VAC 25

Value-driven leadership
 COURSE SYLLABUS
Unit 1: Introduction and Resolving Conflicts of Values within and between other Stakeholders

Introduction to Concepts like Morals, Values, Ethics, Trust, Integrity, Justice, Fairness, Community, Civility and Community, Conflicts, and
Stakeholders. Issues of Conflicts. Resolving Conflicts of Values within and between other Stakeholders.

Unit 2: Workforce Diversity and Corporate Social Responsibility

Diversity, Types of Diversity, Benefits of Workforce Diversity. Corporate Social Responsibility. Milton Friedman's Approach, Companies
Act and Corporate Social Responsibility

Unit 3: Managing Values through Incentives and Informal Mechanisms

Managing Values, Incentives, Material Incentives, Informal Mechanisms, Managing Values through Incentives and Informal Mechanisms

Unit 4: Speaking the Truth and Values Based Marketing

Truth, Unethical Behaviour, Situations where Truth is dangerous for the organization, Importance of Speaking the Truth. Ethical
implications of Marketing Values, Importance of Values Based Marketing. Thomas Donaldson's Ethical Algorithm

Unit 5: Building Social Capital

Social Capital, Constituents of Social Capital, Importance of Social Capital for an Organization, Use Organizational Intellectual Capital to
Create Value
UNIT 2
WORKPLACE DIVERSITY

⮚ Workplace diversity means respecting and valuing the ` and differences that each staff member
brings into the workspace.
⮚ A diverse workplace is an inclusive environment that provides equal rights and opportunities for
all workers, regardless of gender, colour, age, ethnicity, physical ability, sexual orientation,
religious beliefs, and so on.
⮚ It is the law in several countries for workplaces to provide equal opportunity to their employees,
as well as to create a workplace free from discrimination and harassment.
⮚ Employers are responsible for putting measures into place to overcome employment
disadvantage and discrimination in the workplace. This includes valuing workplace diversity and
ensuring that a workplace is free from racial and sexual harassment, discrimination, and
bullying.
⮚ Workplace diversity was one of the key workplace trends in 2020. With the pandemic caused by
Covid-19, companies have turned to the global workforce and started hiring more and more
diverse teams while working remotely.
BENEFITS
Having a diverse and multicultural workplace brings several advantages. Since today’s world is
increasingly more globalised and interconnected, workplaces should take advantage of the diverse
range of skills individuals from different backgrounds and languages can bring.
 Variety of different
perspectives ⮚ Diversity in the workplace ensures a variety of
Increased different perspectives.
creativity ⮚ Since it means that employees will have different
Higher
innovation characteristics and backgrounds, they are also more
Faster problem likely to have a variety of different skills and
solving experiences.
Better decision
making ⮚ Consequently, employees in a company with higher
Increased workplace diversity will have access to a variety of
profits
Higher employee different perspectives, which is highly beneficial when
engagement it comes to planning and executing a business
Reduced employee
turnover strategy.
Better company ⮚ A diverse range of cultures within the workplace allows
reputation companies to deal with the different nuances within a
Increased
productivity global marketplace.
⮚ For example - if a company does business with China,
for example, having an employee who can speak
Mandarin is an asset and can lead to improved
 Variety of different
perspectives ⮚ In addition to having a variety of different perspectives
from people with different backgrounds, the exposure
Increased
creativity to a such variety leads to increased creativity.
Higher ⮚ A diverse workforce brings together people from
innovation
Faster problem different cultural backgrounds with different ways of
solving thinking and approaching problems. This can lead to a
Better decision wider range of perspectives, which in turn can lead to
making
Increased more innovative and creative solutions.
profits ⮚ When you put together people who see the same thing
Higher employee
in different ways, you are more likely to get a melting
engagement
Reduced employee pot of fresh, new ideas, thus improving the creativity of
turnover your workforce.
Better company
reputation ⮚ As various cultures and backgrounds work together,
Increased the opportunity for increased creativity exists. This is
productivity
because there are more people with differing
perspectives and solutions to problems, allowing for a
greater chance of a workable solution to a workplace
problem.
 Variety of different
perspectives ⮚ Diversity in the workplace leads to higher innovation
Increased rate.
creativity ⮚ People from different backgrounds can draw upon their
Higher
innovation unique experiences and knowledge to spark new ideas.
Faster problem ⮚ Diversity can stimulate innovation by challenging
solving conventional thinking, encouraging fresh ideas and
Better decision
making promoting creative problem-solving.
Increased ⮚ Diverse and inclusive teams create an environment
profits
Higher employee where people can be themselves without judgment.
engagement They're more likely to take risks and share new ideas
Reduced employee
when that happens.
turnover
Better company ⮚ Having diverse perspectives from teammates who
reputation come from different backgrounds ensures that
Increased
productivity problems are approached from multiple angles and this
can lead to faster resolutions.
 Variety of different
perspectives ⮚ Companies with higher workplace diversity solve
Increased problems faster.
creativity ⮚ The range of experience, expertise, and working
Higher
innovation methods that a diverse workplace offers can boost
Faster problem problem-solving capacity and lead to greater
solving productivity.
Better decision
making ⮚ A high degree of cognitive diversity could generate
Increased accelerated learning and performance in the face of
profits
Higher employee new, uncertain, and complex situations, enabled by
engagement diverse teams which are able to solve problems faster
Reduced employee
than cognitively similar people.
turnover
Better company ⮚ Employees from diverse backgrounds have different
reputation experiences and views, which is why they are able to
Increased
productivity will bring diverse solutions to the table. Thus, the best
solution can be chosen sooner, which leads to faster
problem-solving.
 Variety of different
perspectives ⮚ According to Forbes, decision making improves as
Increased team diversity increases. A study by People
creativity Management found that diverse teams (of three or
Higher
innovation more people) outperformed individual decision-makers
Faster problem up to 87% of the time.
solving ⮚ A diverse workplace brings together a variety of ideas
Better decision
making and perspectives, which can lead to innovation and
Increased creativity.
profits
Higher employee ⮚ This reduces groupthink, as a diverse group of people
engagement may be more comfortable offering new ideas and
Reduced employee
turnover questioning the ideas of others.
Better company ⮚ A diverse team allows for a wide range of experiences
reputation and backgrounds, which can lead to a broader set of
Increased
productivity ideas. Multiple diverse perspectives can enhance both
the understanding of the problem and the quality of
the solution.
⮚ Individuals are more likely to consider more
 Variety of different
perspectives ⮚ A diverse workforce improves risk management,
Increased extends market prospects, fosters innovation and
creativity creativity, and increases employee performance and
Higher
innovation engagement
Faster problem ⮚ A diverse staff can help businesses reach a wider
solving customer base. Customers feel understood and valued,
Better decision
making and a diverse team is more likely to achieve that.
Increased ⮚ Companies with a diverse workforce make better
profits
Higher employee decisions faster, which gives them an advantage over
engagement their competitors.
Reduced employee
⮚ A diverse workplace can lead to increased productivity.
turnover
Better company This is because a diverse workforce brings a broader
reputation range of skills, experiences, and perspectives to the
Increased
productivity table.
⮚ McKinsey & Company, in a research on 180 companies
in France, Germany, the United Kingdom, and the
United States, found that companies with diverse
 Variety of different
perspectives ⮚ Workplaces that are perceived as diverse have the
Increased highest levels of employee engagement. Engaged
creativity employees are more productive, profitable, safer, and
Higher
innovation stay longer with their company.
Faster problem ⮚ Diversity increases employee satisfaction and reduces
solving conflicts between groups.
Better decision
making ⮚ Diversity is an emerging talent retention strategy.
Increased Employees are more committed and inclined to work
profits
Higher employee for an organization longer when their unique
engagement contributions are recognized and acknowledged.
Reduced employee
⮚ Other elements include: Reduced employee stress,
turnover
Better company Decreased burnout, Improved collaboration, and Lower
reputation absenteeism.
Increased
productivity ⮚ The link between workplace diversity and employee
engagement is pretty straightforward - when
employees feel included, they are more engaged.
 Variety of different
perspectives ⮚ Workplace diversity is beneficial for employee retention.

Increased ⮚ Companies with a diverse workforce are generally more

creativity inclusive of different individual characteristics and
Higher
perspectives.
innovation
Faster problem ⮚ Diversity and inclusion in the workplace cause all
solving employees to feel accepted and valued.
Better decision
⮚ When employees feel accepted and valued, they are
making
Increased also happier in their workplace and stay longer with a
profits company.
Higher employee
engagement ⮚ As a result, companies with greater diversity in the
Reduced employee
workplace have lower turnover rates. By creating
turnover
Better company commitment to diversity and employees create a sense
reputation of belonging to the company and are less likely to leave.
Increased
productivity
 Variety of different
perspectives ⮚ Companies that are dedicated to building and
Increased promoting diversity in the workplace are seen as good,
creativity more human and socially responsible organizations
Higher
innovation which ultimately creates a better reputation for the
Faster problem brand.
solving ⮚ Workplace diversity also makes your company look
Better decision
making more interesting. Finally, if you present a diverse
Increased workforce, you will make it easier for many different
profits
Higher employee people to relate to your company and your brand,
engagement opening doors to new markets, customers and business
Reduced employee
partners.
turnover
Better company ⮚ Companies that have a diverse workplace are often
reputation perceived as better employers. Potential employees
Increased
productivity want an employer who accepts and is tolerant of all
backgrounds and who treats their employees fairly.
 Variety of different
perspectives ⮚ A diverse workplace allows for more ideas and
Increased processes. This diversity of talent means a broader
creativity range of skills among employees, as well as a diversity
Higher
innovation of experiences and perspectives which increases the
Faster problem potential for increased productivity.
solving ⮚ This is also enabled by increased marketing
Better decision
making opportunities: If potential employees or customers see
Increased that a company represents a diverse workplace, it
profits
Higher employee makes them feel like they can relate to the company
engagement more. Using advertising that depicts mature-aged,
Reduced employee
turnover differently-abled, or ethnically diverse people
Better company encourages applicants to apply, promotes a positive
reputation reputation, increases marketplace awareness, and
Increased
productivity generates a more diverse client-base.
⮚ Achieving workplace diversity means you are bringing
out the very best of your employees and allowing them
to reach their full potential. By doing so, your
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TIPS TO CREATE A DIVERSE WORKPLACE

⮚ Discuss diversity with your employees and outline the

benefits of a diverse workplace.
⮚ Identify and address any bias when it comes to the
recruitment process. Have hiring managers be aware of the
qualities and benefits applicants of varying backgrounds can
bring to the company and ensure they are allowing for a fair
hiring process. Let applicants know that you are an equal-
rights employer.
⮚ Value the individual skills that employees bring and make
sure to utilize these strengths to help broaden your market
and grow your company.
⮚ Allow for flexible work options and provide the opportunity for
parental leave for both women and men.
⮚ Create and implement a Workplace Diversity Plan for
employees to become familiar with to practise diversity and
CORPORATE SOCIAL RESPONSIBILITY (CSR)

⮚ Corporate Social Responsibility (CSR) implies a concept, whereby companies decide voluntarily
to contribute to a better society and a cleaner environment – a concept, whereby the companies
integrate social and other useful concerns in their business operations for the betterment of their
stakeholders and society in general in a voluntary way.
⮚ However, Section 135 of the Companies Act, 2013 ("Act") provides that certain companies must
mandatorily contribute a certain amount towards CSR activities. As per the Act, 'Corporate Social
Responsibility' means and includes but is not limited to:
• Projects or programs relating to activities specified in Schedule VII to The Act.
• Projects or programs relating to those activities which are undertaken by the Board of
Directors of a company in ensuring the recommendation of the CSR Committee of the Board as per
declared CSR Policy along with the conditions that such policy will cover subjects specified in
Schedule VII of the Act.
IMPORTANCE OF CSR

CSR is an immense term that is used to explain the

efforts of a company in order to improve society in a
significant manner. Below reasons reflect why CSR is
important:
⮚ CSR improves the public image by publicising the
efforts towards a better society and increasing their
chance of becoming favourable in the eyes of
consumers.
⮚ CSR increases media coverage as media visibility
throws a positive light on the organisation.
⮚ CSR enhances the company’s brand value by
building a socially strong relationship with
customers.
⮚ CSR helps companies to stand out from the
CSR APPLICABILITY IN INDIA

⮚ According to Companies Act, 2013(Section 135 (1)) , the provisions of CSR apply to every

company fulfilling any of the following conditions in the preceding financial year:

• Net worth of more than Rs.500 crore

• Turnover of more than Rs.1000 crore

• Net profit of more than Rs.5 crore

⮚ The Board of Directors of every company for which the CSR provisions apply must ensure that

the company spends in every financial year at least 2% of its average net profits made during

the immediately preceding three financial years as per its CSR policy. If the company has not

completed three financial years since its incorporation, it must spend 2% of its average net

profits made during the immediately preceding financial years as per its CSR policy.
⮚ The Friedman Doctrine, developed by American Economist Milton Friedman, is a theory of

business ethics that states that “an entity’s greatest responsibility lies in the

satisfaction of the shareholders.” Therefore, the business should always endeavor to

maximize its revenues to increase returns for the shareholders.

⮚ An entity does not have any social responsibility to the society around it whatsoever. Instead,

he stated that the only responsibility that an entity should abide by is its shareholders.

⮚ Friedman justified his claim by explaining that any executives in business are employees of the

owners, and they are, therefore, required to deliver quality service to the employer first before

any other party.

⮚ Profits maximization requires the entity to find ways of generating additional revenues through

value addition and creating more products and services while minimizing costs.

⮚ Friedman also stated that shareholders should be in charge of key decisions such as social

initiatives rather than getting an outsider to make the decision on their behalf.
⮚ Friedman’s approach to CSR is also called the shareholder approach of CSR.

⮚ Friedman suggests that profits seeking firms, just as any private agent, do not have sufficient

incentives to efficiently internalize the costs they cause and thus could not be expected to act

socially or environmentally responsible. Consequently, although being a “market purist”, he

advocates government intervention, through regulation or taxation, based on public preferences

(not managers’) and democratic empowerment (not contractual).

⮚ For Friedman, businessmen who believe that a business needs to have a “social conscience” are

just “unwitting puppets of the intellectual forces”, mining the foundation of a free society.

⮚ There are two approaches to Friedman’s opinions on CSR –

1. Utilitarian approach

2. Deontological approach
⮚ The utilitarian argument focuses on the concept of self-interest.

⮚ Friedman believes that market participants, by pursuing their own egoistic self-interests (seeking

profits), are guided by an “invisible hand”, and unintentionally benefit society as a whole in a

more efficient way (Pareto Optimality) than when they would by acting directly to promote the

public welfare.

⮚ Put differently, Friedman questions the competence of business leaders to discern and directly

promote the general welfare and concludes that “the market itself is the best mechanism by

which to promote the public good”.

⮚ Therefore, there is no justification to make a claim that “businesses have any social

responsibilities other than to legally and honestly maximize the profits of the firm”
⮚ The deontological argument, instead, gravitates around the observation that businesses are

contractual arrangements between stockholders and executives.

⮚ As such, managers’ “primary responsibility is to them”: executives must not divert business

resources away from the purposes expressly authorized by the stockholders, irrespective of any

societal benefits that could be accrued by doing so.

⮚ They are always free, as private citizens, to spend their own personal funds for charitable or

socially beneficial projects, but, when functioning as agents of the stockholders, if they engage

in actions that are unrelated to profits maximization, they not only violate their fiduciary duties,

but also become in effect “public employees” or “civil servants”, imposing taxes on business

owners and promoting an “unadulterated socialism”.

⮚ In other words, in the shareholder perspective of Friedman, CSR can be just explained as a

manifestation of moral hazard towards owners.

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