as honesty, integrity, loyalty, fairness, respect for law, and respect for others.
Yet another reason to adopt a universal ethical standard is the transparent character it nurtures in us. If a company’s leadership insists that it stands for honest business transactions at every turn, it cannot prosecute those who defraud the company and look the other way when its own officers do the same. Stakeholders recognize such hypocrisy and rightly hold it against the business’s leaders.
Business leaders are not limited to only one of the normative ethical theories we have described, however. Virtue theory, utilitarianism, and deontology all have advantages to recommend them. Still, what should not change is a corporate commitment to not make exceptions in its practices when those favor the company at the expense of customers, clients, or other stakeholders.
Moving from theory to daily life, we can also look at the way our reputation is established by the implicit and explicit messages we send to others. If we adopt ethical relativism, friends, family, and coworkers will notice that we use different standards for different contexts. This lack of consistency and integrity can alter their perception of us and likely damage our reputation.
### Summary
The adoption of a single ethical code is the mark of a professional of integrity and is supported by the reasoned approach of each of the normative theories of business ethics. When we consistently maintain the same values regardless of the context, we are more likely to engender trust among those with whom we interact.
### Assessment Questions
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# Ethics from Antiquity to the Present
## Introduction
From the time of barter to the age of bitcoin, most people engaged in business transactions have sought trust. Without trust, which is a fundamental outcome of ethical behavior, not just business relationships but all relationships would collapse. To develop insight into our own concepts of ethics, this chapter looks at how ethical systems have developed over time, beginning with the distinction between ethics and the law.
Ethics are the standards of behavior to which we hold ourselves accountable in our personal and professional lives. Laws and regulations set the minimal standards by which society lives out those ethical norms. Because laws are minimal standards, it is not uncommon for an act to be legal but generally deemed unethical. The fact is that law and ethics are not always the same. Always, however, they are in dialogue, and each informs the other. The greatest challenge in business decision-making is moving beyond the letter of the law to create a culture of ethics ().
Can you identify a moment in your life when it was hard to follow your conscience, or your personal morality conflicted with societal norms? What was the nature of the conflict, and how did you approach it? |
# Ethics from Antiquity to the Present
## The Concept of Ethical Business in Ancient Athens
### Learning Objectives
By the end of this section, you will be able to:
1. Identify the role of ethics in ancient Athens
2. Explain how Aristotelian virtue ethics affected business practices
It would be hard to overstate the influence of ancient Athens on Western civilization. Athenian achievements in the arts, literature, and government have molded Western consciousness. Perennial themes, such as the search for individual identity and each person’s place in the world, appear in countless novels and Hollywood screenplays. The role of Athenian ethical theories in philosophy has been profound, and Athenian principles continue to be influential in contemporary philosophy. Ethics, as a form of applied philosophy, was a major focus among the leaders of ancient Athens, particularly teachers like Socrates, Plato, and Aristotle. They taught that ethics was not merely what someone did but who someone was. Ethics was a function of being and, as the guiding principle for dealings with others, it naturally applied as well to the sensitive areas of money and commerce.
### Ancient Athens
Like a modern metropolis, the city-state (polis) of Athens in the fifth century BCE drew people from far afield who wanted a better life. For some, that life meant engaging in trade and commerce, thanks to the openness of the new democracy established under the lawgiver Cleisthenes in 508 BCE. Others were drawn to Athens’ incredibly rich architecture, poetry, drama, religious practices, politics, and schools of philosophy. Youth traveled there hoping to study with such brilliant teachers as the mathematicians Archimedes and Pythagoras; dramatists like Sophocles and Euripides; historians Herodotus and Thucydides; Hippocrates, the father of medicine; and, of course, the renowned but enigmatic philosopher Socrates. More than being the equivalent of rock stars of their day, these thinkers, scholars, and artists challenged youth to pursue truth, no matter the cost to themselves or their personal ambitions. These leaders were interested not in fame or even in personal development but in the creation of an ideal society. This was the Golden Age of ancient Greece, whose achievements were so profound and enduring that they have formed the pillars of Western civilization for nearly two and a half millennia.
Philosophy, in particular, flourished during the Golden Age, with various schools of thought attempting to make sense of the natural and human worlds. The human world was thought to be grounded in the natural world but to transcend it in striking ways, the most obvious being humans use of reason and deliberation. Philosophers like Socrates, Plato, and Aristotle tackled fundamental questions of human existence with such insight that their ideas have remained relevant and universal even at the dawn of artificial intelligence. As British mathematician and philosopher Alfred North Whitehead (1861–1947) observed, “the safest general characterization of the European philosophical tradition is that it consists of a series of footnotes to Plato.”
Why are the insights of these Greek philosophers still relevant today? One reason is their development of the ancient concept of virtue. The person most closely associated with virtue in the West, and the development of what is now known as virtue ethics—that is, an ethical system based upon the exercise of certain virtues (loyalty, honor, courage) emphasizing the formation of character—is Plato’s famous pupil Aristotle (384–322 BCE) ().
### Aristotelian Virtue Ethics
For Aristotle, everything that exists has a purpose, or end, and has been designed to meet that end. For instance, the proper end of birds is to fly, that of fish to swim. Birds and fish have been designed with the appropriate means (feathers, fins) to achieve those ends. Teleology, from the Greek telos meaning goal or aim, is the study of ends and the means directed toward those ends. What is the telos of human beings? Aristotle believed it to be , or happiness. By this, he did not mean happiness in a superficial sense, such as having fun or being content. Rather, he equated happiness with human flourishing, which he believed could be attained through the exercise of the function that distinguishes humans from the natural world: reason. For Aristotle, reason was supreme and best used to increase not wealth but character. “But what is happiness?” he asked. “If we consider what the function of man is, we find that happiness is a virtuous activity of the soul.”
However, because humans are endowed not only with reason but also with the capacity to act in an honorable and ethical manner, they may reject their end, either intentionally or by default. The great task of life, then, is to recognize and pursue happiness, no matter the constraints placed on the individual, the most dramatic of which are suffering and death. Birds and fish have little difficulty achieving their ends, and we can assume that much of this is due to their genetic coding. Because happiness might not be genetically encoded in human beings, they must learn how to be happy. How do they do that? According to Aristotle, eudaimonia is achieved by leading a virtuous life, which is attained over time. “Happiness is a kind of activity; and an activity clearly is developed and is not a piece of property already in one’s possession.”
Aristotle identified two types of virtues, which the philosophical community of his day agreed were objective and not subjective. The two types were intellectual and moral. Intellectual virtues—including knowledge (epistḗmē), wisdom (sophíā), and, most importantly for Aristotle, prudence (), or practical wisdom—served as guides to behavior; that is, a person acted prudently based on the wisdom gained over time through the ongoing acquisition and testing of knowledge. To give an oversimplified but practical application of Aristotelian thinking, a hiring manager acts prudently when assessing a pool of candidates based on knowledge of their backgrounds and on insight gained after years of working in that role. The manager may even use intuitive reason regarding a candidate, which Aristotle believed was another way of arriving at truth. Understood in this way, the manager’s intuition is an impression regarding character and someone’s potential fit in an organization. Among the intellectual virtues, prudence played the major role because it helped individuals avoid excess and deficiency and arrive at the golden mean between the two. Prudence has been translated as “common sense” and “practical wisdom” and helps individuals make the right decision in the right way at the right time for the right reason. In Aristotle’s view, only the truly prudent person could possess all the moral virtues.
The distinction Aristotle made is that the intellectual virtues are acquired purely through learning, whereas the moral virtues are acquired through practice and the development of habits. In contrast to the intellectual virtues, which focused on external acts, the moral virtues had to do with character. They included courage, self-control, liberality, magnificence, honor, patience, and amiability. Some of these virtues had different meanings in ancient Greece than they do today. “Liberal,” for instance, referred not to a political or economic stance but rather to an aspect of personality. Someone would be considered liberal who was open and sharing of him- or herself and his or her talents without fear of rejection or expectation of reciprocity. The paragon of these virtues was the magnanimous individual, someone for whom fame and wealth held little attraction. This person had self-knowledge; was not rash, quick to anger, or submissive to others; and acted with self-respect, control, and prudence. The magnanimous individual achieved happiness by leading a life characterized by reason and will. He or she remained in control of self and did not hand over his or her authority—or moral agency—to others, whether in judgment or in decision-making. “So, magnanimity seems to be a sort of crown of the virtues, because it enhances them and is never found apart from them. This makes it hard to be truly magnanimous, because it is impossible without all-round excellence,” according to Aristotle.
The relationship between the intellectual and the moral virtues was not as clear cut as it may appear, however, because Aristotle believed that action preceded character. In other words, the primary way to change character was through consistent, intentional behavior in the direction of virtue. Aristotle gave the example of courage. A person was not courageous first and then went about performing acts of courage. Rather, courage resulted from incremental change, small steps taken over time that molded the person’s character. It relied on a recognition of justice, so that courage was directed toward the right end. The important task was developing the habit of leading the virtuous life. Anyone could do this; however, it was a discipline that had to be learned and practiced with dedication. We can see that this habit of virtue is especially relevant for business today, when the temptation to conform to an established organizational culture is overwhelming even when that culture may permit and even encourage questionable practices. Add the seductive power of money, and anyone’s courage might be tested.
The most notable feature of virtue ethics is that it viewed the basic ethical unit—the fundamental agent of morality—as the individual, who lived out his or her worldview publicly. A life of virtue, therefore, took place in the economic and political spheres so that others might participate in and benefit from it. In Athenian society, it was important for business to be conducted competently and ethically. Even though Aristotle was suspicious of business, he acknowledged its importance in preserving and nurturing Athenian democracy. He also praised the creation of money to further the goal of justice, so that a shoemaker and a housebuilder, for instance, could trade their wares on an equal basis. Virtue in the marketplace was demonstrated through ethical behavior, according to Aristotle: “People do in fact seek their own good, and think that they are right to act in this way. It is from this belief that the notion has arisen that such people are prudent. Presumably, however, it is impossible to secure one’s own good independently of domestic and political science.” This belief in the public nature of virtue was crucial for the flourishing of the city-state and also has implications for contemporary business, which must consider the individual, organization, industry, and society in its development and planning.
### Honorable Behavior in Business
The common belief in ancient Greece that business and money were somehow tainted reflected Plato’s concept that the physical world was an imperfect expression, or shadow, of the ideal. Everything in the physical world was somehow less than the ideal, and this included the products of human thought and labor. For example, a cow exists in the physical world as an imperfect and temporary expression of the ideal essence of a cow, what we might call “cowness.” (This imperfection accounted for the many variations found in the earthly creature.) Business, as a human invention based on self-interest, also had no appreciable ideal or end. After all, what was the purpose of making money if not having more money? Any end beyond that was not evident. In other words, money existed simply to replicate itself and was fueled by avarice (the love of money) or greed (the love of material goods). “As for the life of the businessman, it does not give him much freedom of action. Besides, wealth is obviously not the good that we are seeking, because it serves only as a means; i.e., for getting something else,” said Aristotle.
Yet, business had an interesting effect that helped invigorate Athenian life and encouraged those engaged in it to be virtuous (or else risk their reputation). This effect was association. Business was based on the free and fair exchange of goods, which brought not only items of merchandise into association with each other but also buyers, sellers, and public officials. The way to ensure ethically sound association was through the exercise of prudence, especially in its demand that people act not rashly but deliberately. This deliberative aspect of prudence provided a way for buyers, sellers, and everyone engaged in a transaction to act honorably, which was of the utmost importance. Honor was not only a foundational virtue but the cultural environment in which the ancient world existed. One of the worst offenses anyone could commit, whether man, woman, free, or slave, was to act in a dishonorable way. Of course, although acting deliberately does not guarantee that one is acting honorably, for Athenians, acting in a calculated way was not an indication of dishonor. Dishonorable acts included any that disturbed the basic order (dikē) of life in which everyone had a role, including the gods.
Interestingly, the Aristotelian approach to business did not condemn money making or the accumulation of riches. What concerned Aristotle, particularly because of its harmful effects on the individual and the city-state, was greed. Aristotle considered greed an excess that tipped the scales of justice and led to scandal. Money might constitute the bait, but greed causes the person to reach out and grab as much as possible, falling into the trap of scandal. The Greeks considered the exercise of greed an irrational, and therefore ignoble, act. Only attention to honor and deliberative prudence could save someone from acting so foolishly.
Honor in ancient Greece was not just an individual characteristic but also a function of the group to which an individual belonged, and the person derived self-esteem from membership in that group. Civic virtue consisted of honorable living in community. Business scandals today often arise not from conflicts of interest but from conflicts of honor in which employees feel torn by their allegiance to a coworker, a supervisor, or the organization. Although few people would use the term honor to describe contemporary workplace culture or corporate mission, nearly everyone understands the importance of reputation and its impact, positive or negative, on a business. Reputation is no accident. It is the product of a culture formed by individual and group effort. That effort is directed, intentional, and ongoing.
According to Aristotle, and later thinkers who expanded upon his work, such as thirteenth-century philosopher and theologian Thomas Aquinas, to act dishonorably casts disrepute on all concerned. Ends and means had to be aligned, particularly in business, which provided people’s livelihoods and secured the economic health of the city-state. Acting honorably meant trying to be magnanimous in all transactions and rising above obsession with baser instincts. The honorable person was magnanimous, prudent, fair, and interested in self-advancement as long as it did not injure personal integrity or the body politic. The importance of prudence is evident because, said Aristotle, it is “concerned with human goods, i.e., things about which deliberation is possible; for we hold that it is the function of the prudent man to deliberate well; and nobody deliberates about things that cannot be otherwise, or that are not means toward an end, and that end is a practical good. And the man who is good at deliberation generally is the one who can aim, by the help of his calculation, at the best of the goods attainable.”
Aquinas further divided Aristotelian prudence into memory, reason, understanding, docility, shrewdness, foresight, circumspection, and caution. To use these qualities in a constructive way, a business person had to direct them toward an appropriate end, which applies to business today just as it did in fourth-century Athens. A merchant could not make money in a random way but had to keep the needs of customers in mind and conduct business with fair prices and fees. This exercise of prudence was part of the cosmic order that ensured the right management of the home, the marketplace, and civilization itself. Similarly, committing fraud or deception to achieve an end, even if that end were good or just, was not considered an honorable act. Only when ends and means were aligned and worked in harmony were those engaged in the transaction considered virtuous. This virtue, in turn, would lead to the happiness Aristotle envisioned and toward which his entire system of virtue ethics aimed.
How, exactly, did honor and deliberative prudence prevent someone from acting foolishly in life and unethically in business? And what does it look like to follow these virtues today?
### Summary
The role of ethics in Athens during Greece’s Golden Age (fifth century BCE) was substantial. Aristotle focused on the role of virtue in developing individual character and social stability. He believed a person’s actions determined whether he or she was virtuous, and the point of the virtuous life was happiness, or eudaimonia.
Aristotle identified two types of virtues: intellectual and moral. Intellectual virtues were acquired through learning and served as guides to behavior by helping the individual discover truth. Moral virtues were acquired through habit and built character by helping someone pursue what is beneficial and avoid what is harmful in daily life. Aristotle considered phrónēsis, or prudence, the most important virtue, because of its practical application.
The thirteenth-century philosopher and theologian Thomas Aquinas agreed with Aristotle that to act dishonorably casts disrepute on all concerned. Ends and means had to be aligned, particularly in business, which provided people’s livelihoods and secured the economic health of the city-state.
### Assessment Questions
### Endnotes
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# Ethics from Antiquity to the Present
## Ethical Advice for Nobles and Civil Servants in Ancient China
### Learning Objectives
By the end of this section, you will be able to:
1. Identify the key features of Confucian virtue ethics
2. Explain how Confucian virtue ethics can be applied to contemporary business
The teachings and writings of Confucius (551–479 BCE; also called Kung Fu Tzu or Master Kung) not only have endured more than two and a half millennia but have influenced Chinese culture to such a degree that they remain part of the national character. In classical Confucianism, the practice of virtue constitutes the essence of governance. Differing from Aristotelian virtue (arête), Confucian virtue emphasizes relationships. Aristotle shows how a self-determining person might live well in society. Confucius showed how a relationship-determining person can live well with others. The reasons for this distinction will become clearer throughout the section.
As an iconic figure, Confucius had an impact on politics, literature, civil administration, diplomacy, and religion in China. Yet, by most accounts, he considered himself a failure, never having achieved the position and security he sought during his lifetime. However, his story is a testament to the reward of a life lived with integrity and simplicity.
### Social Upheaval in Ancient China
More than a century and a half before Aristotle and on the other side of the globe, Confucius, a wandering preacher from the principality of Lu in China, also struggled to answer life’s questions, although in a practical rather than a philosophical way. Confucius committed himself to healing the social divisions that were tearing China apart under the declining Zhou Dynasty. Those divisions led to what historians call the “Period of the Warring States,” which persisted for two hundred years after Confucius’s death. It was a time of constant warfare and violence. To counter the social disintegration he found everywhere, Confucius looked to the past, or “the wisdom of the ancients.” He called for a “return to ,” which was the proper order of the universe in which everyone had a role to play and there was harmony in the world.
We might see this harmony in a contemporary business setting as a team of people bringing different talents to bear on a specific project for the good (and profit) of the company. In this sense, refers to doing those tasks in collaboration with others to achieve the mission of the organization. For Confucius, li was expressed through ritual acts. When the correct rituals were followed in the right way with the right intention for the right end, all was well. Of course, corporate rituals also exist, and like all ritual acts, they reinforce cohesion and identity within the group. Identifying them helps improve employee awareness, productivity, and, perhaps, happiness. One example of this would be new-employee orientation, which is intended to acclimate newcomers to the corporate culture, the company ethos, and the traditions associated with the way the firm does business. Finally, anticipating Aristotle’s golden mean, li emphasized the middle ground between deficiency and excess. “Nothing in excess” was its guiding principle.
Huston Smith, noted historian of world religions, has observed that the widespread adoption of Confucius’s teachings within a generation of his death was not due to the originality of his ideas. What made the humble scholar the greatest cultural force in China’s history was chance. Confucius appeared on the scene at the right time, offering a fractured country an alternative to two extremes, neither of which was working. These were a realism that was tyrannical and relied on brute force to restrain the rivaling factions, and an idealistic approach called Mohism that was based on universal love and mutual aid. Confucius rejected the first as crude and the second as utopian. Instead, he offered a practical but empathetic approach, a sort of tough love for the times.
### Confucian Virtue Ethics
Scholars believe that, like Aristotle, Confucius stressed the virtuous life in his ethical system, with the goal of creating a , or a person who was gracious, magnanimous, and cultured: in other words, a flourishing human being. A junzi exhibited refinement, self-control, and balance in all things, acting neither rashly nor timidly. Such a person was the opposite of a “small” individual, who spent his or her time embroiled in petty rivalries and for whom power was the ultimate measure of success.
The concept of junzi and the Aristotelian magnanimous individual have much in common, except that for Confucius, there was added urgency. To be a junzi was a matter not just of honor but of survival. It is no exaggeration to say that China’s very existence depended upon the ability of individuals—nobles and peasants alike—to rise above the barbarity around them and embrace a way of life directed both outward toward social, political, and administrative reform and inward toward spiritual development. Confucius () believed that living the virtues he taught would achieve both these ends.
The keystone of Confucius’s deliberate tradition was the dao of humanity, or the Way, which established humanity as the answer to rampant lawlessness. Confucius believed people were inherently good and that the way to stop inhuman behavior was to make them even better, or more human. He identified three means to do this, which we explore next: “whole-hearted sincerity and truthfulness,” the “constant mean,” and “expediency” (quan). Specific virtues like moral character, righteousness, wisdom, courage, respect, filial piety, and simplicity formed part of these means. Someone who lived virtuously became more human, which resulted in a flourishing individual and an ordered world.
“Whole-hearted sincerity and truthfulness” meant more than sincerity, because even liars can be convincing. The sincerity Confucius had in mind was closer to loyalty, and the thing to which humans had to be loyal was truth. Confucius intended to counter the blind loyalty that had contributed to the eruption of anarchy throughout China. For instance, if a subject were called upon to offer advice, the subject had to be truthful, even though the ruler might not like the advice, which actually happened to Confucius, causing him to resign his post as minister of justice in Lu. What a subject owed the ruler was not cloying deference but the truth, which would benefit everyone in the long run. The implications for ethical behavior in modern corporations may be obvious. Reporting unethical behavior as a whistleblower or even standing up for truth in a meeting is sometimes easier said than done, which is why living virtuously requires disciplined practice and the support of like-minded individuals.
The “constant mean” refers to balance between excess and deficiency in an existential and in a practical sense. We are to follow the middle path, avoiding extremes of thought and action through ritual acts. We cannot claim to lead a balanced life; we must show it by performing acts that maintain personal and collective order. The Book of Li catalogues many of these acts, which form a guide for proper living, indicating the correct way to maintain the five great relationships that support Chinese society: parent/child, husband/wife, elder/junior sibling, master/apprentice, and ruler/subject. Confucius and his peers believed that properly observing these key five relationships was essential for social good and would invoke divine favor on the people.
Note that three of these are relationships within the family. The family was the basic unit of society and Confucius’s hope for reform, because it was the primary and most influential school of character, virtue, and conscience. Thus, the return to li takes on greater significance than a simple longing for an idyllic past. As Huston Smith noted, “that three of the Five Relationships pertain within the family is indicative of how important Confucius considered this institution to be. In this he was not inventing but continuing the Chinese assumption that the family is the basic unit of society. This assumption is graphically embedded in Chinese legend, which credits the hero who ‘invented’ the family with elevating the Chinese from the animal to human level.”
For Confucius, the third approach to the Way of humanity was the doctrine of expediency. Where Buddhism and Taoism advocated compassion and Mohism advocated universal love, Confucianism defined righteousness as the virtue that would temper compassion and love so that people could live together not just peacefully but justly. Righteousness included a practical approach to problem solving that helped politics, diplomacy, and civil administration to flourish. This expediency, or , is a noteworthy feature of Confucianism. Originally referring to a piece of metal used in balancing scales, quan is applied when weighing options in a moral dilemma and acts as a counterbalance to achieve fairness, enabling parties in a transaction to arrive at an equitable agreement. Ultimately, quan allows people and institutions to prioritize responsive action over ritual and serves as the way to align what people do with who they are, thus allowing them to become more human. For the businessperson, it might mean not fleeing the “tawdry” world of the marketplace but recognizing the humanity within it.
One example of the use of quan is the Broad Group, a Chinese manufacturer of central air conditioning products. The company produces clean energy systems and has developed an alternative to Freon. The new coolant has changed the way energy is delivered to such an extent that Zhang Yue, the company’s chief executive officer, was awarded the Champions of the Earth prize by the United Nations in 2011 for his work in green energy. Certainly, there is more opportunity for sustainable manufacturing and ethical business practices throughout China, and the state is attempting to promote such efforts.
### A Confucian Business Model
The spirituality that emerges from quan as righteousness is not solely about the individual; it is about the act itself, that is, the transaction, whether that takes place in a market, shop, or loading dock. When righteousness is directed outward in this way, it becomes justice, compelling all parties in a transaction to act in good faith or risk upsetting the proper order of things. Justice in this sense allows for wealth creation, investment, and strategic planning as long as all fulfill their roles and act in the manner of a junzi. An overarching spirituality of business may even develop, arising from the people who collectively make up the company. This is a traditionally Confucian way of looking at corporate culture, as the reflection of a larger network of relationships.
The other two Confucian ways of humanity also relate to business, because wholeheartedness and sincerity can serve as models of risk assessment, requiring clearheaded thinking and action balanced with respect for markets, competitors, and stakeholders. The dao of humanity rejects the premise that greed reigns supreme by itself. Instead, its ethical counterpart is truth. Both qualities exist within business practices. In this ethical framework, loyalty to truth is not just a stock phrase but a commitment to value in all aspects of an enterprise, such as sales, finance, marketing, and the employment and hiring chain. An investment advisor might recommend the constant mean to clients so their money is in a diversified portfolio with a long-term strategy. The dao of humanity, wholeheartedness, sincerity, and the other virtues are treated in The Analects ().
Some have criticized Confucianism for impeding progress in China in areas like education, the natural sciences, and business, because it has failed to adapt to the modern context. High-frequency trading, blockchain technology, artificial intelligence, and robotics do not work with cultural values thousands of years old, these critics say, so what we need is a new consciousness for a new era in human history. However, these criticisms miss the point. Confucius was interested in the same thing that concerned Aristotle—namely, the character of the person or persons making decisions rather than the decisions themselves. The importance of character has been proven repeatedly through business scandals like Enron, LIBOR, and the 2008 financial crisis, as well as the recent problems of Uber and Volkswagen, in which personal irresponsibility resulted in disaster. Indeed, business schools now offer seminars for executives integrating virtue ethics—both Aristotelian- and Confucian-inspired models—in leadership development.
The recent campaign of China’s central government against unethical business practices has made a point of prosecuting executives for corruption in the form of bribery, kickbacks, and embezzlement, demonstrating that some Confucian thought has survived from ancient times. Jack Ma, cofounder of the giant Chinese ecommerce site Alibaba, has called this “clean communism,” which might be another way of characterizing the form of state-sponsored capitalism that exists in China. Of course, the former Communist regime did not embrace Confucian virtue. Mao Zedong was deeply suspicious of Confucius, holding him to be a relic of the Imperial Era and having little value for the new China he intended to create with the founding of the People’s Republic of China in 1949.
### Summary
Confucius (551–479 BCE) attempted to revise ancient Chinese traditions and mores to counter the social chaos of his times. His system of virtue ethics emphasized relationships and, when followed faithfully, led to the dao of humanity, that is, true harmonious living. There were three ways to achieve dao: “whole-hearted sincerity and truthfulness,” the “constant mean,” and “expediency” (quan). Someone who lived virtuously became more humane, which resulted in a flourishing individual and an ordered nation.
In Confucian virtue ethics, business was viewed as a network of relationships dependent on trust and righteousness. Righteousness was a form of justice that compelled everyone to act in good faith. Considered in this way, justice allows for wealth creation, investment, and strategic planning as long as everyone fulfills his or her role and acts in accordance with the basic pattern of relationships Confucius identified.
### Assessment Questions
### Endnotes
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# Ethics from Antiquity to the Present
## Comparing the Virtue Ethics of East and West
### Learning Objectives
By the end of this section, you will be able to:
1. Compare the origins and goals of virtue ethics in the East and the West
2. Describe how these systems each aimed to establish a social order for family and business
3. Identify potential elements of a universally applied business ethic
Aristotle and Confucius each constructed an ethical system based on virtue, with Aristotle’s ultimate aim being happiness and Confucius’s being harmony. Each addressed a particular problem. For Aristotle, happiness consisted of the search for truth, which, in turn, required a centered, stable individual who could surmount misfortune or weak character. Confucius looked to settle the soul of the Chinese people by creating a system that reflected the heavenly order on Earth. Both systems rely on reasoned means to achieve reasoned ends.
### East Meets West
Given the vastly different cultural and historical settings of ancient Greece and China, you may be surprised to find similarities between the Aristotelian and Confucian systems of virtue ethics. Yet not only are there similarities but the two systems share the theme of control. For Aristotle, control manifested itself through the deliberative process of phrónēsis, resulting in virtuous living, harmony, and happiness. This application of practical wisdom was related to self-restraint, or temperance. In Confucian virtue ethics, control was a function of self-regulation; primitive instincts were held at bay and the person gained the capacity and courage to act more humanely (). This achievement of control benefited not only the individual but also the family and, by extension, the nation. Self-regulation was Confucius’s way of establishing order.
In a business context, control bears directly on managerial ethics, which is a way of relating to self, employees, and the organization that balances individual and collective responsibility, and in which management also includes planning, organizing, and leading to achieve organizational goals. A self-controlled, disciplined manager is able to work through layers of bureaucracy and the complexities of human interaction to attain goals in a way that is responsible and profitable and that enhances the organization’s mission and culture. These goals are achieved not at the expense of stakeholders but in a way that is fair for all. We might even say that righteousness leads to justice, which includes profit. We saw earlier that neither Aristotle nor Confucius disapproved of profit as long as it benefitted humanity in some way. Both men would have a very definite opinion about the optimization of shareholder wealth.
Despite these similarities between the two traditions, there are differences—the most notable being the locus of ethics. Aristotle placed this locus on individuals, who were called to fulfill their purpose honorably, accepting fate with dignity and aplomb. The basis of this acceptance was reason. For Confucius, reflecting the historical plight of China, the locus was the family, which he envisioned as putting an end to anarchy and setting the nation on its proper course by providing the basic pattern of relationships for personal and professional life. To be sure, family counted for Aristotle just as the individual counted for Confucius, but the emphasis in each system was different. Aristotle acknowledged that “a solitary man has a hard life, because it is not easy to keep up a continuous activity by oneself; but in company with others and in relation to others it is easier.”
Regardless of the source of ethical behavior, those engaged in business were required to act with accountability and responsibility. They were accountable to customers and suppliers when delivering commodities like figs, pottery, or olive oil. And they had to conduct themselves responsibly to maintain their personal and professional reputation. Thus, business was the perfect expression of ethics in both East and West, because it provided a forum within which virtues were tested in very real ways. Confucius urged each follower to be a great or humane person, or ru, not a small one. This was so important that the school established after his death was known as the Ru School, and the principles it taught are called Ruism.
### Personal and Professional Roles
Another important characteristic of Eastern and Western systems of virtue ethics is the integration of personal and professional life. A person could not act one way at home and a completely different way in public, especially civic leaders, merchants, teachers, and rulers. The modern tendency to compartmentalize various aspects of ourselves to accommodate circumstances would have puzzled those living in ancient Greece or China. A retail manager who contributes generously to help protect endangered species but thinks nothing of working the sales staff to the point of burnout to achieve monthly goals has not successfully integrated the personal and the professional, for instance, and even poses obstacles to individual happiness and life in the community. Everyone desires efficiency in business, but compartmentalizing our personal and professional ideals can lead to “dispersed personal accountability” in an organization and the kind of financial meltdown that occurred, through greed and rule-breaking, in the housing and financial industries and led to the worldwide recession of 2008.
What might the integration of personal and professional life look like, and how can we apply it within the relationships that are the foundation of business? To answer this question, consider the essence of the virtuous person that each ethical system strove to create. For Aristotle, the virtuous person saw the truth in every kind of situation. Once acknowledged and recognized, the truth could not be denied without compromising honor. Similarly, Confucius taught that “A gentleman will not, for the space of a meal, depart from humanity. In haste and flurry, he adheres to it; in fall and stumble, he adheres by it.”
Despite the emphasis these systems placed on character, however, character was not ultimately what defined the virtuous individual, family, city-state, or nation. Instead, it was the individual’s transformation, through education, into a different kind of being who will act virtuously even if no one is watching. When the person concentrates on the means used to achieve an end, eventually the means become a way of life even more important than the end itself. It is not merely that the means must match the end, but that they come to define the virtuous person.
The integration of personal and professional lives has two effects: motive and awareness. Motive is the willingness to do the right thing because it is the right thing, even though there may be no perceived benefit. Arguably, it is here that the individual’s true nature is revealed. The other effect, awareness, is the ability to see the ethical dimension in all events, choices, decisions, and actions. Many business scandals could be avoided if more people understood the value of human capital and the need to see the larger picture; to put it differently: responsibility over profitability. Or, as Confucius would say, it is the person who can broaden the Way, not the Way that broadens the person.
### Is There a Universal Ethics?
A fundamental question in the study of ethics is whether we can identify universal, objective moral truths that cut across cultures, geographic settings, and time. At the most foundational level, the answer might be yes. As Aristotle noted, ethics is not a science but an art. Perhaps the best way to answer the question is to consider the methods used for moral decision-making. This strategy would be in line with Aristotelian and Confucian models if we assume that once they attain insight, most people will follow their conscience and act in reasonable, responsible ways. Methods of decision-making then could be adapted to any context or dilemma. But what constitutes a reasonable, responsible method, and who gets to choose it?
It is possible that standards of ethical conduct could be created to guide business affairs fairly and justly. Such standards already exist in most industries and professions. The Generally Accepted Accounting Principles (GAAP) give direction to those working in accounting and finance in the United States. The International Standards Organization offers guidelines and protocols for many industries. Together with governmental regulation, these might serve as the basis for ethical behavior, perhaps even globally. Of course, those fashioning guidelines would have to be sensitive to individual autonomy and national sovereignty, especially when it comes to international jurisdiction, privacy, and human rights. For example, the International Financial Reporting Standards serve as a kind of international GAAP to help companies report financial results in a common accounting language across national boundaries.
Despite our best efforts, someone who wishes to conduct business selfishly and unethically always will be drawn to do so unless given a compelling incentive not to. It is evident why Aristotle and Confucius stressed the importance of schooling. Perhaps what is needed now, building on these two ancient approaches, is business education focused on transformation rather than on conformity to guidelines. This proposal touches the core of both Aristotelian and Confucian teachings: training and education. Training and education help internalize in us more altruistic business practices. They also permit greater integration between our personal and professional understandings of the way we should treat friends, family, customers, and clients. No matter the context, we are then encouraged to treat others with honesty and respect, so that even someone certain to get away with the most outrageous corruption or money-laundering scheme would not do it. Why not? Because doing so would be a betrayal of the person’s conscience and identity. A business education that is truly effective—one for the twenty-first century—would produce a graduate who could stand up and say no to that kind of self-betrayal.
### Summary
Aristotle and Confucius each constructed an ethical system based on virtue, with Aristotle’s anticipated result being happiness and Confucius’s being harmony. For Aristotle, happiness consisted of the search for truth. Confucius looked to create a system that put an end to civil chaos. Although both systems relied on reason and control to achieve their ends, Aristotle placed the locus of ethical behavior on individuals, but he held that a moral upbringing and good political governance also contributed to the formation of moral character. Confucius saw this locus in the family, which provided the basic pattern of relationships for personal and professional life. Reason prevailed throughout, as in the cultivation of a more just and humane person.
In a business context, reason and control bear directly on management, leadership, and corporate culture. They constitute a way of cultivating individual virtue and corporate ethos such that the two go hand in hand. The environment or culture of an organization needs individuals of character who can follow their conscience and experience moral conversion. We might envision the emergence of universal values like reason and control that nurture both the individual and the organization.
### Assessment Questions
### Endnotes
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# Ethics from Antiquity to the Present
## Utilitarianism: The Greatest Good for the Greatest Number
### Learning Objectives
By the end of this section, you will be able to:
1. Identify the principle elements of Jeremy Bentham’s utilitarianism
2. Distinguish John Stuart Mill’s modification of utilitarianism from Bentham’s original formulation of it
3. Evaluate the role of utilitarianism in contemporary business
Although the ultimate aim of Aristotelian virtue ethics was eudaimonia, later philosophers began to question this notion of happiness. If happiness consists of leading the good life, what is good? More importantly, who decides what is good? Jeremy Bentham (1748–1842), a progressive British philosopher and jurist of the Enlightenment period, advocated for the rights of women, freedom of expression, the abolition of slavery and of the death penalty, and the decriminalization of homosexuality. He believed that the concept of good could be reduced to one simple instinct: the search for pleasure and the avoidance of pain. All human behavior could be explained by reference to this basic instinct, which Bentham saw as the key to unlocking the workings of the human mind. He created an ethical system based on it, called utilitarianism. Bentham’s protégé, John Stuart Mill (1806–1873), refined Bentham’s system by expanding it to include human rights. In so doing, Mill reworked Bentham’s utilitarianism in some significant ways. In this section we look at both systems.
### Maximizing Utility
During Bentham’s lifetime, revolutions occurred in the American colonies and in France, producing the Bill of Rights and the Déclaration des Droits de l’Homme (Declaration of the Rights of Man), both of which were based on liberty, equality, and self-determination. Karl Marx and Friedrich Engels published The Communist Manifesto in 1848. Revolutionary movements broke out that year in France, Italy, Austria, Poland, and elsewhere. In addition, the Industrial Revolution transformed Great Britain and eventually the rest of Europe from an agrarian (farm-based) society into an industrial one, in which steam and coal increased manufacturing production dramatically, changing the nature of work, property ownership, and family. This period also included advances in chemistry, astronomy, navigation, human anatomy, and immunology, among other sciences.
Given this historical context, it is understandable that Bentham used reason and science to explain human behavior. His ethical system was an attempt to quantify happiness and the good so they would meet the conditions of the scientific method. Ethics had to be empirical, quantifiable, verifiable, and reproducible across time and space. Just as science was beginning to understand the workings of cause and effect in the body, so ethics would explain the causal relationships of the mind. Bentham rejected religious authority and wrote a rebuttal to the Declaration of Independence in which he railed against natural rights as “rhetorical nonsense, nonsense upon stilts.” Instead, the fundamental unit of human action for him was utility—solid, certain, and factual.
What is utility? Bentham’s fundamental axiom, which underlies utilitarianism, was that all social morals and government legislation should aim for producing the greatest happiness for the greatest number of people. Utilitarianism, therefore, emphasizes the consequences or ultimate purpose of an act rather than the character of the actor, the actor’s motivation, or the particular circumstances surrounding the act. It has these characteristics: (1) universality, because it applies to all acts of human behavior, even those that appear to be done from altruistic motives; (2) objectivity, meaning it operates beyond individual thought, desire, and perspective; (3) rationality, because it is not based in metaphysics or theology; and (4) quantifiability in its reliance on utility.
Bentham was interested in reducing utility to a single index so that units of it could be assigned a numerical and even monetary value, which could then be regulated by law. This utility function measures in “utils” the value of a good, service, or proposed action relative to the utilitarian principle of the greater good, that is, increasing happiness or decreasing pain. Bentham thus created a “hedonic calculus” to measure the utility of proposed actions according to the conditions of intensity, duration, certainty, and the probability that a certain consequence would result. He intended utilitarianism to provide a reasoned basis for making judgments of value rather than relying on subjectivity, intuition, or opinion. The implications of such a system on law and public policy were profound and had a direct effect on his work with the British House of Commons, where he was commissioned by the Speaker to decide which bills would come up for debate and vote. Utilitarianism provided a way of determining the total amount of utility or value a proposal would produce relative to the harm or pain that might result for society.
Utilitarianism is a consequentialist theory. In consequentialism, actions are judged solely by their consequences, without regard to character, motivation, or any understanding of good and evil and separate from their capacity to create happiness and pleasure. Thus, in utilitarianism, it is the consequences of our actions that determine whether those actions are right or wrong. In this way, consequentialism differs from Aristotelian and Confucian virtue ethics, which can accommodate a range of outcomes as long as the character of the actor is ennobled by virtue. For Bentham, character had nothing to do with the utility of an action. Everyone sought pleasure and avoided pain regardless of personality or morality. In fact, too much reliance on character might obscure decision-making. Rather than making moral judgments, utilitarianism weighed acts based on their potential to produce the most good (pleasure) for the most people. It judged neither the good nor the people who benefitted. In Bentham’s mind, no longer would humanity depend on inaccurate and outdated moral codes. For him, utilitarianism reflected the reality of human relationships and was enacted in the world through legislative action.
To illustrate the concept of consequentialism, consider the hypothetical story told by Harvard psychologist Fiery Cushman. When a man offends two volatile brothers with an insult, Jon wants to kill him; he shoots but misses. Matt, who intends only to scare the man but kills him by accident, will suffer a more severe penalty than his brother in most countries (including the United States). Applying utilitarian reasoning, can you say which brother bears greater guilt for his behavior? Are you satisfied with this assessment of responsibility? Why or why not?
### Synthesizing Rights and Utility
As you might expect, utilitarianism was not without its critics. Thomas Hodgskin (1787–1869) pointed out what he said was the “absurdity” of insisting that “the rights of man are derived from the legislator” and not nature. In a similar vein, the poet Samuel Taylor Coleridge (1772–1834) accused Bentham of mixing up morality with law. Others objected that utilitarianism placed human beings on the same level as animals and turned people into utility functions. There were also complaints that it was mechanistic, antireligious, and too impractical for most people to follow. John Stuart Mill sought to answer these objections on behalf of his mentor but then offered a synthesis of his own that brought natural rights together with utility, creating a new kind of utilitarianism, one that would eventually serve to underpin neoclassical economic principles.
Mill’s father, James, was a contemporary and associate of Bentham’s who made sure his son was tutored in a rigorous curriculum. According to Mill, at an early age he learned enough Greek and Latin to read the historians Herodotus and Tacitus in their original languages. His studies also included algebra, Euclidean geometry, economics, logic, and calculus. His father wanted him to assume a leadership position in Bentham’s political movement, known as the Philosophical Radicals. Unfortunately, the intensity and duration of Mill’s schooling—utilitarian conditions of education—were so extreme that he suffered a nervous breakdown at the age of twenty years. The experience left him dissatisfied with Bentham’s philosophy of utility and social reform. As an alternative, Mill turned to Romanticism and poets like Coleridge and Johann Wolfgang Goethe (1749–1832). What he ended up with, however, was not a rejection of utilitarianism but a synthesis of utility and human rights.
Why rights? No doubt, Mill’s early life and formation had a great deal to do with his championing of individual freedom. He believed the effort to achieve utility was unjustified if it coerced people into doing things they did not want to do. Likewise, the appeal to science as the arbiter of truth would prove just as futile, he believed, if it did not temper facts with compassion. “Human nature is not a machine to be built after a model, and set to do exactly the work prescribed for it, but a tree, which requires to grow and develop itself on all sides, according to the tendency of the inward forces which make it a living thing,” he wrote. Mill was interested in humanizing Bentham’s system by ensuring that everyone’s rights were protected, particularly the minority’s, not because rights were God given but because that was the most direct path to truth. Therefore, he introduced the harm principle, which states that the “only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant.”
To be sure, there are limitations to Mill’s version of utilitarianism, just as there were with the original. For one, there has never been a satisfactory definition of “harm,” and what one person finds harmful another may find beneficial. For Mill, harm was defined as the set back of one’s interests. Thus, harm was defined relative to an individual’s interests. But what role, if any, should society play in defining what is harmful or in determining who is harmed by someone’s actions? For instance, is society culpable for not intervening in cases of suicide, euthanasia, and other self-destructive activities such as drug addiction? These issues have become part of the public debate in recent years and most likely will continue to be as such actions are considered in a larger social context. We may also define intervention and coercion differently depending on where we fall on the political spectrum.
Considering the social implications of an individual action highlights another limitation of utilitarianism, and one that perhaps makes more sense to us than it would to Bentham and Mill, namely, that it makes no provision for emotional or cognitive harm. If the harm is not measurable in physical terms, then it lacks significance. For example, if a reckless driver today irresponsibly exceeds the speed limit, crashes into a concrete abutment, and kills himself while totaling his vehicle (which he owns), utilitarianism would hold that in the absence of physical harm to others, no one suffers except the driver. We may not arrive at the same conclusion. Instead, we might hold that the driver’s survivors and friends, along with society as a whole, have suffered a loss. Arguably, all of us are diminished by the recklessness of his act.
### The Role of Utilitarianism in Contemporary Business
Utilitarianism is used frequently when business leaders make critical decisions about things like expansion, store closings, hiring, and layoffs. They do not necessarily refer to a “utilitarian calculus,” but whenever they take stock of what is to be gained and what might be lost in any significant decision (e.g., in a cost-benefit analysis), they make a utilitarian determination. At the same time, one might argue that a simple cost-benefits analysis is not a utilitarian calculus unless it includes consideration of all stakeholders and a full accounting of externalities, worker preferences, potentially coercive actions related to customers, or community and environmental effects.
As a practical way of measuring value, Bentham’s system also plays a role in risk management. The utility function, or the potential for benefit or loss, can be translated into decision-making, risk assessment, and strategic planning. Together with data analytics, market evaluations, and financial projections, the utility function can provide managers with a tool for measuring the viability of prospective projects. It may even give them an opportunity to explore objections about the mechanistic and impractical nature of utilitarianism, especially from a customer perspective.
Utilitarianism could motivate individuals within the organization to take initiative, become more responsible, and act in ways that enhance the organization’s reputation rather than tarnish it. Mill’s On Liberty (), a short treatment of political freedoms in tension with the power of the state, underscored the importance of expression and free speech, which Mill saw not as one right among many but as the foundational right, reflective of human nature, from which all others rights derive their meaning. And therein lay the greatest utility for society and business. For Mill, the path to utility led through truth, and the main way of arriving at truth was through a deliberative process that encouraged individual expression and the clash of ideas.
As for Mill’s harm principle, the first question in trying to arrive at a business decision might be, does this action harm others? If the answer is yes, we must make a utilitarian calculation to decide whether there is still a greater good for the greatest number. Then we must ask, who are the others we must consider? All stakeholders? Only shareholders? What does harm entail, and who decides whether a proposed action might be harmful? This was the reason science and debate were so important to Mill, because the determination could not be left to public opinion or intuition. That was how tyranny started. By introducing deliberation, Mill was able to balance utility with freedom, which was a necessary condition for utility.
Where Bentham looked to numerical formulas for determining value, relying on the objectivity of numbers, Mill sought value in reason and in the power of language to clarify where truth lies. The lesson for contemporary business, especially with the rise of big data, is that we need both numbers and reasoned principles. If we apply the Aristotelian and Confucian rule of the mean, we see that balance of responsibility and profitability makes the difference between sound business practices and poor ones.
### Summary
Jeremy Bentham developed a quantifiable method for determining what was beneficial and what was detrimental. He called this method utilitarianism, because its basic unit, the “util,” acted like a monetary unit. Bentham’s protégé, John Stuart Mill, refined this system to include human rights. His “harm principle” is an outstanding element in his version of utilitarianism.
Utilitarianism in business can lead to a bottom-line mentality in which decisions are based on achieving the greatest good for the organization as it pertains to the greatest number of stakeholders, including shareholders and all others affected by the actions of the organization The outcome is the determining factor, not the intent of the actors or whether people are treated humanely.
### Assessment Questions
### Endnotes
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# Ethics from Antiquity to the Present
## Deontology: Ethics as Duty
### Learning Objectives
By the end of this section, you will be able to:
1. Explain Immanuel Kant’s concept of duty and the categorical imperative
2. Differentiate between utilitarianism and deontology
3. Apply a model of Kantian business ethics
Unlike Bentham and Mill, Immanuel Kant (1724–1804) was not concerned with consequences of one’s actions or the harm caused to one’s individual interests. Instead, he focused on motives and the willingness of individuals to act for the good of others, even though that action might result in personal loss. Doing something for the right reason was much more important to Kant than any particular outcome.
### Aroused From “Dogmatic Slumber”
In 1781, at the age of fifty-six years, Kant published Critique of Pure Reason (Kritik der Reinen Vernunft) in Königsberg, Prussia (). Almost immediately, it transformed him from an obscure professor of metaphysics and logic into a preeminent figure in the world of philosophy. In the 800-page tome, Kant criticized the way rationalism (“pure reason”) had assumed the mantle of absolute truth, supplanting both religious faith and empirical science. Kant referred to the unquestioned acceptance of rationalism as dogmatism. Whether Christian or revolutionary, dogmatic thinking was to be avoided because it obscured the truths of science and religion through flawed logic.
Kant credited the skepticism of empirical philosopher David Hume (1711–1776) with awakening him from “dogmatic slumber,” although he disagreed with Hume, who claimed that the mind did not exist at all but was the result of mental associations derived from sensory experience. For Kant, reality could be discerned not through reasoning or sensory experience alone but only by understanding the nature of the human mind. Kant argued that sensory experience did not create the mind but rather that the mind created experience through its internal structures. And within the mind’s complex structures there also existed an inherent and unconditional duty to act ethically, which Kant called the “categorical imperative,” first outlined in Groundwork of the Metaphysic of Morals (1785).
In its initial form, Kant’s described his concept of the categorical imperative as follows: “Act only according to that maxim whereby you can, at the same time, will that it should become a universal law.” Kant’s categorical (or unconditional) imperative has practical applications for the study of ethics. The categorical imperative contains two major suppositions: (1) We must act on the basis of goodwill rather than purely on self-interested motives that benefit ourselves at the expense of others; (2) we must never treat others as means toward ends benefitting ourselves without consideration of them also as ends in themselves. Kant held that observing the categorical imperative as we consider what actions to take would directly lead to ethical actions on our part.
In Kant’s view, rationalism and empiricism prevented people from perceiving the truth about their own nature. What was that truth? What was sufficient to constitute it? Kant identified an a priori world of knowledge and understanding in which truth lay in the structures and categories of the mind that were beyond perception and reason. This was a radical concept for the times.
In the end, Kant’s systematic analysis of knowing and understanding provided a much-needed counterweight to the logic of Enlightenment rationalism. The existence of the mental structures he proposed has even been confirmed today. For instance, the scientific consensus is that humans are born with cognitive structures designed specifically for language acquisition and development. Even more surprising, there may be similar cognitive structures for morality, conscience, and moral decision-making. So, it is quite possible that conscience, if not happiness, may have a genetic component after all, although Kant himself did not believe the categories of the understanding or the a priori structures of the mind were biological.
### Utilitarianism and Deontology
From a Kantian perspective, it is clear that adherence to duty is what builds the framework for ethical acts. This is in direct contradiction of Bentham’s view of human nature as selfish and requiring an objective calculus for ethical action to result. Kant rejected the idea of such a calculus and believed, instead, that perceptions were organized into preexisting categories or structures of the mind. Compare his notion of an ordered and purposeful universe of laws with the similar logos, or logic, of the ancient Greeks. One of those laws included implementation of the categorical imperative to act ethically, in accordance with our conscience. However, even though that imperative ought to be followed without exception, not everyone does so. In Kant’s moral teachings, individuals still had free will to accept or reject it.
There is a definite contrast between utilitarianism, even Mill’s version, and Kant’s system of ethics, known as deontology, in which duty, obligation, and good will are of the highest importance. (The word is derived from the Greek deon, meaning duty, and logos again, here meaning organization for the purpose of study.) An ethical decision requires us to observe only the rights and duties we owe to others, and, in the context of business, act on the basis of a primary motive to do what is right by all stakeholders. Kant was not concerned with utility or outcome—his was not a system directed toward results. The question for him was not how to attain happiness but how to become worthy of it.
Rather like Aristotle and Confucius, Kant taught that the transcendent aspects of human nature, if followed, would lead us inevitably to treat people as ends rather than means. To be moral meant to renounce uninformed dogmatism and rationalism, abide by the categorical imperative, and embrace freedom, moral sense, and even divinity. This was not a lofty or unattainable goal in Kant’s mind, because these virtues constituted part of the systematic structuring of the human mind. It could be accomplished by living truthfully or, as we say today, authentically. Such a feat transcended the logic of both rationalism and empiricism.
### Kantian Business Ethics
Unlike utilitarianism, which forms the philosophical foundation for most cost-benefit analysis in business, Kantian ethics is not so easily applied. On one hand, it offers a unique opportunity for the development of individual morality through the categorical imperative to act ethically, which emphasizes humanity and autonomy. This imperative addresses one major side of business ethics: the personal. Character and moral formation are crucial to creating an ethical culture. Indeed, business ethics is littered with cases of companies that have suffered damaging crises due to their leaders’ lack of commitment to act on the basis of a good will and with regard for what benefits others. Recent examples include Uber, where a toxic work environment was allowed to prevail, and Volkswagen, which knowingly misrepresented the emissions level of its cars. Such examples exist in government as well, as the recent Theranos and “Fat Leonard” scandals confirm. The latter consisted of graft and corruption in the U.S. Navy’s Pacific fleet and has been a continual source of embarrassment for an institution that prides itself on the honorable conduct of its officers. One person can make a difference, either positively or negatively.
On the other hand, Kant’s categorical imperative is just that: categorical or unconditional. It calls for morally upright behavior regardless of external circumstance or the historical context of a proposed act or decision. Kant affirmed that “the moral law is an imperative, which commands categorically, because the law is unconditioned.” Unconditional ethics could be a challenge for a global organization dealing with suppliers, customers, and competitors in sometimes vastly different cultures. It raises a larger philosophical issue: namely, was Kant correct in believing that morality and mental categories are independent of experience? Or can they be culturally conditioned, and, if so, does that make them relative rather than absolute, as Kant believed them to be?
This question whether ethics is universal is distinctly Kantian, because Kant believed that not only must a moral agent act with others’ interests in mind and have the right intentions, but also that the action be universally applicable. Think of how Kantian ethics might be applied not just on an individual level but throughout an organization, and then society. Kant would judge a corporate act to be ethical if it benefitted others at the same time it benefitted company leadership and stockholders, and if it did not place their interests above those of other stakeholders. If loyalty to a coworker conflicted with loyalty to a supervisor or the organization, for instance, then acts resulting from such loyalty might not meet the conditions of deontology. Either the supervisor or the company would be treated as a means rather than an end. Although the qualitative or humanizing element of Kantian ethics has broad appeal, it runs into limitations in an actual business setting. Whether the limitations have good or bad effects depends on the organization’s culture and leadership. In general, however, most companies do not adhere to strict Kantian theories, because they look to the outcome of their decisions rather than focusing on motives or intentions.
### Summary
Rejecting dogmatic thinking of all kinds, Kant believed people were not the sum total of reactions to stimuli but complex beings with innate structures of understanding and inborn moral sensitivity. In his view, everyone had a duty to obey a categorical imperative to do the just and moral thing, regardless of the consequences. The outcome of an act was not as important as the intent of the actor and whether the act treated others as ends or means. Here, Kant reflected Aristotelian virtue ethics in seeing people as ends in themselves and not as “living tools” or human resources.
This view does not typically govern most management decisions in business; arguably, utilitarianism is the efficient, go-to theory on which corporate leaders often rely. Yet a Kantian understanding of business ethics remains viable even today and sometimes displays itself in the most compassionate and humane actions that evolving commercial organizations take.
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# Ethics from Antiquity to the Present
## A Theory of Justice
### Learning Objectives
By the end of this section, you will be able to:
1. Evaluate John Rawls’s answer to utilitarianism
2. Analyze the problem of redistribution
3. Apply justice theory in a business context
This chapter began with an image of Justice holding aloft scales as a symbol of equilibrium and fairness. It ends with an American political philosopher for whom the equal distribution of resources was a primary concern. John Rawls (1921–2002) wanted to change the debate that had prevailed throughout the 1960s and 1970s in the West about how to maximize wealth for everyone. He sought not to maximize wealth, which was a utilitarian goal, but to establish justice as the criterion by which goods and services were distributed among the populace. Justice, for Rawls, had to do with fairness—in fact, he frequently used the expression justice as fairness—and his concept of fairness was a political one that relied on the state to take care of the most disadvantaged. In his justice theory, offered as an alternative to the dominant utilitarianism of the times, the idea of fairness applied beyond the individual to include the community as well as analysis of social injustice with remedies to correct it.
### Justice Theory
Rawls developed a theory of justice based on the Enlightenment ideas of thinkers like John Locke (1632–1704) and Jean-Jacques Rousseau (1712–1778), who advocated social contract theory. Social contract theory held that the natural state of human beings was freedom, but that human beings will rationally submit to some restrictions on their freedom to secure their mutual safety and benefit, not subjugation to a monarch, no matter how benign or well intentioned. This idea parallels that of Thomas Hobbes (1588–1679), who interpreted human nature to be selfish and brutish to the degree that, absent the strong hand of a ruler, chaos would result. So people willingly consent to transfer their autonomy to the control of a sovereign so their very lives and property will be secured. Rousseau rejected that view, as did Rawls, who expanded social contract theory to include justice as fairness. In A Theory of Justice (1971), Rawls introduced a universal system of fairness and a set of procedures for achieving it. He advocated a practical, empirically verifiable system of governance that would be political, social, and economic in its effects.
Rawls’s justice theory contains three principles and five procedural steps for achieving fairness. The principles are (1) an “original position,” (2) a “veil of ignorance,” and (3) unanimity of acceptance of the original position. By original position, Rawls meant something akin to Hobbes’ understanding of the state of nature, a hypothetical situation in which rational people can arrive at a contractual agreement about how resources are to be distributed in accordance with the principles of justice as fairness. This agreement was intended to reflect not present reality but a desired state of affairs among people in the community. The veil of ignorance () is a condition in which people arrive at the original position imagining they have no identity regarding age, sex, ethnicity, education, income, physical attractiveness, or other characteristics. In this way, they reduce their bias and self-interest. Last, unanimity of acceptance is the requirement that all agree to the contract before it goes into effect. Rawls hoped this justice theory would provide a minimum guarantee of rights and liberties for everyone, because no one would know, until the veil was lifted, whether they were male, female, rich, poor, tall, short, intelligent, a minority, Roman Catholic, disabled, a veteran, and so on.
The five procedural steps, or “conjectures,” are (1) entering into the contract, (2) agreeing unanimously to the contract, (3) including basic conditions in the contract such as freedom of speech, (4) maximizing the welfare of the most disadvantaged persons, and (5) ensuring the stability of the contract. These steps create a system of justice that Rawls believed gave fairness its proper place above utility and the bottom line. The steps also supported his belief in people’s instinctual drive for fairness and equitable treatment. Perhaps this is best seen in an educational setting, for example, the university. By matriculating, students enter into a contract that includes basic freedoms such as assembly and speech. Students at a disadvantage (e.g., those burdened with loans, jobs, or other financial constraints) are accommodated as well as possible. The contract between the university and students has proven to be stable over time, from generation to generation. This same procedure applies on a micro level to the experience in the classroom between an individual teacher and students. Over the past several decades—for better or worse—the course syllabus has assumed the role of a written contract expressing this relationship.
Rawls gave an example of what he called “pure procedural justice” in which a cake is shared among several people. By what agreement shall the cake be divided? Rawls determined that the best way to divide the cake is to have the person slicing the cake take the last piece. This will ensure that everyone gets an equal amount. What is important is an independent standard to determine what is just and a procedure for implementing it.
### The Problem of Redistribution
Part of Rawls’s critique of utilitarianism is that its utility calculus can lead to tyranny. If we define pleasure as that which is popular, the minority can suffer in terrible ways and the majority become mere numbers. This became clear in Mills’s attempt to humanize Bentham’s calculus. But Mills’s harm principle had just as bad an effect, for the opposite reason. It did not require anyone to give up anything if it had to be done through coercion or force. To extend Rawls’s cake example, if one person owned a bakery and another were starving, like Jean Valjean’s sister in Les Misérables, utilitarianism would force the baker to give up what he had to satisfy the starving person without taking into account whether the baker had greater debts, a sick spouse requiring medical treatment, or a child with educational loans; in other words, the context of the situation matters, as opposed to just the consequences. However, Mill’s utilitarianism, adhering to the harm principle, would leave the starving person to his or her own devices. At least he or she would have one slice of cake. This was the problem of distribution and redistribution that Rawls hoped to solve, not by calculating pleasure and pain, profit and loss, but by applying fairness as a normative value that would benefit individuals and society.
The problem with this approach is that justice theory is a radical, egalitarian form of liberalism in which redistribution of material goods and services occurs without regard for historical context or the presumption many share that it inherently is wrong to take the property legally acquired by one and distribute it to another. Rawls has been criticized for promoting the same kind of coercion that can exist in utilitarianism but on the basis of justice rather than pleasure. Justice on a societal level would guarantee housing, education, medical treatment, food, and the basic necessities of life for everyone. Yet, as recent political campaigns have shown, the question of who will pay for these guaranteed goods and services through taxes is a contentious one. These are not merely fiscal and political issues; they are philosophical ones requiring us to answer questions of logic and, especially in the case of justice theory, fairness. And, naturally, we must ask, what is fair?
Rawls’s principles and steps assume that the way in which the redistribution of goods and services occurs would be agreed upon by people in the community to avoid any fairness issues. But questions remain. For one, Rawls’s justice, like the iconic depiction, is blind and cannot see the circumstances in which goods and services are distributed. Second, we may question whether a notion of fairness is really innate. Third, despite the claim that justice theory is not consequentialist (meaning outcomes are not the only thing that matters), there is a coercive aspect to Rawls’s justice once the contract is in force, replacing utility with mandated fairness. Fourth, is this the kind of system in which people thrive and prosper, or, by focusing on the worst off, are initiative, innovation, and creativity dampened on the part of everyone else? Perhaps the most compelling critic of Rawls in this regard was his colleague at Harvard University, Robert Nozick (1938–2002), who wrote A Theory of Entitlement (1974) as a direct rebuttal of Rawlsian justice theory. Nozick argued that the power of the state may never ethically be used to deprive someone of property he or she has legally obtained or inherited in order to distribute it to others who are in need of it.
Still, one of the advantages of justice theory over the other ethical systems presented in this chapter is its emphasis on method as opposed to content. The system runs on a methodology or process for arriving at truth through the underlying value of fairness. Again, in this sense it is similar to utilitarianism, but, by requiring unanimity, it avoids the extremes of Bentham’s and Mill’s versions. As a method in ethics, it can be applied in a variety of ways and in multiple disciplines, because it can be adapted to just about any value-laden content. Of course, this raises the question of content versus method in ethics, especially because ethics has been defined as a set of cultural norms based on agreed-upon values. Method may be most effective in determining what those underlying values are, rather than how they are implemented.
### Justice in Business
Although no ethical framework is perfect or fits a particular era completely, Rawls’s justice theory has distinct advantages when applied to business in the twenty-first century. First, as businesses become interdependent and globalized, they must pay more attention to quality control, human resources, and leadership in diverse settings. What will give greater legitimacy to an organization in these areas than fairness? Fairness is a value that is cross-cultural, embraced by different social groups, and understood by nearly everyone. However, what is considered fair depends on a variety of factors, including underlying values and individual characteristics like personality. For instance, not everyone agrees on whether or how diversity ought to be achieved. Neither is there consensus about affirmative action or the redistribution of resources or income. What is fair to some may be supremely unfair to others. This presents an opportunity for engaged debate and participation among the members of Rawls’s community.
Second, as we saw earlier, justice theory provides a method for attaining fairness, which could make it a practical and valuable part of training at all levels of a company. The fact that its content—justice and fairness—is more accessible to contemporary people than Confucian virtue ethics and more flexible than Kant’s categorical imperative makes it an effective way of dealing with stakeholders and organizational culture.
Justice theory may also provide a seamless way of engaging in corporate social responsibility outwardly and employee development inwardly. Fairness as a corporate doctrine can be applied to all stakeholders and define a culture of trust and openness, with all the corresponding benefits, in marketing, advertising, board development, client relations, and so on. It is also an effective way of integrating business ethics into the organization so ethics is no longer seen as the responsibility solely of the compliance department or legal team. Site leaders and middle managers understand fairness; employees probably even more so, because they are more directly affected by the lack of it. Fairness, then, is as much part of the job as it is an ongoing process of an ethics system. It no doubt makes for a happier and more productive workforce. An organization dedicated to it can also play a greater role in civic life and the political process, which, in turn, helps everyone.
### Summary
Rawls developed a theory of justice based on social contract theory, holding that the natural state of human beings is freedom, not subjugation to a monarch, no matter how benign or well intentioned. Rawls’s theory views human beings as inherently good and, echoing Kant, inclined toward moral rectitude and action. In his theory, Rawls included the “veil of ignorance,” which ensures objectivity in our choices and the avoidance of bias. Criticism of Rawls’s theory focuses primarily on the issue of distribution, because decisions made in ignorance can neither reward innovation and enterprise nor encourage risk.
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# Defining and Prioritizing Stakeholders
## Introduction
In May 2018, in the wake of a global uproar after two Black men in a Philadelphia Starbucks were arrested while awaiting a friend, Starbucks closed its approximately eight thousand U.S. stores to conduct racial bias training (). The company also officially changed its policy to allow people to visit its stores and restrooms without making a purchase, hoping to avoid more incidents like this one (sparked by a White employee calling 9-1-1 when the men did not buy anything). The two men who were arrested eventually settled with Starbucks for an undisclosed sum.
As one of the largest beverage retailers in the world, Starbucks directly affects countless stakeholders: food and drink distributors; coffee and tea growers; milk producers; urban and suburban communities; local, state, and national governments; more than 300,000 employees and 1,600 institutional investors; and millions of customers. The company’s decision to close its U.S. stores for half a day was financially costly, and the training session could never fully solve the problem of conscious or unconscious bias. But the firm believed it was the right thing to do. Why does it matter to its stakeholders what Starbucks does? What role do stakeholders play in a company’s decisions about its ethical behavior, and why?
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# Defining and Prioritizing Stakeholders
## Adopting a Stakeholder Orientation
### Learning Objectives
By the end of this section, you will be able to:
1. Identify key types of business-stakeholder relationships
2. Explain why laws do not dictate every ethical responsibility a company may owe key stakeholders
3. Discuss why stakeholders’ welfare must be at the heart of ethical business decisions
Have you ever had a stake in a decision someone else was making? Depending on your relationship with that person and your level of interest in the decision, you may have tried to ensure that the choice made was in your best interests. Understanding your somewhat analogous role as a stakeholder in businesses large and small, local and global, will help you realize the value of prioritizing stakeholders in your own professional life and business decisions.
### Stakeholder Relationships
Many individuals and groups inside and outside a business have an interest in the way it brings products or services to market to turn a profit. These stakeholders include customers, clients, employees, shareholders, communities, the environment, the government, and the media (traditional and social), among others. All stakeholders should be considered essential to a business, but not all have equal priority. Different groups of stakeholders carry different weights with decision makers in companies and assert varying levels of interest and influence. As we examine their roles, consider how an organization benefits by working with its stakeholders and how it may benefit from encouraging stakeholders to work together to promote their mutual interests.
What are the roles of an organization’s many stakeholders? We begin with the internal stakeholders. The board of directors—in a company large enough to have one—is responsible for defining and evaluating the ongoing mission of a business after its founding. It broadly oversees decisions about the mission and direction of the business, the products or services offered, the markets in which the business will operate, and salary and benefits for the senior officers of the organization. The board also sets goals for income and profitability. Its most important function is to select and hire the chief executive officer (CEO) or president. The CEO is usually the only employee who reports directly to the board of directors, and he or she is charged with implementing the policies the board sets and consulting with them on significant issues pertaining to the company, such as a dramatic shift in products or services offered or discussions to acquire—or be acquired by—another firm.
In turn, the CEO hires executives to lead initiatives and carry out procedures in the various functional areas of the business, such as finance, sales and marketing, public relations, manufacturing, quality control, human resources (sometimes called human capital), accounting, and legal compliance. Employees in these areas are internal stakeholders in the success of both their division and the larger corporation. Some interact with the outside environment in which the business operates and serve as contact points for external stakeholders, such as media and government, as well.
In terms of external stakeholders for a business, customers certainly are an essential group. They need to be able to trust that products and services are backed by the integrity of the company. They also provide reviews, positive or negative, and referrals. Customers’ perceptions of the business matter, too. Those who learn that a business is not treating employees fairly, for instance, may reconsider their loyalty or even boycott the business to try to influence change in the organization. Stakeholder relationships, good and bad, can have compound effects, particularly when social media can spread word of unethical behavior quickly and widely.
Key external stakeholders are usually those outside of the organization who most directly influence a business’s bottom line and hold power over the business. Besides customers and clients, suppliers have a great deal of influence and command a great deal of attention from businesses of all sizes. Governments hold power through regulatory bodies, from federal agencies such as the Environmental Protection Agency to the local planning and zoning boards of the communities in which businesses exist. These latter groups often exercise influence over the physical spaces where businesses work and try to grow ().
Businesses are responsible to their stakeholders. Every purchase of a product or a service carries with it a sort of promise. Buyers promise that their money or credit is good, and businesses promise a level of quality that will deliver what is advertised. The relationship can quickly get more complex, though. Stakeholders also may demand that the businesses they patronize give back to the local community or protect the global environment while developing their products or providing services. Employees may demand a certain level of remuneration for their work. Governments demand that companies comply with laws, and buyers in business-to-business exchanges (B2B, in business jargon) demand not only high-quality products and services but on-time delivery and responsive maintenance and service should something go wrong. Meeting core obligations to stakeholders is primarily about delivering good products and services, but it is also about communicating and preparing for potential problems, whether from within the company or from external circumstances like a natural disaster.
### Ethical Responsibilities Often Extend Beyond Legal Requirements
We have seen that stakeholders include the people and entities invested in and influential in the success of an organization. It is also true that stakeholders can have multiple, and simultaneous, roles. For example, an employee can also be a customer and a stockholder.
Any transaction between a stakeholder and a business organization may appear finite. For instance, after you purchase something from a store you leave and go home. But your relationship with the store probably continues. You might want to repurchase the item or ask a question about a warranty. The store may have collected future marketing data about you and your purchases through its customer loyalty program or your use of a credit card.
Samsung, based in South Korea, is a large, multinational corporation that makes a variety of products, including household appliances such as washers and dryers. When Samsung’s washers developed a problem with the spin cycle in 2017, the company warned customers that the machines could become unbalanced and tip over, and that children should be kept away. The problem persisted, however, and Samsung’s responsibility and legal exposure increased. The eventual fix was to offer all owners of the particular washer model a full refund even if the customer did not have a complaint, and to offer free pick up of the machine as well. The recall covered almost three million washers, which ranged in price from $450 to $1500. By choosing to spend billions to rectify the problem, Samsung limited its legal exposure to potential lawsuits, settlement of which would likely have far exceeded the refunds it paid. This example demonstrates the weight of the implicit social contract between a company and its stakeholders and the potential impact on the bottom line if that contract is broken.
When a product does not live up to its maker’s claims for whatever reason, the manufacturer needs to correct the problem to retain or regain customers’ trust. Without this trust, the interdependence between the company and its stakeholders can fail. By choosing to recognize and repay its customer stakeholders, Samsung acted at an ethical maximum, taking the strongest possible action to behave ethically in a given situation. An ethical minimum, or the least a company might do that complies with the law, would have been to offer the warning and nothing more. This may have been a defensible position in court, but the warning might not have reached all purchasers of the defective machine and many children could have been hurt.
Each case of a faulty product or poorly delivered service is different. If laws reach above a minimum standard, they can grow cumbersome and impede business growth. If businesses adhere only to laws and ethical minimums, however, they can develop poor reputations and people can be harmed. The ethically minimal course of action is not illegal or necessarily unethical, but the company choosing it will have failed to recognize the value of its customers.
The law only partly captures the ethical obligations firms owe their stakeholders. One way many companies go beyond the legally required minimum as employers is to offer lavish amenities—that is, resources made available to employees in addition to wages, salary, and other standard benefits. They include such offerings as on-site exercise rooms and other services, company discounts, complimentary or subsidized snacks or meals, and the opportunity to buy stock in the company at a discounted price. Astute business leaders see the increased costs of amenities as an investment in retaining employees as long-term stakeholders. Stakeholder loyalty within and outside the firm is essential in sustaining any business venture, no matter how small or large.
One challenge for any organization’s managers is that not all stakeholders agree on where the company should strive to land when it chooses between ethical minimums and maximums. Take stockholders, for example. Logically, most stockholders are interested in maximizing the return on their investment in the firm, which earns profit for them in the form of dividends. Lynn Stout, late Professor of Law at Cornell Law School, described the role of shareholder in this way:
Essential to Stout’s point is that shareholders do not necessarily behave as a class. Some will want to maximize their investment even at a cost to other stakeholders. Some may want to extend beyond the legal minimum and seek a long-term perspective on profit maximization, demanding better treatment of stakeholders to maximize future potential value and to do more good than harm.
In the long run, stakeholder welfare must be kept at the heart of each company’s business operations for these significant, twin reasons: It is the right thing to do and it is good for business. Still, if managers need additional incentive to act on the basis of policies that benefit stakeholders, it is useful to recall that stakeholders who believe their interests have been ignored will readily make their displeasure known, both to company management and to the much wider community of social media.
### Summary
An organization has duties and responsibilities with regard to each stakeholder; however, the implicit social contract between business and society means that meeting legal requirements might support only minimal ethical standards. Society on the whole and in the long run requires that business consider a broader range of duties in its relationships with key stakeholders.
### Assessment Questions
### Endnotes
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# Defining and Prioritizing Stakeholders
## Weighing Stakeholder Claims
### Learning Objectives
By the end of this section, you will be able to:
1. Explain why stakeholders’ claims vary in importance
2. Categorize stakeholders to better understand their claims
As we saw earlier in this chapter and in Why Ethics Matter, the law only partially captures the ethical obligations firms owe their stakeholders. A particular stakeholder claim, that is, any given stakeholder’s interest in a business decision, may therefore challenge the ethical stance even of an organization that complies with the law. For example, some community members may oppose the opening of a “big box” chain store that threatens the livelihoods of small-business owners in the area, while shareholders, creditors, employees, and consumers within the nearby neighborhoods support it as an additional opportunity for profit and quality goods at competitive prices. Conflicts like this illustrate how complicated prioritizing stakeholder claims can be, particularly when there are ethical pros and cons on both sides. A big box store may offer a wider selection of goods at lower prices, for example, and create jobs for teens and part-time workers.
A related theme to recall is that even though all stakeholder claims are important for a company to acknowledge, not all claims are of equal importance. Most business leaders appreciate that a company’s key stakeholders are essential to its efficient operation and growth, and that its overall mission, goals, and limited resources will force its managers to make choices by prioritizing stakeholders’ needs. In this section, we look at ethical ways in which business managers can begin to make those decisions.
### The Ethical Basis of Stakeholders’ Claims
Stakeholder claims vary in their significance for a firm. According to Donaldson and Preston, there are three theoretical approaches to considering stakeholder claims: a descriptive approach, an instrumental approach, and a normative approach. The descriptive approach sees the company as composed of various stakeholder groups, each with its own interests. These interests impinge on the company to a greater or lesser degree; thus, the main point of the descriptive approach is to develop the most accurate model and act on it in ways that weigh and balance these interests as fairly as possible. The instrumental approach connects stakeholder management and financial outcomes, proposing that appropriate management of stakeholder interests is important and useful because it contributes to a positive bottom line.
The normative approach considers stakeholders as ends in themselves rather than simply as means to achieve better financial results. According to Donaldson and Preston, in the normative approach “the interests of all stakeholders are of intrinsic value. That is, each group of stakeholders merits consideration for its own sake and not merely because of its ability to further the interests of some other group, such as the shareowners.” This approach is the one that most appropriately represents ethical stakeholder theory, according to Donaldson and Preston, and it places an objective consideration of all stakeholders’ interests ahead of fiscal considerations alone.
We can also view these three approaches to stakeholders as occupying levels of increasing comprehensiveness. At the lowest level is the descriptive approach, which merely sets the stage for consideration of stakeholder claims and concerns. The instrumental aspect combines a consideration for profit along with other stakeholder concerns and attempts to balance these interests with particular attention to the way the company and its shareholders might be affected. The normative approach takes the most comprehensive view of the organization and its stakeholders, putting the focus squarely on stakeholders. Although Donaldson and Preston stress that the descriptive and instrumental approaches are integral to stakeholder theory, they contend that the fundamental basis of stakeholder theory is normative.
Of course, these are theoretical approaches, and the extent to which any of them is implemented in a given company will vary. But unfortunately, the decision to disconnect from stakeholders is both real and expensive for a corporation. A 2005 survey of customers of 362 companies is demonstrative: “Only 8% of customers described their experience as ‘superior.’ However, 80% of the companies surveyed believe that the experience they have been providing is indeed superior.” Another study found significant links between levels of customer satisfaction and a firm’s performance, including rates of retention, overall revenue, and stock price. Enlightened companies spend time and resources testing their stakeholders’ concerns and eliciting their feedback while there is time to incorporate it into management decisions.
A classic example of negative consumer reaction is the response that met Ford Motor Company’s 1958 introduction of the Edsel (). Ford had done extensive research to create a luxury family sedan aimed at an upper-income segment of the market then dominated by Buick, Oldsmobile, and Chrysler. However, the market did not identify Ford products with high status, and the Edsel did not last three years in the marketplace. Ford failed to serve the investors, suppliers, and employees who depended on the company for their livelihoods. Of course, the corporation survived that failure, perhaps because it learned the lessons of stakeholder management the hard way.
Entertainers too (as well as their clubs, venues, and studios) are sensitive to the views of their stakeholders—that is, fans and the consuming public as a whole. Scarlett Johansson recently signed on to play the role of Dante “Tex” Gill in a biographical film (or “biopic”). Gill had been identified as female at birth but spent much of his professional career self-identifying as male. When the casting was announced in July 2018, it provoked a controversy among transgender rights groups, and within a few days, Johansson announced she had withdrawn from the role. “In light of recent ethical questions raised surrounding my casting as Dante Tex Gill, I have decided to respectfully withdraw my participation in the project. . . . While I would have loved the opportunity to bring Dante’s story and transition to life, I understand why many feel he should be portrayed by a transgender person, and I am thankful that this casting debate, albeit controversial, has sparked a larger conversation about diversity and representation in film,” she said.
### Defining Stakeholder Categories
To better understand stakeholder theory and, ultimately, manage stakeholder claims and expectations, it may be helpful to take a closer look at categories of stakeholders. One way to categorize stakeholders is by defining their impact. For example, regulatory stakeholders including stockholders, legislatures, government regulators, and boards of directors are enabling stakeholders because they permit the firm to function. Normative stakeholders such as competitors and peers influence the norms or informal rules of the industry; functional stakeholders are those who influence inputs, such as suppliers, employees, and unions, and those influencing outputs such as customers, distributors, and retailers. Finally, diffused stakeholders include other organizations such as nongovernmental organizations (NGOs), voters, and mass media organizations with less direct relationships but potential for meaningful impacts on firms ().
As the shows, enabling and functional stakeholders are those active in design, production, and marketing. They provide input for the products or services the organization distributes in the form of output. Companies should identify all the stakeholders shown in the figure and consider how they are linked to the firm. Although the diffused linkage stakeholders will vary according to place and time, the enabling, functional, and normative linkage stakeholders are constant, because they are integral to the operation of the firm. Stakeholders, in turn, can exert some control and authority by serving on the board of directors, by exercising their power as purchasers, by being elected to public office, or by joining employees’ unions.
In many cases, if one stakeholder effects a change in the firm, other stakeholders will be affected. For example, if an NGO raises concerns about unequal pay of laborers on a rubber plantation that provides raw materials for gasket makers, the supplier may be forced to equalize pay, incurring additional expense. The supplier has taken the ethical action, but ultimately the cost is likely passed through the supply chain to the end user, the retail purchaser at the local car dealer. The supplier could also have absorbed the additional cost, diminishing the bottom line and reducing returns for stockholders, who may withdraw their investment from the company. Although this model of stakeholder relationships is complex, it is useful in understanding the impact of each individual group on the organization as a whole.
James E. Grunig, now professor emeritus at University of Maryland, and Todd Hunt, who together developed the organizational linkage model in , looked at these relationships through the lens of four “publics” or cohorts: the nonpublic, the latent, the aware, and the active. These publics are distinguished by their degree of awareness of a problem and ability to do something about it. In the nonpublic cohort, no problem is recognized or exists. For the latent public, a problem is there but the public does not recognize it. The aware public recognizes that a problem exists. The active public is aware of the problem and organizes to respond to it. These categories help the organization design its message about a problem and decide how to communicate. Herein lies the ethical significance. If an organization is aware of a problem and the public is not, the organization has an opportunity to communicate and guide the public in recognizing and dealing with it, as the example of Johnson & Johnson’s Tylenol product in the following box illustrates.
On the other hand, a company might try to manage a problem by covering it up or denying it. For example, Volkswagen had data that showed its diesel engine’s emissions exceeded U.S. pollution standards. Rather than redesign the engine, Volkswagen engineers installed a unit in each car to interpret the emissions as if they met Environmental Protection Agency standards. When the fraud was discovered, Volkswagen was required to buy back millions of cars. As of September 2017, the company had incurred fines and expenses in excess of $30 billion, and some employees had gone to jail. Such damage is bad enough, but loss of reputation and the trust of consumers and stockholders has hurt the company’s value and share price. Volkswagen’s management of stakeholder relationships was poor and extremely expensive. Once-loyal stakeholders became part of an aware and active public—a group of people united by a common problem and organized for satisfaction, sometimes demanding compensation.
A challenge for business leaders is to assign appropriate weights to stakeholder claims on their companies in an ethical manner. This task is even more difficult because a claim is not necessarily a formal process. “Essentially, stakeholders ‘want something’ from an organization. Some want . . . to influence what the organization does . . . and others are, or potentially could be, concerned with the way they are affected by the organization.”
If a stakeholder has its own identity or voice, or if members of a stakeholder group are many, the claim can be clear and direct, such as in the case of a union negotiating for better pay and benefits, or a community trying to lure a corporation to open operations there. Think of the enormous effort communities around the world make to try to get the Olympics or World Cup organizers to bring the competition to their locale. In spite of significant investment and debt, these communities see a real advantage to their local economy.
Many stakeholder claims are indirect, or “voiceless,” due perhaps to their representing relatively few individuals relative to the size and power of the organization and the time required to evoke a response from a large, bureaucratic company. If you have ever had a problem with a cable television or satellite company, you can immediately understand this stakeholder relationship, because it is so difficult to find someone with enough authority to make a decision on behalf of the company. Some companies count on individuals’ growing frustrated and giving up on the claim. An indirect stakeholder claim might also be one that affects future generations, such as concerns about air and water pollution. For example, University of Southern California law professor Christopher D. Stone introduced in 1972 what was then a radical concept for the law in the United States, that the environment itself is entitled to legal standing in the courts. If this were so, then the environment might also be eligible for certain protections under the law. Appearing at the dawn of increasing social awareness of ecologic concerns, Stone’s influential law review article “Should Trees Have Standing?” gave many environmentalists a new legal philosophy to harness in defense of the natural world.
### Summary
There are three approaches to stakeholder theory: the descriptive approach, the instrumental approach, and the normative approach. The normative approach takes the most comprehensive view of the organization and its stakeholders and is the fundamental basis of stakeholder theory. Organizations can analyze stakeholder claims by classifying them on the basis of their intensity and impact on the firm, as well as on the basis of their relationship to the firm. Such classifications may include enabling stakeholders, normative stakeholders, functional stakeholders, and diffused stakeholders. Using the lens of the four “publics” (the nonpublic, the latent, the aware, and the active), we can also understand a stakeholder claim on the basis of the public’s degree of awareness of a problem and ability to do something about it.
### Assessment Questions
### Endnotes
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# Defining and Prioritizing Stakeholders
## Ethical Decision-Making and Prioritizing Stakeholders
### Learning Objectives
By the end of this section, you will be able to:
1. Identify the factors that affect stakeholder prioritization
2. Explain why priorities will vary based upon the interest and power of the stakeholder
3. Describe how to prioritize stakeholder claims, particularly when they conflict
If we carry the idea of stakeholder to the extreme, every person is a stakeholder of every company. The first step in stakeholder management, the process of accurately assessing stakeholder claims so an organization can manage them effectively, is therefore to define and prioritize stakeholders significant to the firm. Then, it must consider their claims.
Given that there are numerous types of stakeholders, how do managers balance these claims? Ethically, no group should be treated better than another, and managers should respond to as many stakeholders as possible. However, time and resource limitations require organizations to prioritize claims as stakeholder needs rise and fall.
### Stakeholder Prioritization
First, it may help to speak to the expectations that any stakeholders may have of a particular business or institution. It depends on particular stakeholders, of course, but we can safely say that all stakeholders expect a form of satisfaction from an organization. If these stakeholders are shareholders (stockowners), then they generally wish to see a high return on their purchase of company shares. If, on the other hand, they are employees, they typically hope for interesting tasks, a safe work environment, job security, and rewarding pay and benefits. If, yet again, the stakeholders are members of the community surrounding a business, they usually wish that the company not harm the physical environment or degrade the quality of life within it.
So the task confronting an organization’s management begins with understanding these multiple and sometimes conflicting expectations and ethically deciding which stakeholders to focus on and in what sequence, if not all stakeholders cannot be addressed simultaneously, that is, stakeholder prioritization. It helps to actively gather information about all key stakeholders and their claims. First, managers must establish that an individual with a concern is a member of a stakeholder group. For example, a brand may attract hundreds or thousands of mentions on Twitter each day. Which ones should be taken seriously as representative of key stakeholders? Brand managers look for patterns of communication and for context when deciding whether to engage with customers in the open expanses of social media platforms.
After establishing that a key stakeholder group is being represented, the manager should identify what the company needs from the stakeholder. This simply helps clarify the relationship. If nothing is needed immediately or for the foreseeable future, this does not mean the stakeholder group does not matter, but it can be a good indication that the stakeholder need not be prioritized at the moment.
Note that managers are often considering these questions in real time, usually with limited resources and power, and that circumstances can change in a matter of moments. In one sense, all representatives of a company are constantly practicing stakeholder prioritization. It need not be a formal process. At times, it is a question of which supplier should be praised or prodded or which customer has a larger order to fill or a special request that might be met. What matters is establishing that someone is a stakeholder, that the concern is currently important, and that the relationship matters for the growth of the business.
If the firm cannot survive without this particular stakeholder or replace him or her relatively easily, then such a person should have priority over other stakeholders who do not meet this criterion. Key suppliers, lucrative or steady customers, and influential regulators must all be attended to but not necessarily capitulated to. For example, a local state legislator representing the district where a business is located may be urging the legislature to raise business taxes to generate more revenue for the state. By him- or herself, the legislator may not have sufficient political clout to persuade the legislature to raise taxes. Yet wise business leaders will not ignore such a representative and will engage in dialogue with him or her. The legislator may eventually be able to win others over to the cause, so it behooves perceptive management to establish a working relationship with him or her.
Not every stakeholder can command constant attention, and no firm has unlimited time or resources, so in one sense, this prioritizing is simply the business of management. Combine the inherent priority of the stakeholder relationship with the level of exigency, that is, the level of urgency of a stakeholder claim, to arrive at a decision about where to begin focusing resources and efforts.
Stakeholder prioritization will also vary based on time and circumstance. For example, a large retailer facing aggressive new competitors must prioritize customer service and value. With Amazon acquiring Whole Foods and drastically cutting prices, the grocery chain’s customer base may very well grow because prices could become more attractive while the perception of high quality may persist. Potential customers may no longer need to economize by shopping elsewhere. Whole Foods’ competitors, on the other hand, must now prioritize customer service, whereas before they could compete on price alone. Whole Foods can become a serious competitor to discount grocery stores like ALDI and Walmart.
Another way to prioritize stakeholder relationships is with a matrix of their power and interest. As shows, a stakeholder group can be weighted on the basis of its influence (or power) over and interest in its relationship to the firm. A stakeholder with a high level of both power and interest is a key stakeholder. If this type of stakeholder group encounters a problem, its priority rises.
On the supplier side, a small farmer or seasonal supplier could fall in the low-power, low-interest category, particularly if that farmer were selling various retailers produce from his or her fields. However, if that same farmer could connect to a huge purveyor like Kroger, he or she could sell this giant customer its entire crop. This relationship places the farmer in the low-power, high-interest category, meaning he or she will most likely have to make price adjustments to make the sale.
The model’s focus on power reveals a need for any company to carefully cultivate relationships with stakeholders. Not all stakeholders have equal influence with a firm. Still, no organization can blithely ignore any stakeholder without potentially debilitating economic consequences. For example, now that Amazon has acquired Whole Foods and increased the size of the customer stakeholder group, it must also find ways to personalize its communications with this group, because personal service has traditionally been more a hallmark of Whole Foods than of Amazon.
Successful business practice today hinges on the ethical acknowledgement of stakeholder claims. It is the right thing to do. Not only that, it also engenders satisfied stakeholders, whether they be customers, stockowners, employees, or the community in which a firm is located. Naturally, satisfied stakeholders lead to the financial well-being of a company.
### Managing Stakeholder Expectations
Stakeholder management does not work if the firm’s prioritizing decisions are based on flawed, inaccurate, or incomplete information. Some tools are available to help. MITRE is a nonprofit research and development consulting firm that helps governments and other large organizations with many stakeholders conduct stakeholder assessment. The MITRE Guide to Stakeholder Assessment and Management lays out a five-step system for stakeholder management.
Overall, MITRE stresses that an organization must sustain trust with its stakeholders through communication efforts. To accomplish this, however, stakeholders must first be clearly identified and then periodically reidentified, because stakeholder cohorts change in size and significance over time. The concerns or claims of stakeholders are identified through data gathering and analysis. Sometimes a firm will conduct surveys or focus groups with customers, suppliers, or other stakeholders. Other times, product usage data will be available as a function of sales figures and marketing data. For software in web and mobile applications, for example, user data may be readily available to show how stakeholders are using the company’s digital services or why they appear to be purchasing its products. Another source of stakeholder data is social media, where firms can monitor topics stakeholders of all types are talking about. What matters is gathering relevant and accurate data and ensuring that key stakeholders are providing it. In the next step, managers present the results of their research to the company’s decision makers or make decisions themselves. Finally, stakeholders should be informed that their concerns were taken into consideration and that the company will continue to heed them. In other words, the firm should convey to them that they are important.
Because every firm, no matter its mission, ultimately depends on the marketplace, its clients or customers are often high-priority stakeholders. Ethically, the company owes allegiance to customer stakeholders, but it also has an opportunity and perhaps a responsibility to shape their expectations in ways that encourage its growth and allow it to continue to provide for employees, suppliers, distributors, and shareholders.
We should note, too, that nonprofit organizations are beholden, for the most part, to the same rules that apply to for-profits for their sustainability. Nonprofits typically provide a service that is just as dependent on cash flow as is the service or product of a for-profit. A significant difference, of course, is that the client or customer for a nonprofit’s service often is unable to pay for it. Therefore, the necessary cash must come from other sources, often in the form of donations or endowments. Hence, those who give to philanthropies constitute essential stakeholders for these nonprofits and must be acknowledged as such.
Wesley E. Lindahl, who studies and advises nonprofits, notes that philanthropies have an ethical obligation to safeguard the donations that come their way. He likens this to a stewardship, because the monies given to charities are gifts intended for others very much in need of them. So those who manage nonprofits have a special obligation to ensure that these donations are well spent and distributed appropriately.
There are three major components to bringing about change in customer or donor expectations: (1) customer receptivity to a product or service offered by the company, (2) acknowledgement of the gap between customer receptivity and corporate action to reduce it, and (3) a system to bring about and maintain change in customer desires to bring it in line with precisely what the corporation can deliver. One example of firms altering customers’ habits is the evolution of beverage containers. Most soft drinks and other beverages such as beer were once delivered in reusable glass bottles. Customers were motivated to return the bottles by the refund of a minimal cash deposit originally paid at the time of purchase. The bottles had to be thick and sturdy for reuse, which resulted in substantial transportation costs, due to their weight.
To reduce these costs of manufacturing and transportation, manufacturers first redesigned production to be local, and then, when technology allowed, introduced aluminum cans and pull tabs. Eventually, the cardboard carton that held bottles together was replaced by a plastic set of rings to hold aluminum cans together. Now, however, customers and other stakeholders object to the hazard these rings present to wildlife. Some firms have responded by redesigning their packaging yet again. This ongoing process of developing new packaging, listening to feedback, and redesigning the product over time ultimately changed stakeholder behavior and modernized the beverage industry. Stakeholders are essential parts of a cycle of mutual interest and involvement.
The ethical responsibility of a stakeholder is to make known his or her preferences to the companies he or she purchases from or relies on. Such communication can lead to an increased commitment on the part of corporations to improve. To the extent they do so, companies act more ethically in responding to the wishes and needs of their stakeholders.
### Summary
Business leaders prioritize those stakeholders who have immediate needs or high urgency or great significance to the organization, and the identity of these groups may shift over time. Stakeholders can also be prioritized on the basis of their relationship to the organization using a matrix of their power and interest. Steps in the MITRE stakeholder management process are to establish trust, identify stakeholders, gather and analyze appropriate data, present information to management, and let stakeholders know they matter. Because customers are often considered high-priority stakeholders, it can be essential for corporations and nonprofit organizations to manage any expectations that customers (or donors) may have.
### Assessment Questions
### Endnotes
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# Defining and Prioritizing Stakeholders
## Corporate Social Responsibility (CSR)
### Learning Objectives
By the end of this section, you will be able to:
1. Define corporate social responsibility and the triple bottom line approach
2. Compare the sincere application of CSR and its use as merely a public relations tool
3. Explain why CSR ultimately benefits both companies and their stakeholders
Thus far, we have discussed stakeholders mostly as individuals and groups outside the organization. This section focuses on the business firm as a stakeholder in its environment and examines the concept of a corporation as a socially responsible entity conscious of the influences it has on society. That is, we look at the role companies, and large corporations in particular, play as active stakeholders in communities. Corporations, by their sheer size, affect their local, regional, national, and global communities. Creating a positive impact in these communities may mean providing jobs, strengthening economies, or driving innovation. Negative impacts may include doing damage to the environment, forcing the exit of smaller competitors, and offering poor customer service, to name a few. This section examines the concept of a corporation as a socially responsible entity conscious of the influences it has on society.
### Corporate Social Responsibility Defined
In recent years, many organizations have embraced corporate social responsibility (CSR), a philosophy (introduced in Why Ethics Matter,) in which the company’s expected actions include not only producing a reliable product, charging a fair price with fair profit margins, and paying a fair wage to employees, but also caring for the environment and acting on other social concerns. Many corporations work on prosocial endeavors and share that information with their customers and the communities where they do business. CSR, when conducted in good faith, is beneficial to corporations and their stakeholders. This is especially true for stakeholders that have typically been given low priority and little voice, such as the natural environment and community members who live near corporate sites and manufacturing facilities.
CSR in its ideal form focuses managers on demonstrating the social good of their new products and endeavors. It can be framed as a response to the backlash corporations face for a long track record of harming environments and communities in their efforts to be more efficient and profitable. Pushback is not new. Charles Dickens wrote about the effects of the coal economy on nineteenth-century England and shaped the way we think about the early industrial revolution. The twentieth-century writer Chinua Achebe, among many others, wrote about colonization and its transformative and often painful effect on African cultures. Rachel Carson first brought public attention to corporation’s chemical poisoning of U.S. waterways in her 1962 book Silent Spring.
Betty Friedan’s The Feminine Mystique (1963) critiqued the way twentieth-century industrialization boxed women into traditional roles and limited their agency. Kate Chopin’s novel The Awakening (1899) and the nineteenth-century novels of Jane Austen had already outlined how limited options were for women despite massive social and economic shifts in the industrializing West. Stakeholder communities left out of or directly harmed by the economic revolution have demanded that they be able to influence corporate and governmental economic practices to benefit more directly from corporate growth as well as entrepreneurship opportunities. The trend to adopt CSR may represent an opportunity for greater engagement and involvement by groups mostly ignored until now by the wave of corporate economic growth reshaping the industrialized world.
### CSR and the Environment
Corporations have responded to stakeholder concerns about the environment and sustainability. In 1999, Dow Jones began publishing an annual list of companies for which sustainability was important. Sustainability is the practice of preserving resources and operating in a way that is ecologically responsible in the long term. The Dow Jones Sustainability Indices “serve as benchmarks for investors who integrate sustainability considerations into their portfolios.” There is a growing awareness that human actions can, and do, harm the environment. Destruction of the environment can ultimately lead to reduction of resources, declining business opportunities, and lowered quality of life. Enlightened business stakeholders realize that profit is only one positive effect of business operations. In addition to safeguarding the environment, other ethical contributions that stakeholders could lobby corporate management to make include establishing schools and health clinics in impoverished neighborhoods and endowing worthwhile philanthropies in the communities where companies have a presence.
Other stakeholders, such as state governments, NGOs, citizen groups, and political action committees in the United States apply social and legal pressure on businesses to improve their environmental practices. For example, the state of California in 2015 enacted a set of laws, referred to as the California Transparency in Supply Chains Act, which requires firms to report on the working conditions of the employees of their suppliers. The law requires only disclosures, but the added transparency is a step toward holding U.S. and other multinational corporations responsible for what goes on before their products appear in shiny packages in stores. The legislators who wrote California’s Supply Chains Act recognize that consumer stakeholders are likely to bring pressure to bear on companies found to use slave labor in their supply chains, so forcing disclosure can bring about change because corporations would rather adjust their relationships with supply-chain stakeholders than risk alienating massive numbers of customers.
As instances of this type of pressure on corporations increase around the world, stakeholder groups become simultaneously less isolated and more powerful. Firms need customers. Customers need employment, and the state needs taxes just as firms need resources. All stakeholders exist in an interdependent network of relationships, and what is most needed is a sustainable system that enables all types of key stakeholders to establish and apply influence.
### People, Planet, Profit: The Triple Bottom Line
How can corporations and their stakeholders measure some of the effects of CSR programs? The triple bottom line (TBL) offers a way. TBL is a measure described in 1994 by John Elkington, a British business consultant (), and it forces us to reconsider the very concept of the “bottom line.” Most businesses, and most consumers for that matter, think of the bottom line as a shorthand expression of their financial well-being. Are they making a profit, staying solvent, or falling into debt? That is the customary bottom line, but Elkington suggests that businesses need to consider not just one but rather three measures of their true bottom line: the economic and also the social and environmental results of their actions. The social and environmental impacts of doing business, called people and planet in the TBL, are the externalities of their operations that companies must take into account.
The TBL concept recognizes that external stakeholders consider it a corporation’s responsibility to go beyond making money. If increasing wealth damages the environment or makes people sick, society demands that the corporation revise its methods or leave the community. Society, businesses, and governments have realized that all stakeholders have to work for the common good. When they are successful at acting in a socially responsible way, corporations will and should claim credit. In acting according to the TBL model and promoting such acts, many corporations have reinvested their efforts and their profits in ways that can ultimately lead to the development of a sustainable economic system.
### CSR as Public Relations Tool
On the other hand, for some, CSR is nothing more than an opportunity for publicity as a firm tries to look good through various environmentally or socially friendly initiatives without making systemic changes that will have long-term positive effects. Carrying out superficial CSR efforts that merely cover up systemic ethics problems in this inauthentic way (especially as it applies to the environment), and acting simply for the sake of public relations is called greenwashing. To truly understand a company’s approach toward the environment, we need to do more than blindly accept the words on its website or its advertising.
Coca-Cola provides another example of practices some would identify as greenwashing. The company states the following on its website:
Let us take a close look at this statement. “Engaging stakeholders in long-term dialogue” appears to describe an ongoing and reciprocal relationship that helps improvement be continuous. Commitment to “stakeholder engagement as a core component of business and sustainability strategies” appears to focus the company on the requirement to conduct clear, honest, transparent reporting.
Currently 20 percent of the people on Earth consume a Coca-Cola product each day, meaning a very large portion of the global population belongs to the company’s consumer stakeholder group. Depending on the process and location, it is estimated that it takes more than three liters of water to produce a liter of Coke. Each day, therefore, millions of liters of water are removed from the Earth to make Coke products, so the company’s water footprint can endanger the water supplies of both employee and neighbor stakeholders. For example, in Chiapas, Mexico, the Coca-Cola bottling plant consumes more than one billion liters of water daily, but only about half the population has running water. Mexico leads the world in per capita consumption of Coke products.
If consumers are aware only of Coca-Cola’s advertising campaigns and corporate public relations writings online, they will miss the very real concerns about water security associated with it and other corporations producing beverages in similar fashion. Thus it requires interest on the part of stakeholders to continue to drive real CSR practices and to differentiate true CSR efforts from greenwashing.
### The Ultimate Stakeholder Benefit
CSR used in good faith has the potential to reshape the orientation of multinational corporations to their stakeholders. By positioning themselves as stakeholders in a broader global community, conscientious corporations can be exemplary organizations. They can demonstrate interest and influence on a global scale and improve the way the manufacture of goods and delivery of services serve the local and global environment. They can return to communities as much as they extract and foster automatic financial reinvestment so that people willing and able to work for them can afford not only the necessities but a chance to pursue happiness.
In return, global corporations will have sustainable business models that look beyond short-term growth forecasts. They will have a method of operating and a framework for thinking about sustained growth with stakeholders and as stakeholders. Ethical stakeholder relationships systematically grow wealth and opportunity in dynamic fashion. Without them, the global consumer economy may fail. On an alternate and ethical path of prosperity, today’s supplier is a consumer in the next generation and Earth is still inhabitable after many generations of dynamic change and continued global growth.
### Summary
Most organizations must practice genuine corporate social responsibility to be successful in the modern marketplace. The triple bottom line places people and the planet on equal standing with profit in the mission of an organization. The genuine practice of CSR, unlike greenwashing, requires a commitment to an additional stakeholder, the planet, whose continued healthy existence is essential for any organization to operate.
### Assessment Questions
### Endnotes
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# Three Special Stakeholders: Society, the Environment, and Government
## Introduction
Good business leaders know that a commitment to sustainability and corporate social responsibility (CSR) requires a strong foundation, one upon which a company can build and expand its commitment to every aspect of the organization. Companies that truly intend to incorporate CSR into their long-term strategy start by soliciting input from a large and diverse group of stakeholders, followed by a transparent process of implementation, commitment, and enforcement. Corporate social responsibility is more than just another policy; it’s a philosophy, capturing the essence of nemawashi, or “building strong roots” (). CSR also demonstrates that a company is willing to commit the financial and human resources necessary to make it a reality, rather than just a talking point.
This chapter looks at sustainability and CSR from the perspective of a diverse constituency, including managers, employees, investors, government regulators, competitors, customers and clients, the community, and the environment. If you were a CEO, would you be willing to commit the time and money to incorporate CSR the right way in your company? Why might some businesses hesitate to use a nemawashi-style approach?
### Endnotes
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# Three Special Stakeholders: Society, the Environment, and Government
## Corporate Law and Corporate Responsibility
### Learning Objectives
By the end of this section, you will be able to:
1. Explain how investors and owners benefit from doing business as a corporate entity
2. Define the concept of shareholder primacy
3. Discuss the conflict between shareholder primacy and corporate social responsibility
Corporate law, which enables businesses to take advantage of a legal structure that separates liability from ownership and control, was introduced in most states in the nineteenth century. The separation of ownership and liability means that, unlike sole proprietors and members of partnerships, owners of modern business corporations enjoy the advantage of limited liability for the corporation’s debts and other financial obligations, a concept at the heart of a U.S. economic system built on capitalism.
### The Advantages of Corporate Status
The concept of limited liability means that the owners (shareholders or stockholders) of corporations, as well as directors and managers, are protected by laws stating that in most circumstances, their losses in case of business failure cannot exceed the amount they paid for their shares of ownership (). The same protection applies to owners of some other business entities such as limited liability companies (LLCs). An LLC is similar to a corporation in that owners have limited liability; however, it is organized and managed more like a partnership. For purposes of granting owners the protection of limited liability, several types of entities are possible within each state, including a corporation, an LLC, a limited liability partnership, and a limited partnership.
Without state incorporation laws, business owners would be subject to personal liability for business losses, which could create several disadvantages. Ownership would be riskier, so owners could have more difficulty selling their ownership interests. They could also be subject to a pro rata share of income taxes. These types of personal financial liability could limit the ability of businesses to raise capital by selling stock. Limited liability, by reducing the amount a shareholder can lose from investing in a corporation by buying its stock, increases the investment’s attractiveness to potential new shareholders. Ultimately, corporate status increases both the potential number of willing investors and the amount of capital they are likely to invest. After all, would you be willing to invest your money in a business if you knew not only that you could lose the capital you invested, but also that you could be sued personally for any and all debts of the business?
Corporate status is conferred upon a business by state law (statute) when a state issues the business a charter of incorporation. The protective shield of corporate status enables businesses to socialize their losses in a way that traditional proprietorships and partnerships are not able to do. Socializing a loss is a means to amortize it or spread it out over society in general, so the owners do not absorb it individually. Amortization is similar to the idea behind insurance, in which many people bear a small share in a loss, rather than one or a few people bearing all of it. Therefore, it is accurate to say that society enables corporations to exist, both by passing laws that create them and by limiting the financial risk exposure of their owners. Since our society grants for-profit businesses the right to incorporate and make unlimited profits with limited liability, a reasonable person could conclude that corporations owe a debt to society in return. Corporations’ quid pro quo—a Latin term meaning this for that—is acceptance of corporate social responsibility, to benefit the many stakeholders to whom corporations may owe a duty, including customers, the community, the environment, employees, media, and the government ().
### Balancing the Many Responsibilities of a Corporation
A longstanding ethical debate about corporate social responsibility asks whether, in fact, a corporation owes a duty to society or only to its shareholders. The line of important court cases shaping this issue spans almost a century and includes a series of landmark cases involving the Ford Motor Company, the Wrigley Company, and Hobby Lobby.
In (1919), the Michigan Supreme Court ruled in favor of shareholder primacy, saying that founder Henry Ford must operate the Ford Motor Company primarily in the profit-maximizing interests of its shareholders. In the traditional corporate model, a corporation earns revenue and, after deducting expenses, distributes the profits to shareholders in the form of dividends. Ford had announced that his company would stop paying big dividends to shareholders and instead would use its profits to achieve several other goals, including improving product quality, expanding company facilities, and perhaps most surprisingly, lowering prices. Shareholders then sued Ford, asking the court to order Ford Motor Company to continue allocating the lion’s share of profits to high dividend payments. (It is ironic that the named shareholders who sued Ford were the Dodge brothers, former Ford suppliers who had recently started their own car company.)
At the trial, Ford () testified that he believed his company was sufficiently profitable to consider its broader obligation and engage in activities to benefit the public, including its workers and customers. This was a unique position for the founder and primary owner of a large corporation to take in the early twentieth century. During the rise of capitalism in the United States, most owners sought only to maximize profits, because that was the primary basis of their ability to attract capital and to reinvest in the company. Most investors were interested in a healthy return on their investment, rather than any type of social good. Shareholders contended that the concern Ford expressed for his workers and customers was both improper and illegal. The court agreed, and Ford was forced to abandon his managerial goal of balancing profits and realizing broader social goals.
Ironically, in the same case, the court upheld the validity of a doctrine known as the business judgment rule, a common-law principle stating that officers, directors, and managers of a corporation are not liable for losses incurred when the evidence demonstrates that decisions were reasonable and made in good faith, which gives corporate management latitude in deciding how to run the company. Essentially, the business judgment rule holds that a court will not second-guess the decisions of a company’s managers or directors.
The legality and appropriateness of social responsibility as a business policy have followed a long and winding road since 1919. In the 1950s and 1960s, for example, some state courts rejected the shareholder primacy doctrine, instead ruling that a broad interpretation of the business judgment rule allowed managers discretion when it came to allocating company assets, including using them for programs demonstrating social awareness.
In 1968, in a highly publicized case, the court ruled that the board of directors of the Wrigley Company, of baseball and chewing gum fame, had a significant amount of discretion in determining how to balance the interests of stakeholders. The case of (1968) revolved around William Wrigley Jr.’s ownership of the Chicago Cubs. The baseball team had steadfastly refused to install the lights necessary for playing night games at Wrigley Field, even though every other stadium in major league baseball had lights. Instead, the Cubs had respected the local community’s belief that night baseball games and their associated lights would negatively affect the surrounding neighborhood, creating more opportunities for crime. In the view of some investors, however, the Cubs’ decision was depressing profits for shareholders. The shareholders brought a challenge against the Wrigley Company, but the Cubs’ owners won the case.
The Wrigley case represented a shift from the idea that corporations should pursue only the maximization of shareholder value, as had been held in the Ford Motor Company case. As a follow-up to this case, lights were finally installed at Wrigley Field in 1988, but only after the owner, William Wrigley III, had sold the team (in 1981) to the Tribune Company, a large media conglomerate that fought for six years to install lights. However, the case stands as precedent for the ability of management to balance various interests and profits when making decisions.
Dodge v. Ford (1919) and Shlensky v. Wrigley (1968) established the dynamic nature of the debate over the shareholder primacy doctrine and indicated a shift in both legal thought and precedent toward allowing management greater latitude in deciding how to best manage a corporation. A more recent decision, (2014), demonstrated what some may consider the double-edged sword of this latitude. In a 5–4 decision in favor of Hobby Lobby, the Supreme Court ruled that some corporations (those that are closely held by a few shareholders) can object on ethical, moral, or religious grounds to the Affordable Care Act’s rule that health insurance policies must cover various forms of contraception; such companies can elect not to offer such coverage.
The majority opinion in the case was written by Justice Samuel Alito, joined by Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, and Anthony Kennedy. In essence, the Court ruled that business owners could place their personal values first and follow their own agenda. The case received a great deal of publicity, some of it quite negative. Essentially, the Court held in this case that “corporate law does not require for-profit corporations to pursue profit at the expense of everything else,” similar to the ruling in the Chicago Cubs/Wrigley Field case.
The decision was a victory for the family that owns Hobby Lobby and has been praised by some and criticized by others for expanding the rights of corporate owners. Some analysts believe it represents more than just an expansion of management prerogative and enlarges the right of corporations to be treated as a “person.” The Hobby Lobby case can be interpreted to mean the people who control corporations (owners and/or management) may act on their own values in a way that might well be inconsistent with the interests of employees and other minority shareholders. In the majority decision, Alito wrote, “A corporation is simply a form of organization used by human beings to achieve desired ends. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people.” Hobby Lobby is primarily owned by one family, and Alito’s comments seem to suggest that another interpretation would limit the applicability of the case to only closely held corporations, in which the majority of the stock is owned by a small number of shareholders.
Some might think Henry Ford’s attempt to forego profits in order to pay workers higher wages was a good choice but not find Hobby Lobby’s preference for limiting female employees’ health insurance benefits on religious grounds to be so. However, the law must be interpreted logically: If you give management the prerogative to put one social issue ahead of profits, should management not also be able to pursue any social issue of its choosing? An extension of the logic used in the Hobby Lobby case could lead to an expansion of the corporate rights of the personhood doctrine, for example, by allowing the individual right to privacy to become a shield against regulatory scrutiny by government agencies (although a corporation is not a natural person).
Another potential problem with giving management greater rights to pursue social agendas is protecting the interests of minority shareholders who disagree with the majority. Since corporation law is state law, the protections for minority shareholders vary widely, but owners of a small number of shares have little or no power to influence the choices the corporation makes. Some states allow cumulative voting for seats on the board of directors, which increases minority shareholder power. Others permit buyouts or dissolution statutes that apply to closely held corporations. However, in a traditional large corporation, none of these protections for minority interests are likely to apply. Of course, another option is for disgruntled shareholders to sell their shares.
### The Two Sides of the Corporate Responsibility Debate
The issue of corporate social responsibility is the subject of high-level global discussion and debate among leaders in the public and private sectors, such as the World Economic Forum Annual Meeting in Davos, Switzerland. Numerous respected academic centers also hold forums on CSR, such as the Center on Democracy, Development, and the Rule of Law at Stanford University and the Harvard Law School Forum on Corporate Governance and Financial Regulation.
As we have seen, slow but steady acceptance of CSR as a legitimate business concept has led to the legal and ethical position that corporate directors and managers may exercise business judgment and discretion in running a corporation. This development has come about for multiple reasons: a) the fact that society allows LLCs to exist, b) the sheer magnitude of the economic power corporations possess, and c) the desire of corporations to act responsibly in order to avoid more extensive government regulation. Managers are usually accorded significant latitude as long as they can point to a rational interpretation of their actions as benefiting the corporation as a whole in the long term. The combination of economic and political power in the world’s largest corporations necessitates that executives consider the interests of a broader set of stakeholders, rather than only stockholders. Indeed, social, environmental, and charitable programs often create shareholder value rather than take away from it. And honoring obligations to all stakeholders in a corporation—including those who own no stock shares—is the moral minimum a firm must undertake to satisfy the base threshold for acting ethically.
A recent study by researchers at Princeton and the University of Texas indicates that corporations benefit from following CSR policies in multiple ways. These benefits are collectively called a “halo effect” and can add value to the business. As an example, consumers frequently take CSR spending as an indirect indicator that a company’s products are of high quality, and often they are also more willing to buy these products as an indirect way of donating to a good cause.
However, some economists, such as Milton Friedman, Henry Hazlitt, Adam Smith, and others, have argued that CSR initiatives based on environmental or social justice instead limit shareholder wealth. The Nobel Prize-winning economist Milton Friedman (1912–2006) believed shareholders should be able decide for themselves what social initiatives to donate to or to take part in, rather than having a business executive decide for them. He argued that both government regulation and corporate social initiatives allow an outside third party to make these choices for shareholders.
In Friedman’s opinion, too much power assumed by corporate management in pursuing a social agenda might ultimately lead to a form of corporate autocracy. Supporters of the profit maximization principle believe it is a waste of corporate resources to reduce air pollution below the level required by law, to require vendors to participate in a sustainable supply chain initiative, or to pay lower-level employees a salary above the legally mandated minimum wage. Friedman asserted that “doing good deeds” is not the job of corporations; it is the right of those people who want to do them but should not be imposed on those who do not. His philosophy asserts that socially oriented initiatives are analogous to a form of outside regulation, resulting in higher costs to those corporations that follow socially responsible policies.
When Friedman was laying out this position in the 1970s, it reflected the prevailing opinion of a majority of U.S. shareholders and commentators on corporate law at that time. In the years since then, however, Friedman’s perspective has fallen into disfavor. This does not invalidate his point of view, but it does demonstrate that public opinion about corporations is subject to change over time. The subjectivity or relativity with which we view companies along with their perceived rights and responsibilities is a major theme this text addresses.
Do corporate directors owe a specific fiduciary duty to shareholders? A fiduciary duty is a very high level of legal responsibility owed by those who manage someone else’s money, which includes the duties of care and loyalty. Some examples of relationships that include a fiduciary duty are those between a trustee of an estate and its beneficiary, and between a fund manager and a client. According to the American Bar Association, the business judgment rule states “that as fiduciaries, corporate directors owe the corporation and its shareholders fiduciary duties of diligence and fidelity in performing their corporate duties. These fiduciary obligations include the duty of care and the duty of loyalty . . . the duty of care consists of an obligation to act on an informed basis; the duty of loyalty requires the board and its directors to maintain, in good faith, the corporation’s and its shareholders’ best interests over anyone else’s interests.” So it would seem that the answer is yes, corporate directors do have a specific fiduciary duty to promote the best interests of the corporation. But what exactly does that duty entail? Does that specifically mean returning profits to shareholders in the form of dividends? As we have seen, these questions have frequently spilled over into the courts, in the form of shareholder lawsuits challenging the actions of directors and/or management.
UCLA law professor Steven Bainbridge wrote in the New York Times: “If directors were allowed to deviate from shareholder wealth maximization, they would inevitably turn to indeterminate balancing standards, which provide no accountability.” As support for his position, Bainbridge pointed to a 2010 case, , in which a Delaware court ruled that corporate directors are bound by fiduciary duties and standards that include “acting to promote the value of the corporation for the benefit of its stockholders.”
However, Lynn Stout, a professor at Cornell University Law School, wrote a contrasting piece in the New York Times in which she said, “There is a common belief that corporate directors have a legal duty to maximize corporate profits and shareholder value—even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.” Her opinion is based in part on the Hobby Lobby decision referenced above.
Thus, while ethicists may agree that corporations do indeed owe social responsibilities to society, legal experts still differ over this point. The fact that we have seen inconsistent decisions from the courts over the last century confirms the lack of legal consensus. Of course, both legal and ethical opinion are always in flux, so where the debate stands today in no way indicates where it will be in ten years. On this issue, public opinion, as well as that of politicians and even the courts, is like a pendulum swinging back and forth, usually between points of view that are center-right or center-left, rather than at the extremes. However, the pendulum is reset every so often, and the arc within which it swings may differ from era to era.
It is clear that many different stakeholders value corporate social responsibility, including some investors, shareholders, employees, customers, and suppliers. Indeed, some businesses look at CSR as providing a perfect long-term strategic opportunity to strengthen company fundamentals while contributing to society at the same time. Effective corporate leaders will get try to get investors on board with the idea of CSR, avoiding or minimizing the potential for any litigation related to maximization of profits. And innovative companies are finding ways to create value for both the business and society simultaneously.
Data analysis indicates that following a policy of corporate social responsibility does not have to mean losing money; on the contrary, many corporations that use an ethical approach to doing business are actually quite profitable. Mutual funds, recognizing that investors care about sustainable investing, now offer socially responsible funds, and third-party ratings companies, such as Morningstar, rate the funds so potential investors can evaluate how well the companies in them are meeting environment, social, and governance challenges. An example of such a fund is the Calvert Fund, which describes itself as a “leader in responsible investing with a mission to deliver superior long-term performance to our clients and to enable them to achieve positive impact.”
The chart below analyzes mutual funds and their rate of return over several different time periods; included are examples of both general index funds and “socially responsible” or social index funds (). If we compare the two general index funds at the top to the three funds at the bottom that invest in socially responsible companies, we see a competitive return on investment in the social funds. Social responsibility does not mean lower profitability.
### Summary
While some argue that corporations have a primary duty to maximize profits for the benefit of shareholders, others assert that businesses have a duty to the society in which they operate, a duty that serves as the basis of the CSR philosophy. Many court cases have addressed the issue, but it has not been conclusively resolved.
Despite the ongoing ethical debate, being a good corporate citizen is a goal toward which most contemporary corporations strive. An effective CSR policy usually means that companies have to commit to both an internal and external approach to ethics. Corporate social responsibility and good corporate governance are in reality just two sides of the very same coin. Social responsibility does not mean lower profitability.
### Assessment Questions
### Endnotes
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# Three Special Stakeholders: Society, the Environment, and Government
## Sustainability: Business and the Environment
### Learning Objectives
By the end of this section, you will be able to:
1. Explain the concept of earth jurisprudence
2. Evaluate the claim that sustainability benefits both business and the environment
3. Identify and describe initiatives that attempt to regulate pollution or encourage businesses to adopt clean energy sources
Public concern for the natural environment is a relatively new phenomenon, dating from the 1960s and Rachel Carson’s seminal book Silent Spring, published in 1962. In 1992, Cormac Cullinan’s Wild Law proposed “earth justice” or “earth jurisprudence,” a concept underlying the law’s ability to protect the environment and effectively regulate businesses that pollute. The preoccupation with business success through investment in corporations, in contrast, is a much older concept, dating back at least to the creation of the British East India Company in 1600, and the widespread emergence of the corporation in Europe in the 1700s. If you were a business owner, would you be willing to spend company resources on environmental issues, even if not required to do so by law? If so, would you be able to justify your actions to shareholders and investment analysts as smart business decisions?
### Environmental Justice
If a business activity harms the environment, what rights does the environment have to fight back? Corporations, although a form of business entity, are actually considered persons in the eyes of the law. Formally, corporate personhood, a concept we touched on in the preceding section, is the legal doctrine holding that a corporation, separate and apart from the people who are its owners and managers, has some of the same legal rights and responsibilities enjoyed by natural persons (physical humans), based on an interpretation of the word “person” in the Fourteenth Amendment.
The generally accepted constitutional basis for allowing corporations to assert that they have rights similar to those of a natural person is that they are organizations of people who should not be deprived of their rights simply because they act collectively. Thus, treating corporations as persons who have legal rights allows them to enter into contracts with other parties and to sue and be sued in a court of law, along with numerous other legal rights. Before and after the Supreme Court’s ruling in (2010), which upheld the First Amendment free-speech rights of corporations, there have been numerous challenges to the concept of corporate personhood; however, none have been successful. Thus, U.S. law considers corporations to be persons with rights protected under key constitutional amendments, regulations, and case law, as well as responsibilities under the law, just as human persons have.
A question that logically springs from judicial interpretations of corporate personhood is whether the environment should enjoy similar legal status. Should the environment be considered the legal equivalent of a person, able to sue a business that pollutes it? Should environmental advocates have been able to file a lawsuit against BP (formerly British Petroleum) on behalf of the entire Gulf of Mexico for harm created by the 2010 Deepwater Horizon oil spill (discussed in more detail in the government regulation section of this chapter), which, at five million barrels, was ten times larger than the famous Exxon Valdez spill and remains the largest and most widespread ocean oil spill in the history of the global petroleum industry? Furthermore, the Deepwater Horizon spill affected not only thousands of businesses and people, but also the entirety of the Gulf of Mexico, which will suffer harm for years to come. Should the Gulf of Mexico have legal standing to sue, just like a person?
While U.S. jurisprudence has not yet officially recognized the concept that Earth has legal rights, there are examples of progress. Ecuador is now the first country to officially recognize the concept. The country rewrote its Constitution in 2008, and it includes a section entitled “Rights for Nature.” It recognizes nature’s right to exist, and people have the legal authority to enforce these rights on behalf of the ecosystem, which can itself be named as a litigant in a lawsuit.
Earth jurisprudence is an interpretation of law and governance based on the belief that society will be sustainable only if we recognize the legal rights of Earth as if it were a person. Advocates of earth jurisprudence assert that there is legal precedent for this position. As pointed out earlier in this chapter, it is not only natural persons who have legal rights, but also corporations, which are artificial entities. Our legal system also recognizes the rights of animals and has for several decades. According to earth jurisprudence advocates, officially recognizing the legal status of the environment is necessary to preserving a healthy planet for future generations, in particular because of the problem of “invisible pollution.”
Businesses that pollute the environment often hide what they are doing in order to avoid getting caught and facing economic, legal, or social consequences. The only witness may be Earth itself, which experiences the harmful impact of their invisible actions. For example, as revealed in a recent report, companies all over the world have for years been secretly burning toxic materials, such as carbon dioxide, at night. A company that needs to dump a toxic substance usually has three choices: dispose of it properly at a safe facility, recycle and reuse it, or secretly dump it. There is no doubt that dumping is the easiest and cheapest option for most businesses.
As another example, approximately twenty-five million people board cruise ships every year, and as a result, cruise ships dump one billion gallons (3.8 billion liters) of sewage into the oceans annually, usually at night so no one sees or smells it. Friends of the Earth, a nongovernmental organization (NGO) concerned with environmental issues, used data from the U.S. Environmental Protection Agency (EPA) to calculate this figure. The sewage dumped into the sea is full of toxins, including heavy metals, pathogens, bacteria, viruses, and pharmaceutical drugs (). When invisibly released near coasts, this untreated sewage can kill marine animals, contaminate seafood, and sicken swimmers, and no one registers the damage except the ocean itself. Many believe the environment should have the right not to be secretly polluted in the dead of night, and Earth should have rights at least equal to those of corporations.
Cormac Cullinan, an environmental attorney, author, and leading proponent of earth jurisprudence, often collaborates with other environmental advocates such as Thomas Berry, an eco-theologian, scholar, and author. Cullinan, Berry, and others have written extensively about the important legal tenets of earth jurisprudence; however, it is not a legal doctrine officially adopted by the United States or any of its states to date. The concept of earth justice is tied indirectly to the economic theory of the “tragedy of the commons,” a phrase derived from British economist William Forster Lloyd, who, in the mid-nineteenth century, used a hypothetical example of unregulated grazing on common land to explain the human tendency to act independently, putting self-interest first, without regard for the common good of all users. The theory was later popularized by ecologist and philosopher Garrett Hardin, who tied it directly to environmental issues. In other words, when it comes to natural resources, the tragedy of the commons holds that people generally use as much of a free resource as they want, without regard for the needs of others or for the long-term environmental effects. As a way of combating the tragedy of the commons, Cullinan and others have written about the concept of earth justice, which includes the following tenets:
Today, supporters of the environment assert that government has both a right and an obligation to ensure that businesses do not overuse any resource, and to mandate adequate environmental protection when doing so. In addition, some form of fee may be collected for using up a natural resource, such as severance taxes imposed on the removal of nonrenewable resources like oil and gas, or deposits required for possible cleanup costs after projects have been abandoned. As part of the growing acceptance of the concept of earth justice, several nonprofit educational organizations and NGOs have become active in both lobbying and environmental litigation. One such organization is the Center for Earth Jurisprudence (housed at the Barry School of Law in Orlando), a nonprofit group that conducts research in this area.
### Why Sustainability Is Good for Business
The notion that the environment should be treated as a person is relatively new. But given the prominence of the environmental movement worldwide, no well-managed business today should be conducted without an awareness of the tenuous balance between the health of the environment and corporate profits. It is quite simply good business practice for executives to be aware that their enterprise’s long-term sustainability, and indeed its profitability, depend greatly on their safeguarding the natural environment. Ignoring this interrelationship between business and the environment not only elicits public condemnation and the attention of lawmakers who listen to their constituents, but it also risks destroying the viability of the companies themselves. Virtually all businesses depend on natural resources in one way or another.
Progressive corporate managers recognize the multifaceted nature of sustainability—a long-term approach to business activity, environmental responsibility, and societal impact. Sustainability affects not only the environment but also other stakeholders, including employees, the community, politics, law, science, and philosophy. A successful sustainability program thus requires the commitment of every part of the company. For example, engineers are designing manufacturing and production processes to meet the demands of companies dedicated to sustainability, and the idea of company-wide sustainability is now mainstream. Many of the largest companies in the world see sustainability as an important part of their future survivability.
### The Global 100 and Sustainability’s Strategic Worth
Corporate Knights is a Canadian research and publishing company that compiles an annual list called the Global 100, identifying the world’s most sustainable companies. The 2018 edition of the list, presented at the World Economic Forum in Davos, Switzerland, shows that an increasing number of major multinational companies take sustainability seriously, including many U.S. businesses. The highest-ranking U.S. company is technology giant Cisco, which ranks seventh on the Global 100 list. Other U.S. companies in the top twenty-five include Autodesk, Merck, and McCormick & Co. The countries with the best representation on the list are primarily from North America and Western Europe: the United States (18), France (15), the United Kingdom (10), Germany (7), Brazil (5), Finland (5), and Sweden (5).
You may expect that companies dedicated to sustainability would be less profitable in the long run as they face additional costs. In fact, data from the Global 100’s return on investment shows this is not the case. Let’s examine the evidence. If an investor had put $250 in Global 100 companies in 2005, it would have been worth $580 in 2015, compared to $520 for the same amount invested in a typical index fund. The Global 100’s cumulative return on high-sustainability firms is about 25 percent higher than a traditional investment.
Cisco Systems, number seven on the global list, is a good example of how green procurement and sustainable sourcing have become a regular part of the supply chain. At Cisco, according to a top-level supply chain executive, “we take seriously the responsibility of delivering products in an ethical and environmentally responsible manner.” Cisco relies on its Supplier Code of Conduct to set standards for suppliers so they follow fair labor practices, ensure safe working conditions, and reduce their carbon footprint, the amount of carbon dioxide and other carbon compounds released by the consumption of fossil fuels, which can be measured quantitatively (see the link below). Cisco is in the process of embedding sustainability into supply chain management at all levels.
Another company dedicated to sustainability is Siemens, which was ranked number nine on the 2018 list. Siemens is a multinational industrial conglomerate headquartered in Germany, whose businesses range from power plants to electrical systems and equipment in the medical field and high-tech electronics. Siemens was rated the most energy-efficient firm in its sector, because it produced more dollars in revenue per kilowatt used than any other industrial corporation. This is a standard technique to judge efficiency and demonstrates that Siemens has a low carbon footprint for a company in the industries in which it operates. The commitment of Siemens to sustainability is further demonstrated by its decision to manufacture and sell more environmentally friendly infrastructure products such as green heating and air conditioning systems.
Cisco and Siemens show that businesses across the globe are starting to understand that for a supply chain to be sustainable, companies and their vendors must be partners in a clean and safe environment. Do businesses simply pay lip service to environmental issues while using all available natural resources to make as much money as they can in the present, or are they really committed to sustainability? There is abundant evidence that sustainability has become a policy adopted by businesses for financial reasons, not simply public relations.
McKinsey & Company is one of the world’s largest management consulting firms and a leader in the use of data analytics, both qualitative and quantitative, to evaluate management decisions. McKinsey conducts periodic surveys of companies around the world on matters of importance to corporate leaders. In the 2010 survey, 76 percent of executives agreed that sustainability provides shareholders long-term value, and in the 2014 survey, entitled “Sustainability’s Strategic Worth,” the data indicated that many companies consider cost savings to be the number-one reason for adopting such policies. Cost cutting, improved operations, and efficiency were indicated as the primary reasons for adopting sustainability policies by over one-third of all companies (36%).
Other major studies have demonstrated similar results. Grant Thornton is a leading global accounting and consulting firm. Its 2014 report on CSR showed that the top reason companies cite for moving towards more environmentally responsible business practices is financial savings. Grant Thornton conducted more than 2,500 interviews with clients and business executives in approximately thirty-five countries to discover why companies are making a commitment to sustainable practices. The study found that cost management was the key reason for sustainability (67%).
A specific example is Dell Computers, headquartered outside Austin, Texas, and with operations all over the world. The “Dell Legacy of Good Plan” has set a goal to reduce greenhouse gas emissions from all facilities and operations by 50 percent by the year 2020, along with several other environmental goals. As part of this overall plan, Dell created the Connected Workplace, a flex-work program allowing alternative arrangements such as variable work hours to avoid rush hour, full- or part-time work at home flexibility, and job sharing. This sustainability initiative helps the company avoid about seven thousand metric tons of greenhouse gas emissions, and, directly related to the financial benefit of sustainability, it saves the company approximately $12 million per year.
However, adopting sustainability policies may require a long-term outlook. A recent article in the Harvard Business Review discussed the issue of sustainability and how it can create real cost savings (). “It’s hard for companies to recognize that sustainable production can be less expensive. That’s in part because they have to fundamentally change the way they think about lowering costs, taking a leap of faith . . . that initial investments made in more-costly materials and methods will lead to greater savings down the road. It may also require a willingness to buck conventional financial wisdom by focusing not on reducing the cost of each part but on increasing the efficiency of the system as a whole.”
### Sustainability Standards
The International Organization for Standardization, or ISO, is an independent NGO and the world’s largest developer of voluntary international business standards. More than twenty thousand ISO standards now cover matters such as sustainability, manufactured products, technology, food, agriculture, and even healthcare. The adoption and use of these standards by companies is voluntary, but they are widely accepted, and following ISO certification guidelines results in the creation of products and services that are clean, safe, reliable, and made by workers who enjoy some degree of protection from workplace hazards.
In the environmental area, the ISO 14000 series of standards promotes effective environmental management systems in business organizations by providing cost-effective tools that make use of best practices for environmental management. These standards were developed in the 1990s and updated in 2015; they cover everything from the eco-design (ISO 14006) of factories and buildings to environmental labels (ISO 14020) to limits on the release of greenhouse gasses (ISO 14064). While their adoption is still voluntary, a growing number of countries allow only ISO 14000-certified companies to bid on public government contracts, and the same is true of some private-sector companies ().
Another type of sustainability standard with which businesses may elect to comply is LEED certification. LEED stands for Leadership in Energy and Environmental Design, and it is a rating system devised by the U.S. Green Building Council to evaluate a structure’s environmental performance. The most famous example is the Empire State Building in New York City, which was awarded LEED Gold status (for existing buildings). The LEED certification was the result of a multimillion-dollar rebuilding program to bring the building up to date, and the building is the tallest in the United States to receive it. There are dozens of other examples of large commercial buildings, such as the Wells Fargo Tower in Los Angeles, as well as thousands of smaller buildings and residential homes. LEED certification is the driver behind the ongoing market transformation towards sustainable design in all types of structures, including buildings, houses, and factories.
### The High Cost of Inaction
According to estimates from the EPA, by the year 2050, Earth’s population will be about ten billion people. Dramatic population growth has had a very significant and often negative human impact on the planet. Not only are there more people to feed, house, and care for, but new technologies allow businesses to harness natural resources in unprecedented amounts. NGOs and government agencies alike have taken notice. For years, the Department of State and the Department of Defense have considered climate change to be a potential threat to the long-term security of the United States. If unmanaged, climate change could pose a risk to both U.S. security and Department of Defense facilities and operations. Other respected organizations are also alerting the public to the risks of ignoring climate change.
The Union of Concerned Scientists (UCS) has released a detailed report identifying approximately twenty serious risks that will be faced if the problem is not addressed in a substantial way. These risks include rising seas and increased coastal flooding, more intense and frequent heat waves, more destructive hurricanes, wildfires that last longer and produce more damage, and heavier precipitation in some areas and more severe droughts in other areas. In addition to extreme weather events, there would likely be widespread forest death in the Rocky Mountains and other mountain ranges, the destruction of coral reefs, and shifts in the ranges of plants and animals. Both military bases and national landmarks would be at risk, as would the electrical grid and food supply. The UCS, with a membership consisting of the world’s most respected scientists, bases its projections on scientific research studies that have produced empirical evidence of climate change. Its official position is that “global warming is already having significant and very costly effects on communities, public health, and our environment.”
Environmental protection and climate change issues receive varying degrees of support at the national level, depending on the commitment different presidents make to them. During periods in which the administration in Washington demonstrates a lower priority for climate change issues, such as the Trump administration’s announced intention to withdraw from the Paris Climate Accord, private companies may take the lead on actions to reduce global warming emissions.
For example, Microsoft founder Bill Gates recently announced the creation of a private initiative to invest $20 billion on climate-related research and development over the next five years. This is an example of government-funded early experimental research that a business may be able to turn into a commercially viable solution. If government steps back, private-sector companies concerned about long-term sustainability may have to take a leadership role. Ultimately, it requires the cooperation of public and private efforts to address climate change; otherwise, the impacts will continue to intensify, growing more costly and more damaging.”
Sustainability often requires the public and private sectors to cooperate. Inaction contributes to disasters like the 2017 devastation of Houston by Hurricane Harvey and of Puerto Rico by Hurricane Maria. There is often tension between developers who want to build and cities that try to legislate for more green space. Green space not only offers a place for recreation and enjoyment of nature, but also provides essential natural drainage for rain and flood waters, reducing the likelihood that developed areas will end up underwater in a storm.
U.S. government agencies, such as the National Aeronautics and Space Administration (NASA) and National Oceanic and Atmospheric Administration, have identified many challenges in which sustainability can make a positive contribution. These include climate change, decreasing supplies of clean water, loss of ecological systems, degradation of the oceans, air pollution, an increase in the use and disposal of toxic substances, and the plight of endangered species. Progress toward solving these challenges depends in part on deciding who should help pay for the protection of global environmental resources; this is an issue of both environmental and distributive justice.
One way to address the issue of shared responsibility between corporations and society is the implementation of a “cap and trade” system. According to the Environmental Defense Fund, cap and trade is a viable approach to addressing climate change by curbing emissions that pollute the air: The “cap” is a limit on greenhouse gas emissions—if companies exceed their cap, they must pay penalties—whereas the “trade” allows companies to use the free market to buy and sell pollution allowances that permit them to emit a certain amount of pollution.
At present, there are more questions than answers, including how much of the responsibility lies with governments, how this responsibility can be allocated between developed and developing nations, how much of the cost should the private sector bear, and how should these divisions of cost and responsibility be enforced. Private companies must bear part of the cost, and the business sector recognizes they have some responsibility, but many disagree on whether that should be in the form of after-the-fact fines, or before-the-fact fees and deposits paid to the government. Regulations may very well have to be international in scope, or companies from one country may abuse the environment in another.
Inaction on issues of sustainability can lead to long-term environmental consequences that may not be reversible (the death of ocean coral, the melting of polar ice caps, deforestation). Another hurdle is that it is sometimes difficult to convince companies and their investors that quarterly or annual profits are short-term and transitory, whereas environmental sustainability is long-term and permanent.
### Environmental Economics and Policy
Some politicians and business leaders in the United States believe that the U.S. system of capitalism and free enterprise is the main reason for the nation’s prosperity over the past two hundred years and the key to its future success. Free enterprise was very effective in facilitating the economic development of the United States, and many people benefited from it. But it is equally true that this could not have happened without the country’s wealth of natural resources like oil, gas, timber, water, and many others. When we consider the environment and the role of sustainability, the question is not whether our system works well with an abundance of natural resources. Rather, we should ask how well it would work in a nation, indeed in a world, in which such resources were severely limited.
Does business, as the prime user of these resources, owe a debt to society? The Harvard Business Review recently conducted a debate on this topic on its opinion/editorial pages. Business owes the world everything and nothing, according to Andrew Winston, author and consultant on environmental and social challenges. “It’s an important question,” he wrote, “but one that implies business should do the socially responsible thing out of a sense of duty. This idea is a distraction. Sustainability in business is not about philanthropy, but about profitability, innovation, and growth. It’s just plain good business.” On the other hand, Bart Victor, professor at Vanderbilt University’s Owen Graduate School of Management, wrote, “Business is far more powerful and deeply influential than any competing ideological force, political force or environmental force . . . business now has to see itself and its responsibilities and obligations in a new way.”
Using deontological or duty-based reasoning, we might conclude that business does owe a debt to the environment. A basic moral imperative in a normative system of ethics is that someone who uses something must pay for it. In contrast, a more utilitarian philosophy might hold that corporations create jobs, make money for shareholders, pay taxes, and produce things that people want; thus, they have done their part and do not owe any other debt to the environment or society at large. However, utilitarianism is often regarded as a “here and now” philosophy, whereas deontology offers a longer-term approach, taking future generations into account and thus aligning more with sustainability.
Should businesses have to pay more in fees or taxes than ordinary citizens for public resources or infrastructure they use to make a profit? Consider the example of fracking: West Texas has seen a recent boom in oil and gas drilling due to this relatively new process. Fracking is short for hydraulic fracturing, which creates cracks in rocks beneath Earth’s surface to loosen oil and gas trapped there, thus allowing it to flow more easily to the surface. Fracking has led to a greatly expanded effort to drill horizontally for oil and gas in the United States, especially in formations previously thought to be unprofitable, because there was no feasible way to get the fossil fuels to the surface. However, it comes with a significant downside.
Fracking requires very heavy equipment and an enormous amount of sand, chemicals, and water, most of which must be trucked in. Traffic around Texas’s small towns has increased to ten times the normal amount, buckling the roads under the pressure of a never-ending stream of oil company trucks. The towns do not have the budget to repair them, and residents end up driving on dangerous roads full of potholes. The oil company trucks are using a public resource, the local road system, often built with a combination of state and local taxpayer funds. They are obviously responsible for more of the damage than local residents driving four-door sedans to work. Shouldn’t the businesses have to pay a special levy to repair the roads? Many think it is unfair for small towns to have to burden their taxpayers, most of whom are not receiving any of the profits from oil and gas development, with the cost of road repair. An alternative might be to impose a Pigovian tax, which is a fee assessed against private businesses for engaging in a specific activity (proposed by British economist A. C. Pigou). If set at the proper level, the tax is intended as a deterrent to activities that impose a net cost—what economists call “negative externalities”—on third parties such as local residents.
This issue highlights one of many environmental debates sparked by the fracking process. Fracking also causes the overuse and pollution of fresh water, spills toxic chemicals into the ground water, and increases the potential for earthquakes due to the injection wells drilled for chemical disposal. Ultimately, as is often the case with issues stemming from natural resource extraction, local residents may receive a few short-term benefits from business activity related to drilling, but they end up suffering a disproportionate share of the long-term harm.
One method of dealing with the long-term harm caused by pollution is a carbon tax, that is, a “pay-to-pollute” system that charges a fee or tax to those who discharge carbon into the air. A carbon tax serves to motivate users of fossil fuels, which release harmful carbon dioxide into the atmosphere at no cost, to switch to cleaner energy sources or, failing that, to at least pay for the climate damage they cause, based on the amount of greenhouse gas emissions generated from burning fossil fuels. A proposal to implement a carbon tax system in the United States has been recommended by many organizations, including the conservative Climate Leadership Council (CLC). Exxon Mobil, Shell, British Petroleum, and Total, along with other oil companies and a number of large corporations in other industries, recently announced their support for the plan to tax carbon emissions put forth by the CLC.
Would this “pay-to-pollute” method actually work? Will companies agree to repay the debt they owe to the environment? Michael Gerrard, the director of the Sabin Center for Climate Change Law at Columbia University Law School, said, “If a sufficiently high carbon tax were imposed, it could accomplish a lot more for fighting climate change than liability lawsuits.” Initial estimates are that if the program were implemented, companies would pay more than $200 billion a year, or $2 trillion in the first decade, an amount deemed sufficient to motivate the expanded use of renewable sources of energy and reduce the use of nonrenewable fossil fuels.
Some environmental organizations, including the Nature Conservancy and the World Resources Institute, are also endorsing the plan, as are some legislators in Washington, DC. “The basic idea is simple,” Senator Sheldon Whitehouse (D-RI) said. “You levy a price on a thing you don’t want—carbon pollution—and you use the revenue to help with things you do want.” According to the senator, a U.S. carbon tax or a fee of $45 per metric ton would reduce U.S. carbon emissions by more than 40 percent in the first decade. This is an idea with global support, and it has already been tried. The World Bank has data indicating that forty countries, along with some major cities, have already enacted such programs, including all countries of the EU, as well as New Zealand and Japan.
### Summary
Adopting sustainability as a strategy means protecting the environment. Society has an interest in the long-term survival, indeed the flourishing, of ecological habitats and natural resources, and we ask and expect companies to respect this societal goal in their business activities.
When analyzing what a business owes society in return for the freedom to extract our natural resources, we must balance development and preservation. It may be easy to say from afar that a business should cut back on how much it pollutes the air, but what happens when that means cutting back on fossil fuel use and transitioning to electric vehicles, a choice that affects everyone on a personal level?
### Assessment Questions
### Endnotes
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# Three Special Stakeholders: Society, the Environment, and Government
## Government and the Private Sector
### Learning Objectives
By the end of this section, you will be able to:
1. Identify three public health issues that might warrant government regulation
2. Explain what is meant by “revolving door” in a political context
3. Compare constitutional arguments for and against government regulation of industry
Ideally, all levels of government—local, state, and federal—should work with each other and with private-sector businesses to accomplish a fair and rational balance between their respective roles in maintaining a just society. Rarely does one actor alone solve a problem; more often, it takes either a state-federal or a government-business partnership to make a significant impact on a social or economic challenge. Such partnerships are often quite effective, according to Deloitte, a global consulting and accounting firm.
For example, the federal Clean Air Act of 1970 gives the EPA nationwide authority, but controlling air pollution, which does not recognize borders, also necessitates that state governments play a very significant role in enforcing environmental standards. In turn, about half the states also allow major cities to have their own air quality regulatory programs. “Think globally, act locally” seems to capture the essence of government regulation in air quality. For decades, California has had an air-quality program that not only attempts to comply with mandates in the federal program but also goes a step further to create state-specific rules, such as stricter auto emissions guidelines.
In another example, in May 2017, the Environment and Natural Resources Division of the U.S. Department of Justice, together with the EPA and the Texas Commission on Environmental Quality, announced a settlement with Vopak, a Houston energy company, related to air-quality violations by the company. Both federal and state government agencies had filed actions against Vopak, stating that the company failed to comply with Clean Air Act requirements to properly manage equipment at its on-site wastewater treatment facility, resulting in excess emissions of a variety of hazardous air pollutants, as well as volatile organic compounds, in an area classified as not meeting ground-level ozone standards. Per the settlement terms, the company, at considerable cost, “will install state-of-the art pollution controls at the wastewater treatment system and use infrared cameras” to detect otherwise undetectable air pollution from its chemical storage tanks. Additionally, Vopak will pay a $2.5 million civil penalty.
### Sustainability and the Public Interest
For two centuries, businesses have profited from using and selling the nation’s natural resources. The tradeoff in a free but regulated economic system such as that in the United States is to allow the continued extraction of natural resources but to require a commitment to protection of the environment in return. This bargain promotes long-term sustainability by balancing the interests of the environment, state and local governments, and users of natural resources. However, this public-private collaboration is not without controversy.
When discussing the topic of sustainability as a function of responsible and sustainable business conduct, we consider not only environmental health but also public health. Polluting the environment is bad for public health, but so too are a wide variety of inherently dangerous products from alcohol to tobacco to guns to drugs. The World Health Organization estimates that alcohol is the cause of close to 7 percent of all deaths each year globally, or about 3.5 million people, and total global sales of alcohol are well over $1 trillion per year. The question is whether society should allow businesses to market, sell, and profit from a product that causes so many deaths and creates a significant public health problem. The same question can be asked about tobacco, on which businesses make over half a trillion dollars annually and which the United States has struggled to regulate for years. Some businesses are acting on their own to rein in the sale or use of harmful products. In 2014, CVS, a drugstore and health care giant, chose to stop selling tobacco products, because such sales do not support its corporate mission.
Few issues are the source of as much public debate as guns, but it is clear that gun violence in the United States is a major public health challenge. There are about 35,000 deaths per year in the United States due to firearms, and another 75,000 nonfatal firearm injuries. However, thousands of businesses profit from gun sales. Annual revenue in the gun and ammunition manufacturing industry is close to $14 billion, producing a profit of $1.5 billion, whereas the annual revenue of gun and ammunition stores is an additional $3 billion, resulting in a profit of $500 million. Based on these facts, should the sale of guns remain relatively unregulated, or, in the interest of public health, should the government increase regulatory efforts in this area? On the corporate front, after the most recent fatal mass shooting at a high school in Parkland, Florida, several companies took action without waiting for the law to change. Dick’s Sporting Goods announced it will no longer sell semi-automatic assault rifles, such as the AR-15, as has Kroger, which owns Fred Meyer stores. Walmart has announced it will no longer sell guns to anyone under twenty-one years of age.
Another pressing social issue is opioid abuse. In 2016, there were approximately sixty thousand deaths due to drug overdoses, almost double the number of gun deaths. Profits from the sale of these drugs are in the tens of billions of dollars, and the pharmaceutical industry spends $100 million lobbying Congress not to regulate it more stringently. Some local government entities are suing opioid drug manufacturers, and, in the private sector, CVS recently announced it would now fill opioid prescriptions with supplies for only seven days. While opioids are legal and often legitimately prescribed for pain management, a large part of the problem is that they are also overprescribed. Given these facts, should pharmaceutical corporations be allowed to profit from this product? What ethical or legal responsibilities do those in the medical community have for the problem?
Although sustainability discussions justifiably focus on the protection of human life and public health issues, a related ethical issue close to the hearts of many citizens is animal rights. Businesses have begun to take notice of public demands in this area, as evidenced by a 2017 Fortune article about the Yoox Net-a-Porter Group. Net-a-Porter is a large, online retailer (with $2 billion/year in sales) that markets top-line brands such as Prada, Gucci, and Michael Kors. After a survey of its customers showed that a significant majority want the company to forgo fur products, it decided to forbid the use of fur in its entire line. Other big-name brands such as Armani, Hugo Boss, North Face, Nautica, and Timberland have followed Net-a-Porter’s lead and recently announced fur-free policies.
Related developments are taking place in the cosmetics and food industries. Many cosmetics companies have announced cruelty-free product testing policies for products ranging from makeup to hairspray. In the food industry, the U.S. Department of Agriculture recently reported that cage-free eggs account for approximately one-quarter of the wholesale shell egg market. Why? Sales and profits are the answer, along with sustainability. According to research conducted by Walmart, over 75 percent of the retail giant’s customers said they would be more likely to shop at a store that improves its policies related to animal welfare. Thus, not only Walmart but also supermarket chains such as Kroger have announced the gradual implementation of cage-free egg-buying policies, as have fast food giants such as McDonald’s and Burger King. Such changes are often prompted, if not driven, by the influence of informed consumer stakeholders who are demanding the products they want to buy.
### The Revolving Door between Government Regulation and the Private Sector
While private companies may take the initiative in response to public demand, and intergovernmental cooperation can accomplish many good things, sometimes the solution is for a private-sector company or industry to work directly with the government, as we saw with the example of Space X. Given the pressure on federal, state, and local agencies to reduce their budgets, many have increasingly turned to public-private partnerships, or P3s, as a means to solve problems.
Sometimes, however, the relationship between business and government can become too close, as when executives from the private sector leave their jobs to work for government agencies, becoming the regulators rather than the regulated, and then return to industry in a kind of “revolving door” effect. For example, Goldman Sachs, one of the world’s largest financial services firms, has seen many of its executives take senior leadership positions in the presidential administrations of both Democrats and Republicans, including the present secretary of the treasury, Steven Mnuchin. The same trend is occurring on a global level; Mario Draghi, the president of the European Central Bank, was previously a vice chair and managing director of Goldman Sachs International, and Mark Carney, the governor of the Bank of England, worked for Goldman Sachs as well. The large number of executives from one of the biggest investment banks in the world moving in and out of government service causes some critics to warn of the “fox guarding the hen house” approach to regulation. Is the relationship between government and the private sector sometimes too cozy? Does this revolving door in fact result in bad policy?
Of course, it would be incorrect to assume, because multiple executives of a firm landed in government positions, that the firm is automatically guilty of wrongdoing. Goldman Sachs has created several programs with ethical goals. The company encourages clients to consider environmental and sustainability issues, and it backs green bonds, which are used to fund projects that have positive environmental and/or climate benefits. In truth, our government would find it difficult to function without the expertise from the private sector supplementing that of the public sector in public service positions.
Research by the Federal Reserve Bank of Kansas City demonstrates how regulation and legislation in this area must strike a balance between encouraging and discouraging executives from the private sector to serve in high-level government positions. Our system of government service does not want to run the risk of undermining “the ability of regulatory agencies to seek and retain top level talent, but at the same time we do not want to impair the independence of government policy-makers.”
A quick look at some figures indicates the scope of the problem. A 2008 General Accounting Office survey of fifty large defense contractors revealed that almost ninety thousand people who had left the Department of Defense in the preceding eight years were afterwards employed by private-sector companies doing business with the government as contractors. While legal restrictions exist to limit the revolving door effect, most relate only to direct government contracting. Private-sector companies seeking to acquire talent by hiring former employees of the federal government must be aware of the statutory and regulatory restrictions and their associated penalties.
One rule says former senior government employees may not make any communication with or appearance before their former agency, with the intent to influence the agency, for one year after leaving service. The ban is extended to two years for certain “very senior” officials. Penalties for violations can include fines of up to $50,000 per violation and/or twice the amount of compensation received. On a company level, the penalty can be up to $500,000 per violation and/or twice the amount of the contract. Moreover, individuals who intentionally violate the law may be subject to criminal penalties, which can include up to five years in jail.
In 2009, shortly after he took office, President Obama issued an executive order requiring all executive agency appointees to take an ethics pledge as a prerequisite for accepting appointment. The pledge included a lobbying ban and restrictions on appointees and lobbyists entering and leaving the government. For instance, appointees entering the government had to agree not to participate in any matter both “directly and substantially” related to their former employer or clients for two years. However, because these ethical restrictions were implemented by way of executive order, not federal statute, they may vary from president to president. Ethical questions have been raised about traditional conflict of interest concepts in the present administration, because people currently serving in it have retained ownership of private companies rather than selling them or placing them in blind trusts.
Of course, the relationship between government and business is an important one, and expertise in a field can be extremely valuable to both sides in a business-government partnership. However, this collaboration should be transparent and subject to public scrutiny, as noted by the Brookings Institution, one of the oldest nonprofit public policy think tanks. In a report entitled “Amateur Government: When Political Appointees Manage the Federal Bureaucracy,” the Institution warns against the potential for conflicts of interest stemming from allowing too many industry executives to move into government service, set overtly pro-industry policies, and then go back to their higher-paying, private-sector jobs. The key is to seek a balance.
### Government Regulation and the Constitution
Over the past decade, many politicians have run for office on a platform of reducing government regulation. There are at least two closely related positions on reducing federal government regulation. The first is essentially a states’ rights position that seeks to limit the powers of the federal government to those very specifically enumerated in the Constitution. It is based on principles embodied in the Tenth Amendment and on a narrow interpretation of the Commerce Clause. The Tenth Amendment reserves to the states any right not specifically delegated to the federal government. The Commerce Clause is the part of the Constitution that gives the federal government the right to regulate commerce between states.
The second, related view of government regulation holds that “less is better” at all levels, whether state or federal. Its followers simply seek to reduce the size of government and regulation at every level. Some might attribute this position to a libertarian or “small government” philosophy.
These two philosophies might be characterized as less government regulation vs. no government regulation, other than military defense. The preference for state regulation is often based on a belief in the business community that many states are softer on regulation that the federal government, or that states are closer to the problems businesses face and are more efficient at addressing them. However, there is little clear evidence that one branch of government is more efficient than another. The real challenge is weighing the benefits of regulation against the costs, and finding the right balance between over- and under-regulation. Weak regulation can allow a business to cut corners. For instance, auto emission regulations intended to go into effect by certain dates have been delayed multiple times during the 1980s and the early 2000s. The Obama administration announced plans to enforce tougher rules, but the current administration has said it plans to delay implementation. Auto emission regulations have become politically charged, constantly changing depending on the party in power, and some states have responded with their own legislation instead of waiting for the federal stalemate to end. Regulation that is consistently enforced in the effort to achieve the long-term goal, such as cleaner air, is preferable to a moving target.
A third position is that government is not necessarily a bad thing. Such a “federalist” philosophy might assert that centralized government provides an array of benefits for citizens. For example, in the Federalist Papers, Alexander Hamilton emphasized that a well-intentioned central government was not the enemy of liberty but rather the best means of securing the rights achieved through the passage of the Constitution. He and others also pointed out an advantage of federal over state government—a large republic such as the United States would actually benefit from a larger electorate and a larger pool of qualified leaders, and competing state and regional interests would be more balanced under federal regulation.
Acceptance of one or the other of these philosophies may lean an administration towards more or less regulation, as well as calibrating its response to aggressive lobbying by industries seeking to reduce regulation they view as burdensome. The results for the environment and/or public health can sometimes be disastrous.
Questions of regulation and political influence have become even more sensitive in recent years, following the decision in Citizens United v. Federal Election Commission (2010). In , the U.S. Supreme Court ruled 5–4 that laws preventing corporations from using general treasury funds for political advertising violated the First Amendment’s guarantee of freedom of speech. In other words, the government may not prevent corporations from spending money to support or oppose candidates in elections. With this decision, the Court invalidated numerous campaign finance reform laws. Many commentators think the decision opened the floodgates for special-interest groups to spend without limit in U.S. elections.
What does Citizens United mean for businesses? Business entities may now seek to persuade the voting public by spending an unlimited amount of money on political ads, whether through social media or traditional print and broadcast media. Businesses opposed to government regulation can spend without limit to help elect candidates whose position on reduced regulation is the same as theirs, thereby increasing the pressure on Congress to deregulate. Many think the profusion of money in U.S. politics is one cause of the partisan divide that often paralyzes the legislative branch and unduly influences the executive branch.
One of the sponsors of the corporate governance law known as the Sarbanes-Oxley Act (SOX), Senator Paul Sarbanes (D-MD), is among those who would like to see financial limits on business lobbying groups and political action committees, several of which are attempting to repeal current regulations such as SOX, which is tough on business fraud. Sarbanes-Oxley, passed in 2002 in response to several highly publicized corporate fraud cases that took down companies such as Enron and WorldCom, mandates reporting transparency in areas ranging from finance to accounting to supply chain activities. Essentially, it ensures that we now consider it both unethical and illegal to deceive shareholders, creditors, and the public at large.
Sarbanes-Oxley applies to publicly traded companies and is enforced by the Securities and Exchange Commission. It covers multiple topics such as the independence of corporate boards and outside certified public accounting firms that audit corporations. The law also makes the CEO and CFO personally responsible for errors in annual audits—thus making it harder to “cook the books.” Finally, it prohibits company loans to executives and grants protection to whistleblowers.
Some critics thought compliance with SOX might be too costly. However, after more than a decade of enforcement, it is now clear to most that Sarbanes-Oxley was, and is, a necessary regulatory step. It has allowed for significant progress to be made in slowing down the kind of unethical conduct that led to the Enron fraud. Although SOX technically applies only to publicly traded companies, many private companies also adopt SOX-style internal controls and transparency, as do not-for-profits such as universities and hospitals.
### Summary
One challenge in a free enterprise system is balancing the need for government regulation and private-sector corporate managers’ need for independence in running their businesses. The Sarbanes-Oxley Act tries to strike this balance by mandating transparency in corporate governance. This debate also includes the question whether businesses operating in the private sector ought to do public good on their own, regardless of whether the government mandates it. For example, many companies make a commitment to keep the environment clean, and to do so by going above and beyond what the law requires.
### Assessment Questions
### Endnotes
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# The Impact of Culture and Time on Business Ethics
## Introduction
Ethics is a construct of considerable significance to human beings. Some suggest ethics emerged to allow families and clans to cooperate in harsh environments. Others point to its use in governing trade and commerce, even simple bartering. Still others say ethical behavior is wired into the cognitive structures of the brain, explaining why we find codes of ethics and morality in texts as diverse as the Code of Hammurabi (a Babylonian code of law nearly four thousand years old), the Bible, the Napoleonic Code, and The Analects of Confucius, all of which outline ways for people to live together in society.
Whatever its origin, ethics has almost certainly existed throughout human time and varied with language, culture, history, and geography (). Are there underlying values that transcend time and place, however? If so, do the protocols of business ethics embody these values? For instance, we see respect for others in Dubai, where tea accompanies negotiations; in Tokyo, where formal words and bows come first; and in Lima, where polite inquiries about the family precede business. Is respect, therefore, a universal value?
In short, to what degree is any code of business ethics conditioned by culture, time, and geography? Given that individuals are responsible only for their own behavior, is it possible for business ethics to be universal? |
# The Impact of Culture and Time on Business Ethics
## The Relationship between Business Ethics and Culture
### Learning Objectives
By the end of this section, you will be able to:
1. Describe the processes of acculturation and enculturation
2. Explain the interaction of business and culture from an ethical perspective
3. Analyze how consumerism and the global marketplace might challenge the belief system of an organization
It has been said that English is the language of money and, for that reason, has become the language of business, finance, trade, communication, and travel. As such, English carries with it the values and assumptions of its native speakers around the world. But not all cultures share these assumptions, at least not implicitly. The sick leave or vacation policies of a British investment bank, for instance, may vary greatly from those of a shoe manufacturer in Laos. Because business and capitalism as conducted today have evolved primarily from European origins and profits are measured against Western standards like the U.S. dollar, the ethics that emerges from them is also beholden primarily (but not exclusively) to Western conceptions of behavior. The challenge for business leaders everywhere is to draw out the values of local cultures and integrate the best of those into their management models. The opportunities for doing so are enormous given the growing impact of China, India, Russia, and Brazil in global commerce. The cultures of these countries will affect the dominant business model, possibly even defining new ethical standards.
### Business Encounters Culture
To understand the influence of culture on business ethics, it is essential to understand the concepts of enculturation and acculturation. In its most basic anthropological sense, enculturation refers to the process by which humans learn the rules, customs, skills, and values to participate in a society. In other words, no one is born with culture; all humans, regardless of their origin, have to learn what is considered appropriate behavior in their surrounding cultures. Whereas enculturation is the acquisition of any society’s norms and values, acculturation refers specifically to the cultural transmission and socialization process that stems from cultural exchange. The effects of this blending of cultures appear in both the native (original) culture and the host (adopted) culture. Historically, acculturation has often been the result of military or political conquest. Today, it also comes about through economic development and the worldwide reach of the media.
One of the earliest real estate deals in the New World exemplifies the complexity that results when different cultures, experiences, and ethical codes come into contact. No deed of sale remains, so it is difficult to tell exactly what happened in May 1626 in what is now Manhattan, but historians agree that some kind of transaction took place between the Dutch West India Company, represented by Pieter Minuit, the newly appointed director-general of the New Netherland colony, and the Lenape, a Native American tribe (). Which exact Lenape tribe is unknown; its members may have been simply passing through Manhattan and could have been the Canarsee, who lived in what is today southern Brooklyn. Legend has it that the Dutch bought Manhattan island for $24 worth of beads and trinkets, but some historians believe the natives granted the Dutch only fishing and hunting rights and not outright ownership. Furthermore, the price, acknowledged as “sixty guilders” (about $1000 today), could actually represent the value of items such as farming tools, muskets, gun powder, kettles, axes, knives, and clothing offered by the Dutch. Clearly, the reality was more nuanced than the legend.
The “purchase” of Manhattan is an excellent case study of an encounter between two vastly different cultures, worldviews, histories, and experiences of reality, all within a single geographic area. Although it is a misconception that the native peoples of what would become the United States did not own property or value individual possession, it is nevertheless true that their approach to property was more fluid than that of the Dutch and of later settlers like the English, who regarded property as a fixed commodity that could be owned and transferred to others. These differences, as well as enforced taxation, eventually led to war between the Dutch and several Native American tribes. European colonization only exacerbated hostilities and misunderstandings, not merely about how to conduct business but also about how to live together in harmony.
Two major conditions affect the relationship between business and culture. The first is that business is not culturally neutral. Today, it typically displays a mindset that is Western and primarily English-speaking and is reinforced by the enculturation process of Western nations, which tends to emphasize individualism and competition. In this tradition, business is defined as the exchange of goods and services in a dedicated market for the purpose of commerce and creating value for its owners and investors. Thus, business is not open ended but rather directed toward a specific goal and supported by beliefs about labor, ownership, property, and rights.
In the West, we typically think of these beliefs in Western terms. This worldview explains the misunderstanding between Minuit, who assumed he was buying Manhattan, and the tribal leaders, who may have had in mind nothing of the sort but instead believed they were granting some use rights. The point is that a particular understanding of and approach to business are already givens in any particular culture. Businesspeople who work across cultures in effect have entered the theater in the middle of the movie, and often they must perform the translation work of business to put their understanding and approach into local cultural idioms. One example of this is the fact that you might find sambal chili sauce in an Indonesian McDonald’s in place of Heinz ketchup, but the restaurant, nevertheless, is a McDonald’s.
The second condition that affects the relationship between business and culture is more complex because it reflects an evolving view of business in which the purpose is not solely generating wealth but also balancing profitability and responsibility to the public interest and the planet. In this view, which has developed as a result of political change and economic globalization, organizations comply with legal and economic regulations but then go beyond them to effect social change and sometimes even social justice. The dominant manufacture-production-marketing-consumption model is changing to meet the demands of an increasing global population and finite resources. No longer can an organization maintain a purely bottom-line mentality; now it must consider ethics, and, therefore, social responsibility and sustainability, throughout its entire operation. As a result, local cultures are assuming a more aggressive role in defining their relationship with business prevalent in their regions.
Had this change taken place four centuries ago, that transaction in Manhattan might have gone a little differently. However, working across cultures can also create challenging ethical dilemmas, especially in regions where corruption is commonplace. A number of companies have experienced this problem, and globalization will likely only increase its incidence.
### Balancing Beliefs
What about the ethical dimensions of a business in a developed country engaging in commerce in an environment where corruption might be more rampant than at home? How can an organization remain true to its mission and what it believes about itself while honoring local customs and ethical standards? The question is significant because it goes to the heart of the organization’s values, its operations, and its internal culture. What must a business do to engage with local culture while still fulfilling its purpose, whether managers see that purpose as profitability, social responsibility, or a balance between the two?
Most business organizations hold three kinds of beliefs about themselves. The first identifies the purpose of business itself. In recent years, this purpose has come to be the creation not just of shareholder wealth but also of economic or personal value for workers, communities, and investors. The second belief defines the organization’s mission, which encapsulates its purpose. Most organizations maintain some form of mission statement. For instance, although IBM did away with its formal mission statement in 2003, its underlying beliefs about itself have remained intact since its founding in 1911. These are (1) dedication to client success, (2) innovation that matters (for IBM and the world), and (3) trust and personal responsibility in all relationships. President and chief executive officer (CEO) Ginni Rometty stated the company “remain[s] dedicated to leading the world into a more prosperous and progressive future; to creating a world that is fairer, more diverse, more tolerant, more just.”
Finally, businesses also go through the process of enculturation; as a result, they have certain beliefs about themselves, drawn from the customs, language, history, religion, and ethics of the culture in which they are formed. One example of a company whose ethics and ethical practices are deeply embedded in its culture is Merck & Co., one of the world’s largest pharmaceutical companies and known for its strong ethical values and leadership. As its founder George W. Merck (1894–1957) once stated, “We try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.” Culture is deeply rooted, but businesses may make their own interpretations of its accepted norms.
Our beliefs are also challenged when a clash occurs between a legal framework and cultural norms, such as when a company feels compelled to engage in dubious and even illegal activities to generate business. For example, the German technology company Siemens has paid billions of dollars in fines and judgments for bribing government officials in several countries. Although some local officials may have expected to receive bribes to grant government contracts, Siemens was still bound by national and international regulations forbidding the practice, as well as by its own code of ethics. How can a company remain true to its mission and code of ethics in a highly competitive international environment ()?
Business performance is a reflection of what an organization believes about itself, as in the IBM and Merck examples. Those beliefs, in turn, spring from what the individuals in the organization believe about it and themselves, based on their communities, families, personal biographies, religious beliefs, and educational backgrounds. Unless key leaders have a vision for the organization and themselves, and a path to achieving it, there can be no balance of beliefs about profitability and responsibility, or integration of business with culture. The Manhattan purchase was successful to the degree that Minuit and the tribal leaders were willing to engage in an exchange of mutual benefit. Yet this revealed a transaction between two very different commercial cultures. Did each group truly understand the other’s perception of an exchange of goods and services? Furthermore, did the parties balance personal and collective beliefs for the greater good? Given the distinctions between these two cultures, would that even have been possible?
### Consumerism and the Global Marketplace
To paraphrase the ancient Greek philosopher Heraclitus (c. 535–475 BCE), the one constant in life is change. Traditional norms and customs have changed as the world’s population has grown more diverse and urbanized, and as the Internet has made news and other resources readily available. The growing emphasis on consumerism—a lifestyle characterized by the acquisition of goods and services—has meant that people have become defined as “consumers” as opposed to citizens or human beings. Unfortunately, this emphasis eventually leads to the problem of diminishing marginal utility, with the consumer having to buy an ever-increasing amount to reach the same level of satisfaction.
At the same time, markets have become more diverse and interconnected. For example, South Korean companies like LG and Samsung employ 52,000 workers in the United States, and many U.S. companies now manufacture their products abroad. Such globalization of their domestic markets has allowed U.S. consumers to enjoy products from around the world, but it also presents ethical challenges. The individual consumer, for instance, may benefit from lower prices and a greater selection of goods, but only by supporting a company that might be engaged in unethical practices in its overseas supply or distribution chains. Producers’ choices about wages, working conditions, environmental impact, child labor, taxation, and plant safety feature in the creation of each product brought to market. Becoming aware of these factors requires consumers to engage in an investigation of the business practices of those parties they will patronize and exercise a certain amount of cultural and ethical sensitivity.
In considering the ethical challenges presented by the outsourcing of production to lower costs and increase profits, let us return to the example of IBM. IBM has a responsibility to provide technology products of high quality at affordable prices in line with its beliefs about client success, innovation, and trust. If it achieved these ends in a fraudulent or otherwise illegal way, it would be acting irresponsibly and in violation of both U.S. and host country laws and as well as the company’s own code of ethics. These constraints appear to leave little room for unethical behavior, yet in a globalized world of intense competition, the temptation to do anything possible to carve out an advantage can be overpowering. This choice between ends and means is reminiscent of the philosophers Aristotle and Kant, both of whom believed it impossible to achieve just ends through unjust means.
But what about consumer responsibility and the impact on the global community? Western consumers tend to perceive globalization as a phenomenon intended to benefit them specifically. In general, they have few compunctions about Western businesses offshoring their manufacturing operations as long as it ultimately benefits them as consumers. However, even in business, ethics is not about consumption but rather about human morality, a greater end. Considering an expansion of domestic markets, what feature of this process enables us to become more humane rather than simply pickier consumers or wasteful spenders? It is the opportunity to encounter other cultures and people, increasing our ethical awareness and sensitivity. Seen in this way, globalization affects the human condition. It raises no less a question than what kind of world we want to leave to our children and grandchildren.
### Summary
Culture has a tremendous influence on ethics and its application in a business setting. In fact, we can argue that culture and ethics cannot be separated, because ethical norms have been established over time by and make sense to people who share the same background, language, and customs. For its part, business operates within at least two cultures: its organizational culture and the wider culture in which it was founded. When a business attempts to establish itself in a new environment, a third culture comes into play. With increasingly diverse domestic and global markets and the spread of consumerism, companies must consider the ethical implications of outsourcing production and resist the temptation to look the other way when their values are challenged by the reality of overseas supply or distribution chains.
### Assessment Questions
### Endnotes
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# The Impact of Culture and Time on Business Ethics
## Business Ethics over Time
### Learning Objectives
By the end of this section, you will be able to:
1. Describe the ways ethical standards change over time
2. Identify major shifts in technology and ethical thinking over the last five hundred years
3. Explain the impact of government and self-imposed regulation on ethical standards and practices in the United States
Besides culture, the other major influence in the development of business ethics is the passage of time. Ethical standards do not remain fixed; they transform in response to evolving situations. Over time, people change, technology advances, and cultural mores (i.e., acquired culture and manners) shift. What was considered an appropriate or accepted business practice one hundred or even fifty years ago may not carry the same moral weight it once did. However, this does not mean ethics and moral behavior are relative. It simply acknowledges that attitudes change in relationship to historical events and that cultural perspective and the process of acculturation are not stagnant.
### Shifts in Cultural and Ethical Standards
We find an example of changing cultural mores in the fashion industry, where drastic evolution can occur even over ten years, let alone a century. The changes can be more than simply stylistic ones. Clothing reflects people’s view of themselves, their world, and their values. A woman in the first half of the twentieth century might be very proud to wear a fox stole with its head and feet intact (). Today, many would consider that an ethical faux pas, even as the use of fur remains common in the industry despite active campaigns against it by organizations such as People for the Ethical Treatment of Animals. At the same time, cosmetics manufacturers increasingly pledge not to test their products on animals, reflecting changing awareness of animals’ rights.
Bias is built into the human psyche and expressed through our social structures. For this reason, we should avoid making snap judgments about past eras based on today’s standards. The challenge, of course, is to know which values are situational—that is, although many values and ethics are relative and subjective, others are objectively true, at least to most people. We can hardly argue in favor of slavery, for example, no matter in which culture or historical era it was practiced. Of course, although some values strike us as universal, the ways in which they are interpreted and applied vary over time, so that what was once acceptable no longer is, or the reverse.
Thus, we acknowledge that different eras upheld different ethical standards, and that each of these standards has had an impact on our understanding of ethics today. But this realization raises some basic questions. First, what should we discard and what should we keep from the past? Second, on what basis should we make this decision? Third, is history cumulative, progressing onward and upward through time, or does it unfold in different and more complicated ways, sometimes circling back upon itself?
The major historical periods that have shaped business ethics are the age of mercantilism, the Industrial Revolution, the postindustrial era, the Information Age, and the age of economic globalization, to which the rise of the Internet contributed significantly. Each of these periods has had a different impact on ethics and what is considered acceptable business practice. Some economists believe there may even be a postglobalization phase arising from populist movements throughout the world that question the benefits of free trade and call for protective measures, like import barriers and export subsidies, to reassert national sovereignty. In some ways, these protectionist reactions represent a return to the theories and policies that were popular in the age of mercantilism.
Unlike capitalism, which views wealth creation as the key to economic growth and prosperity, mercantilism relies on the theory that global wealth is static and, therefore, prosperity depends on extracting wealth or accumulating it from others. Under mercantilism, from the sixteenth to the eighteenth centuries, the exploration of newly opened markets and trade routes coincided with the impulse to colonize, producing an ethical code that valued acculturation by means of trade and often brute force. European powers extracted raw commodities like cotton, silk, diamonds, tea, and tobacco from their colonies in Africa, Asia, and South America and brought them home for production. Few questioned the practice, and the operation of business ethics consisted mainly of protecting owners’ interests.
During the Industrial Revolution and the postindustrial era, in the nineteenth and early twentieth centuries, business focused on the pursuit of wealth, the expansion of overseas markets, and the accumulation of capital. The goal was to earn as high a profit as possible for shareholders, with little concern for outside stakeholders. Charles Dickens (1812–1870) famously exposed the conditions of factory work and the poverty of the working class in many of his novels, as did the American writer Upton Sinclair (1878–1968). Although these periods witnessed extraordinary developments in science, medicine, engineering, and technology, the state of business ethics was perhaps best described by critics like Ida Tarbell (1857–1944), who said of industrialist John D. Rockefeller (1839–1937) (), “Would you ask for scruples in an electric dynamo?”
With the advent of the Information and Internet ages in the late twentieth and early twenty-first centuries, a code of professional conduct developed for the purpose of achieving goals through strategic planning. In the past, ethical or normative rules were imposed from above to lead people toward right behavior, as the company defined it. Now, however, more emphasis is placed on each person at a firm embracing ethical standards and following those dictates to arrive at the appropriate behavior, whether at work or when off the clock. The creation of human resources departments (increasingly now designated as human capital or human assets departments) is an outgrowth of this philosophy, because it reflects a view that humans have a unique value that ought not be reduced simply to the notion that they are instruments to be manipulated for the purposes of the organization. Millennia earlier, Aristotle referred to “living tools” in a similar but critical way. Although one characteristic of the information age—access to information on an unprecedented scale—has transformed business and society (and some say made it more egalitarian), we must ask whether it also contributes to human flourishing, and to what extent business should concern itself with this goal.
### A Matter of Time
What effect does time have on business ethics, and how is this effect achieved? If we accept that business today has two purposes—profitability and responsibility—we might assume that business ethics is in a much better position now than in the past to affect conduct across industries. However, much of the transformation of business over time has been the result of direct government intervention; one recent example is the Dodd–Frank Wall Street Reform and Consumer Protection Act that followed the financial crisis of 2008. Yet, despite such regulation and increased management vigilance in the form of ethics training, compliance reporting, whistleblower programs, and audits, it is tempting to conclude that business ethics is in worse shape than ever. The Information Age and the Internet may even have facilitated unethical behavior by making it easier to move large sums of money around undetected, by enabling the spread of misinformation on a global scale, and by exposing the public to the theft and misuse of vast stores of personal data gathered by companies as diverse as Equifax and Facebook.
However, since the mercantile era, there has been a gradual increase in awareness of the ethical dimension of business. As we saw in the preceding chapter, businesses and the U.S. government have debated and litigated the role of corporate social responsibility throughout the twentieth century, first validating the rule of shareholder primacy in Dodge v. Ford Motor Company (1919) and then moving away from a strict interpretation of it in Shlensky v. Wrigley (1968). In Dodge v. Ford Motor Company (1919), the Michigan Supreme Court famously ruled that Ford had to operate in the interests of its shareholders as opposed to its employees and managers, which meant prioritizing profit and return on investment. This court decision was made even though Henry Ford had said, “My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this we are putting the greatest share of our profits back in the business.” By mid-century and the case of Shlensky v. Wrigley (1968), the courts had given boards of directors and management more latitude in determining how to balance the interests of stakeholders. This position was confirmed in the more recent case of Burwell v. Hobby Lobby (2014), which held that corporate law does not require for-profit corporations to pursue profit at the expense of everything else.
Governmental regulation and legal interpretations have not been the only avenues of change over the past century. The growing influence of consumers has been another driving force in recent attempts by businesses to self-regulate and voluntarily comply with global ethical standards that ensure basic human rights and working conditions. The United Nations (UN) Global Compact is one of these standards. Its mission is to mobilize companies and stakeholders to create a world in which businesses align their strategies and operations with a set of core principles covering human rights, labor, the environment, and anticorruption practices. The Global Compact is a “voluntary initiative based on CEO commitments to implement universal sustainability principles and to undertake partnerships in support of UN goals.” Of course, as a voluntary initiative, the initiative does not bind corporations and countries to the principles outlined in it.
Whenever we look at the ways in which our perception of ethical business practice changes over time, we should note that such change is not necessarily good or bad but rather a function of human nature and of the ways in which our views are influenced by our environment, our culture, and the passage of time. Many of the examples discussed thus far illustrate a gradual increase in social awareness due to the actions of individual leaders and the historical era in which they found themselves. This does not mean that culture is irrelevant, but that human nature exists and ethical inclination is part of that nature. Historical conditions may allow this nature to be expressed more or less fully. We might measure ethical standards according to the degree they allow human compassion to direct business practice or, at least, make it easier for compassion to hold sway. We might then consider ethics not just a nicety but a constitutive part of business, because it is an inherent human trait. This is a perspective Kant and Rawls might have agreed with. Ethical thinking over time should be measured, deliberate, and open to examination.
### Summary
As a function of culture, ethics is not static but changes in each new era. Technology is a driving force in ethical shifts, as we can see in tracing changes from the age of mercantilism to the Industrial Revolution to the postindustrial era and the Information Age. Some of the most successful recent efforts to advance ethical practices have come from influences outside industry, including government regulation and consumer pressure.
### Assessment Questions
### Endnotes
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# The Impact of Culture and Time on Business Ethics
## The Influence of Geography and Religion
### Learning Objectives
By the end of this section, you will be able to:
1. Describe the impact of geography on global relationships and business ethics
2. Explain how religion informs ethical business practice around the world
Business ethics guides people to practice commerce professionally and honestly and in a way that permits as many as possible to flourish. However, as we have seen, the ethical standards by which business is conducted can vary depending on culture and time. Geography and regional cultural practices also play a significant role. As global markets become increasingly connected and interdependent, we navigate more of our valued relationships across international boundaries.
### Business as Global Relationships
Global relationships teach us to be sensitive not just to other languages and customs but also to other people’s worldviews. A company looking to move its production to another country may be interested in setting up supply, distribution, and value chains that support human rights, worker safety, and equity for women, while the local culture is excited about the economic benefits it will gain from the company’s investment in employment and the local tax base and infrastructure. These goals need not be in conflict, but they must be integrated if the company is to reach an ethically sound agreement with the host country. Dialogue and openness are crucial to this process, just as they are in every other kind of relationship.
Geography affects a business’s relationship with almost any type of stakeholder, from stockholders and employees to customers, the government, and the environment. Hence the growing importance of localization, the process of adapting a product for non-native environments and languages, especially other nations and cultures. Such adaption often starts with language translation but may include customizing content or products to the tastes and consumption habits of the local market; converting currencies, dates, and other measurements to regional standards; and addressing community regulations and legal requirements.
Research has shown that successful leaders and organizations with global responsibilities “need to understand and exceed the leadership expectations in the cultures they are interacting with.” In its study of leadership effectiveness and organizational behavior across cultures, the GLOBE leadership project of the Beedie School of Business at Simon Fraser University in Vancouver, Canada, found leader effectiveness is contextual and strongly connected to cultural and organizational values. The study also concluded that, although leaders learn to adapt to cultural expectations, they often have to exceed those expectations to be truly successful. In other words, business has a role beyond merely reflecting the culture in which it operates.
One element of business culture you may not realize is based on local custom and culture is the notion of time. Unlike the notion of historical time discussed in the previous module, the concept of time in business—people’s approach to punctuality, for example—varies widely in different cultures. To put it in economic terms, all cultures share the resource of time, but they measure and use that resource very differently. These differences might significantly affect the foundation of any business relationships you may want to establish around the world. For this and many other reasons, basic cultural literacy must be at the forefront of any ethical system that governs business behavior.
Consider, for example, that in the United States, we might speak of “a New York minute,” “the nick of time,” “the eleventh hour,” and so on. Such expressions make sense in a culture where the enculturation process emphasizes competition and speed. But even among Western business cultures, conceptions of time can differ. For example, the Italian subito and the German sofort both refer to something happening “at once” or “straightaway,” but with different expectations about when the action, in fact, will take place. And some cultures do not measure the passage of time at all.
Generally, the farther east and south we travel from the United States, the more time becomes relational rather than chronological. In Kenya, tutaonana baadaye means “see you later,” although “later” could be any time, open to context and interpretation. The nomadic inhabitants of North Africa known as the Tuareg sit down to tea before discussing any business, and as a rule, the longer the time spent in preliminary conversation, the better. A Tuareg proverb has it that the first cup of tea is bitter like life, the second sweet like love, and the third gentle like death. Compare this with the Western attitude that “time flies” and “time is money.” Finally, Westerners doing business in some English-speaking African countries have learned that if they want something immediately, they have to say “now now” as “now” by itself does not convey the desired sense of immediacy.
Another aspect of international business relationships is the question of personal space. In Nigeria, for example, standing either too close or too far from someone to whom you are speaking might be seen as impolite. In some cultures, touch is important in establishing connection, whereas in others it may be frowned upon. As a general rule, “contact” cultures—where people stand closer together when interacting, touch more often, and have more frequent direct eye contact—are found in South America, the Middle East, and southern Europe, while “noncontact” cultures—where eye contact and touching are less frequent, and there is less physical proximity during interactions—are in northern Europe, the Far East, and the United States. So, the seemingly innocuous gesture of a handshake to cement a new business relationship might be viewed very differently depending on where it occurs and who is shaking hands.
All of this speaks to the awareness and cultural sensitivity that must be exhibited by an ethical manager doing business in a region different from his or her own. Certain mistakes, particularly accidental ones and those not motivated by malicious design, will likely be forgiven. Still, a global ethical demeanor requires that we be as conscious as possible as to what constitutes courtesy wherever we find ourselves conducting business.
### Religion and Ethics
A major factor in the difference that geography and culture make in our ethical standards is the influence of religious practice. For example, just as the current debate over the redistribution of goods and services has Christian roots, so the Industrial Revolution in England and northern Europe looked to Protestant Christianity in particular for the values of frugality, hard work, industriousness, and simplicity. Until the seventeenth century, religion and ethics were nearly inseparable. Many believed that people could not be persuaded to do the right thing without the threat of eternal damnation. The Enlightenment’s attempt to peel religion away from ethics was short-lived, with even Kant acknowledging the need to base morality on something beyond the rationalism of his time.
Religions are neither uniform nor monolithic, of course, nor are they unchanging over time. The core of Christianity, for instance, does not change, but its emphasis in any given period does. Moreover, the state or crown often worked side by side with the church in the past, choosing certain teachings over others to promote its own interests. This cooperation was evident during the era of mercantilism when the issue of personhood, or the privilege of having the freedom and capacity to make decisions and act morally, was hotly debated in the context of slavery, a practice that had been going on for centuries in the Christian West and the Islamic East. Although the church officially opposed slavery, the conquest of new lands was justified theologically as bringing salvation and civilization to populations considered savage and unsophisticated. Christianity was thought to save them from their pagan ways just as Islam and the message of the prophet saved unbelievers in the East. Behavioral norms for the clergy were founded and supported by the divine right of kings and the authority of religious tradition (). Commerce and trade followed these norms.
By the time of the Industrial Revolution and postindustrial eras, Protestantism and its values of frugality, hard work, and simplicity (the “Protestant ethic”) had helped create a culture of individualism and entrepreneurship in the West, particularly in Great Britain and the United States. In fact, the Protestant work ethic, religion, and a commitment to hard work all are intertwined in the business history of both these countries. One example of this singular association is John D. Rockefeller, who, in the late nineteenth and early twentieth centuries, commanded the attention given today to Bill Gates and Warren Buffet as emblems of free enterprise.
No one was more convinced of the link between religious faith and success in business than Rockefeller, who clung to his Baptist faith from his early years until his death in 1937. The richest person of his age, Rockefeller earned his fortune as the founder and major shareholder of Standard Oil but always regarded his billions as a public trust rather than his personal prize. “As his fortune grew big enough to beggar the imagination, [Rockefeller] retained his mystic faith that God had given him money for mankind’s benefit . . . or else why had He lavished such bounty on him?” Despite criticism, even from family members, Rockefeller donated enormous sums to many causes, especially medical research (in the form of Rockefeller University) and higher education. He financed the founding of the University of Chicago as an institution that would train students to pursue their professional and business interests under the guidance of Christian faith.
Still, as Ida Tarbell pointed out in her work, Rockefeller’s business ethics were not above reproach. In making his fortune, he pursued markedly Darwinian practices revealing a conviction in survival of the fittest. Later in life, and as his philanthropic motivation increased, his endowment of several charitable causes more fully reflected his belief as to how God wished him to dispose of a sizable portion of his wealth.
Of course, Rockefeller’s concept of stewardship—an attitude toward money and capital that stresses care and responsibility rather than pure utility—can be found across cultures and religions in various forms, and there are many similarities among the Judaic, Islamic, and Christian views of money and its use toward a greater end. All three of these religions teach that no harm should be done to others, nor should people be treated as means toward a material end like wealth. Yet what role does a religious concept of stewardship play in the ethics of the twenty-first century? The Enlightenment attempted to separate religion and ethics but could not. Are the two concepts inextricably linked? Might the business leaders of today succeed where the Enlightenment failed?
Although religious practices and cultural assumptions remain strongly in place, fewer people in the West today profess a religion than in the past. Does this development affect the way you approach business relationships and conduct negotiations? Might we see a universal, secular code of ethics developing in place of religion? If so, how would it accommodate the differences across time, regions, and cultures discussed in this chapter? The Universal Declaration of Human Rights, adopted by the United Nations General Assembly in December 1948, contains a list of basic human rights such as the right to life, liberty, due process, religion, education, marriage, and property. Business ethics will have to balance all these factors when adopting standards of conduct and local practices.
### Summary
Business is primarily about relationships—with employees, business partners, and customers and clients. Ethical standards and practices governing these relationships depend on the environment they exist in, an environment that, in turn, depends on additional factors such as geography and religion. Religion’s role in business is less certain today; we are perhaps more likely to see a universal, secular code of ethics develop than to see religion serve as common ground for different cultures to come together.
### Assessment Questions
### Endnotes
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# The Impact of Culture and Time on Business Ethics
## Are the Values Central to Business Ethics Universal?
### Learning Objectives
By the end of this section, you will be able to:
1. Explain the difference between relative and absolute ethical values
2. Discuss the degree to which compliance is linked with organizational responsibility and personal values
3. Identify the criteria for a system of normative business ethics
4. Evaluate the humanistic business model
One of the perennial themes in business ethics—indeed, in ethics in general—is the difference between relative and absolute values. Is it possible to identify a set of universal values that is consistent across cultures and time? We might begin with always honoring the terms of a contract, consistently treating customers and partners with honesty, and never cheating. Where could we go from there? No matter our culture, geography, or time, could we identify some basic normative behaviors to govern business conduct in general?
### Absolute Values versus Relative Values
To put this question another way, is there a set of universal values that all can endorse? Are there “human values” that apply everywhere despite differences in time, place, and culture ()? If not, and if ethical standards are relative, are they worth having? Again, the UN Universal Declaration of Human Rights is a useful starting point for the way business can conduct itself. Let us look at how it is possible to align business with human rights in such a way that both profitability and responsibility are honored across the globe.
According to the Union Internationale des Avocats, an international, nongovernmental association of legal professionals, corruption “corrodes the democratic principles of accountability, equality, and transparency. It poses an extremely high cost to the citizenry, it saps the credibility of government and it places companies under an unbearable economic burden.” The UN Convention Against Corruption has called corruption “an insidious plague” that exists everywhere and “hurts the poor disproportionately by diverting funds intended for development, undermining a Government’s ability to provide basic services, feeding inequality and injustice and discouraging foreign aid and investment.” Corruption appears to exist everywhere, so it would seem to require a persistent and consistent answer everywhere. Can business ethics provide one?
Business ethics exists on three levels: the individual, the organizational, and the societal. At the organizational and societal levels, laws, regulations, and oversight can go a long way toward curtailing illegal activity. Business ethics motivates managers to (1) meet legal and industry governing and reporting requirements and (2) shape corporate culture so that corrupt practices such as bribery, embezzlement, and fraud have no place in the organization. In the ideal case, the organization’s culture never allows the latter, because scandals not only damage reputations but they make companies and countries much less attractive to investors. Corruption is expensive: According to the World Economic Forum, no less than $2 trillion is lost each year worldwide as a result of corruption, a staggering waste not just of resources but of credibility for business in general.
At the individual level, when corruption takes place, it is a matter of conscience. Corruption can be defeated only by individuals acting in accordance with their conscience and being supported by systems and corporate culture that encourage such action. Transparency, whistleblower programs, ethics training, and modeling of appropriate behavior by upper management can create the conditions for employees to act ethically, but conscience is a personal phenomenon. So, although the work of national, regional, and international organizations can limit corruption through enforcement and the prosecution of cases (as was the case with the revelation of the so-called Panama Papers), corruption will not be reduced in any significant way unless efforts have been made to form individual conscience and teach practical ways to act on it.
Although ethical practice has been directly influenced by religion, as noted, ethics is not religion and religious belief is not a prerequisite for a commitment to business ethics. For example, although what constitutes ethical behavior in Islamic society is strongly linked to religious values, secular philosophers can endorse a highly developed commitment to commercial ethics, too. Furthermore, most religions have high ethical standards but do not address many of the problems faced in business. And although a good system of law incorporates ethical standards, the law can and sometimes does deviate from what is ethical. Finally, in the same vein, ethics is not science. The social and natural sciences provide data to make better ethical choices, but science cannot tell people what they ought to do (nor should it).
Absolute values do exist. Abstaining from cheating customers, defrauding clients, lying, and murder are fairly objective ethical values; the reason for making any exceptions must be carefully laid out. Ethical systems, whether utilitarian, rights based, or based on natural law and virtue ethics, are attempts to translate absolute values like these into workable solutions for people. From these systems has emerged a basic set of ethical norms for the business world.
### Business Ethics and Compliance
A hallmark of any profession is the existence of ethical guidelines, often based on values like honesty, integrity, and objectivity. Organizational responsibility is fairly straightforward: Comply with applicable local, state, national, and international regulations. Compliance can be an immense task for industries like aerospace, pharmaceuticals, banking, and food production, due to the large number of employees involved, the certification of them that sometimes is necessary, and the requisite record keeping. Still, legal requirements are usually clear, as are the ways an organization can exceed them (as do, for example, companies such as Whole Foods, Zappos, and Starbucks). Personal responsibility is a different matter. It is either less clear what to do or harder to do it because of constant pressure to increase the organization’s profitability and the perception that “everybody else is doing it.”
In the United States, companies spend more than $70 billion annually on ethics training; worldwide, the figure is more than double that. Unfortunately, in the United States, much of this money is spent on merely meeting the minimum requirements of compliance, so that if there is ever a problem with the Department of Justice or the Securities and Exchange Commission, the organization is insulated from criticism or liability because its employees have engaged in the recommended training. Federal Sentencing Guidelines for felonies and serious misdemeanors now carry mandatory prison time for individual executives who are convicted. These guidelines also are designed to help organizations with compliance and reporting, and they introduce seven steps toward that end: (1) create a Code of Ethics, (2) introduce high-level oversight, (3) place ethical people in positions of authority, (4) communicate ethics standards, (5) facilitate employee reporting of misconduct, (6) react and respond to instances of misconduct, and (7) take preventive steps.
Many organizations focus on the letter of the law so that they can claim “good faith” in their effort to create an ethical environment. However, middle managers and employees often complain their ethics training consists of passing a computerized sexual harassment or fraud program once a year but that nothing is done to address issues in a substantive way or to change the culture of the organization, even those that have experienced problems. The focus still seems to be on organizational responsibility and compliance as opposed to individual responsibility and the formation of ethical conscience. We might argue that it is not the business of business to form people in their conscience, but the result of not doing so has become expensive for everyone concerned.
The damage done to an organization’s or government’s reputation due to scandal can be enormous and long lasting. The 2017 conviction for bribery and embezzlement of Lee Jae-yong, heir to the Samsung electronics empire, was part of a widespread corruption scandal that brought down the president of South Korea. Bribery was also at the heart of the FIFA (Fédération Internationale de Football Association) corruption scandal, in which soccer officials, marketing executives, and broadcasters were accused of racketeering, wire fraud, and money laundering by the U.S. Department of Justice in 2015. The Volkswagen emissions scandal also began in 2015, when the Environmental Protection Agency cited the German automaker for violating the Clean Air Act by cheating on emissions tests. To date, the fallout has cost the company nearly $30 billion in fines.
As the LIBOR (London Interbank Offered Rate) scandal, in which banks were manipulating rates to profit from trades, showed, ethical breakdowns often occur because systems fail or people make bad decisions, and sometimes both. In the case of LIBOR, the United Kingdom’s Serious Fraud Office determined there were inadequate systems of oversight in the setting of rates and that individual executives encouraged rate fixing, which led to the conviction of several traders, at least one of whom still maintains his innocence. The result was a staggering $6 billion cumulative fine for the banks involved (i.e., Barclay’s, J.P. Morgan Chase, Citicorp, Royal Bank of Scotland, and Deutsche Bank).
If there is anything to be learned from these scandals, it is that organizations will succumb to ethics crises if they do not pay attention to their organizational culture and foster their employees’ growth as moral beings. This is even more important in industries like banking that are more susceptible to unethical behavior because of the great sums of money that change hands. Compliance is important, but business managers must attempt to go above and beyond to clearly model and enforce the highest standards of ethical behavior.
### Normative Business Ethics
Normative business ethics should address systemic issues such as oversight and transparency as well as the character of individuals who make up the organization. Human flourishing may not be the immediate concern of business, but managers and employees have a significant impact on business performance. Giving employees common-sense advice and training in practical ways to counter unethical behavior, as well as ethical role models at the top of the organization, can be more effective than prevention. There are programs that do this, such as “Giving Voice to Values” at the Darden School of Business at the University of Virginia. These programs are effective for their ability to help individuals act on their principles. As effective as they may be, however, they beg the larger question not of how someone can act on what their conscience tells them but how to determine what their conscience is telling them in the first place.
One model of ethical behavior, sometimes called the humanistic business model, may provide the answer for businesses that wish to achieve the dual goal of human flourishing and responsible profits. In this model, organizations focus on employees as a vital part of the operation and support them in their professional training, health care, education, family responsibilities, and even spiritual concerns. Leaders create positive relationships with stakeholders, including their employees, to cultivate investor goodwill and because they believe in the underlying values of trust and authenticity. The influence of positive psychology is evident, and there is much to commend in this kinder approach to the job of management that makes an effort to establish “sustainable human welfare.” However, happy employees are one thing; the human flourishing identified by Aristotle and John Stuart Mill is quite another. What, then, is missing from humanistic business?
The problem is that if anything flourishes in this model, it is often the business rather than the employees. After all, free enterprise has the interests of the enterprise at heart. But employees are human beings first, which means any attempt to improve their welfare must begin by thinking of them as human beings rather than as employees. How can businesses do this?
One alternative is to put the humanities into business. Businesses currently rely heavily on data analytics, algorithms, and statistical analyses to drive decision-making. The use of these tools is often backed by social science research in consumer behavior, behavioral finance, and cognitive studies. But looking to the humanities to understand business is an opportunity to engage business in subjects and ideas that have a tremendous, if often overlooked, impact on people. After all, literature that has stood the test of time can provide tremendous insight into human behavior, and Homer or Shakespeare may be more relevant to contemporary executive leadership than a business seminar on how to motivate employees.
In fact, we could argue that anything that makes an impact on people should legitimately be within the scope of business. Richard DeGeorge (1933–) of the University of Kansas describes what adding the humanities to business education entails:
In DeGeorge’s humanities model, business ethics would not prepare students to do certain things, for which they likely will be trained by their employers, but to be certain persons. DeGeorge suggests that “a course in the philosophy of business would enable students to think about the foundations of business—its values, ends, purpose, and justification . . . philosophy could add a critical element to business education, an element that would keep business education always alive and prevent it from becoming an accepted, orthodox ideology.”
Finally, if normative business ethics is to recognize and, ultimately, be based on the individual, it must address another human trait: bias. Intellectual, emotional, and social biases affect all decision-making, including those of an ethical nature. Some bias is good, as in having a favorable disposition toward those who work hard in intellectually honest ways. Bias also rewards those who support and nurture the best elements of a culture, whether corporate, social, or political. But it becomes dangerous when people use it to blind themselves to the reality around them, reinforce hardened positions even in the face of contradictory evidence, and shirk their responsibility as moral beings.
An example of bias occurs when employees engage in unethical activity because it has been sanctioned by higher-ups. They abdicate personal responsibility by assigning blame elsewhere. However, no amount of rationalization of the fear of job loss, financial pressure, desire to please a supervisor, and the rest, can justify such behavior, because it diminishes moral agency, the self-awareness, freedom, and ability to make choices based on our perception of right and wrong. And such agency needs to be at the heart of business ethics. After all, we cannot make a commitment to serve customers, develop leaders, and improve life for all stakeholders unless there is freedom and moral agency, the necessary ingredients in establishing an attitude of concern, that is, respect for oneself and for others, including all appropriate stakeholders.
### Summary
Any system of business ethics must consider the processes of enculturation and acculturation as well as the fact that ethical standards may shift depending on geography or time, even if certain underlying ethical values (e.g., prohibitions against lying, fraud, or murder) may remain constant. It is usually in a business’s best interest to promote human flourishing within the organization, providing comprehensive training along a humanistic business model, which applies the social sciences to ensure profitability and responsibility in an organization as well as happy, productive employees.
### Assessment Questions
### Endnotes
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# What Employers Owe Employees
## Introduction
The 2020 Gender Diversity Index shows that many Fortune 1000 boards of directors still lack diversity. Women and minorities continue to be underrepresented at the chief executive officer (CEO) level too. Does this sameness merely look bad, or are there ethical and business reasons why top U.S. management should be more diverse ()?
A demographic disconnect between leadership and workforce influences working conditions in many ways. For example, if more women held leadership roles, would workplace sexual harassment have come to light before the #MeToo movement? Would more companies offer paid family leave? If minorities were better represented at the executive level, would corporate lobbyists advocate differently for immigration and health care policies? When 70 percent of boardroom seats are occupied by White men, who make up only 30 percent of the population, many people’s views, ideas, and opinions will go unheard in decisions that affect their lives and livelihoods. We have seen progress, but much remains to be accomplished. Does management have an ethical duty to try to diversify top leadership? Whatever individual responses we might offer to each of these questions, a significant theme in this chapter is that ethical behavior in the workplace is most effectively instituted when it is modeled by senior leadership.
### Endnotes
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# What Employers Owe Employees
## The Workplace Environment and Working Conditions
### Learning Objectives
By the end of this section, you will be able to:
1. Identify specific ethical duties managers owe employees
2. Describe the provisions of the Occupational Safety and Health Act
3. Identify Equal Employment Opportunity Commission protections, including those against sexual harassment at work
4. Describe how employees’ expectations of work have changed
All employees want and deserve a workplace that is physically and emotionally safe, where they can focus on their job responsibilities and obtain some fulfillment, rather than worrying about dangerous conditions, harassment, or discrimination. Workers also expect fair pay and respect for their privacy. This section will explore the ethical and legal duties of employers to provide a workplace in which employees want to work.
### Ethical Decision-Making and Leadership in the Workplace
A contemporary corporation always owes an ethical, and in some cases legal, duty to employees to be a responsible employer. In a business context, the definition of this responsibility includes providing a safe workplace, compensating workers fairly, and treating them with a sense of dignity and equality while respecting at least a minimum of their privacy. Managers should be ethical leaders who serve as role models and mentors for all employees. A manager’s job, perhaps the most important one, is to give people a reason to come back to work tomorrow.
Good managers model ethical behavior. If a corporation expects its employees to act ethically, that behavior must start at the top, where managers hold themselves to a high standard of conduct and can rightly say, “Follow my lead, do as I do.” At a minimum, leaders model ethical behavior by not violating the law or company policy. One who says, “Get this deal done, I don’t care what it takes,” may very well be sending a message that unethical tactics and violating the spirit, if not the letter, of the law are acceptable. A manager who abuses company property by taking home office supplies or using the company’s computers for personal business but then disciplines any employee who does the same is not modeling ethical behavior. Likewise, a manager who consistently leaves early but expects all other employees to stay until the last minute is not demonstrating fairness.
Another responsibility business owes the workforce is transparency. This duty begins during the hiring process, when the company communicates to potential employees exactly what is expected of them. Once hired, employees should receive training on the company rules and expectations. Management should explain how an employee’s work contributes to the achievement of company-wide goals. In other words, a company owes it to its employees to keep them in the loop about significant matters that affect them and their job, whether good or bad, formal or informal. A more complete understanding of all relevant information usually results in a better working relationship.
That said, some occasions do arise when full transparency may not be warranted. If a company is in the midst of confidential negotiations to acquire, or be acquired by, another firm, this information must be kept secret until a deal has been completed (or abandoned). Regulatory statutes and criminal law may require this. Similarly, any internal personnel performance issues or employee criminal investigations should normally be kept confidential within the ranks of management.
Transparency can be especially important to workers in circumstances that involve major changes, such as layoffs, reductions in the workforce, plant closings, and other consequential events. These kinds of events typically have a psychological and financial impact on the entire workforce. However, some businesses fail to show leadership at the most crucial times. A leader who is honest and open with the employees should be able to say, “This is a very difficult decision, but one that I made and will stand behind and accept responsibility for it.” To workers, euphemisms such as “right sizing” to describe layoffs and job loss only sounds like corporate doublespeak designed to help managers justify, and thereby feel better (and minimize guilt), about their (or the company’s) decisions. An ethical company will give workers advance notice, a severance package, and assistance with the employment search, without being forced to do so by law. Proactive rather than reactive behavior is the ethical and just thing to do.
Historically, however, a significant number of companies and managers failed to demonstrate ethical leadership in downsizing, eventually leading Congress to take action. The Worker Adjustment and Retraining Notification (WARN) Act of 1989 has now been in effect for almost three decades, protecting workers and their families (as well as their communities) by mandating that employers provide sixty days’ advance notice of mass layoffs and plant closings (). This law was enacted precisely because companies were not behaving ethically.
A report by the Cornell University Institute of Labor Relations indicated that, prior to passage of WARN, only 20 percent of displaced workers received written advance notice, and those who did received very short notice, usually a few days. Only 7 percent had two months’ notice of their impending displacement. Employers typically preferred to get as many days of work as possible from their workforces before a mass layoff or closing, figuring that workers might reduce productivity or look for other jobs sooner if the company were transparent and open about its situation. In other words, when companies put their own interests and needs ahead of the workforce, we can hardly call that ethical leadership.
Other management actions covered by WARN include outsourcing, automation, and artificial intelligence in the workplace. Arguably, a company has an ethical duty to notify workers who might be adversely affected even if the WARN law does not apply, demonstrating that the appropriate ethical standard for management often exceeds the minimum requirements of the law. Put another way, the law sometimes is often slow to keep up with ethical reflection on best management practices.
### Workplace Safety under the Occupational Safety and Health Act
The primary federal law ensuring physical safety on the job is the Occupational Safety and Health Act (OSHA), which was passed in 1970. The goal of the law is to ensure that employers provide a workplace environment free of risk to employees’ safety and health, such as mechanical or electrical dangers, toxic chemicals, severe heat or cold, unsanitary conditions, and dangerous equipment. OSHA also refers to the Occupational Safety and Health Administration, which operates as a division of the Department of Labor and oversees enforcement of the law. This act created the National Institute for Occupational Safety and Health (NIOSH), which serves as the research institute for OSHA and enunciates appropriate standards for safety and health on the job.
Employer obligations under OSHA include the duty to provide a safe workplace free of serious hazards, to identify and eliminate health and safety hazards (), to inform employees of hazards present on the job and institute training protocols sufficient to address them, to extend to employees protective gear and appropriate safeguards at no cost to them, and to publicly post and maintain records of worker injuries and OSHA citations.
OSHA and related regulations give employees several important rights, including the right to make a confidential complaint with OSHA that might result in an inspection of the workplace, to obtain information about the hazards of the workplace and ways to avoid harm, to obtain and review documentation of work-related illnesses and injuries at the job site, to obtain copies of tests done to measure workplace hazards, and protection against any employer sanctions as a consequence of complaining to OSHA about workplace conditions or hazards. A worker who believes his or her OSHA rights are being violated can make an anonymous report. OSHA will then establish whether there are reasonable grounds for believing a violation exists. If so, OSHA will conduct an inspection of the workplace and report any findings to the employer and employee, or their representatives, including any steps needed to correct safety and health issues.
OSHA has the authority to levy significant fines against companies that commit serious violations. The largest imposed to date were against BP, the oil company responsible for the largest oil spill in U.S. history, discussed in the feature box on BP Deepwater Horizon Oil Spill and Government Regulation. OSHA took into account that seventeen workers died on BP’s rig, Deepwater Horizon, as a result of the initial explosion and fire in April 2010. Consequently, rig-worker safety was upgraded by statute. Total OSHA penalties issued to BP from 2005 to 2009 exceed $102 million.
Other large fines issued over the last thirty years include $2.8 million against Union Carbide for violations related to an explosion and fire at its plant in Seadrift, Texas, in March 1991; $8.2 million levied against Samsung Guam in the wake of numerous worksite accidents at Guam’s International Airport in 1995; and $8.7 million against Imperial Sugar in connection with an explosion at the company’s plant in Port Wentworth, Georgia, in February 2008. More recently, OSHA fined the producers of The Walking Dead $12,675 (the maximum allowable for a single citation) in the wake of the death of a stuntman working on an episode of the television show in Georgia in July 2017. These fines demonstrate that the agency is serious about trying to protect the environment and workers. However, for some, the question remains whether it is more profitable for a business to gamble on cutting corners on safety and pay the fine if caught than to spend the money ahead of time to make workplaces completely safe. OSHA fines do not really tell the whole story of the penalties for workplace safety issues. There can also be significant civil liability exposure and public relations damage, as well as worker compensation payments and adverse media coverage, making an unsafe workplace a very expensive risk on multiple levels.
### A Workplace Free of Harassment
Employers have an ethical and a legal duty to provide a workplace free of harassment of all types. This includes harassment based on sex, race, religion, national origin, and any other protected status, including disability. Employees should not be expected to work in an atmosphere where they feel harassed, prejudiced against, or disadvantaged. The two complaints most frequently filed with the Equal Employment Opportunity Commission (EEOC), which strives to eliminate racial, gender, and religious discrimination in the workplace, are sexual harassment and racial harassment. Together, these categories made up two-thirds of all cases filed during 2017. More than thirty thousand complaints of sexual, gender, racial, or creedal harassment are filed each year, illustrating the frequency of the problem.
The EEOC enforces Title VII of the Civil Rights Act (CRA) of 1964, which prohibits workplace discrimination including sexual harassment. (As discussed elsewhere in the text, the CRA also protects employees from discrimination based on race, gender, religion, and national origin.) According to EEOC guidelines, it is unlawful to sexually harass a person because of that person’s sex, either through explicit offers in exchange for sexual favors (known as quid pro quo) or through actions at a broader more systemic level that create a “hostile working environment.” Sexual harassment includes unwelcome touching, requests for sexual favors, any other verbal or physical harassment of a sexual nature, offensive remarks based on a person’s sex, and off-color jokes. The harasser can be the victim’s supervisor (which creates company liability the first time it happens) or a peer coworker (which usually creates liability after the second time it happens, assuming the company had notice of the first occurrence). It can even be someone who is not an employee, such as a client or customer, and the law applies to men and women. Thus, the victim and the harasser both can be either a woman or a man, and offenses include both opposite-sex and same-sex harassment.
Although the law does not prohibit mild teasing, offhand comments, or isolated incidents that are not serious, harassment does become illegal when, according to the law, it is so frequent “that it creates a hostile or offensive work environment or when it is so severe that it results in an adverse employment decision (such as the victim being fired or demoted).” It is management’s responsibility to prevent harassment through education, training, and enforcement of a policy against it, and failure to do so will result in legal liability for the company.
Two relatively recent examples of workplace environments that descended into the worst excesses of sexist and other inappropriate behavior occurred at American Apparel and Uber. In both cases, principal leaders were mostly men who engaged in ruthless, no-holds-barred management practices that benefitted only those subordinates who most resembled the leaders themselves. Such environments may thrive for a while, but the long-term consequences can include criminal violations that produce hefty fines and imprisonment, bankruptcy, and radical upheaval in corporate management. At American Apparel and at Uber, these events resulted in the dismissal of each company’s CEO, Dov Charney (who also was the founder of the company) and Travis Kalanick (who was one of the corporation’s founders), respectively.
In 2017 and 2018, a renewed focus on sexual harassment in the workplace and other inappropriate sexual behaviors brought a stream of accusations against high-profile men in politics, entertainment, sports, and business. They included entertainment industry mogul Harvey Weinstein; Pixar’s John Lasseter; on-air personalities Matt Lauer and Charlie Rose; politicians such as Roy Moore, John Conyers, and Al Franken; and Uber’s Kalanick, to name just a few ().
The workplace harassment problem has continued for many decades despite the EEOC’s enforcement efforts; it remains to be seen whether new public scrutiny will prompt a permanent change in the workplace. The Ford Motor Company serves as a relevant example. Decades after Ford tried to address sexual harassment at two Chicago-area assembly plants, the abuse at the plants evidently continues. According to legal action filed with the EEOC in the early 1990s, conditions for women working at some Ford auto assembly plants were hostile. Female employees alleged they were groped, that men pressed against them and simulated sex acts, and that men even masturbated in front of them. They further asserted that men would routinely make crude comments about the figures of female coworkers, and graffiti depictions of penises were everywhere—carved into tables, spray painted onto floors, and scribbled on walls. Managers and floor supervisors were accused of giving women better assignments in return for sex and punishing those who refused.
In the 1990s, lawsuits and an EEOC action led to a $22 million settlement in which Ford admitted to widespread misconduct and committed to crack down on the offenders. However, it seems Ford still did not learn its lesson, or, after almost three decades, the memory dimmed and they slipped right back into old habits. In August 2017, the EEOC reached a new $10 million settlement with Ford for sexual and racial harassment at the two Chicago plants. Though Ford did not admit any wrongdoing in the recent settlement, it appears that neither millions of dollars in earlier damages nor promises by management led to any serious change. The New York Times interviewed some of the women at Ford, and Sharon Dunn, who was a party of the first case and is now again a party of the second, said, “For all the good that was supposed to come out of what happened to us, it seems like Ford did nothing. If I had that choice today, I wouldn’t say a damn word.”
### A Satisfied Workforce
Although the workplace should be free of harassment and intimidation of every sort, and management should provide a setting where all employees are treated with dignity and respect, ideally, employers should go much further.
Most people spend at least one-third and possibly as much as one-half of their waking hours at work. Management, therefore, should make work a place where people can thrive, that fosters an atmosphere in which they can be engaged and productive. Workers are happier when they like where they work and when they do not have to worry about childcare, health insurance, or being able to leave early on occasion to attend a child’s school play, for example. For our grandparents’ generation, a good job was dependably steady, and employees tended to stay with the same employer for years. There were not many extras other than a secure job, health insurance, and a pension plan. However, today’s workers expect these traditional benefits and more. They may even be willing to set aside some salary demands in exchange for an environment featuring perquisites (or “perks”; nonmonetary benefits) such as a park-like campus, an on-the-premises gym or recreational center, flextime schedules, on-site day care and dry cleaning, a gourmet coffee house or café, and more time off. This section will explore how savvy managers establish a harmonious, compassionate workplace while still setting expectations of top performance.
Happy employees are more productive and more focused, which enhances their performance and leads to better customer treatment, fewer sick days, fewer on-the-job accidents, and less stress and burnout. They are more focused on their work, more creative, and better team players, and they are more likely to help others and demonstrate more leadership qualities. How, then, does an employer go about the process of making workers happy? Research has identified several pitfalls that managers should avoid if they want to have a good working relationship with their direct reports and, indeed, all their employees. One is making employees feel like they are just employees. To be happy at work, employees, instead, need to feel like they know each other, have friends at work, are valued, and belong. Another pitfall is remaining aloof or above your employees. Taking an authentic interest in who they are as people really does matter. When surveys ask employees, “Do you feel like your boss cares about you?,” too frequently the answer is no. One way to show caring and interest is to recognize when employees are making progress; another might be to take a personal interest in their lives and families. Asking employees to share their ideas and implementing these ideas whenever possible is another form of acknowledgement and recognition. Pause and highlight important milestones people achieve, and ensure that they feel their contributions are noticed by saying thank you.
Good advice to new managers includes making work fun. Allow people to joke around as appropriate so that when mistakes occur they can find humor in the situation and move forward without fixating simply on the downside. Celebrate accomplishments. Camaraderie and the right touch of humor can build a stronger workplace culture. Encourage exercise and sleep rather than long work hours, because those two factors improve employees’ health, focus, attention, creativity, energy, and mood. In the long run, expecting or encouraging people to regularly work long hours because leaving on time looks bad is counterproductive to the goals of a firm. Accept that employees need to disengage sometimes. People who feel they are always working because their management team expects they must remain in touch via e-mail or mobile phone can become tremendously stressed. To combat this, companies should not expect their workers to be available around the clock, and workers should not feel compelled to be so available. Rather, employers should allow employees to completely disengage regularly so they can focus on their friends and families and tend to their own personal priorities. By way of international comparison, according to a recent article in Fortune, Germany and France have actually gone as far as banning work-related e-mails from employers on the weekends, which is a step in the right direction, even if only because disconnecting from work is now mandated by law.
Employers must decide exactly how to spend the resources they have allocated to labor, and it can be challenging to make the right decision about what to provide workers (). Should managers ask employees what they want? Benchmark the competition? Follow the founder’s or the board’s recommendations? How does a company make lifestyle benefits fair and act ethically when there is backlash against family-friendly policies from people who do not have their own families? Unlike the purchase of raw materials, utilities, and other budgetary items, which is driven primarily by cost and may present only a few choices, management’s offering of employee benefits can present dozens of options, with costs ranging from minimal to very high. Work-at-home programs may actually cost the company very little, for example, whereas health insurance benefits may cost significantly more. In many other industrialized countries, the government provides (i.e., subsidizes) benefits such as health insurance and retirement plans, so a company does not have to weigh the pros and cons (i.e., do a cost-benefit analysis) of what to offer in this area. In the United States, employee benefits become part of a cost-benefit analysis, especially for small and mid-sized companies. Even larger companies today are debating what benefits to offer.
Management has to decide not only how much money to spend on benefits and perks but precisely what to spend the money on. Another decision is what benefit choices management should allow each employee to make, and which choices to make for the workforce as a whole. The best managers communicate regularly with their workforce; as a result, they are more likely to know (and be able inform top management about) the types of perks most desired and most likely to attract and keep good workers. shows that men and women do not always want the same benefits, which presents a challenge for management. For instance, many women place about twice as much value as many men do on day care (23%–11%) and on paid family leave (24%–14%). Also valued more highly generally by women than by men are better health insurance, work-from-home options, and flexible hours, whereas more men value an on-site gym and free coffee more than women typically do.
Age and generation also play a role in the types of perks that employees value. Workers aged eighteen to thirty-five rank career advancement opportunities (32%) and work-life balance (33%) as most important to them at work. However, 42 percent of workers older than thirty-five say work-life balance is the most important feature. This is likely because Generation X (born in the years 1965–1980) place a high value on opportunities for work-life balance, although, like Baby Boomers (born in the years 1946–1964), they also value salary and a solid retirement plan. On the other hand, Millennials (born in the years 1981–1997) appreciate flexibility: having a choice of benefits, paid time off, the ability to telecommute, flexible hours, and opportunities for professional development.
The menu of benefits and perks thus depends on several variables, such as what the company can afford, whether employees value perks over the more direct benefit of higher pay, what the competition offers, what the industry norm is, and the company’s geographic location. For example, Google is constantly searching for ways to improve the health, well-being, and morale of its “Googlers.” The company is famous for offering unusual perks, like bicycles and electric cars to get staff around its sprawling California campus. Additional benefits are generous paid parental leave for new parents, on-site childcare centers at one location, paid leaves of absence to pursue further education with tuition covered, and on-site physicians, nurses, and health care. Other perks are gaming centers, organic gardens, eco-friendly furnishings, a pets-at-work policy, meditation and mindfulness training, and travel insurance and emergency assistance on personal and work-related travel. On the death of a Google employee, his or her spouse or domestic partner is compensated with a check for 50 percent of the employee’s salary each year for a decade. In addition, all a deceased employee’s stock options vest immediately for the surviving spouse or domestic partner. Furthermore, a deceased employee’s children receive $1000 per month until they reach the age of nineteen, or until the age of twenty-three if they are full-time students.
In addition to offering benefits and perks, managers can foster a healthy workplace by applying good “people skills” as well. Managers who are respectful, open, transparent, and approachable can achieve two goals simultaneously: a workforce that is happier and also one that is more productive. Good management requires constant awareness that each team member is also an individual working to meet both personal and company goals. Effective managers act on this by regularly meeting with employees to recognize strengths, identify constructive ways to improve on weaknesses, and help workers realize collective and individual goals. Ethical businesses and good managers also invest in efforts like performance management and employee training and development. These commitments call for giving employees frequent and honest feedback about what they do well and where they need improvement, thereby enabling them to develop the skills they need, not only to succeed in the current job but to move on to the next level. Fostering teamwork by treating people fairly and acknowledging their strengths is also an important responsibility of management. Ethical managers, therefore, demonstrate most, if not all, of the following qualities: cultural awareness, positive attitude, warmth and empathy, authenticity, emotional intelligence, patience, competence, accountability, respectful, and honesty.
### Summary
A company and its managers need to provide a workplace at which employees want to work, free of safety hazards and all types of harassment. Perks and benefits also make the company an attractive place to work. Yet another factor is managers who make employees feel valued and respected. A company can use all these tools to attract and retain top talent, helping to reach the goals of having a well-run company with a satisfied workforce. Philosophers Aristotle and Immanuel Kant said taking ethical action is the right thing to do. The decision to create an environment in which employees want to come to work each day is, in large part, an ethical choice, because it creates a healthy environment for all to encounter. However, the bonus comes when a satisfied workforce fosters increased quality and productivity, which leads to appreciative customers or clients and increased profitability. There is a financial payoff in that a well-treated workforce is also a productive one.
### Assessment Questions
### Endnotes
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# What Employers Owe Employees
## What Constitutes a Fair Wage?
### Learning Objectives
By the end of this section, you will be able to:
1. Explain why compensation is a controversial issue in the United States
2. Discuss statistics about the gender pay gap
3. Identify possible ways to achieve equal pay for equal work
4. Discuss the ethics of some innovative compensation methods
The Center for Financial Services Innovation (CFSI) is a nonprofit, nonpartisan organization funded by many of the largest American companies to research issues affecting workers and their employers. Findings of CFSI studies indicate that employee financial stress permeates the workplaces of virtually all industries and professions. This stress eats away at morale and affects business profits. A recent CFSI report details data showing that “85% of Americans are anxious about their personal financial situation, and admit that their anxiety interferes with work. Furthermore, this financial stress leads to productivity losses and increased absenteeism, healthcare claims, turnover and costs affecting workers who cannot afford to retire.” The report also indicates that employees with high financial anxiety are twice as likely to take unnecessary sick time, which is can be expensive for an employer.
The CFSI report makes clear that ensuring workers are paid a fair wage is not only an ethical practice; it is also an effective way to achieve employees’ highest and most productive level of performance, which is what every manager wants. In the process, it also makes workers more loyal to the company and less likely to jump ship at the first sign of a slightly better wage somewhere else.
The concept of a fair wage has a greater significance than simply one worker’s pay or one company’s policy. It is an economic concept critical to the nation as a whole in an economic system like capitalism, in which individuals pay for most of what they need in life rather than receiving government benefits funded by taxes. The ethical issues for the business community and for society at large are to identify democratic systems that can effectively eradicate the financial suffering of the poorest citizens and to generate sufficient wages to support the economic sustainability of all workers in the United States. Put another way, has the real income of average American workers declined so much over the past few decades that it now threatens the productivity of the largest economy in the world?
### Economic Data as an Indicator of Fair Wages
The Pew Research Center indicates that over the thirty-five years between 1980 and 2014, the inflation-adjusted hourly wages of most middle-income American workers were nearly stagnant, rising just 6 percent, or an average of less than 0.2 percent, per year. (The Pew Research Center defines middle-class adults as those living in households with disposable incomes ranging from 65 percent to 200 percent of the national median, which is approximately $60,000.) The data collected by the Economic Policy Institute, a nonprofit, nonpartisan think tank, show the same stagnant trend. Contrast this picture with the wages of high-income workers, which rose 41 percent over the same years. Many economists, political leaders, and even business leaders admit that increasing wage and wealth disparities are not a sustainable pattern if the U.S. economy is to succeed in the long term. Wage growth for all workers must be fair, which, in most cases, means higher wages for low- and middle-income workers. presents evidence of the growth of the income gap in the United Sates since the start of the great recession in 2007.
No reasonable person, regardless of profession or political party, would dispute that employees are entitled to a fair or just wage. Rather, it is in the calculation of a fair wage that the debate begins. Economists, sociologists, psychologists, and politicians all have opinions about this, as have most workers. Some of the factors that feature in calculations are federal and state minimum-wage standards, the cost of living, and the rate of inflation. Should a fair wage include enough money to raise a family, too, if the wage earner is the sole or principal support of a family?
shows the growth, or lack of growth, in the buying power of a minimum-wage earner since 1940. Compare the twenty-year period of 1949 through 1968 with the fifty-year period from 1968 through 2017. The difference has created a sobering reality for many workers. In the nearly six decades since 1960, the inflation-adjusted real minimum wage actually declined by 23 percent. That means minimum-wage workers did not even break even; the value of their wages declined over fifty years, meaning they have effectively worked half a century with no raise. In the following chart, nominal wage represents the actual amount of money a worker earns per hour; real wage represents the nominal wage adjusted for inflation. We consider real wages because nominal wages do not take into account changes in prices and, therefore, do not measure workers’ actual purchasing power.
One positive development for minimum-wage workers is that state governments have taken the lead in what was once viewed primarily as a federal issue. Today, most states have a higher minimum hourly wage than the federal minimum of $7.25. States with the highest minimum hourly wages are Washington ($11.50), California and Massachusetts ($11.00), Arizona and Vermont ($10.50), New York and Colorado ($10.40), and Connecticut ($10.00). Some cities have even higher minimum hourly wages than under state law; for example, San Francisco and Seattle are at $15.00. As of the end of 2017, twenty-nine states had higher minimum hourly wages than the federal rate, according to Bankrate.com ().
### Unfair Wages: The Gender Pay Gap
Even after all possible qualifiers have been added, it remains true that women earn less than men. Managers sometimes offer multiple excuses to justify pay inequities between women and men, such as, “Women take time off for having babies” or “Women have less experience,” but these usually do not explain away the differences. The data show that a woman with the same education, experience, and skills, doing the same job as a man, is still likely to earn less, at all levels from bottom to top. According to a study by the Institute for Women’s Policy Research, even women in top positions such as CEO, vice president, and general counsel often earn only about 80 percent of what men with the same job titles earn. Data from the EEOC over the five years from 2011 through 2015 for salaries of senior-level officials and managers (defined by the EEOC as those who set broad policy and are responsible for overseeing execution of those policies) show women in these roles earned an average of about $600,000 per year, compared with their male counterparts, who earned more than $800,000 per year. That $200,000 difference amounts to a wage gap of about 35 percent each year.
The same is true in mid-level jobs as well. In a long-term study of compensation in the energy industry, researchers looked at the job of a land professional—who negotiates with property owners to lease land on which the oil companies then drill wells—and found evidence of women consistently getting paid less than men for doing the same job. Median salaries were compared for male and female land professionals with similar experience (one to five years) and educational background (bachelor’s degree), and men earned $7000 more per year than their female counterparts.
Doesn’t the law require men and women to be paid the same? The answer is yes and no. Compensation discrimination has been illegal for more than fifty years under a U.S. law called the Equal Pay Act, passed in 1963. But the problem persists. Women earned about 60 percent of what men earned in 1960, and that value had risen to only 80 percent by 2016. Given these historic rates, women are not projected to reach pay equity until at least 2059, with projections based on recent trends predicting dates as late as 2119. These are aggregate data; thus, they include women and men with the same job, or similar jobs, or jobs considered to fall in the same general category, but the data do not compare the salary of a secretary to that of a CEO, which would be an unrealistic comparison.
Equal pay under the law means equal pay for the “same” job, but not for the “equivalent” job. Those companies wishing to avoid strict compliance with the law may use several devices to justify unequal pay, including using slightly different job titles, slightly different lists of job duties, and other techniques that lead to different pay for different employees doing essentially the same job. Women have taken employers to court for decades, only to find their lawsuits unsuccessful because proving individual compensation discrimination is very difficult, especially given that multiple factors can come into play in compensation decisions. Sometimes class-action lawsuits have been more successful, but even then plaintiffs often lose.
Can anything be done to achieve equal pay? One step would be to pass a new law strengthening the rules on equal pay, but two recent attempts to pass the Paycheck Fairness Act (S.84, H.R.377) and the Fair Pay Act (S.168, H.R.438) narrowly failed. These or similar bills, if ever enacted into law, would significantly reduce wage discrimination against those who work in similar job categories by establishing equal pay for “equivalent” work, rather than the current law which uses the term “same” job. The idea of pay equivalency is closely related to comparable worth, a concept that has been put into action on a limited basis over the years, but never on a large scale. Comparable worth holds that workers should be paid on the basis of the worth of their job to the organization. Equivalent work and comparable worth can be important next steps in the path to equal pay, but they are challenging to implement because they require rethinking the entire basis for pay decisions.
If a woman’s starting salary for the first job of her career is less than that of a man, the initial difference, even if small, tends to cause a systemic, career-long problem in terms of pay equity. Researchers at Temple University and George Mason University found that if a new hire gets $5000 more than another worker hired at the same time, the difference is significantly magnified over time. Assuming an average annual pay increase of 5 percent, an employee starting with a $55,000 salary will earn at least $600,000 more over a forty-year career than an employee who starts an equivalent job with a $50,000 salary. This significantly affects many personal decisions, including retirement, because, all other things equal, a lower-paid woman will have to work three years longer than a man to earn the same amount of money over the course of her career.
Part of the reason that initial pay disparity is heightened over a career is that when a worker changes jobs, the new employer usually asks what the employee was making in his or her last job and uses that as a baseline for pay in the new job. To combat the problem of history-based pay, which often hurts women, eight states (and numerous municipalities) in the United States now ban employers from asking job applicants to name their last salary. Although this restriction will not solve the entire problem, it could have a positive effect if it spreads nationally. In a survey by the executive search firm Korn Ferry, forty-six of one hundred companies said they usually comply with the legal requirements in force in the strictest of the locations in which they operate, meaning workers in states without this law might not be asked about their salary history during new-job negotiations either.
### Experiments in Compensation
Whether we are discussing fair wages, minimum wages, or equal wages, the essence of the debate often boils down to ethics. What should people get paid, who should determine that, and should managers and upper management do only what is required by law or go above and beyond if that means doing what they think is right? Organizational pay structures are set by a variety of methods, including internal policies, the advice of outside compensation consultants, and external data, such as market salaries.
An innovative compensation decision in Seattle may provide some insight. In 2011, a young man earning $35,000 a year told his boss at Gravity Payments, a credit-card payments business, that his earnings were not sufficient for a decent life in expensive Seattle. The boss, Dan Price, who cofounded the company in 2004, claimed to be surprised and insisted that he had always emphasized the best pay for his employees. Nevertheless, he decided his employee was right. For the next three years, Gravity gave every employee a 20 percent annual raise. Still, profit continued to outgrow wages. So Price announced that over the next three years, Gravity would phase in a minimum salary of $70,000 for all employees. He reduced his own salary from $1 million to $70,000, to demonstrate the point and help fund it. The following week, five thousand people applied for jobs at Gravity, including a Yahoo executive who took a pay cut to transfer to a company she considered fun and meaningful to work for.
Price’s decision started a national debate: How much should people be paid? Since 2000, U.S. productivity has increased 22 percent, yet inflation-adjusted median wages have increased only 2 percent. That means a larger share of capitalism’s rewards are going to shareholders and top executives (who already earn an average of three hundred times more than typical workers, up from seventy times more just a decade ago), and a smaller share is going to workers. If Gravity profits while sharing the benefits of capitalism more broadly, Price’s actions will be seen as demonstrating that underpaying the workforce hurts employers. If it fails, it may look like proof that companies should not overpay.
Price insisted that low starting salaries were antithetical to his values and felt that struggling employees would not be motivated to maintain the high quality that made his company successful with that compensation. He calls the $70,000 minimum wage an ethical and moral imperative rather than a business strategy, and, though it will cost Gravity about $2 million per year, he has ruled out price increases and layoffs. More than half the initial cost was offset by his own pay cut, the rest by profit. Revenue continues to grow at Gravity, along with the customer base and the workforce. Currently, the firm has a retention rate of 91 percent. Yet Price says managers’ scorecards should measure purpose, impact, and service, as much as profit.
Price remains a controversial figure as a business leader, as his relationships with his ex-wife and other women have led to accusations of misogyny against him. It's up to the individual to conclude whether these accusations of personal misconduct, if true, impinge on or outweigh any credit he may be deserving for his progressive view on worker compensation.
Michael Wheeler, a professor at Harvard Business School who teaches a course called “Negotiation and The Moral Leader,” recently discussed the aftermath of Dan Price’s decision at Gravity. He interviewed other entrepreneurs about their plans for creative compensation to help develop a happy and motivated workforce, and it appears that some other companies are taking notice of how successful Gravity has been since Price made the decision to pay his workers more. One of these entrepreneurs was Megan Driscoll, the CEO of Pharmalogics Recruiting, who, after hearing Dan Price speak to a group of executives, was inspired to raise the starting base pay of her employees by 33 percent. When Driscoll put her plan to work, her business had forty-six employees and $6.7 million in revenue. A year later, staff and revenues had jumped to seventy-two and $15 million, respectively. Driscoll points to data showing her people are working harder and smarter after the pay raise than before. There has been a 32 percent increase in clients, and the client retention rate doubled to 80 percent.
Stephan Aarstol, CEO of Tower Paddleboards, wanted to give his workers a raise, but his company did not have the cash. Instead, Aarstol boldly cut the work day to five hours from the ten hours most employees had been working. Essentially that doubled their pay, and as a result, he says, employee focus and engagement have skyrocketed, as have company profits.
Managers must carefully balance the short term, such as quarterly profits, versus long-term sustainability as a successful company. This requires recognizing the value of work that each person contributes and devising a fair, and sometimes creative, compensation plan.
### Summary
The concept of paying people fairly can become complicated. It includes trying to allocate and compensate workers in the most effective manner for the company, but it takes judgement, wisdom, and a moral imperative to do it fairly. Managers must balance issues of compensation equity, employee morale, motivation, and profits—all of which may have legal, ethical, and business elements. The issue of a fair wage is particularly salient for those earning the minimum wage, which, in real terms, has declined by 23 percent since 1960, and for women, who continue to experience a significant pay gap as compared with their male counterparts.
### Assessment Questions
### Endnotes
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# What Employers Owe Employees
## An Organized Workforce
### Learning Objectives
By the end of this section, you will be able to:
1. Discuss trends in U.S. labor union membership
2. Define codetermination
3. Compare labor union membership in the United States with that in other nations
4. Explain the relationship between labor productivity gains and the pay ratio in the United States
The issue of worker representation in the United States is a century-old debate, with economic, ethical, and political aspects. Are unions good for workers, good for companies, good for the nation? There is no single correct response. Your answer depends upon your perspective—whether you are a worker, a manager, an executive, a shareholder, or an economist. How might an ethical leader address the issue of the gap between labor’s productivity gains and their relatively stagnant wages as compared with that of management?
### Organized Labor
Americans’ longstanding belief in individualism makes some managers wonder why employees would want or need to be represented by a labor union. The answer is, for the same reasons a CEO wants to be represented by an attorney when negotiating an employment contract, or that an entertainer wants to be represented by an agent. Unions act as the agent/lawyer/negotiator for employees during collective bargaining, a negotiation process aimed at getting management’s agreement to a fair employment contract for members of the union. Everyone wants to be successful in any important negotiation, and people often turn to professionals to help them in such a situation.
However, in the United States, as elsewhere around the globe, the concept of worker organization has been about more than simply good representation. Unionization and worker rights have often been at the core of debates related to class economics, political power, and ethical values. There are legitimate points on each side of the union debate ().
The value of unions is a topic that produces significant disagreement. Historically, unions have attained many improvements for workers in terms of wages and benefits, standardized employment practices, labor protections (e.g., child labor laws), workplace environment, and on-the-job safety. Nevertheless, sometimes unions have acted in their own interests to sustain their own existence, without primary concern for the workers they represent.
The history of the worker movement (summarized in the video in the following Link to Learning) reveals that in the first half of the twentieth century, wages were abysmally low, few workplace safety laws existed, and exploitive working conditions allowed businesses to use child labor. Unions stepped in and played an important role in leveling the playing field by representing the interests of the workers. Union membership grew to a relatively high level (33% of wage and salary workers) in the 1950s, and unions became a force in politics. However, their dominance was relatively short-lived, not least because in the 1960s, the federal government started to enact employment laws that codified many of the worker protections unions had championed. In the 1980s and 1990s, the U.S. economy gradually evolved from manufacturing, where unions were strong, to services, where unions were not as prevalent. The service sector is more difficult to organize, due to a variety of factors such as the historical absence of unions in the sector, workers’ widely differing work functions and schedules, challenging organizational status, and white-collar bias against unions.
These developments, along with the appearance of state right-to-work laws, have led to a decline in unions and their membership. Right-to-work laws give workers the option of not joining the union, even at companies where the majority has voted to be represented by a union, resulting in lower membership. Right-to-work laws attempt to counter the concept of a union shop or closed shop, which requires that all new hires automatically be enrolled in the labor union appropriate to their job function and that union dues automatically be deducted from their pay.
Some question the fairness of right-to-work laws, because they allow those who do not join the union to get the same pay and benefits as those who do join and who pay unions dues for their representation. On the other hand, right-to-work laws provide workers the right of choice; those who do not want to join a union are not forced to do so. Those who do not choose to join may end up having a strained relationship with union workers, however, when a union-mandated strike occurs. Some non-union members, and even union members, elect to cross the picket line and continue to work. Traditionally, these “scabs,” as they are derisively labeled by unions, have faced both overt and subtle retaliation at the hands of their coworkers, who prioritize loyalty to the union.
Twenty-eight states have right-to-work laws (). Notice that many right-to-work states, such as Michigan, Missouri, Indiana, Wisconsin, Kentucky, Tennessee, Alabama, and Mississippi, are among the top ten states where automobiles are manufactured and unions once were strong.
According to the U.S. Bureau of Labor Statistics, total union membership in the United States dropped to 20 percent of the workforce in 1980; by 2016, it was down to about half that (). Public sector (government) workers have a relatively high union membership rate of 35 percent, more than five times that of private-sector workers, which is at an all-time low of 6.5 percent. White-collar workers in education and training, as well as first responders such as police and firefighters now have some of the highest unionization rates, also 35 percent. Among states, New York continues to have the highest union membership rate at 23 percent, whereas South Carolina has the lowest, at slightly more than 1 percent.
Codetermination is a workplace concept that goes beyond unionization to embrace shared governance, in which management and workers cooperate in decision-making and workers have the right to participate on the board of directors of their company. Board-level representation by employees is widespread in European Union countries. Most codetermination laws apply to companies over a certain size. For example, in Germany, they apply to companies with more than five hundred employees. The labor union movement never has been quite as strong in the United States as in Europe—the trade-union movement began in Europe and remains more vibrant there even today—and codetermination is thus not common in U.S. companies ().
Codetermination has worked relatively well in some countries. For example, in Germany, workers, managers, and the public at large support the system, and it has often resulted in workers who are more engaged and have a real voice in their workplaces. Management and labor have cooperated, which, in turn, has led to higher productivity, fewer strikes, better pay, and safer working conditions for employees, which is a classic win-win for both sides.
### Pay and Productivity in the United States
Some managers, politicians, and even members of the general public believe unions are a big part of the reason that U.S. companies have difficulty competing in the global economy. The conservative think tank Heritage Foundation conducted a study that concluded unions may be responsible, in part, for a slower work process and reduced productivity. However, multiple other studies indicate that U.S. productivity is up.
Productivity in the United States increased 74 percent in the period 1973 to 2016, according to the OECD. In global productivity rankings, most studies indicate the United States ranks quite high, among the top five or six countries in the world and number two on the list compiled by the OECD ().
During the same period as the productivity gains discussed in the preceding paragraph, 1973 to 2016, wages for U.S. workers increased only 12 percent. In other words, productivity has grown six times more than pay. Taken together, these facts mean that American workers, union members or not, should not shoulder the blame for competitive challenges faced by U.S. companies. Instead, they are a relative bargain for most companies. compares productivity and pay and demonstrates the growing disparity between the two, based on data collected by the Economic Policy Institute.
### Is Management Compensation Fair?
We gain yet another perspective on labor by looking at management compensation relative to that of employees. Between 1978 and 2014, inflation-adjusted CEO pay increased by almost 1,000 percent in the United States, while worker pay rose 11 percent. A popular way to compare the fairness of a company’s compensation system with that in other countries is the widely reported pay ratio, which measures how many times greater CEO pay is than the wages for the average employee.
The average multiplier effect in the United States is in the range of three hundred. This means that CEO pay is, on average, three hundred times as high as the pay of the average worker in the same company. In the United Kingdom, the multiplier is twenty-two; in France, it is fifteen; and in Germany, it is twelve. The 1965 U.S. ratio was only twenty to one, which raises the question, why and how did CEO pay rise so dramatically high in the United States compared with the rest of the world? Are CEOs in the United States that much better than CEOs in Germany or Japan? Do American companies perform that much better? Is this ratio fair to investors and employees? A large part of executive compensation is in the form of stock options, which frequently are included in the calculation of an executive’s salary and benefits, rather than direct salary. However, this, in turn, raises the question of whether all or a portion of the general workforce should also share in some form of stock options.
Everyone wants to be paid fairly for their work. Whether CEO or administrative assistant, engineer or assembly-line worker, we naturally look out for our own best interest. Thus, management compensation is a topic that often causes resentment among the rank and file, especially when organized workers go on strike. From the employee viewpoint, the question is why management often wants to hold the line when it comes to everyone’s wages but their own.
### Summary
Employees seek fair treatment in the workplace and sometimes gain a negotiating advantage with management by choosing to be represented by a labor union. Union membership in the United States has fallen in recent years as federal and state law have expanded to include worker protections unions fought for, and as the nation has shifted from a manufacturing to a service economy. Public-sector employee groups such as teachers, professors, first responders, and nurses are unionized in some cities and states. U.S. workers have contributed to a long rise in productivity over the last forty years but have not generally shared in wage gains.
### Assessment Questions
### Endnotes
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# What Employers Owe Employees
## Privacy in the Workplace
### Learning Objectives
By the end of this section, you will be able to:
1. Explain what constitutes a reasonable right to privacy on the job
2. Identify management’s responsibilities when monitoring employee behavior at work
Employers are justifiably concerned about threats to and in the workplace, such as theft of property, breaches of data security, identity theft, viewing of pornography, inappropriate and/or offensive behavior, violence, drug use, and others. They seek to minimize these risks, and that often requires monitoring employees at work. Employers might also be concerned about the productivity loss resulting from employees using office technology for personal matters while on the job. At the same time, however, organizations must balance the valid business interests of the company with employees’ reasonable expectations of privacy.
Magnifying ethical and legal questions in the area of privacy is the availability of new technology that lets employers track all employee Internet, e-mail, social media, and telephone use. What kind and extent of monitoring do you believe should be allowed? What basic rights to privacy ought a person have at work? Does your view align more closely with the employer’s or the employee’s?
### Legal and Ethical Aspects of Electronic Monitoring
Monitored workstations, cameras, microphones, and other electronic monitoring devices permit employers to oversee virtually every aspect of employees’ at-work behavior (). Technology also allows employers to monitor every aspect of computer use by employees, such as downloads of software and documents, Internet use, images displayed, time a computer has been idle, number of keystrokes per hour, words typed, and the content of e-mails. According to a survey by the American Management Association, 48 percent of employers used a form of video monitoring in the workplace, and 67 percent monitored employee Internet use. In 30 percent of the organizations responding to the survey, this electronic monitoring had ultimately led to an employee’s termination.
The laws and regulations governing electronic monitoring are somewhat indirect and inconsistent. Very few specific federal statutes directly regulate private employers when it comes to broad workplace privacy issues. However, monitoring is subject to various state rules under both statutory and common law, and sometimes federal and state constitutional provisions as well. The two primary areas of the law related to workplace monitoring are a federal statute called the Electronic Communications Privacy Act of 1986 (ECPA) and various state common law protections against invasion of privacy.
Although the ECPA may appear to prohibit an employer from monitoring its employees’ oral, wire, and electronic communications, it contains two big exceptions that weaken its protection of employees’ rights. One is the business purpose exception. This allows employers—on the basis of legitimate business purposes—to monitor electronic and oral communications, and employers generally assert a legitimate business purpose to be present. The other widely used exception is the consent exception, which allows employers to monitor employee communications provided employees have given their consent. According to the Society for Human Resource Management, the ECPA definition of electronic communication applies to the electronic transmission of communications but not to their electronic storage. Therefore, courts have distinguished between monitoring electronic communications such as e-mail during transmission and viewing e-mails in storage. Viewing emails during transmission is broadly allowed, whereas viewing stored e-mail is considered similar to searching an employee’s private papers and thus is not routinely allowed under the ECPA unless certain circumstances apply (e.g., the e-mails are stored in the employer’s computer systems).
In general, it is legal for a company to monitor the use of its own property, including but not limited to computers, laptops, and cell phones. According to the ECPA, an employer-provided computer system is the property of the employer, and when the employer provides employees with a laptop they can take home, it likely violates no laws when it monitors everything employees do with that computer, whether business-related or personal. The same is true of an employer-provided cell phone or tablet, and always true when an employer gives employees notice of a written policy regarding electronic monitoring of equipment supplied by the company. Generally, the same is not true of equipment owned by the employee, such as a personal cell phone.
However, an important distinction is based on the issue of consent. The consent provision in the ECPA is not limited to business communications only; therefore, a company might be able to assert the right to monitor personal electronic communications if it can show employee consent (although this is very likely to worry employees, as discussed in the next section). Another consideration is whose e-mail server is being used. The ECPA and some state laws generally make it illegal for employers to intercept private e-mail by using an employee’s personal log-on/user ID/password information.
Although the ECPA and National Labor Relations Act are both federal laws, individual states are free to pass laws that impose greater limitations, and several states have done so. Some require employers to provide employees advance written notice that specifies the types or methods of monitoring to which they will be subjected. Examples of state laws creating some degree of protection for workers include laws in California and Pennsylvania that require consent of both parties before any conversation can be monitored or recorded.
Employees can bring common law privacy claims to challenge employer monitoring. (Common laws are those based on prior court decisions rather than on legislatively enacted statutes.) To prevail on a common law claim of invasion of privacy, which is a tort, the employee must demonstrate a right to privacy with respect to the information being monitored. Several state constitutions, such as those in Louisiana, Florida, South Carolina, and California, expressly provide citizens a right to privacy, which may protect employees with respect to monitoring of their personal electronic information and personal communication in the workplace.
One additional regulatory consideration applicable to electronic monitoring is whether the company’s workforce is unionized. The National Labor Relations Board, the federal labor law agency, has ruled that the video surveillance of any portion of the workplace is a condition of employment subject to collective bargaining and must be agreed to by the union before implementation, so employees have notice. If a workplace is not unionized (the majority are not), then this federal regulation requiring notice does not apply, and as stated previously in this chapter, if there is any protection at all, it would have to be given by state regulation (which is rare in the private [nongovernmental] sector).
### What Constitutes a Reasonable Monitoring Policy?
Many employees generally are not be familiar with the specific details of the law. They may feel offended by monitoring, especially of their own equipment. Companies must also consider the effect on workplace morale if everyone feels spied upon, and the risk that some high-performing employees may decide to look elsewhere for career opportunities. Employers should develop a clear, specific, and reasonable monitoring policy. The policy should limit monitoring to that which is directly work related. For example, if a company is concerned about productivity and the goal of monitoring is to keep tabs on employee performance, then neither keystroke logging nor screenshot recording is necessary; software designed to show idle time or personal Internet use would be more helpful in identifying wasted time, which is the ultimate goal.
Employers should always remember their business goals when monitoring employees. It is not only a matter of treating employees ethically; it also makes good business sense to ensure that monitoring pertains only to business matters and does not unnecessarily intrude into the privacy of employees. Perhaps most importantly, in the interest of fairness, the monitoring policy must be communicated to the employees. When, if ever, is it acceptable to monitor without notice to the employee and without his or her knowledge?
The Connecticut policy in the preceding Link to Learning applies to all employers (i.e., in state and in private sector workplaces). However, many states have policies that apply only to employees who work for the government. State employees hold a special status that conveys certain state constitutional rights with regard to due process, reasonable searches, and related legal doctrines. The same is true for federal government employees and the U.S. Constitution, which means the government has a duty of fairness in employee surveillance. It does not mean, however, that the government cannot monitor its employees at all, as demonstrated by an incident involving a California police officer. In a unanimous decision in Ontario v. Quon, the U.S. Supreme Court in 2010 ruled in favor of a police chief in Ontario, California, who read nearly five hundred text messages sent by one of his sergeants on a police-issued pager. Many of the text messages were personal and some were sexually explicit. Only a few dozen were work related. The justices agreed that constitutional limits on unreasonable searches by public employers (under the Fourth Amendment) were minimal given a work-related purpose.
This decision creates precedent for more than 25 million employees of federal, state, and local governments and limits their expectation of privacy when using employer-issued tools. “Because the search [by the police chief] was motivated by a legitimate work-related purpose and because it was not excessive in scope, the search was reasonable,” said Justice Anthony M. Kennedy.
In the private sector, where employees are not working for the government and the constitutional prohibition on unreasonable searches and seizures has very little applicability, if any, employers have even more latitude in terms of employee monitoring than in a government setting. The Ontario v. Quon case in all likelihood would never even make it to court if the employer were a private-sector company, because the issue of whether getting the text message was a reasonable search and seizure under the Fourth Amendment does not apply in a nongovernment employment setting. The Constitution acts to limit government intrusions but does not generally restrict private companies in this type of situation. However, ethical considerations may encourage private-sector employers to treat their workers respectfully, even if not required by law.
### Drug Testing in the Workplace
Key issues that arise about a drug testing or monitoring program begin with whether an employer wants or needs to do it. Is it required by law for a particular job, under state or local regulations? Is it for pre-employment clearance? Does the employer need employees’ permission? Does a failed test require mandatory termination? With the exception of employers in industries regulated by the federal government, such as airlines, trucking companies, rail lines, and national security-related firms, federal law is not controlling on the issue of drug testing in the workplace; it is largely a state issue. At the federal level, the Department of Transportation does mandate drug testing for workers such as airline crews and railway conductors and has a specific procedure that must be followed. However, for the most part, drug testing is not mandatory and depends on whether the employer wants to do it. Multiple states do regulate drug testing, but to varying degrees, and there is no common standard to be followed.
Testing of job applicants is the most common form of drug testing. State laws typically allow it, but the employer must follow state rules, if they exist, about providing notice and following standard procedures intended to prevent inaccurate samples. Testing current employees is much less common, primarily due to cost; however, companies that do use drug testing include some in the pharmaceutical and financial services industries. Some states put legal constraints on drug testing of private-sector employees. For example, in a few states. the job must include the possibility of property damage or injury to others, or the employer must believe the employee is using drugs.
Challenging a drug test is difficult because tests are considered highly accurate. An applicant or employee can refuse to take the test, but that often means not being hired or losing the job, assuming the worker is an employee at will. The concept of employment at will affirms that either the employee or the employer may dissolve an employment arrangement at will (i.e., without cause and at any time unless an employment contract is in effect that stipulates differently). Most workers are considered employees at will because neither the employer nor employee is obligated to the other; the worker can quit or be fired at any time for any reason because there is no contractual obligation. In some states, the employee risks not only job loss but also the denial of unemployment benefits if fired for refusing to take a drug test. Thus, the key concept that makes drug testing possible is employment at will, which covers approximately 85 percent of the employees in the private sector (unionized workers and top executives have contracts and thus are not at will, nor are government employees who have due process rights). The only legal limitation is that, in some states, the drug testing procedure must be fair, accurate, and designed to minimize errors and false-positive results.
The drug testing process, however, raises some difficult privacy issues. Employers want and are allowed to protect against specimen tampering by taking such steps as requiring subjects to wear a hospital gown. Some employers use test monitors who check the temperature of the urine and/or listen as a urine sample is collected. According to the Cornell University Law School Legal Information Institute, some state courts (e.g., Georgia, Louisiana, Hawaii) have found it an unreasonable invasion of privacy for the monitor to watch an employee in the restroom; however, in other states (e.g., Texas, Nevada), this is allowed.
Case examples abound of challenges based on privacy concerns. In an article in the Harvard Journal of Law and Technology, University of Houston Law School professor Mark Rothstein, who is director of the Health Law and Policy Institute, summarized examples of legal challenges. In one case, the court ruled that an employer engaged in unlawful retaliation as defined by the Mine Safety and Health Act. The employer dismissed two employees who were required to urinate in the presence of others but found themselves unable to do so. In a different case, $125,000 in tort damages was awarded to a worker for invasion of privacy and negligent infliction of emotional distress as a consequence of his being forced to submit a urine sample as he was being directly observed.
### Summary
Monitoring of employees, whether electronically or through drug testing, is a complex area of workforce management. Numerous state and federal legal restrictions apply, and employers must decide not only what they are legally allowed to do but also what they should do ethically, keeping in mind the individual privacy concerns of their employees.
### Assessment Questions
### Endnotes
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# What Employees Owe Employers
## Introduction
What Employers Owe Employees discussed the duties, obligations, and responsibilities managers and companies owe their employees. This chapter looks at the other side of that relationship to weigh the ethical dimensions of being a worthy employee and responsible coworker ().
Coworkers may express their opinions differently, for instance, agreeing or disagreeing, perhaps in very animated ways. Although we and our peers at work may not see eye to eye on every issue, we work best when we understand the need to get along and to show a degree of loyalty to our employer and each other, as well as to ourselves, our values, and our own best interests. Balancing these factors requires a concerted effort.
What would you do, for example, if one of your coworkers were being bullied or harassed by another employee or a manager? Suppose a former colleague tried to recruit you to her new firm. What is the ethical action for you to take? How would you react if you learned your company’s managers were behaving unethically or breaking the law? Who could you tell, and what could you expect as a result? What is the right response if a client or customer behaves badly toward you as an employee representing your firm? How do you provide good customer service and support the company brand in the face of difficult working conditions? |
# What Employees Owe Employers
## Loyalty to the Company
### Learning Objectives
By the end of this section, you will be able to:
1. Define employees’ responsibilities to the company for which they work
2. Describe a non-compete agreement
3. Explain how confidentiality applies to trade secrets, intellectual property, and customer data
The relationship between employee and employer is changing, especially our understanding of commitment and loyalty. An ethical employee owes the company a good day’s work and his or her best effort, whether the work is stimulating or dull. A duty of loyalty and our best effort are our primary obligations as employees, but what they mean can change. A manager who expects a twentieth-century concept of loyalty in the twenty-first century may be surprised when workers express a sense of entitlement, ask for a raise after six months, or leave for a new job after twelve months. This chapter will explore a wide range of issues from the perspective of what and how employees contribute to the overall success of a business enterprise.
### A Duty of Loyalty
Hard work and our best effort likely make sense as obligations we owe an employer. However, loyalty is more abstract and less easily defined. Most workers do not have employment contracts, so there may not be a specific agreement between the two parties detailing their mutual responsibilities. Instead, the common law (case law) of agency in each state is often the source of the rules governing an employment relationship. The usual depiction of duty in common law is the duty of loyalty, which, in all fifty states, requires that an employee refrain from acting in a manner contrary to the employer’s interest. This duty creates some basic rules employees must follow on the job and provides employers with enforceable rights against employees who violate them.
In general terms, the duty of loyalty means an employee is obligated to render “loyal and faithful” service to the employer, to act with “good faith,” and not to compete with but rather to advance the employer’s interests. The employee must not act in a way that benefits him- or herself (or any other third party), especially when doing so would create a conflict of interest with the employer. The common law of most states holds as a general rule that, without asking for and receiving the employer’s consent, an employee cannot hold a second job if it would compete or conflict with the first job. Thus, although the precise boundaries of this aspect of the duty of loyalty are unclear, an employee who works in the graphic design department of a large advertising agency in all likelihood cannot moonlight on the weekend for a friend’s small web design business. However, employers often grant permission for employees to work in positions that do not compete or interfere with their principal jobs. The graphic designer might work for a friend’s catering business, for example, or perhaps as a wedding photographer or editor of a blog for a public interest community group.
What is clear is that it is wrong for employees to make work decisions primarily for their own personal gain, rather than doing what is in the employer’s best interest. An employee might have the authority to decide which other companies the employer will do business with, for example, such as service vendors that maintain the copiers or clean the offices. What if the employee owned stock in one of those companies or had a relative who worked there? That gives him or her an incentive to encourage doing business with that particular company, whether it would be best for the employer or not.
The degree to which the duty of loyalty exists is usually related to the degree of responsibility or trust an employer places in an employee. More trust equals a stronger duty. For example, when an employee has very extensive authority or access to confidential information, the duty can rise to its highest level, called a fiduciary duty, which is discussed in an earlier chapter.
### Differing Concepts of Loyalty
There is no generally agreed-upon definition of an employee’s duty of loyalty to his or her employer. One indicator that our understanding of the term is changing is that millennials are three times more likely than older generations to change jobs, according to a Forbes Human Resources Council survey (). About nine in ten millennials (91 percent) say they do not expect to stay with their current job longer than three years, compared with older workers who often anticipated spending ten years or even an entire career with one employer, relying on an implicit social contract between employer and employee that rewarded lifetime employment.
The Loyalty Research Center, a consulting firm, defines loyal employees as “being committed to the success of the organization. They believe that working for this organization is their best option . . . and loyal employees do not actively search for alternative employment and are not responsive to offers.” Likewise, Wharton School, University of Pennsylvania, professor Matthew Bidwell says there are two halves to the term: “One piece is having the employer’s best interests at heart. The other piece is remaining with the same employer rather than moving on.” Bidwell goes on to acknowledge, “There is less a sense that your organization is going to look after you in the way that it used to, which would lead [us] to expect a reduction in loyalty.”
Why are employees less likely to feel a duty of loyalty to their companies? One reason is that loyalty is a two-way street, a feeling developed through the enactment of mutual obligations and responsibilities. However, most employers do not want to be obligated to their workers in a legal sense; they usually require that almost all workers are employees “at will,” that is, without any long-term employment contract. Neither state nor federal law mandates an employment contract, so when a company says an employee is employed at will, it is sending a message that management is not making a long-term commitment to the employee. Employees may naturally feel less loyalty to an organization from which they believe they can be let go at any time and for any legal reason (which is essentially what at-will employment means). Of course, at-will employment also means the employee can also quit at any time. However, freedom to move is a benefit only if the employee has mobility and a skill set he or she can sell to the highest bidder. Otherwise, for most workers, at-will employment usually works to the employer’s advantage, not the employee’s.
Another reason the concept of loyalty to an organization seems to be changing at all levels is the important role money plays in career decisions. When they see chief executive officers (CEOs) and other managers leaving to work for the highest bidder, subordinates quickly conclude that they, too, ought to look out for themselves, just as their bosses do, rather than trying to build up seniority with the company. Switching jobs can often be a way for employees to improve their salaries. Consider professional sports. For decades professional athletes were tied to one team and could not sell their services to the highest bidder, meaning that their salaries were effectively capped. Finally, after several court decisions (including the Curt Flood reserve clause case involving the St. Louis Cardinals and Major League Baseball), players achieved some degree of freedom and can now switch employers frequently in an effort to maximize their earning potential.
The same evolution occurred in the entertainment industry. In the early years of the movie business, actors were tied to studios by contracts that prevented them from making movies for any other studio, effectively limiting their earning power. Then the entertainment industry changed as actors gained the freedom to sell their services to the highest bidder, becoming much more highly compensated in the process. Employees in any industry, not just sports and entertainment, benefit from being able to change jobs if their salary at their current job stagnates or falls below the market rate.
Another economic phenomenon affecting loyalty in the private sector was the switch from defined-benefit to defined-contribution retirement plans. In the former, often called a pension, employee benefits are usually sponsored (paid) fully by the employer and calculated using a formula based on length of employment, salary history, and other factors. The employer administers the plan and manages the investment risk, promising the employee a set payout upon retirement. In the defined-contribution plan, however, the employee invests a certain percentage of his or her salary in a retirement fund, often a 401(k) or 403(b) plan, where it is sometimes matched (partially or wholly) by the employer. (These savings plans with their seemingly strange designations are part of the U.S. Internal Revenue Code, and the letter/number combinations indicate subsections of the Code. 401(k) Plans typically are featured in for-profit employment settings and 403(b) plans in nonprofit environments.) Defined-benefit plans reward longevity in the firm, whereas defined-contribution plans reward high earnings over seniority. Thus, with the growth of defined-contribution plans, some reasons for staying with the same employer over time are no longer applicable.
According to PayScale’s Compensation Best Practices Report, the two leading motivators people give for leaving their job are first, higher pay, and second, personal reasons (e.g., family, health, marriage, spousal relocation). Of course, beyond money, workers seek meaning in their work, and it is largely true that money alone does not motivate employees to higher performance. However, it is a mistake for managers to think money is not a central factor influencing employees’ job satisfaction. Money matters because if employees are not making enough money to meet their financial obligations or goals, they will likely be looking to for a higher-paying job. And, of course, increasing salary or other benefits can be a way of demonstrating both the company’s loyalty to its employees and the role it believes employees’ best interests play in its mission—navigating the aforementioned two-way street. For some employees, simply being acknowledged and thanked for their service and good work can go a long way toward sparking their loyalty; for others, more concrete rewards may be necessary.
Finally, many people work for themselves as freelance or contract workers in the new “gig” economy. They may take assignments from one or more companies at a time and are not employees in the traditional sense of the word. Therefore, it seems more reasonable that they would approach work in the same way a certified public accountant or attorney would—as completing a professional job for a client, after which they move on the next client, always keeping their independent status. We would not expect gig workers to demonstrate employer loyalty when they are not employees.
### Confidentiality
In the competitive world of business, many employees encounter information in their day-to-day work that their employers reasonably expect they will keep confidential. Proprietary (private) information, the details of patents and copyrights, employee records and salary histories, and customer-related data are valued company assets that must remain in-house, not in the hands of competitors, trade publications, or the news media. Employers are well within their rights to expect employees to honor their duty of confidentiality and maintain the secrecy of such proprietary material. Sometimes the duty of confidentiality originates specifically from an employment contract, if there is one, and if not, the duty still exists in most situations under the common law of agency.
Most companies do not consider U.S. common law on confidentiality sufficient protection, so they often adopt employment agreements or contracts with employees that set forth the conditions of confidentiality. (Note that such contracts define a one-way obligation, from the employee to the employer, so they do not protect the at-will employee from being terminated without cause.) Typically, an employment agreement will list a variety of requirements. For example, although in most situations the law would already hold that the employer owns copyrightable works created by employees within the scope of their employment (known as works for hire), a contract usually also contains a specific clause stating that the company owns any and all such works and assigning ownership of them to the company. The agreement will also contain a patent assignment provision, stating that all inventions created within the scope of employment are owned by or assigned to the company.
Employers also want to protect their trade secrets, that is, information that has economic value because it is not generally known to the public and is kept secret by reasonable means. Trade secrets might include technical or design information, advertising and marketing plans, and research and development data that would be useful to competitors. Often nondisclosure agreements are used to protect against the theft of all such information, most of which is normally protected only by the company’s requirement of secrecy, not by federal intellectual property law. Federal law generally protects registered trademarks (commercial identifications such as words, designs, logos, slogans, symbols, and trade dress, which is product appearance or packaging) and grants creators copyrights (to protect original literary and artistic expressions such as books, paintings, music, records, plays, movies, and software) and patents (to protect new and useful inventions and configurations of useful articles) ().
U.S. companies have long used non-compete agreements as a way to provide another layer of confidentiality, ensuring that employees with access to sensitive information will not compete with the company during or for some period after their employment there. The stated purpose of such agreements is to protect the company’s intellectual property, which is the manifestation of original ideas protected by legal means such as patent, copyright, or trademark. To be enforceable, non-compete agreements are usually limited by time and distance (i.e., they are in effect for a certain number of months or years and within a certain radius of the employer’s operations). However, some companies have begun requiring these agreements even from mid- and lower-level workers in an attempt to prevent them from changing jobs, including those who have no access to any confidential intellectual property. About 20 percent of the U.S. private-sector workforce, and about one in six people in jobs earning less than $40,000 a year, are now covered by non-compete agreements. The increased use of such agreements has left many employees feeling trapped by their limited mobility.
An ethical question arises regarding whether this practice is in the best interests of society and its workers, and some states are responding. California enacted a law in 2017 saying that most non-compete agreements are void, holding that although an employee may owe the employer a responsibility not to compete while employed, that duty ceases upon termination of employment. In other words, an employee does not “belong” to a company forever. In California, therefore, a non-compete arrangement that limits employment after leaving the employer is now unenforceable. Does this law reflect the approach that most states will now take? A California company may still legally prohibit its employees from moonlighting during the term of their employment, particularly for a competitor.
Employers may also insert a nonsolicitation clause, which protects a business from an employee who leaves for another job and then attempts to lure customers or former colleagues into following. Though these clauses have limitations, they can be effective tools to protect an employer’s interest in retaining its employees and customers. However, they are particularly difficult for employees to comply with in relatively closed markets. Sample language for all the clauses we have discussed is found in .
A final clause an employee might be required to sign is a nondisparagement clause, which prohibits defaming or deliberately running down the reputation of the former employer.
### Summary
Although employees’ and employers’ concepts of loyalty have changed, it is reasonable to expect workers to have a basic sense of responsibility to their company and willingness to protect a variety of important assets such as intellectual property and trade secrets. Current employees should not compete with their employer in a way that would violate conflict-of-interest rules, and former employees should not solicit previous customers or employees upon leaving employment.
### Assessment Questions
### Endnotes
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# What Employees Owe Employers
## Loyalty to the Brand and to Customers
### Learning Objectives
By the end of this section, you will be able to:
1. Describe how employees help build and sustain a brand
2. Discuss how employees’ customer service can help or hurt a business
A good employment relationship is beneficial to both management and employees. When a company’s products or services are legitimate and safe and its employment policies are fair and compassionate, managers should be able to rely on their employees’ dedication to those products or services and to their customers. Although no employee should be called upon to lie or cover up a misstep on the part of the firm, every employee should be willing to make a sincere commitment to an ethical employer.
### Respecting the Brand
Every company puts time, effort, and money into developing a brand, that is, a product or service marketed by a particular company under a particular name. As Apple, Coca-Cola, Amazon, BMW, McDonald’s, and creators of other coveted brands know, branding—creating, differentiating, and maintaining a brand’s image or reputation—is an important way to build company value, sell products and services, and expand corporate goodwill. In the sense discussed here, the term “brand” encompasses an image, reputation, logo, tagline, or specific color scheme that is trademarked, meaning the company owns it and must give permission to others who would legally use it (such as Tiffany’s unique shade of blue).
Companies want and expect employees to help in their branding endeavors. For example, according to the head of training at American Express, the company’s brand is its product, and its mantra has always been, “Happy employees make happy customers.” American Express places significant emphasis on employee satisfaction because it is convinced this strategy helps protect and advance its brand. One company that uses positive employee involvement in branding is the technology conglomerate Cisco, which started a branding program on social media that reaches out to employees (). Employees are encouraged to be creative in their brand-boosting posts in the program. The benefit is that prospective job candidates get a peek into Cisco life, and current employees feel the company trusts and values their ideas.
However, protecting the brand can be a special challenge today, thanks to the ease with which customers and even employees can post negative information about the brand on the Internet and social media. Consider these examples in the fast-food industry. A photo posted on Taco Bell’s Facebook page showed an employee licking a row of tacos. A Domino’s Pizza employee can be seen in a YouTube video spitting on food, putting cheese into his nose and then putting that cheese into a sandwich, and rubbing a sponge used for dishwashing on his groin area. On Twitter, a Burger King employee in Japan posted a photo of himself lying on hamburger buns while on duty.
The companies all responded swiftly. A Taco Bell spokesperson said the food was not served to customers and the employee in the photo was fired. The two Domino’s employees behind the videos were fired and faced felony charges and a civil lawsuit; Domino’s said the tainted food was never delivered. According to a Burger King news release, the buns in the photo were waste material because of an ordering mistake and were promptly discarded after the photo was taken; the employee in the photo was fired.
These examples demonstrate how much damage disloyal or disgruntled employees can create, especially on social media. All three companies experienced financial and goodwill losses after the incidents and struggled to restore public trust in their products. The immediate and long-term costs of such incidents are the reason companies invest in developing brand loyalty among their employees.
According to a Harvard Business Review interview with Colin Mitchell, global vice president, McDonald’s Brand, McDonald’s, good branding requires that a business think of marketing not just to its customers but also to its employees, because they are the “very people who can make the brand come alive for your customers”. The process of getting employees to believe in the product, to commit to the idea that the company is selling something worth buying, and even to think about buying it, is called internal marketing. Of course, some employees may not want to be the equivalent of a company spokesperson. Is it reasonable to expect an employee to be a kind of roving ambassador for the company, even when off the clock and interacting with friends and neighbors? Suppose employers offer employees substantial discounts on their products or services. Is this an equitable way to sustain reciprocal loyalty between managers and workers? Why or why not?
Internal marketing is an important part of the solution to the problem of employees who act as if they do not care about the company. It helps employees make a personal connection to the products and services the business sells, without which they might be more likely to undermine the company’s expectations, as in the three fast-food examples cited in this section. In those cases, it is clear the employees did not believe in the brand and felt hostile toward the company. The most common problem is usually not as extreme. More often it is a lack of effort or “slacking” on the job. Employees are more likely to develop some degree of brand loyalty when they share a common sense of purpose and identity with the company.
### Obligations to Customers
As the public’s first point of contact with a company, employees are obliged to assist the firm in forming a positive relationship with customers. How well or poorly they do so contributes a great deal to customers’ impression of the company. And customers’ perceptions affect not only the company but all the employees who depend on its success for their livelihood. Thus, the ethical obligations of an employee also extend to interactions with customers, whom they should treat with respect. Employers can encourage positive behavior toward customers by empowering employees to use their best judgment when working with them.
It may take only one bad customer interaction with a less-than-engaged or committed employee to sour brand loyalty, no matter how hard a company has worked to build it. In the same way, just one good experience can build up good will.
Employees who treat customers well are assets to the company and deserve to be treated as such. Sometimes, however, customers are rude or disrespectful, creating a challenge for an employee who wants to do a good job. This problem is best addressed by management and the employee working together. In the Pizza Hut case that follows, an employee was placed in a bad situation by customers.
### Summary
Employees have a duty to be loyal to the brand and treat customers well. Internal marketing is one process by which a company instills employee commitment to the brand and builds loyalty in its workforce. This loyalty should be a two-way street, however. If the company wants its employees to treat customers with respect, it must treat them with respect as well.
### Assessment Questions
### Endnotes
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# What Employees Owe Employers
## Contributing to a Positive Work Atmosphere
### Learning Objectives
By the end of this section, you will be able to:
1. Explain employees’ responsibility to treat their peers with respect
2. Describe employees’ duty to follow company policy and the code of conduct
3. Discuss types of workplace violence
You may spend more time with your coworkers than you spend with anyone else, including your family and friends. Thus, your ability to get along with work colleagues can have a significant impact on your life, as well as your attitude toward your job and your employer. All sorts of personalities populate our workplaces, but regardless of their working style, preferences, or quirks, employees owe one another courtesy and respect. That does not mean always agreeing with them, because evaluating a diversity of perspectives on business problems and opportunities is often essential for finding solutions. At the same time, however, we are responsible for limiting our arguments to principles, not personalities. This is what we owe to one another as human beings, as well as to the firm, so worksite arguments do not inflict lasting harm on the people who work there or on the company itself.
### Getting Along with Coworkers
An employee who gets along with coworkers can help the company perform better. What can employees do to help create a more harmonious workplace with a positive atmosphere?
One thing you can do is to keep an open mind. You may be wondering as you start a new job whether you will get along with your colleagues as well as you did at your old job. Or, if you did not get along with the people there and were looking for a change, you might fear things will be the same at the new job. Do not make any prejudgments. Get to know a bit about your new coworkers. Accept, or extend, lunch invitations, join weekend activities and office social events, and perhaps join those office traditions that bind long-serving employees and newcomers together in a collaborative spirit.
Another thing you can do it to remember to be kind. Everyone has a bad day every now and then, and if you spot a coworker having one, performing a random act of kindness may make that person’s day better. You do not need to be extravagant. Offer to stay late to help the person meet a tight deadline, or bring coffee or a healthy snack to someone working on particularly difficult tasks. Remember the adage, “It’s nice to be important, but it’s more important to be nice.”
For any relationship to succeed, including the relationship between coworkers, the parties must respect each other—and show it. Avoid doing things that might offend others. For example, do not take credit for someone else’s work. Do not be narrow minded; when someone brings up a topic such as politics or religion, be willing to listen and tolerate differing points of view.
A related directive is to avoid sexual jokes, stories, anecdotes, and innuendos. You might think it is okay to talk about anything and everything at work, but it is not. Others may not find the topic funny and feel offended, and you may make yourself vulnerable to action by management if such behavior is reported. Your coworkers might be a captive audience, but you should never place them in an awkward position.
Make an effort to get along with everyone, even difficult people. You did not choose your coworkers, and some may be hard to get along with. But professionalism requires that we attempt to establish the best working relationships we can on the job, no matter the opinions we might have about our colleagues. Normally, we might like some of them very much, be neutral about some others, and genuinely dislike still others. Yet our responsibility in the workplace is to respect and act at least civilly toward all of them. We likely will feel better about ourselves as professionals and also live up to our commitments to our companies.
Finally, do no use social media to gossip. Gossiping at work can cause problems anywhere, perhaps especially on social media, so resist the urge to vent online about your coworkers. It makes you appear petty, small, and untrustworthy, and colleagues may stop communicating with you. You may also run afoul of your employer’s social media policy and risk disciplinary action or dismissal.
### Understanding Personalities
Understanding the various personalities at work can be a complex task, but it is a vital one for developing a sense of collegiality. One technique that may be helpful is to develop your own emotional intelligence, which is the capacity to recognize other people’s emotions and also to know and manage your own. One aspect of using emotional intelligence is showing empathy, the willingness to step into someone else’s shoes.
All of us have different workplace personalities, which express the way we think and act on the job. There are many such personalities, and none is superior or inferior to another, but they are a way in which we exhibit our uniqueness on the job (). Some of us lead with our brains and emphasize logic and reason. Others lead with our hearts, always emphasizing mercy over justice in our relationships with others.
Employees can also have very different work styles, the way in which we are most comfortable accomplishing our tasks at work. Some of us gravitate toward independence and jobs or tasks we can accomplish alone. Others prefer team or project work, bringing us into touch with different personalities. Still others seek a mix of these environments. Some prioritize getting the job done as efficiently as possible, whereas others value the journey of working on the project with others and the shared experiences it brings. There is no right or wrong style, but it benefits any worker to know his or her preferences and something about the work personalities of colleagues. When in the office, the point for any of us individually is to appreciate what motivates our greatest success and happiness on the job.
### Reducing Workplace Violence
As recent incidents have shown—for example, the April 2018 shooting at YouTube headquarters in San Bruno, California—workplace violence is a reality, and all employees play a role in helping make work a safe, as well as harmonious place. Employees, in fact, have a legal and ethical duty not to be violent at work, and managers have a duty to prevent or stop violence. The National Institute for Occupational Safety and Health reports that violence at work usually fits into one of four categories: traditional criminal intent, violence by one worker against another, violence stemming from a personal relationship, and violence by a customer.
In violence based on traditional criminal intent, the perpetrator has no legitimate relationship to the business or its employees, and often the violence is part of a crime such as robbery or shoplifting. Violence between coworkers occurs when a current or former employee attacks another employee in the workplace. Worker-on-worker deaths account for approximately 15 percent of all workplace homicides. All companies are at risk for this type of violence, and contributing factors include failure to conduct a criminal background check as part of the hiring process.
When the violence arises from problems in a personal relationship, the perpetrator often has a direct relationship not with the business but with the victim, who is an employee. This category of violence accounts for slightly less than 10 percent of all workplace homicides. Women are at higher risk of being victims of this type of violence than men. In the fourth scenario, the violent person has a legitimate relationship with the business, perhaps as a customer or patient, and becomes violent while on the premises. A large portion of customer incidents occur in the nightclub, restaurant, and health care industries. In 2014, about one-fifth of all workplace homicides resulted from this type of violence.
### Codes of Conduct
Companies have a right to insist that their employees, including managers, engage in ethical decision-making. To help achieve this goal, most businesses provide a written code of ethics or code of conduct for all employees to follow. These cover a wide variety of topics, from workplace romance and sexual harassment to hiring and termination policies, client and customer entertainment, bribery and gifts, personal trading of company shares in any way that hints of acting on insider knowledge of the company’s fortunes, outside employment, and dozens of others. A typical code of conduct, regardless of the company or the industry, will also contain a variety of standard clauses, often blending legal compliance and ethical considerations ().
Two areas that deserve special mention are cybersecurity and harassment. Recent news stories have highlighted the hacking of electronic tools such as computers and databases, and employees and managers can indirectly contribute to such data breaches through unauthorized web surfing, sloppy e-mail usage, and other careless actions. Large companies such as Equifax, LinkedIn, Sony, Facebook, and JP Morgan Chase have suffered the theft of customer information, leading to loss of consumer confidence; sometimes large fines have been levied on companies. Employees play a part in preventing such breaches by strictly following company guidelines about data privacy and confidentiality, the use and storage of passwords, and other safeguards that limit access to only authorized users.
We are also witnessing an increased level of public awareness about harassment in the workplace, particularly because of the #MeToo movement that followed revelations in 2017 and 2018 of years of sexual predation by powerful men in Hollywood and Washington, DC, as well as across workplaces of all kinds, including in sports and the arts. A victim of sexual harassment can be a man or a woman, and/or the same sex as the harasser. The harasser can be a supervisor, coworker, other employee, officer/director, intern, consultant, or nonemployee. Whatever the situation, harassing and threatening behavior is wrong (and sometimes criminal) and should always be reported.
### Summary
Ethical employees accept their role in creating a workplace that is respectful, safe, and welcoming by getting along with coworkers and doing what is best for the company. They also comply with corporate codes of conduct, which cover a wide range of behaviors, from financial dealings and bribery to sexual harassment. In addition, they are alert to any situation in the workplace that could escalate into violence. In short, the employee has a duty to be a responsible person in the job.
### Assessment Questions
### Endnotes
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# What Employees Owe Employers
## Financial Integrity
### Learning Objectives
By the end of this section, you will be able to:
1. Describe an employee’s responsibilities to the employer in financial matters
2. Define insider trading
3. Discuss bribery and its legal and ethical consequences
Employees may face ethical dilemmas in the area of finance, especially in situations such as bribery and insider trading in securities. Such dubious “profit opportunities” can offer the chance of realizing thousands or millions of dollars, creating serious temptation for an employee. However, insider trading and bribery are serious violations of the law that can result in incarceration and large fines.
### Insider Trading
The buying or selling of stocks, bonds, or other investments based on nonpublic information that is likely to affect the price of the security being traded is called insider trading. For example, someone who is privy to information that a company is about to be taken over, which will cause its stock price to rise when the information becomes public, may buy the stock before it goes up in order to sell it later for an enhanced profit. Likewise, someone with inside information about a coming drop in share price may sell all his or her holdings at the current price before the information is announced, avoiding the loss other shareholders will suffer when the price falls. Although insider trading can be difficult to prove, it is essentially cheating. It is illegal, unethical, and unfair, and it often injures other investors, as well as undermining public confidence in the stock market.
Insider trading laws are somewhat complex. They have developed through federal court interpretations of Section 10(b)5 of the Securities Exchange Act of 1934, as well as through actions by the U.S. Securities and Exchange Commission (SEC). The laws identify several kinds of violations. These include trading by an insider (generally someone who performs work for the company) who possesses significant confidential information relevant to the valuation of the company’s stock, and trading by someone outside of the company who is given this sort of information by an insider or who obtains it inappropriately. Even being the messenger (the one communicating material nonpublic information to others on behalf of someone else) can be a legal violation.
The concept of an “insider” is broad and includes officers, directors, and employees of a company issuing securities. A person can even constitute what is called a “temporary insider” if he or she temporarily assumes a unique confidential relationship with a firm and, in doing so, acquires confidential information centered on the firm’s financial and operational affairs. Temporary insiders can be investment bankers, brokers, attorneys, accountants, or other professionals typically thought of as outsiders, such as newspaper and television reporters.
A famous case of insider trading, Securities and Exchange Commission v. Texas Gulf Sulphur Co. (1968), began with the discovery of the Kidd Mine and implicated the employees of Texas mining company. When first notified of the discovery of a large and very valuable copper deposit, mine employees bought stock in the company while keeping the information secret. When the information was released to the public, the price of the stock went up and the employees sold their stock, making a significant amount of money. The SEC and the Department of Justice prosecuted the employees for insider trading and won a conviction; the employees had to give back all the money they had made on their trades. Insider trading cases are often highly publicized, especially when charges are brought against high-profile figures.
### Bribery and the Foreign Corrupt Practices Act
Another temptation that may present itself to employees is the offer of a bribe. A bribe is a payment in some material form (cash or noncash) for an act that runs counter to the legal or ethical culture of the work environment. Bribery constitutes a violation of the law in all fifty U.S. states, as well as of a federal law that prohibits bribery in international transactions, the Foreign Corrupt Practices Act. Bribery generally injures not only individuals but also competitors, the government, and the free-market system as a whole. Of course, often the bribe is somewhat less obvious than an envelope full of money. It is important, therefore, to understand what constitutes a bribe.
Numerous factors help establish the ethics (and legality) of gift giving and receiving: the value of the gift, its purpose, the circumstances under which it is given, the position of the person receiving it, company policy, and the law. Assuming an employee has decision-making authority, the company wants and has the right to expect him or her to make choices in its best interest, not the employee’s own self-interest. For example, assume an employee has the authority to buy a copy machine for the company. The employer wants to get the best copy machine for the best price, taking into account quality, service, warranties, and other factors. But what if the employee accepts a valuable gift card from a vendor who sells a copy machine with higher operating and maintenance charges, and then places the order with that vendor. This is clearly not in the best interests of the employer. It constitutes a failure on the part of the employee to follow ethical and legal rules, and, in all likelihood, company policy as well. If a company wants its employees always to do the right thing, it must have policies and procedures that ensure the employees know what the rules are and the consequences for breaking them.
A gift may be only a well-intentioned token of appreciation, but the potential for violating company rules (and the law) is still present. A well-written and effectively communicated gift policy provides guidance to company employees about what is and is not appropriate to accept from a customer or vendor and when. This policy should clearly state whether employees are allowed to accept gifts on or outside the work premises and who may give or accept them. If gifts are allowed, the gift policy should define the acceptable value and type, and the circumstances under which an employee may accept a gift.
When in doubt about whether the size or value of a gift renders it impossible for an employee to accept it, workers should be advised to check with the appropriate officer or department within their company. Be it an “ethics hotline” or simply the human resources department, wise firms provide an easy protocol for employees to follow in determining what falls within and without the protocols for accepting gifts.
As an example of a gift policy, consider the federal government’s strict rules. A federal employee may not give or solicit a contribution for a gift to an official superior and may not accept a gift from an employee receiving less pay if that employee is a subordinate. On annual occasions when gifts are traditionally given, such as birthdays and holidays, an employee may give a superior a gift valued at less than $10. An employee may not solicit or accept a gift given because of his or her official position, or from a prohibited source, including anyone who has or seeks official action or business with the agency. In special circumstances such as holidays, and unless the frequency of the gifts would appear to be improper, an employee generally may accept gifts of less than $20. Gifts of entertainment, such as expensive restaurant meals, are also restricted. Finally, gifts must be reported when their total value from one source exceeds $390 in a calendar year. Some companies in the private sector follow similar rules.
Bribery presents a particular ethical challenge for employees in the international business arenas. Although every company wants to land lucrative contracts around the world, most expect their employees to follow both the law and company policy when attempting to consummate such deals. The U.S. law prohibiting bribery in international business dealings is the Foreign Corrupt Practices Act (FCPA), which is an amendment to the Securities and Exchange Act of 1934, one of the most important laws promoting transparency in corporate governance. The FCPA dates to 1977 and was amended in 1988 and 1998. Its main purpose is to make it illegal for companies and their managers to influence or bribe foreign officials with monetary payments or rewards of any kind in an attempt to get or keep business opportunities outside the United States. The FCPA is enforced through the joint efforts of the SEC and the Department of Justice. It applies to any act by U.S. businesses, their representatives, foreign corporations whose stock is traded in U.S. markets, and all U.S. citizens, nationals, or residents acting in furtherance of a foreign corrupt practice, whether they are physically present in the United States or not (this is called the nationality principle). Antibribery law is a serious issue for companies with overseas business and cross-border sales. Any companies or individuals convicted of these activities may pay significant fines, and individuals can face prison time.
The FCPA prohibits an agent of any company incorporated in the United States from extending a bribe to a foreign government official to achieve a business advantage in that country, but it does not specifically prohibit the extension of a bribe to a private officer of a nongovernmental company in a foreign country. The definition of a foreign government official can be expansive; it includes not only those working directly for the government but also company officials if the company is owned or operated by the government. An exception is made for “facilitating or grease payments,” small amounts of money paid to low-level government workers in an effort to speed routine tasks like processing paperwork or turning on electricity, but not to influence the granting of a contract.
Illegal payments need not be cash; they can include anything of value such as gifts and trips. For example, BHP Billiton, a U.S. energy company, and GlaxoSmithKline, a U.K. pharmaceutical company, were each fined $25 million for buying foreign officials tickets to the 2008 Olympic Games in Beijing, China. Fines for violations like these can be large and can include civil penalties as well as forfeited profits. For example, Telia, a Swedish telecommunications provider whose shares are traded on Nasdaq, recently agreed to pay nearly a billion dollars ($965 million) in a settlement to resolve FCPA violations that consisted of using bribery to win business in Uzbekistan.
The potential effect of laws such as the FCPA that impose ethical duties on employees and the companies they work for is often debated. Although some believe the FCPA disadvantages U.S. firms competing in foreign markets, others say it is the backbone of an ethical free enterprise system. The argument against strong enforcement of the FCPA has some merit according to managers in the field, and there is a general sense that illegal or unethical conduct is sometimes necessary for success. An attorney for energy-related company Cinergy summed up the feelings of many executives: “Shame on the Justice Department’s myopic view and inability to understand the realities of the world.” Some nations consider business bribery to be culturally acceptable and turn a blind eye to such activities.
The argument in favor of FCPA enforcement has its supporters as well, who assert that the law not only covers the activities of U.S. companies but also levels the playing field because of its broad jurisdiction over foreign enterprises and their officials. The fact is that since the United States passed the FCPA, other nations have followed suit. The 1997 Organization for Economic Cooperation and Development (OECD) Anti-Bribery Convention has been instrumental in getting its signatories (the United Kingdom and most European Union nations) to enact stricter antibribery laws. The United Kingdom adopted the Bribery Act in 2010, Canada adopted the Corruption of Foreign Officials Act of 1999, and European Union nations have done the same. There is also the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which has forty-three signatories, including all thirty-five OECD countries and eight other countries.
Companies and employees engaging in transactions in foreign markets face an increased level of regulatory scrutiny and are well served if they put ethics policies in place and enforce them. Companies must train employees at all levels to follow compliance guidelines and rules, rather than engaging in illegal conduct such as “under the table” and “off the books” payments ().
### Ethical Leadership
Of course, bribery is just one of many ethical dilemmas an employee might face in the workplace. Not all such dilemmas are governed by the clear-cut rules generally laid out for illegal acts such as bribery. Employees may find themselves being asked to do something that is legal but not considered ethical. For example, an employee might receive confidential proprietary knowledge about another firm that would give his or her firm an unfair competitive advantage. Should the employee act on this information?
Most companies say they want all employees to obey the law and make ethical decisions. But employees typically should not be expected to make ethical decisions based just on gut instinct; they need guidance, training, and leadership to help them navigate the maze of grey areas that present themselves daily in business. This guidance can be provided by the company through standard setting and the development of ethical codes of conduct and policies. Senior managers modeling ethical behavior and so leading by direct example also provide significant direction.
### Summary
Legal and cultural differences may allow bribes in other countries, but bribery and insider trading (which allows someone with private information about securities to profit from that knowledge at the public’s expense) are illegal in the United States, as well as unethical. A clear gift policy should be in place to help employees understand when it is acceptable to accept a gift from another employee or an outsider (such as a vendor), and to distinguish gifts from bribes.
### Assessment Questions
### Endnotes
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# What Employees Owe Employers
## Criticism of the Company and Whistleblowing
### Learning Objectives
By the end of this section, you will be able to:
1. Outline the rules and laws that govern employees’ criticism of the employer
2. Identify situations in which an employee becomes a whistleblower
This chapter has explained the many responsibilities employees owe their employers. But workers are not robots. They have minds of their own and the freedom to criticize their bosses and firms, even if managers and companies do not always welcome such criticism. What kind of criticism is fair and ethical, what is legal, and how should a whistleblowing employee be treated?
### Limiting Pay Secrecy
For decades, most U.S. companies enforced pay secrecy, a policy that prohibits employees from disclosing or discussing salaries among themselves. The reason was obvious: Companies did not want to be scrutinized for their salary decisions. They knew that if workers were aware of what each was paid, they would question the inequities that pay secrecy kept hidden from them.
Recently, the situation has begun to change. Ten states have enacted new laws banning employers from imposing pay secrecy rules: California, Colorado, Illinois, Louisiana, Maine, Michigan, Minnesota, New Hampshire, New Jersey, and Vermont. The real game changer came in 2012, when multiple decisions by the National Labor Relations Board (NLRB) and various federal courts made it clear that most pay secrecy policies are unenforceable and violate federal labor law (National Labor Relations Act, 29 U.S.C. § 157-158). Generally speaking, labor law lends employees the right to engage in collective activities, including that of discussing with each other the specifics of their individual employment arrangements, which includes how much they are paid. Moreover, the applicable sections of the 1935 National Labor Relations Act (NLRA) apply to union and non-union employees, so there is no exception made for companies whose employees are non-unionized, meaning the law protects all workers. In 2014, President Barack Obama issued an executive order banning companies that engaged in federal contracting from prohibiting such salary discussions.
Opening up the discussion of pay acknowledges the growing desire of employees to be well informed and to have the freedom to question or criticize their company. If employees cannot talk about something at work because they think it will make their boss angry, where do they go instead? Social media can be a likely answer. Protections generally extend to salary discussions on Facebook or Twitter or Instagram; Section 7 of the NRLA protects two or more employees who act together or discuss improving their terms and conditions of employment in person or online, just as it does in other settings.
### Speaking Out on Social Media
Does the First Amendment protect employees at work who criticize their boss or their company? Generally, no. That answer may surprise those who believe that the First Amendment protects all speech. It does not. The Bill of Rights was created to protect citizens from an overreaching government, not from their employer. The First Amendment reads as follows:
The key words are “Congress shall make no law,” meaning the content of speech is something the government and politicians cannot control with laws or policies. However, this right of free speech is generally not applicable to the private sector workplace and does not cover criticism of your employer.
Does that mean an employee can be fired for criticizing the company or boss? Yes, under most circumstances. Therefore, if someone posts a message on social media that says, “My boss is a jerk” or “My company is a terrible place to work,” the likelihood is that the person can be fired without any recourse, assuming he or she is an employee at will (see the discussion of at-will employment earlier in this chapter). Unless the act of firing constitutes a violation under federal law, such as Title VII of the Civil Rights Act of 1964, the speech is not protected speech, and thus the speaker (the employee) is not protected.
At some point, all of us may get angry with our companies or supervisors, but we still have a duty to keep our disputes in-house and not make public any situations we are attempting to resolve internally. Employers typically are prohibited from discussing human resource matters relating to any specific employees. Employees, too, should keep complaints confidential unless and until crimes are charged or civil suits are filed.
The rules related to social media are evolving, but applicable laws do not generally distinguish between sites or locations in which someone might criticize an employer, so criticism of the boss remains largely unprotected speech. As discussed earlier, employees can go online and post information about wages, hours, and working conditions, and that speech is protected by federal statute. So, although some general complaints against employers are not protected under the First Amendment, they may be protected under the NLRA (because arguably they may be related to terms and conditions of employment). However, most courts agree that statements personally critical of the boss or the company on a basis other than wages and working conditions are not protected. Obviously, there is no protection when employees post false or misleading information on social media in an attempt to harm the company’s reputation or that of management.
### Whistleblowing: Risks and Rewards
The act of whistleblowing—going to an official government agency and disclosing an employer’s violation of the law—is different from everyday criticism. In fact, whistleblowing is largely viewed as a public service because it helps society reduce bad workplace behavior. Being a whistleblower is not easy, however, and someone inclined to act as one should expect many hurdles. If a whistleblower’s identity becomes known, his or her revelations may amount to career suicide. Even if they keep their job, whistleblowers often are not promoted, and they may face resentment not only from management but also from rank-and-file workers who fear the loss of their own jobs. Whistleblowers may also be blacklisted, making it difficult for them to get a job at a different firm, and all as a result of doing what is ethical.
Blowing the whistle on your employer is thus a big decision with significant ramifications. However, most employees do not want to cover up unethical or illegal conduct, nor should they. When should employees decide to blow the whistle on their boss or company? Ethicists say it should be done with an appropriate motive—to get the company to comply with the law or to protect potential victims—and not to get revenge on a boss at whom you are angry. Of course, even if an employee has a personal revenge motive, if the company actively is breaking the law, it is still important that the wrongdoing be reported. In any case, knowing when and how to blow the whistle is a challenge for an employee wanting to do the right thing.
The employee should usually try internal reporting channels first, to disclose the problem to management before going public. Sometimes workers mistakenly identify something as wrongdoing that was not wrongdoing after all. Internal reporting gives management a chance to start an investigation and attempt to rectify the situation. The employee who goes to the government should also have some kind of hard evidence that wrongful actions have occurred; the violation should be serious, and blowing the whistle should have some likelihood of stopping the wrongful act.
Under many federal laws, an employer cannot retaliate by firing, demoting, or taking any other adverse action against workers who report injuries, concerns, or other protected activity. One of the first laws with a specific whistleblower protection provision was the Occupational Safety and Health Act of 1970. Since passage of that law, Congress has expanded whistleblower authority to protect workers who report violations of more than twenty different federal laws across various topics. (There is no all-purpose whistleblower protection; it must be granted by individual statutes.)
A sample of the specific laws under which whistleblowing employees are protected can be found in the environmental area, where it is in the public interest for employees to report violations of the law to the authorities, which, in turn, helps the average citizen concerned about clean air and water. The Clean Air Act protects any employee reporting air emission violations from area, stationary, and mobile sources from any retaliation for such reporting. The Water Pollution Control Act similarly protects from retaliation any employee who reports alleged violations relating to discharge of pollutants into water.
Without the help of employees who are “on the ground” and see the violations occur, it could be difficult for government regulators to always find the source of pollution. Even when whistleblowers are not acting completely altruistically, their revelations may still be true and worthy of being brought to the public’s attention. Thus, in such situations, the responsible employee becomes a steward of the public interest, and we all should want whistleblowers to come forward. Yet not all whistleblowers are white knights, and not all their firms are evil dragons worthy of being slain.
Blowing the whistle may bring the employee more than just intrinsic ethical rewards; it may also result in cash. The most lucrative law under which employees can blow the whistle is the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733. This legislation was enacted in 1863, during the American Civil War, because Congress was worried that suppliers of goods to the Union Army might cheat the government. The FCA has been amended many times since then, and today it serves as a leading example of a statutory law that remains important after more than 150 years. The FCA provides that any person who knowingly submits false claims to the government must pay a civil penalty for each false claim, plus triple the amount of the government’s damages. The amount of this basic civil penalty is regularly adjusted by the cost of living, and the current penalty range is from $5500 to $11,000.
More importantly for our discussion, the qui tam provision of the law allows private persons (called relators) to file lawsuits for violations of the FCA on behalf of the government and to receive part of any penalty imposed. The person bringing the action is a type of a whistleblower, but one who initiates legal action on his or her own rather than simply reporting it to a government agency. If the government believes it is a worthwhile case and intervenes in the lawsuit, then the relator (whistleblower) is entitled to receive between 15 and 25 percent of the amount the government recovers. If the government thinks winning is a long shot and declines to intervene in the lawsuit, the relator’s share increases to 25 to 30 percent.
A few whistleblowers have become rich (and famous, thanks to an ABC News story), with awards ranging in the neighborhood of $100 million. In 2012, a single whistleblower, Bradley Birkenfeld, a former UBS employee, was awarded $104 million by the Internal Revenue Service (IRS), making him the most highly rewarded whistleblower in history. Birkenfeld also spent time in prison for participating in the tax fraud he reported. In 2009, ten former Pfizer employees were awarded $102 million for exposing an illegal promotion of prescription medications. John Kopchinski, the original whistleblower and one of the ten, received $50 million. In another case involving the health care company HCA, two employees who blew the whistle on Medicare fraud ended up receiving a combined total of $100 million.
It is not just the size of the reward that should get your attention but also the amount of money these employees saved taxpayers and/or shareholders. They turned in companies that were cheating the Centers for Medicare and Medicaid Services (affecting taxpayers), the IRS (affecting government revenues), and private health insurance (affecting premiums). The public saved far more than the reward paid to the whistleblowers.
Incredibly high rewards such as the aforementioned are somewhat unusual, but according to National Whistleblower Center director Stephen Kohn, “Birkenfeld’s and Eckard’s rewards act like advertisements for the U.S. government’s whistleblower programs, which make hundreds of rewards every year.” The FCA is one of four laws under which whistleblowers can receive a reward; the others are administered by the IRS, the SEC, and the Commodity Futures Trading Commission. Most whistleblowers do not get paid until the lawsuit and all appeals have concluded and the full amount of any monetary penalty has been paid to the government. Many complex cases of business fraud can go on for several years before a verdict is rendered and appealed (or a settlement is reached). An employee whose identity has been disclosed and who has been unofficially blacklisted may not see any reward money for several years.
Sometimes employees, including managers, face an ethical dilemma that they seek to address from within rather than becoming a whistleblower. The risk is that they may be ignored or that their speaking up will be held against them. However, companies should want and expect employees to step forward and report wrongdoing to their superiors, and they should support that decision, not punish it. Sallie Krawcheck, a financial industry executive, was not a whistleblower in either the classical or the legal sense. She went to her boss with her discovery of wrongdoing at work, which means she had no legal protection under whistleblower statutes. Read her story in the following box.
### Summary
Employees should understand that there are limits to what can be posted about their employer online, just as there are limits to what they can say in the workplace, and that the First Amendment generally does not protect such speech. Whistleblowers are protected, and sometimes rewarded, for their willingness to come forward, but they can still face a hostile environment in some situations. Employees should not use whistleblowing as an attempt to get back at a boss or employer they do not like; rather, they should use it as a means to stop serious wrongdoing.
### Assessment Questions
### Endnotes
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# Recognizing and Respecting the Rights of All
## Introduction
Effective business managers in the twenty-first century need to be aware of a broad array of ethical choices they can make that affect their employees, their customers, and society as a whole. What these decisions have in common is the need for managers to recognize and respect the rights of all.
Actively supporting human diversity at work, for instance, benefits the business organization as well as society on a broader level (). Thus, ethical managers recognize and accommodate the special needs of some employees, show respect for workers’ different faiths, appreciate and accept their differing sexual orientations and identification, and ensure pay equity for all. Ethical managers are also tuned in to public sentiment, such as calls by stakeholders to respect the rights of animals, and they monitor trends in these social attitudes, especially on social media.
How would you, as a manager, ensure a workplace that values inclusion and diversity? How would you respond to employees who resisted such a workplace? How would you approach broader social concerns such as income inequality or animal rights? This chapter introduces the potential impacts on business of some of the most pressing social themes of our time, and it discusses ways managers can respect the rights of all and improve business results by choosing an ethical path. |
# Recognizing and Respecting the Rights of All
## Diversity and Inclusion in the Workforce
### Learning Objectives
By the end of this section, you will be able to:
1. Explain the benefits of employee diversity in the workplace
2. Discuss the challenges presented by workplace diversity
Diversity is not simply a box to be checked; rather, it is an approach to business that unites ethical management and high performance. Business leaders in the global economy recognize the benefits of a diverse workforce and see it as an organizational strength, not as a mere slogan or a form of regulatory compliance with the law. They recognize that diversity can enhance performance and drive innovation; conversely, adhering to the traditional business practices of the past can cost them talented employees and loyal customers.
A study by global management consulting firm McKinsey & Company indicates that businesses with gender and ethnic diversity outperform others. According to Mike Dillon, chief diversity and inclusion officer for PwC in San Francisco, “attracting, retaining and developing a diverse group of professionals stirs innovation and drives growth.” Living this goal means not only recruiting, hiring, and training talent from a wide demographic spectrum but also including all employees in every aspect of the organization.
### Workplace Diversity
The twenty-first century workplace features much greater diversity than was common even a couple of generations ago. Individuals who might once have faced employment challenges because of religious beliefs, ability differences, or sexual orientation now regularly join their peers in interview pools and on the job. Each may bring a new outlook and different information to the table; employees can no longer take for granted that their coworkers think the same way they do. This pushes them to question their own assumptions, expand their understanding, and appreciate alternate viewpoints. The result is more creative ideas, approaches, and solutions. Thus, diversity may also enhance corporate decision-making.
Communicating with those who differ from us may require us to make an extra effort and even change our viewpoint, but it leads to better collaboration and more favorable outcomes overall, according to David Rock, director of the Neuro-Leadership Institute in New York City, who says diverse coworkers “challenge their own and others’ thinking.” According to the Society for Human Resource Management (SHRM), organizational diversity now includes more than just racial, gender, and religious differences. It also encompasses different thinking styles and personality types, as well as other factors such as physical and cognitive abilities and sexual orientation, all of which influence the way people perceive the world. “Finding the right mix of individuals to work on teams, and creating the conditions in which they can excel, are key business goals for today’s leaders, given that collaboration has become a paradigm of the twenty-first century workplace,” according to an SHRM article.
Attracting workers who are not all alike is an important first step in the process of achieving greater diversity. However, managers cannot stop there. Their goals must also encompass inclusion, or the engagement of all employees in the corporate culture. “The far bigger challenge is how people interact with each other once they’re on the job,” says Howard J. Ross, founder and chief learning officer at Cook Ross, a consulting firm specializing in diversity. “Diversity is being invited to the party; inclusion is being asked to dance. Diversity is about the ingredients, the mix of people and perspectives. Inclusion is about the container—the place that allows employees to feel they belong, to feel both accepted and different.”
Workplace diversity is not a new policy idea; its origins date back to at least the passage of the Civil Rights Act of 1964 (CRA) or before. Census figures show that women made up less than 29 percent of the civilian workforce when Congress passed Title VII of the CRA prohibiting workplace discrimination. After passage of the law, gender diversity in the workplace expanded significantly. According to the U.S. Bureau of Labor Statistics (BLS), the percentage of women in the labor force increased from 48 percent in 1977 to a peak of 60 percent in 1999. Over the last five years, the percentage has held relatively steady at 57 percent. Over the past forty years, the total number of women in the labor force has risen from 41 million in 1977 to 71 million in 2017. The BLS projects that the number of women in the U.S. labor force will reach 92 million in 2050 (an increase that far outstrips population growth).
The statistical data show a similar trend for African American, Asian American, and Hispanic workers (). Just before passage of the CRA in 1964, the percentages of minorities in the official on-the-books workforce were relatively small compared with their representation in the total population. In 1966, Asians accounted for just 0.5 percent of private-sector employment, with Hispanics at 2.5 percent and African Americans at 8.2 percent. However, Hispanic employment numbers have significantly increased since the CRA became law; they are expected to more than double from 15 percent in 2010 to 30 percent of the labor force in 2050. Similarly, Asian Americans are projected to increase their share from 5 to 8 percent between 2010 and 2050.
Much more progress remains to be made, however. For example, many people think of the technology sector as the workplace of open-minded millennials. Yet Google, as one example of a large and successful company, revealed in its latest diversity statistics that its progress toward a more inclusive workforce may be steady but it is very slow. Men still account for the great majority of employees at the corporation; only about 30 percent are women, and women fill fewer than 20 percent of Google’s technical roles (). The company has shown a similar lack of gender diversity in leadership roles, where women hold fewer than 25 percent of positions. Despite modest progress, an ocean-sized gap remains to be narrowed. When it comes to ethnicity, approximately 56 percent of Google employees are White. About 35 percent are Asian, 3.5 percent are Latino, and 2.4 percent are Black, and of the company’s management and leadership roles, 68 percent are held by White people.
Google is not alone in coming up short on diversity. Recruiting and hiring a diverse workforce has been a challenge for most major technology companies, including Facebook, Apple, and Yahoo (now owned by Verizon); all have reported gender and ethnic shortfalls in their workforces.
The Equal Employment Opportunity Commission (EEOC) has made available 2014 data comparing the participation of women and minorities in the high-technology sector with their participation in U.S. private-sector employment overall, and the results show the technology sector still lags. Compared with all private-sector industries, the high-technology industry employs a larger share of Whites (68.5%), Asian Americans (14%), and men (64%), and a smaller share of African Americans (7.4%), Latinos (8%), and women (36%). Whites also represent a much higher share of those in the executive category (83.3%), whereas other groups hold a significantly lower share, including African Americans (2%), Latinos (3.1%), and Asian Americans (10.6%). In addition, and perhaps not surprisingly, 80 percent of executives are men and only 20 percent are women. This compares negatively with all other private-sector industries, in which 70 percent of executives are men and 30 percent women.
Technology companies are generally not trying to hide the problem. Many have been publicly releasing diversity statistics since 2014, and they have been vocal about their intentions to close diversity gaps. More than thirty technology companies, including Intel, Spotify, Lyft, Airbnb, and Pinterest, each signed a written pledge to increase workforce diversity and inclusion, and Google pledged to spend more than $100 million to address diversity issues.
Diversity and inclusion are positive steps for business organizations, and despite their sometimes slow pace, the majority are moving in the right direction. Diversity strengthens the company’s internal relationships with employees and improves employee morale, as well as its external relationships with customer groups. Communication, a core value of most successful businesses, becomes more effective with a diverse workforce. Performance improves for multiple reasons, not the least of which is that acknowledging diversity and respecting differences is the ethical thing to do.
### Adding Value through Diversity
Diversity need not be a financial drag on a company, measured as a cost of compliance with no return on the investment. A recent McKinsey & Company study concluded that companies that adopt diversity policies do well financially, realizing what is sometimes called a diversity dividend. The study results demonstrated a statistically significant relationship of better financial performance from companies with a more diverse leadership team, as indicated in . Companies in the top 25 percent in terms of gender diversity were 15 percent more likely to post financial returns above their industry median in the United States. Likewise, companies in the top 25 percent of racial and/or ethnic diversity were 35 percent more likely to show returns exceeding their respective industry median.
These results demonstrate a positive correlation between diversity and performance, rebutting any claim that affirmative action and other such programs are social engineering that constitutes a financial drag on earnings. In fact, the results reveal a negative correlation between performance and lack of diversity, with companies in the bottom 25 percent for gender and ethnicity or race proving to be statistically less likely to achieve above-average financial returns than the average companies. Non-diverse companies were not leaders in performance indicators. Positive correlations do not equal causation, of course, and greater gender and ethnic diversity do not automatically translate into profit. Rather, as this chapter shows, they enhance creativity and decision-making, employee satisfaction, an ethical work environment, and customer goodwill, all of which, in turn, improve operations and boost performance.
Diversity is not a concept that matters only for the rank-and-file workforce; it makes a difference at all levels of an organization. The McKinsey & Company study, which examined twenty thousand firms in ninety countries, also found that companies in the top 25 percent for executive and/or board diversity had returns on equity more than 50 percent higher than those companies that ranked in the lowest 25 percent. Companies with a higher percentage of female executives tended to be more profitable.
Achieving equal representation in employment based on demographic data is the ethical thing to do because it represents the essential American ideal of equal opportunity for all. It is a basic assumption of an egalitarian society that all have the same chance without being hindered by immutable characteristics. However, there are also directly relevant business reasons to do it. More diverse companies perform better, as we saw earlier in this chapter, but why? The reasons are intriguing and complex. Among them are that diversity improves a company’s chances of attracting top talent and that considering all points of view may lead to better decision-making. Diversity also improves customer experience and employee satisfaction.
To achieve improved results, companies need to expand their definition of diversity beyond race and gender. For example, differences in age, experience, and country of residence may result in a more refined global mind-set and cultural fluency, which can help companies succeed in international business. A salesperson may know the language of customers or potential customers from a specific region or country, for example, or a customer service representative may understand the norms of another culture. Diverse product-development teams can grasp what a group of customers may want that is not currently being offered.
Resorting to the same approaches repeatedly is not likely to result in breakthrough solutions. Diversity, however, provides usefully divergent perspectives on the business challenges companies face. New ideas help solve old problems—another way diversity makes a positive contribution to the bottom line.
### The Challenges of a Diverse Workforce
Diversity is not always an instant success; it can sometimes introduce workplace tensions and lead to significant challenges for a business to address. Some employees simply are slow to come around to a greater appreciation of the value of diversity because they may never have considered this perspective before. Others may be prejudiced and consequently attempt to undermine the success of diversity initiatives in general. In 2017, for example, a senior software engineer’s memo criticizing Google’s diversity initiatives was leaked, creating significant protests on social media and adverse publicity in national news outlets. The memo asserted “biological causes” and “men’s higher drive for status” to account for women’s unequal representation in Google’s technology departments and leadership.
Google’s response was quick. The engineer was fired, and statements were released emphasizing the company’s commitment to diversity. Although Google was applauded for its quick response, however, some argued that an employee should be free to express personal opinions without punishment (despite the fact that there is no right of free speech while at work in the private sector).
In the latest development, the fired engineer and a coworker filed a class-action lawsuit against Google on behalf of three specific groups of employees who claim they have been discriminated against by Google: Whites, conservatives, and men. This is not just the standard “reverse discrimination” lawsuit; it goes to the heart of the culture of diversity and one of its greatest challenges for management—the backlash against change.
In February 2018, the National Labor Relations Board ruled that Google’s termination of the engineer did not violate federal labor law and that Google had discharged the employee only for inappropriate but unprotected conduct or speech that demeaned women and had no relationship to any terms of employment. Although this ruling settles the administrative labor law aspect of the case, it has no effect on the private wrongful termination lawsuit filed by the engineer, which is still proceeding.
Yet other employees are resistant to change in whatever form it takes. As inclusion initiatives and considerations of diversity become more prominent in employment practices, wise leaders should be prepared to fully explain the advantages to the company of greater diversity in the workforce as well as making the appropriate accommodations to support it. Accommodations can take various forms. For example, if you hire more women, should you change the way you run meetings so everyone has a chance to be heard? Have you recognized that women returning to work after childrearing may bring improved skills such as time management or the ability to work well under pressure? If you are hiring more people of different faiths, should you set aside a prayer room? Should you give out tickets to football games as incentives? Or build team spirit with trips to a local bar? Your managers may need to accept that these initiatives may not suit everyone. Adherents of some faiths may abstain from alcohol, and some people prefer cultural events to sports. Many might welcome a menu of perquisites (“perks”) from which to choose, and these will not necessarily be the ones that were valued in the past. Mentoring new and diverse peers can help erase bias and overcome preconceptions about others. However, all levels of a company must be engaged in achieving diversity, and all must work together to overcome resistance.
### Summary
A diverse workforce yields many positive outcomes for a company. Access to a deep pool of talent, positive customer experiences, and strong performance are all documented positives. Diversity may also bring some initial challenges, and some employees can be reluctant to see its advantages, but committed managers can deal with these obstacles effectively and make diversity a success through inclusion.
### Assessment Questions
### Endnotes
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# Recognizing and Respecting the Rights of All
## Accommodating Different Abilities and Faiths
### Learning Objectives
By the end of this section, you will be able to:
1. Identify workplace accommodations often provided for persons with differing abilities
2. Describe workplace accommodations made for religious reasons
The traditional definition of diversity is broad, encompassing not only race, ethnicity, and gender but also religious beliefs, national origin, and cognitive and physical abilities as well as sexual preference or orientation. This section examines two of these categories, religion and ability, looking at how an ethical manager handles them as part of an overall diversity policy. In both cases, the concept of reasonable accommodation means an employer must try to allow for differences among the workforce.
### Protections for People with Disabilities
In the United States, the Americans with Disabilities Act (ADA), passed in 1990, stipulates that a person has a disability if he or she has a physical or mental impairment that reduces participation in “a major life activity,” such as work. An employer may not discriminate in offering employment to an individual who is diagnosed as having such a disability. Furthermore, if employment is offered, the employer is obliged to make reasonable accommodations to enable him or her to carry out normal job tasks. Making reasonable accommodations may include altering the physical workplace so it is readily accessible, restructuring a job, providing or modifying equipment or devices, or offering part-time or modified work schedules. Other accommodations could include providing readers, interpreters, or other necessary forms of assistance such as an assistive animal (). The ADA also prohibits discriminating against individuals with disabilities in providing access to government services, public accommodations, transportation, telecommunications, and other essential services.
Access and accommodation for employees with physical or mental disabilities are good for business because they expand the potential pool of good workers. It is also ethical to have compassion for those who want to work and be contributing members of society. This principle holds for customers as well as employees. Recognizing the need for protection in this area, the federal government has enacted several laws to provide it. The Disability Rights Division of the U.S. Department of Justice lists ten different federal laws protecting people with disabilities, including not only the ADA but also laws such as the Rehabilitation Act, the Air Carrier Access Act, and the Architectural Barriers Act.
A key part of complying with the law is understanding and applying the concept of reasonableness: “An employer is required to provide a reasonable accommodation to a qualified applicant or employee with a disability unless the employer can show that the accommodation would be an undue hardship—that is, that it would require significant difficulty or expense.”
The law does not require an employee to refer to the ADA or to “disability” or “reasonable accommodation” when requesting some type of assistance. Managers need to be able to recognize the variety of ways in which a request for an accommodation is communicated. For example, an employee might not specifically say, “I need a reasonable accommodation for my disability” but rather, “I’m having a hard time getting to work on time because of the medical treatments I’m undergoing.” This example demonstrates a challenge employers may face under the ADA in properly identifying requests for accommodation.
### Managing Religious Diversity in the Workplace
Title VII of the CRA, which governs nondiscrimination, applies the same rules to the religious beliefs (or nonbeliefs) of employees and job applicants as it does to race, gender, and other categories. The essence of the law mandates four tenets that all employers should follow: nondiscrimination, nonharassment, nonretaliation, and reasonable accommodation.
Regulations require that an employee notify the employer of a bona fide religious belief for which he or she wants protection, but the employee need not expressly request a specific accommodation. The employer must consider all possible accommodations that do not require violating the individual’s beliefs and/or practices, such as allowing time off (). However, the accommodation need not pose undue hardship on the firm, in terms of either scheduling or financial sacrifice. The employer must present proof of hardship if it decides it cannot offer an accommodation.
Some cases of accommodation are based on cultural heritage rather than religion.
Reasonable accommodation may require more than just a couple of hours off to go to weekly worship or to celebrate a holiday. It may extend to dress and uniform requirements, grooming rules, work rules and responsibilities, religious expression and displays, prayer or meditation rooms, and dietary issues.
The law also protects those who do not have traditional beliefs. In Welsh v. United States (1970), the Supreme Court ruled that any belief occupying “a place parallel to that filled by the God of those admittedly qualifying for the exception” is covered by the law. A nontheistic value system consisting of personal, moral, or ethical beliefs that is sincerely held with the strength of traditional religious views is deserving of protection. Protected individuals need not have a religion; indeed, if atheist or agnostic, they may have no religion at all.
Religion has become a hot-button issue for some political groups in the United States. Religious tolerance is the official national policy enshrined in the Constitution, but it has come under attack by some who want to label the United States an exclusively Christian nation.
### Summary
To accommodate religious beliefs, the absence of formal religious faith, or disabilities, businesses should make every reasonable accommodation they can to allow workers to contribute to the company. This may require scheduling flexibility, the use of special devices, or simply an understanding manager.
### Assessment Questions
### Endnotes
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# Recognizing and Respecting the Rights of All
## Sexual Identification and Orientation
### Learning Objectives
By the end of this section, you will be able to:
1. Explain how sexual identification and orientation are protected by law
2. Discuss the ethical issues raised in the workplace by differences in sexual identification and orientation
As society expands its understanding and appreciation of sexual orientation and identity, companies and managers must adopt a more inclusive perspective that keeps pace with evolving norms. Successful managers are those who willing to create a more welcoming work environment for all employees, given the wide array of sexual orientations and identities evident today.
### Legal Protections
Workplace discrimination in this area means treating someone differently solely because of his or her sexual identification or sexual orientation, which can include, but is not limited to, identification as gay or lesbian (homosexual), bisexual, transsexual, or straight (heterosexual). Discrimination may also be based on an individual’s association with someone of a different sexual orientation. Forms that such discrimination may take in the workplace include denial of opportunities, termination, and sexual assault, as well as the use of offensive terms, stereotyping, and other harassment.
Although the U.S. Supreme Court ruled in United States v. Windsor (2013) that Section 3 of the 1996 Defense of Marriage Act (which had restricted the federal interpretations of “marriage” and “spouse” to opposite-sex unions) was unconstitutional, and guaranteed same-sex couples the right to marry in Obergefell v. Hodges (2015), marital status has little or no direct applicability to the circumstances of someone’s employment. In terms of legal protections at work, the LGBTQ community had been at a disadvantage because Title VII of the CRA was not interpreted to address sexual orientation and federal law did not prohibit discrimination based on this characteristic. In the 2020 Supreme Court case Bostock v. Clayton County, the Court held that discrimination based on "sex" includes discrimination based on sexual orientation and gender identity.
While the 2020 Supreme Court decision extended protection in terms of employment considerations, discrimination in other forms remains. For example, a proposed law named the Equality Act is a federal LGBTQ nondiscrimination bill that would provide protections for LGBTQ individuals in employment, housing, credit, and education. But unless and until it passes, it remains up to the business community to provide protections consistent with those provided under federal law for other employees or applicants.
### Ethical Considerations
In the absence of a specific law, LGBTQ issues present a unique opportunity for ethical leadership. Many companies choose to do the ethically and socially responsible thing and treat all workers equally, for example, by extending the same benefits to same-sex partners that they extend to opposite-sex spouses. Ethical leaders are also willing to listen and be considerate when dealing with employees who may still be coming to an understanding of their sexual identification.
Financial and performance-related considerations come into play as well. Denver Investments recently analyzed the stock performance of companies before and after their adoption of LGBTQ-inclusive workplace policies. The number of companies outperforming their peers in various industries increased after companies adopted LGBTQ-inclusive workplace policies. Once again, being ethical does not mean losing money or performing poorly.
In fact, states that have passed legislation considered anti-LGBTQ by the wider U.S. community, such as the Religious Freedom Restoration Act in Indiana or North Carolina’s H.B. 2, the infamous “bathroom bill” that would require transgender individuals to use the restroom corresponding with their birth certificate, have experienced significant economic pushback. These states have seen statewide and targeted boycotts by consumers, major corporations, national organizations such as the National Collegiate Athletic Association, and even other cities and states. In 2016, in response to H.B. 2, nearly seventy large U.S. companies, including American Airlines, Apple, DuPont, General Electric, IBM, Morgan Stanley, and Wal-Mart, signed an amicus (“friend of the court”) brief in opposition to the unpopular North Carolina bill. In 2017, the North Carolina legislature replaced the law, and a 2019 court settlement substantially altered it; however, the remaining North Carolina law limits local municipalities' protections for LGBTQ people. Indiana’s Religious Freedom Restoration Act evoked a similar backlash in 2015 and public criticism from U.S. businesses.
To assess LGBTQ equality policies at a corporate level, the Human Rights Campaign foundation publishes an annual Corporate Equality Index (CEI) of approximately one thousand large U.S. companies and scores each on a scale of 0 to 100 on the basis of how LGBTQ-friendly its benefits and employment policies are (). More than six hundred companies recently earned a perfect score in the 2018 CEI, including such household names as AT&T, Boeing, Coca-Cola, Gap Inc., General Motors, Johnson & Johnson, Kellogg, United Parcel Service, and Xerox.
Another organization tracking LGBTQ equality and inclusion in the workplace is the National LGBT Chamber of Commerce, which issues third-party certification for businesses that are majority-owned by LGBT individuals. There are currently more than one thousand LGBT-certified business enterprises across the country, although California, New York, Texas, Florida, and Georgia account for approximately 50 percent of them. Although these are all top-ranked states for new business startups in general, they are also home to multiple Fortune 500 companies whose diversity programs encourage LGBT-certified businesses to become part of their supply chains. Examples of large LGBT-friendly companies with headquarters in these states are American Airlines, JPMorgan Chase, SunTrust Bank, and Pacific Gas & Electric.
### Summary
Although about half the states prohibit sexual orientation discrimination in private and public workplaces and a few do so in public workplaces only, federal law does not. Successful companies will not only follow the applicable law but also develop ethical policies to send a clear message that they are interested in job skills and abilities, not sexual orientation or personal life choices.
### Assessment Questions
### Endnotes
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# Recognizing and Respecting the Rights of All
## Income Inequalities
### Learning Objectives
By the end of this section, you will be able to:
1. Explain why income inequality is a problem for the United States and the world
2. Analyze the effects of income inequality on the middle class
3. Describe possible solutions to the problem of income inequality
The gap in earnings between the United States’ affluent upper class and the rest of the country continues to grow every year. The imbalance in the distribution of income among the participants of an economy, or income inequality, is an enormous challenge for U.S. businesses and for society. The middle class, often called the engine of growth and prosperity, is shrinking, and new ethical, cultural, and economic problems are following from that change. Some identify income inequality as an ethical problem, some as an economic problem. Perhaps it is both. This section will address income inequality and the way it affects U.S. businesses and consumers.
### The Middle Class in the United States
Data collected by economic researchers at the University of California show that income disparities have become more pronounced over the past thirty-five years, with the top 10 percent of income earners averaging ten times as much income as the bottom 90 percent, and the top 1 percent making more than forty times what the bottom 90 percent does. The percentage of total U.S. income earned by the top 1 percent increased from 8 percent to 22 percent during this period. indicates the disparity as of 2015.
The U.S. economy was built largely on the premise of an expanding and prosperous middle class to which everyone had a chance of belonging. This ideal set the United States apart from other countries, in its own eyes and those of the world. In the years after World War II, the GI Bill and returning prosperity provided veterans with money for education, home mortgages, and even small businesses, all of which helped the economy grow. For the first time, many people could afford homes of their own, and residential home construction reached record rates. Families bought cars and opened credit card accounts. The culture of the middle class with picket fences, backyard barbecues, and black-and-white televisions had arrived. Television shows such as Leave it to Beaver and Father Knows Best reflected the “good life” desired by many in this newly emerging group. By the mid-1960s, middle-class wage earners were fast becoming the engine of the world’s largest economy.
The middle class is not a homogenous group, however. For example, split fairly evenly between Democratic and Republican parties, the middle class helped elect Republican George W. Bush in 2004 and Democrat Barack Obama in 2008 and 2012. And, of course, a suburban house with a white picket fence represents a consumption economy, which is not everyone’s idea of utopia, nor should it be. More importantly, not everyone had equal access to this ideal. But one thing almost everyone agrees on is that a shrinking middle class is not good for the economy. Data from the International Monetary Fund indicate the U.S. middle class is going in the wrong direction. Only one-quarter of 1 percent of all U.S. households have moved up from the middle- to the upper-income bracket since 2000, while twelve times that many have slid to the lower-income bracket. That is a complete reversal from the period between 1970 and 2000, when middle-income households were more likely to move up than down. According to Business Insider, the U.S. middle class is “hollowing out, and it’s hurting U.S. economic growth.”
Not only has the total wealth of middle-income families remained flat () but the overall percentage of middle-income households in the United States has shrunk from almost 60 percent in 1970 to only 47 percent in 2014, a very significant drop. Because consumers of comfortable means are a huge driver of the U.S. economy, with their household consumption of goods and services like food, energy, and education making up more than two-thirds of the nation’s gross domestic product (GDP), the downward trend is an economic challenge for corporate America and the government. Business must be part of the solution. But exactly what can U.S. companies do to help address income inequality?
### Addressing Income Inequality
Robert Reich was U.S. Secretary of Labor from 1993 to 1997 and served in the administrations of three presidents (Gerald Ford, Jimmy Carter, and Bill Clinton). He is one of the nation’s leading experts on the labor market and the economy and is currently the chancellor’s professor of Public Policy at University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. Reich recently told this story: “I was visited in my office by the chairman of one of the country’s biggest high-tech firms. He wanted to talk about the causes and consequences of widening inequality and the shrinking middle class, and what to do about it.” Reich asked the chairman why he was concerned. “Because the American middle class is the core of our customer base. If they can’t afford our products in the years ahead, we’re in deep trouble.”
Reich is hearing a similar concern from a growing number of business leaders, who see an economy that is leaving out too many people. Business leaders know the U.S. economy cannot grow when wages are declining, nor can their businesses succeed over the long term without a growing or at least a stable middle class. Other business leaders, such as Lloyd Blankfein, CEO of Goldman Sachs, have also said that income inequality is a negative development. Reich quoted Blankfein: “It is destabilizing the nation and is responsible for the divisions in the country . . . too much of the GDP over the last generation has gone to too few of the people.”
Some business leaders, such as Bill Gross, chair of the world’s largest bond-trading firm, suggest raising the federal minimum wage, currently $7.25 per hour for all employers doing any type of business in interstate commerce (e.g., sending or receiving mail out of state) or for any company with more than $500,000 in sales. Many business leaders and economists agree that a higher minimum wage would help address at least part of the problem of income inequality; industrialized economies function best when income inequality is minimal, according to Gross and others who advocate for policies that bring the power of workers and corporations back into balance. A hike in the minimum wage affects middle-class workers in two ways. First, it is a direct help to those who are part of a two-earner family at the lower end of the middle class, giving them more income to spend on necessities. Second, many higher-paid workers earn a wage that is tied to the minimum wage. Their salaries would increase as well.
Without congressional action to raise the minimum wage, states have taken the lead, along with businesses that are voluntarily raising their own minimum wage. Twenty-nine states have minimum wages that exceed the federal rate of $7.25 per hour. Costco, T.J. Maxx, Marshalls, Ikea, Starbucks, Gap, In-and-Out Burger, Whole Foods, Ben & Jerry’s, Shake Shack, and McDonalds have also raised minimum wages in the past two years. Target recently announced a rise in its minimum wage to eleven dollars per hour, and banks, including Wells Fargo, PNC Financial Services, and Fifth Third Bank, announced a fifteen-dollar minimum wage.
The American Sustainable Business Council, in conjunction with Business for a Fair Wage, surveyed more than five hundred small businesses, and the results were surprising. A clear majority (58%–66%, depending on region) supported raising the minimum wage to at least ten dollars per hour. Business owners were not simply being ethical; most understand that their business would benefit from an increase in consumers’ purchasing power, and that this, in turn, would help the general economy. Frank Knapp, CEO of the South Carolina Small Business Chamber of Commerce representing five thousand business owners, said a higher minimum wage “will put more money in the hands of 300,000 South Carolinians who make less than ten dollars per hour and they will spend it here in our local economies. This minimum wage increase will also benefit another 150,000 employees who will have their wages adjusted. The resulting net $500 million increase in state GDP will be good for small businesses and good for the economy of South Carolina.”
In addition to paying a higher wage, businesses can help workers move to, or stay in, the middle class in other ways. For decades, some companies have hired many full-time workers as independent contractors because it saves them money on a variety of employee benefits they do not have to offer as a result. However, that practice shifts the burden to the workers, who now have to pay the full cost of their health insurance, workers’ compensation, unemployment benefits, time off, and payroll taxes. A recent Department of Labor study indicates that employer costs for employee compensation averaged $35.64 per hour worked in September 2017; wages and salaries averaged $24.33 per hour worked and accounted for 68 percent of these costs, whereas benefit costs averaged $11.31 and accounted for the remaining 32 percent. That means if employees on the payroll were paid as independent contractors, their pay would effectively be about one-third less, assuming they purchased benefits on their own. The 30 percent difference companies save by hiring independent contractors is often the margin between being in the middle class and falling below it.
Yet sympathy for raising the minimum wage at either the federal or state level to sustain the middle class or reduce poverty in general has not been unanimous. Indeed, some economists have questioned whether a positive correlation exists between greater wages and a lowering of the poverty rate. Representative of such thought is the work of David Neumark, an economist at the University of California, Irvine, and William L. Wascher, a long-time economic researcher on the staff of the Board of Governors of the Federal Reserve System. They argue that, however well-meaning such efforts might be, simply raising the minimum wage can be counterproductive to driving down poverty. Rather, they maintain, the right calculus for achieving this goal is much more complex. As they put it, “we are hard-pressed to imagine a compelling argument for a higher minimum wage when it neither helps low-income families nor reduces poverty.” Instead, the federal and state governments should consider a series of steps, such as the Earned Income Tax Credit, that would be more effective in mitigating poverty.
### Pay Equity as a Corollary of Income Equality
The issue of income inequality is of particular significance as it relates to women. According to the World Economic Forum (WEF), gender inequality is strongly associated with income inequality. The WEF studied the association between the two phenomena in 140 countries over the past twenty years and discovered they are linked virtually everywhere, not only in developing nations. The issue of pay discrimination is addressed elsewhere in this textbook; however, the issue merits mention here as a part of the bigger picture of equality in the workplace. Adding to the disparity in income between men and women is the reality that many women are single mothers with dependent children and sometimes grandchildren. Hence, any reduction in their earning power has direct implications for their dependents, too, constituting injustice to multiple generations.
According to multiple studies, including those by the American Association of University Women and the Pew Research Center, on average, women are paid approximately 80 percent of what men are paid. Laws that attempt to address this issue have not eradicated the problem. A recent trend is to take legislative action at the state rather than the federal level. A New Jersey law, for example, was named the Diane B. Allen Equal Pay Act to honor a retired state senator who experienced pay discrimination. It will be the strongest such law in the country, allowing victims of discrimination to seek redress for up to six years of underpayment, and monetary damages for a prevailing plaintiff will be tripled.
The most significant part of the law, however, is a seemingly small change in wording that will have a big impact. Rather than requiring “equal pay for equal work,” as does the federal law and most state laws aimed at the gender wage gap, the Diane B. Allen Equal Pay Act will require “equal pay for substantially similar work.” This means that if a New Jersey woman has a different title than her male colleague but performs the same kinds of tasks and has the same level of responsibility, she must be paid the same. The new law recognizes that slight differences in job titles are sometimes used to justify pay differences but in reality are often arbitrary.
Minnesota recently passed a similar law, but it applies only to state government employees, not private-sector workers. It mandates that women be paid the same for comparable jobs and analyzes the work performed on the basis of how much knowledge, problem solving, and responsibility is required, and on working conditions rather than merely on job titles.
Ethical business managers will see this trend as an effort to address an ethical issue that has existed for well over a century and will follow the lead of states such as New Jersey and Minnesota. A company can help solve this problem by changing the way it uses job titles and creating a compensation system built on the ideas behind these two laws, which focus on job characteristics and not titles.
### Summary
Income inequality has grown sharply while the U.S. middle class, though vital to economic growth, has continued to shrink. Currently, the federal minimum wage is $7.25 per hour, and many states simply follow the federal lead in establishing their own minimums. Though some economists dispute the existence of a simple, direct link between a shrinking middle class and governmental failure to raise the minimum wage at a sufficiently rapid pace, no one denies that businesses themselves could take the lead here by paying a higher minimum wage. Companies also can commit to hire workers as employees rather than as independent contractors and pay the cost of their benefits, and to pay women the same as men for similar work.
### Assessment Questions
### Endnotes
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# Recognizing and Respecting the Rights of All
## Animal Rights and the Implications for Business
### Learning Objectives
By the end of this section, you will be able to:
1. Explain rising concerns about corporate treatment of animals
2. Explain the concept of agribusiness ethics
3. Describe the financial implications of animal ethics for business
Ethical questions about our treatment of animals arise in several different industries, such as agriculture, medicine, and cosmetics. This section addresses these questions because they form part of the larger picture of the way society treats all living things—including nonhuman animals as well as the environment. All states in the United States have some form of laws to protect animals; some violations carry criminal penalties and some carry civil penalties. Consumer groups and the media have also applied pressure to the business community to consider animal ethics seriously, and businesses have discovered money to be made in the booming business of pets. Of course, as always, we should acknowledge that culture and geography influence our understanding of ethical issues at a personal and a business level.
### A Brief History of the Animal Rights Movement
Rhode Island, along with Boulder, Colorado, and Berkeley, California, led the way in enacting legislation recognizing individuals as guardians, not owners, of their animals, thus giving animals legal status beyond being just items of property. Many U.S. colleges now teach courses on animal rights law, there is strong support for granting fundamental legal rights to animals, and some attorneys, scientists, and ethicists dedicate their careers to animal rights.
The animal movement started in the late nineteenth century when the American Society for the Prevention of Cruelty to Animals (ASPCA) was formed, along with the American Humane Association. The American Welfare Institute and the Humane Society of the United States (HSUS) were established in the 1950s. The first federal animal protection law, the Humane Slaughter Act, was passed in the 1950s to avoid unnecessary suffering to farm animals (ten billion of which are killed every year). The most important U.S. law forbidding cruelty to animals in laboratory settings was enacted in 1966; the Animal Welfare Act requires basic humane conditions to be maintained for animals in testing facilities. Finally, in the 1970s and 1980s, the modern animal rights social movement emerged. It has led to an increased awareness of animal ethics by consumers and businesses.
However, despite significant progress, research using animals for product testing continues to be controversial in the United States, particularly because improved technology has offered humane and effective alternatives. The use of animals in biomedical research has drawn slightly less negative reaction than in consumer product testing, because of the more critical nature of the research. Though animal welfare laws have ameliorated some of the pain of animals used in biomedical research, ethical concerns remain, and veterinarians and physicians are demanding change, as are animal rights groups and policy and ethics experts. Increased integration of ethics in business conduct is operating alongside the desire to recognize animal rights, the entitlement of nonhuman animals to ethical treatment.
### The Ethics of What We Eat
Concern for the welfare of animals beyond pets brings us to the agribusiness industry. This is where groups such as the ASPCA and HSUS have been particularly active. Agribusiness is a huge industry that provides us with the food we eat, including plant-based and animal-based foodstuffs. The industry has changed significantly over the past century, evolving from one consisting primarily of family and/or small businesses to a much larger one dominated mostly by large corporations. Aspects of this business with relevant and interrelated ethical questions range from ecology, animal rights, and economics to food safety and long-term sustainability (). To achieve a high level of sustainability in the world’s food supply chain, all stakeholders—the political sector, the business sector, the finance sector, the academic sector, and the consumer—must work in concert to achieve an optimal result, and a cost-benefit analysis of ethics in the food industry should include a recognition of all their concerns.
Experts predict that for us to meet the food needs of the world’s population, we will need to double food production over the next fifty years. Given this, a high priority in the agribusiness industry ought to be to meet this demand for food at a reasonable price with products that are not a threat to human health and safety, animal health, or the limited resources in Earth’s environment. However, to do so requires attention to factors such as soil and surface water conservation and protection of natural land and water areas. Furthermore, the treatment of animals by everyone in the livestock chain (e.g., livestock farmers, dealers, fish farmers, animal transporters, slaughterhouses) must be appropriate for a society with high legal and ethical standards.
The food chain can be truly sustainable only when it safeguards the social welfare and living environment of the people working in it. This means eliminating corruption, human rights violations (including forced labor and child labor), and poor working conditions. We must also encourage and empower consumers to make informed choices, which includes enforcing labeling regulations and the posting of relevant and accurate dietary information.
Finally, an analysis of the food supply chain must also include an awareness of people’s food needs and preferences. For example, the fact that growing numbers of consumers are adopting vegetarian, vegan, gluten-free, or non–genetically modified organism diets is now apparent at responsive restaurants, grocery stores, and employer-provided cafés. For many, the ethical treatment of animals remains a philosophic issue; however, some rules about what foods are morally acceptable and how they are prepared for consumption (e.g., halal or kosher) are also grounded in faith, so animal rights have religious implications, too.
All in all, consumers’ growing ethical sensitivity about what we eat could ultimately transform agribusiness. More acreage might be assigned to growing fruits and vegetables relative to those given over to livestock grazing, for instance. Or revelations about slaughterhouse processes may reduce our acceptance of the ways in which meat is processed for consumption. The economic consequences for agribusiness of such changes are difficult to underestimate.
### The Use of Animals in Medical and Cosmetic Research
Viewpoints about animals used in medical research are changing in very significant ways and have resulted in a variety of initiatives seeking alternatives to animal testing. As an example, in conjunction with professionals from human and veterinary medicine and the law, the Yale University Hastings Program in Ethics and Health Policy, a bioethics research institute, is seeking alternatives to animal testing that focus on animal welfare.
Animals such as monkeys and dogs are used in medical research ranging from the study of Parkinson disease to toxicity testing and studies of drug interactions and allergies. There is no question that medical research is a valuable and important practice. The question is whether the use of animals is a necessary or even best practice for producing the most reliable results. Alternatives include the use of patient-drug databases, virtual drug trials, computer models and simulations, and noninvasive imaging techniques such as magnetic resonance imaging and computed tomography scans. Other techniques, such as microdosing, use humans not as test animals but as a means to improve the accuracy and reliability of test results. In vitro methods based on human cell and tissue cultures, stem cells, and genetic testing methods are also increasingly available.
As for consumer product testing, which produces the loudest outcry, the Federal Food, Drug, and Cosmetic Act does not require that animal tests be conducted to demonstrate the safety of cosmetics. Rather, companies test formulations on animals in an attempt to protect themselves from liability if a consumer is harmed by a product. However, a significant amount of new research shows that consumer products such as cosmetics can be accurately tested for safety without the abuse of animals. Some companies may resist altering their methods of conducting research, but a growing number are now realizing that their customers are demanding a change.
### Regulating the Use of Animals in Research and Testing
Like virtually every other industrialized nation, the United States permits medical experimentation on animals, with few limitations (assuming sufficient scientific justification). The goal of any laws that exist is not to ban such tests but rather to limit unnecessary animal suffering by establishing standards for the humane treatment and housing of animals in laboratories.
As explained by Stephen Latham, the director of the Interdisciplinary Center for Bioethics at Yale, possible legal and regulatory approaches to animal testing vary on a continuum from strong government regulation and monitoring of all experimentation at one end, to a self-regulated approach that depends on the ethics of the researchers at the other end. The United Kingdom has the most significant regulatory scheme, whereas Japan uses the self-regulation approach. The U.S. approach is somewhere in the middle, the result of a gradual blending of the two approaches.
A movement has begun to win legal recognition of chimpanzees as the near-equivalent of humans, therefore, as “persons” with legal rights. This is analogous to the effort called environmental justice, an attempt to do the same for the environment (discussed in the section on Environmental Justice in Three Special Stakeholders: Society, the Environment, and Government). A nonprofit organization in Florida, the Nonhuman Rights Project, is an animal advocacy group that has hired attorneys to present a theory in court that two chimpanzees (Tommy and Kiko) have the legal standing and right to be freed from cages to live in an outdoor sanctuary (). In this case, the attorneys have been trying for years to get courts to grant the chimps habeas corpus (Latin for “you shall have the body”), a right people have under the U.S. Constitution when held against their will. To date, this effort has been unsuccessful. The courts have extended certain constitutional rights to corporations, such as the First Amendment right to free speech (in the 2010 Citizens United case). Therefore, some reason, a logical extension of that concept would hold that animals and the environment have rights as well.
In cosmetic testing, the United States has relatively few laws protecting animals, whereas about forty other nations have taken more direct action. In 2013, the European Union banned animal testing for cosmetics and the marketing and sale of cosmetics tested on animals. Norway and Switzerland passed similar laws. Outside Europe, a variety of other nations, including Guatemala, India, Israel, New Zealand, South Korea, Taiwan, and Turkey, have also passed laws to ban or limit cosmetic animal testing. U.S. cosmetic companies will not be able to sell their products in any of these countries unless they change their practices. The Humane Cosmetics Act has been introduced but not yet passed by Congress. If enacted, it would end cosmetics testing on animals in the United States and ban the import of animal-tested cosmetics. However, in the current antiregulatory environment, passage seems unlikely.
According to the Humane Society of the United States, a more realistic alternative approach is to develop nonanimal tests that could provide more human safety data, including information about cancer and birth defects related to new products. Consumer pressure can also influence change. If consumer purchases demonstrate a preference for cruelty-free cosmetics and support ending cosmetics animal testing, businesses will get the message. Almost one hundred companies have already ceased testing cosmetics on animals, including The Body Shop, Burt’s Bees, E.L.F. Cosmetics, Lush, and Tom’s of Maine. Lists of such firms are maintained by People for the Ethical Treatment of Animals and similar organizations.
Companies will be wise to adapt to the increasing level of public awareness and consumer expectations, not least because U.S. culture now incorporates pets in almost every aspect of life. Dogs, cats, and other animals function as therapy pets for patients and those experiencing stress; an Uber-style dog service will bring dogs to work or school for a few minutes of companionship. Pets visit hospitals and act as service animals, appearing in restaurants, campuses, and workplaces where they would have been prohibited as recently as ten years ago. According to the American Pet Products Association (APPA), a trade group, two-thirds of U.S. households own a pet, and pet industry sales have tripled in the past fifteen years. The APPA estimates U.S. spending on pets will reach almost $70 billion a year by 2018.
“People are fascinated by pets. We act and spend on them as if they were our children,” says New York University sociology professor Colin Jerolmack, who studies animals in society. As people increasingly want to include pets in all aspects of life, new and different industries have emerged and will continue to do so, such as tourism centered on the presence of pets and retail opportunities such as health insurance for animals, upscale stores, and new products specifically tailored for pets. With interest in pets at an all-time high, businesses cannot ignore the trend, either in terms of revenue to be earned or in terms of the ethical treatment of their fellow animals in laboratories.
### Summary
Mainstream businesses from pharmaceutical and medical companies to grocers and restaurants must all consider the growing public awareness of the ethical treatment of nonhuman animals. This evolving concern has particular consequences for agribusiness in terms of what creatures we consider appropriate to cultivate and eat. Cosmetic companies are increasingly subject to legislative mandates in the global marketplace and to consumer pressure at home to adopt ethical policies with regard to animal testing. An aware consuming public can continue to force improvements in our treatment of animals.
### Assessment Questions
### Endnotes
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# Professions under the Microscope
## Introduction
As consumers, employees, and community members, we see everywhere the extent to which business can contribute to either social well-being or harm. Some career paths invite special scrutiny because of their influential role in society and the extent to which they serve as magnets for business students. Friends and critics of these professions have studied the unique ethical issues they raise and individuals who pursue careers in these fields should give careful consideration to these findings to decide if the benefits outweigh the potential downsides.
Entrepreneurship, for instance, offers the opportunity to construct your own business in the hope of profit, but at some personal and financial cost. Are the potential gains being overplayed when, in fact, most entrepreneurial businesses fail? Advertising is the driver of sales, but are its claims honest and its delivery platforms, including social media, acting in good faith? Do they exert undue or biased influence on the gullible and the young? Insurance is necessary, but what is the proper and ethical role of property insurers, for example, in the face of increasingly dangerous natural disasters? Health care in the United States is extraordinarily expensive, especially compared with that in other industrialized nations, and access is too often limited to those with means. Should quality health care be a right for all rather than a privilege for the few? |
# Professions under the Microscope
## Entrepreneurship and Start-Up Culture
### Learning Objectives
By the end of this section, you will be able to:
1. Identify ethical challenges relating to entrepreneurial start-ups
2. Describe positive and negative effects of growth in a start-up
3. Discuss the role of the founder in instilling an ethical culture
An entrepreneur is a business leader willing to risk starting a new company and offering a product or service he or she hopes will be sustainable and permit the firm to prosper. The entrepreneur may have to find the money required for this venture and typically draws on business experience gained by working for others first. Entrepreneurship often requires hard work, but the potential for economic payoff and career satisfaction appeals to many.
### The Risks of Entrepreneurship
Although the risk of failure associated with starting a business is real and even high, we hear much in the media about success stories and little about those entrepreneurs who crash and burn. Perhaps the allure of entrepreneurship inevitably outshines any mention of the downside. Still, start-ups impose a higher than normal degree of risk, and we turn to the evidence for this now.
What is the specific nature of entrepreneurial risk? Different studies yield different results, but business consultant Patrick Henry reported that “75 percent of venture-backed startups fail.” Henry added that “this statistic is based on a Harvard Business School study by Shikhar Ghosh. In a study by Statistical Brain, ‘Startup Business Failure Rate by Industry,’ the failure rate of all U.S. companies after five years was over 50 percent, and over 70 percent after ten years.”
This figure might be enough to chill the enthusiasm of any would-be entrepreneur who believes an exciting or novel concept is enough to support a successful company with a minimal amount of time and effort and a great deal of other people’s money. Still, the ranks of start-ups expand prodigiously each month in the United States.
Even start-ups that beat the odds financially need to be watchful for a different sort of pitfall, an ethical failure that can be nourished by the very strengths that allow a company to get off the ground. That pitfall is the hubris or excessive pride that may characterize some entrepreneurs, particularly after they have had some initial success. Uber, an application-based, ride-hailing service, was founded in San Francisco by Travis Kalanick and Garrett Camp in 2009. If ever an idea matched the success potential of smartphones, it was this one. Offering a cheaper and more convenient service than hailing a cab on city streets, Uber was valued at $70 billion in 2017 and operated, with varying degrees of success, in seventy countries at that point. However, the corporate culture, especially at headquarters, left many observers aghast in early 2017 after an Uber engineer, Susan Fowler, blogged about her experiences there. Other employees substantiated much of her account, revealing an atmosphere rife with misogyny, homophobia, and sexual harassment.
This culture was permitted—even fostered—by Kalanick, who reigned unchecked for several years over what the New York Times labeled an “aggressive, unrestrained workplace culture.” Muted grumblings from quarters within the company never received much attention outside the firm, allowing Kalanick to become a high-flying role model for would-be entrepreneurs who wished to emulate his success. A reckoning finally arrived when Uber’s board of directors asked him to resign his position as chief executive officer in June 2017.
Yet the workplace culture that prevailed during his years at the company was not unique to Uber. Many firms have experienced it. Holding destructive egos in check is an ethical challenge at many successful businesses, particularly at hard-riding start-ups. Founders and their start-up teams need to be aware of how deeply their attitudes toward others; their visible treatment of employees, customers, and clients; and their display of fairness will come to shape the company they are building. It is not enough for the founders to hypothesize, “we’ll get around to establishing the right protocols after we’re solvent.” Nor is it adequate to insist that standards of courteous business practice will naturally emerge on their own. An initial culture either of ethics or its absence will set a tone from the first day of business. If the founders believe these niceties are not required of them owing to their genius or confidence, such arrogance will displace ethics as a best practice. To believe otherwise is self-deception.
### Why Successful Start-Ups Change as They Grow
A legendary example of a start-up that still inspires many today is the Hewlett-Packard Corporation (HP). Its origins lie in the efforts of Bill Hewlett and David Packard, two Stanford University classmates in the 1930s. Much like members of a garage band, they started their company in a real garage, and the firm has outgrown its humble beginnings many times over ().
Start-ups are exciting. Many of their founders, like the late Steve Jobs of Apple, attain near-rock star status, and the companies can generate enormous profit. They allow many to do what they have always wanted to do and be their own bosses. Yet we often overlook the fact that even some of the most successful entrepreneurs experience many failures before they succeed, and long hours of hard work are typically required even for these failures. Smart entrepreneurs learn from their failures, but each lesson can be painful, frustrating, and time consuming.
A unique personality is required to weather the stresses and strains of a start-up, and it is a personality that tolerates much personal deprivation as it pursues the perceived highest goal of all, success for the firm, no matter what personal or collective costs might be entailed. The culture of entrepreneurialism allows for many business leaders and their staffs to be deprived of a portion of their humanity along the way to success. Thus, a preeminent ethical consideration is whether the result justifies this cost. At the very least, determined entrepreneurs must be advised of these possible sacrifices. They constitute the collateral damage of entrepreneurial dreams that any ambitious start-up founder should contemplate. Will one emerge at the end of the process as the sort of person one most wishes to be?
Even if a start-up becomes what its founders wish it to be—astronomically successful—inevitably it will change as it grows, acquires new locations, and hires more employees. These changes may eventually produce an organization with added layers—essentially, a hardened bureaucracy that slows down and complicates the management process. The company may no longer make essential decisions with the speed and nimbleness that once were possible. In short, success for a start-up is often accompanied by the risk of becoming, over time, exactly the traditional business structure its founders once rejected. So the founders of an entrepreneurial shop, and their successors, must guard against change that radically alters the original spirit of innovation and the free and rapid flow of information, even as the company grows. No business leader seeks bureaucracy, but it typically accompanies growth within any organization.
Particular problems that arise out of bureaucratization are additional layers of management, more codified procedures, and internal obstructions that surface as a business attempts to capitalize on its initial success. As more employees are added to the mix, the original team’s sense of common purpose can become diluted.
Max Weber (1864–1920), the German academic, economist, and sociologist, appreciated the consequences of bureaucracy years ago. In Wirtschaft und Gesellschaft [Economy and Society], published posthumously in 1925, he pointed out, “in the private economy, [bureaucracy emerges] only in the most advanced institutions of capitalism.” Weber cemented the link between bureaucracy and capitalism further: “The development of the money economy [emphasis is Weber’s] . . . is a presupposition of bureaucracy. Today it not only prevails but is predominant.”
Because start-ups constitute an “advanced” feature of capitalism, and because bureaucracy presupposes a “money economy,” Weber prophesied that agile start-ups would be ripe for bureaucratization as they grow and age. Finally, he included this acknowledgement of the permanence of bureaucracy: “Once it is firmly established, bureaucracy is among those social structures which are the hardest to destroy.”
More recently, Michael A. Lutzker confirmed Weber’s testimony on the inevitability of bureaucracy: “The administrative function has of course been a pervasive element of all societies, ancient, medieval, and modern, but Weber was among the first to recognize the distinctive character of bureaucracy in the modern era.”
Simply put, the very same success that permits a start-up to flourish often produces bureaucratic structures that chip away at the free-flowing camaraderie that allowed a handful of founders to act instantly and with one mind. As the staff expands, employees’ ranks become more defined, titles and hierarchies appear, and individual achievements become harder to spot. This is what changes within a successful start-up, and it moves the company away from the more congenial atmosphere that characterized it at its outset. An original small partnership often becomes a corporate behemoth, and it takes on many of the attributes of those cubicle workplaces that frequently inspired its founders to strike out on their own in the first place.
All the better, then, if ethical practices that permit coworkers to bond as colleagues with a sense of commitment to each other and to their customers or clients emerge through a company’s trial-and-error experience at the outset. Only if the founders and initial staff emphasize treating all stakeholders with honesty, courtesy, and respect will the new firm stand a chance of indelibly cementing ethics into its operating matrix.
### Entrepreneurial Culture
A fairly common characteristic of successful start-ups is charismatic, driven founders with take-no-prisoner competitive mentalities, as was illustrated earlier in this chapter in the example of Kalanick and the leadership values at Uber. After all, it takes a thick skin and powerful ego to get through the inevitable disappointments that confront a start-up leader. Often, however, even when these self-assured personalities evade the most egregious behavior of a Kalanick, they still remain very difficult for others to abide. Many companies discover that a different leadership ethos is necessary as they grow. Could entrepreneurs still succeed if they also embraced a humanistic leadership style at the outset, or would this invariably undermine the already low initial odds of success? It is a difficult problem with which many firms wrestle. Dedicated employees may be put off by demanding leaders who are harsh, giving little back to loyal workers even after achieving success. New employees may decide the working climate is less congenial than they anticipated and simply leave. This turnstile effect of workers voting on management with their feet constitutes an ethical judgment of repugnant leadership at the top.
These observations identify what may be unique to entrepreneurial culture. This is a combination of personality and management style often identified with those business leaders who strike out on their own, bring a start-up to life, and shape its initial business practices and culture on the job. If the enterprise is successful, the principles and philosophy of the founder become enshrined in the lore of the company, so that long after his or her departure, succeeding leaders find themselves beholden to the management philosophy exemplified from the early days of the firm. As you seek the right leadership style to implement on the job, begin by asking precisely what kind of leader you would prefer to work for if you were not the boss. The answer you provide may very well be the best model to follow as you develop your own leadership personality, whether it is at a start-up or a more established company.
The first employees of a start-up realize what is at stake as the company tiptoes into new entrepreneurial waters. The founder may be the boss, but those associated with him or her sense a collaborative spirit that directly joins them to the founder as well as each other. There can be a genuine fraternity among those who have been with the firm since day 1 or shortly thereafter. Founding members of an entrepreneurial business are also often willing to undergo the strains and rigors attached to a start-up in return for an ownership stake in the company that allows them to profit handsomely from its later growth and success.
Newer staff, however, may not share this mindset. They may simply be seeking a secure position with a growing business rather than a chance to get in on the ground floor of a risky start-up. They will not necessarily have the tolerance for the demanding hours, chaos, and abrasive personalities that can characterize the early days of an enterprise. Can entrepreneurial founders shape a company’s culture so it can accommodate talented employees who are looking for a corporate culture that supports some work–life balance?
Consider also the ethical practices of an entrepreneur and the ethical expectations of employees. Suppose that one of the distinguishing features woven into the fabric of the start-up is the respect extended to customers or clients. An entrepreneur typically promises always to hold customers in the highest regard, never lie to them, and serve them well. Furthermore, suppose this entrepreneur successfully instills this same ethos among all employees from the outset. Respect for customers is intended to become a distinguishing feature of the business; even if it causes monetary loss to the company, this entrepreneur will not cheat a client or misrepresent the company’s services. Finally, presume that this ethos is embedded into the culture of the company while it is still in start-up mode.
Now, and literally against the odds, suppose the company becomes successful. This may signal the hardest time of all for the entrepreneur. Growth often accompanies success, and growth means, among other things, more employees. Not all these new hires will be as committed to the same degree of responsibility for customers. They will not necessarily set out to cheat clients, but they might lack the founder’s enthusiasm for the most honorable treatment of customers. How can an entrepreneur ensure that the initial commitment carries over to the second generation of leadership? He or she cannot simply order it to happen—human nature usually does not respond so easily. So entrepreneurs must do their best to ensure that their version of customer service, one that prioritizes respect for clients, is passed along to new employees. It may be ingrained in the longest-serving employees, but it must be nurtured to the point where it has the same significance for the newest hires. This is where leadership mettle is tested to the severest degree.
### Summary
The atmosphere surrounding entrepreneurs and their start-ups can provide a dizzying rush. The opportunities to create a company, be your own boss, make a dramatic impact on business, establish an entrepreneurial culture that will be adopted by others, and possibly become rich in the process certainly all appeal to our human nature. Still, the entrepreneurial lifestyle is challenging, and the success rate for start-ups is exceptionally low. Interpersonal conflicts are prevalent in start-up environments, and entrepreneurs who seek to stay true to their vision and ethical values face a difficult road. At many points, start-up founders have to choose how they most wish to be remembered: for the sake of their business success alone or also for the ethical fashion in which they attained that success and the humane culture they have embedded in their new firm. Sometimes these are mutually exclusive goals, but the most ethical entrepreneurs do their best to ensure that both objectives mesh for themselves and their firms. This lies at the heart of any definition of ethical leadership.
### Assessment Questions
### Endnotes
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# Professions under the Microscope
## The Influence of Advertising
### Learning Objectives
By the end of this section, you will be able to:
1. Discuss how social media has altered the advertising landscape
2. Explain the influence of advertising on consumers
3. Analyze the potential for subliminal advertising
The advertising industry revolves around creating commercial messages urging the purchase of new or improved products or services in a variety of media: print, online, digital, television, radio, and outdoor. Because as consumers we need and want to be informed, this feature of advertising is to the good. Yet some advertising is intended to lead to the purchase of goods and services we do not need. Some ads may make claims containing only the thinnest slice of truth or exaggerate and distort what the goods and services can actually deliver. All these tactics raise serious ethical concerns that we will consider here.
### The Rise of Social Media
Relevant to any discussion of the influence and ethics of advertising is the emergence and dominance of social media, which now serve as the format within which many people most often encounter ads. Kelly Jensen, a digital-marketing consultant, observed that we inhabit a “Digital Era” in which “the internet is arguably the single most influential factor of our culture—transforming the way we view communication, relationships, and even ourselves. Social media platforms have evolved to symbolize the status of both individuals and businesses alike. . . Today, using social media to create brand awareness, drive revenue, engage current customers, and attract new ones isn’t optional anymore. Now it is an absolute ‘must.’”
These are bold claims—as are the claims of some advertising—but Jensen argues convincingly that social media platforms reach many consumers, especially younger ones, who simply cannot be captured by conventional advertising schemes. For those who derive most of the significant information that shapes their lives solely through electronic sources, nothing other than social media–based appeals stands much chance of influencing their purchasing decisions.
This upending of conventional modes of advertising has begun to change the content of ads dramatically. It certainly presents a new stage on which people as young as their teens increasingly rely for help in choosing what to buy. Many marketers have come to appreciate that if they are not spreading the word about their products and services via an electronic source, many millennials will ignore it.
Undeniably, a digital environment for advertising, selling, and delivering products and services functions as a two-edged sword for business. It provides lightning-quick access to potential customers, but it also opens pathways for sensitive corporate and consumer data to be hacked on an alarming scale. It offers astute companies nearly unlimited capacity to brand themselves positively in the minds of purchasers, but it simultaneously offers a platform for disgruntled stakeholders to assail companies for both legitimate and self-serving reasons.
Paul A. Argenti, who has taught business communication for many years at the Tuck School of Business at Dartmouth University, has studied this dilemma. As he put it, “mobile apps have created a new playground for cyber-thieves.” And consumer advocates and purchasers alike “now use technology to rally together and fuel or escalate a crisis—posing additional challenges for the corporation” in the crosshairs of criticism. Finally, “the proliferation of online blogs and social networking sites has greatly increased the visibility and reach of all current events, not excluding large corporate” bungling.
Regardless of the delivery platform, however, any threat that the advertising of unnecessary or harmful products may pose to our autonomy as consumers is complicated by the fact that sometimes we willingly choose to buy goods or services we may not necessarily require. Sometimes we even buy things that have been proven to be harmful to us, such as cigarettes and sugary drinks. Yet we may desire these products even if we do not need them. If we have the disposable income to make these discretionary purchases, why should we not do so, and why should advertisers not advise us of their availability?
### Does Advertising Drive Us to Unnecessary Purchases?
By definition, advertising aims to persuade consumers to buy goods and services, many of which are nonessential. Although consumers have long been encouraged to heed the warning caveat emptor (let the buyer beware), it is a valid question whether advertisers have any ethical obligation to rein in the oft-exaggerated claims of their marketing pitches. Most consumers emphatically would agree that they do.
The award-winning Harvard University economist John Kenneth Galbraith directly addressed this issue in The Affluent Society, first published in 1958. In what he depicted as the “the dependence effect,” Galbraith bemoaned the power of corporations to harness wide-ranging advertising strategies, marketing efforts, and sales pitches to influence consumer purchasing decisions. He asked whether it is possible for a sophisticated advertising campaign to create a demand for a product whose benefits are frivolous at best. If so, is there anything inherently wrong with that? Or are informed consumers themselves responsible for resisting tempting—though misleading—advertising claims and exercising their own best judgment about whether to buy a product that might be successful, not because it deserves to be but simply because of the marketing hype behind it? These questions remain fundamental to the manager’s task of creating ethical advertising campaigns in which truthful content is prioritized over inducing wasteful consumption.
Psychological appeals form the basis of the most successful ads. Going beyond the standard ad pitch about the product’s advantages, psychological appeals try to reach our self-esteem and persuade us that we will feel better about ourselves if we use certain products. If advertising frames the purchase of a popular toy as the act of a loving parent rather than an extravagance, for instance, consumers may buy it not because their child needs it but because it makes them feel good about what generous parents they are. This is how psychological appeals become successful, and when they do work, this often constitutes a victory for the power of psychological persuasion at the expense of ethical truthfulness.
Purchases are also affected by our notion of what constitutes a necessity versus a luxury, and that perception often differs across generations. Older consumers today can probably remember when a cell phone was considered a luxury, for instance, rather than a necessity for every schoolchild. On the other hand, many younger consumers consider the purchase of a landline unnecessary, whereas some older people still use a conventional phone as their main or even preferred means of communication. The cars and suburban homes that were once considered essential purchases for every young family are slowly becoming luxuries, replaced, for many millennials, by travel. Generational differences like these are carefully studied by advertisers who are anxious to make use of psychological appeals in their campaigns.
A consumer craze based on little more than novelty—or, at least, not on necessity or luxury in the conventional sense—is the Pet Rock, a recurring phenomenon that began in 1977. Pet Rocks have been purchased by the millions over the years, despite being nothing more than rocks. During the 2017 holiday shopping season, they retailed at $19.95. Is this a harmless fad, or a rip-off of gullible consumers who are persuaded it can satisfy a real need? In the annals of marketing, the Pet Rock craze denotes one of the most successful campaigns—still unfolding today, though in subdued fashion—in support of so dubious a product.
As long as marketers refrain from breaking the law or engaging in outright lies, are they still acting ethically in undertaking influential advertising campaigns that may drive gullible consumers to purchase products with minimal usefulness? Is this simply the free market in operation? In other words, are manufacturers just supplying a product, promoting it, and then seeing whether customers respond positively to it? Or are savvy marketing campaigns exerting too much influence on consumers ill prepared to resist them? Many people have long asked exactly these questions, and we still have arrived at no clear consensus as to how to answer them. Yet it remains an obligation of each new generation of marketers to reflect on these points and, at the very least, establish their convictions about them.
A second ethical question is how we should expect reasonable people to respond to an avalanche of marketing schemes deliberately intended to separate them from their hard-earned cash. Are consumers obligated to sift through all the messages and ultimately make purchasing decisions in their own best interest? For example, does a perceived “deal” on an unhealthy food option justify the purchase ()? These questions have no consensus answers, but they underlie any discussion of the point at which sophisticated advertising runs headlong into people’s obligation to take responsibility for the wisdom of their purchases.
No one would argue that children are particularly susceptible to the ads commercial television rains over them regularly. Generally, young children have not developed sufficient judgment to know what advertised products are good for them and which ones have little or no benefit or perhaps can even harm. Research has even shown that very young children have difficulty separating what is real on television from what is not. This is especially so as it pertains to advertising for junk food. Savvy marketers take advantage of the fact that young children (those younger than age seven or eight years) view advertising in the same manner they do information from trustworthy adults—that is, as very credible—and so marketers hone pitches for junk food directly to these children.
What restrictions could we reasonably impose on those who gear their ads toward children? We could argue that they should take special care that ads targeting children make absolutely no exaggerated claims, because children are less capable of seeing through the usual puffery that most of us ignore. Children are more literal, and once they gain the ability to understand messages directed toward them, especially when voiced by adult authority figures, they typically accept these as truthful statements.
When adults make poor consumer choices, who is responsible? Is it ourselves? Is it our society and culture, which permit the barrage of marketing to influence us in ways we often come to regret? Is it the persuasive power of marketers, which we should rein in through law? Do adults have the right to some assistance from marketers as they attempt to carry out their responsibility to protect children from manipulative ads? We have no easy answers to these questions, though they have taken on special urgency as technology has expanded the range of advertising even to our smartphones.
### Is Subliminal Advertising Real?
It may be possible for marketing to be unfairly persuasive in ways that overwhelm the better judgment of consumers. Whether it is the consumers’ responsibility to resist or marketers’ to tone down their appeals, or both, will continue to be debated. Yet the question of where responsibility lies when consumers are steered to make choices certainly has ethical ramifications.
Some psychologists and educational specialists claim that the very old and the very young are particularly ill prepared to exercise good judgment in the face of subliminal advertising, that is, embedded words or images that allegedly reach us only beneath the level of our consciousness. Other experts, however, disagree and insist that subliminal advertising is an urban myth that no current technology could create or sustain.
A U.S. journalist, Vance Packard, published The Hidden Persuaders in 1957, contending that subliminal messaging had already been introduced into some U.S. cinemas to sell more refreshments at the theaters’ snack bars. Alarms sounded at the prospect, but it turned out that any data on which Packard was relying came from James Vicary, a U.S. market researcher who insisted he had engineered the feat in a cinema in New Jersey. No other substantiation was provided, and Vicary’s claim was eventually dismissed as self-promotion, which he seemed to concede in an interview five years later. Although the immediate threat of subliminal advertising receded, some people remain concerned that such persuasion might indeed be possible, especially with the advent of better technologies, like virtual reality, to implement it.
A 2015 study at the University of South Carolina found that thirsty test subjects placed in the role of shoppers in a simulated grocery store could be subliminally influenced in their choice of beverages if they were primed by images of various beverage brands within fifteen minutes of acknowledging being thirsty. After that window of time passed, however, any impact of subliminal messaging receded.
So the scientific evidence establishing any real phenomenon of subliminal advertising is inconclusive. Put another way, the evidence to this point does not definitively demonstrate the existence of a current technology making subliminal marketing pitches possible. Given this, it cannot be clearly determined whether such a technology, if it did exist, would be effective. Another question is whether virtual reality and augmented reality might eventually make subliminal advertising viable. Real subliminal persuasion might render children, the elderly, and those with developmental disabilities more vulnerable to falling prey. Could even the most skeptical viewer resist a message so powerfully enhanced that the product can be sampled without leaving home? Would you be in favor of federal government regulation to prevent such ads? What sort of ethical imperatives would you be willing to request of or impose on sophisticated marketers?
Advertising plays a useful role in informing consumers of new or modified products and services in the marketplace, and wise purchasers will pay attention to it but with a discerning eye. Even the exaggerated claims that often accompany ads can serve a purpose as long as we do not unquestioningly accept every pitch as true.
### Summary
The Internet and social media present new canvasses for marketing that possess great power and for which rules and ethical norms are being developed. Psychological appeals and subliminal messaging present their own ethical issues. Discerning consumers currently must rely on their own sensibility to ferret out factual claims for advertised products and bear the burden of shielding those under their charge from the worst manipulative effects of marketing.
### Assessment Questions
### Endnotes
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