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Friday, October 11, 2019

Analyzing the ethical arguments against insider trading


by: Daryl Fritzie Ann A. Ang, CPA

Abstract
This article identifies the real reason why insider trading is unethical and morally wrong. It examines the principal ethical arguments for treating insider trading as morally wrong: the claim that the practice is unfair, the claim that it harms ordinary investors and the society as a whole, the claim that it involves with proprietary rights or “misappropriation: of information and the claim that it is deceptive.  The author concludes that each of these arguments has some serious deficiencies; no one of them by itself provides a sufficient reason for insider trading to be unethical.  The author determined that the most persuasive moral basis for wrongness of insider trading is that it undermines the fiduciary relationships that lies at the heart of the business.
Keywords: Insider trading, insider, inside, morality, moral rights, conflict of interest
Introduction
Behind every great fortune, lies a great crime, so said the French novelist Honore de Balzac. Could this be more pronounced in stock markets around the world where the most brilliant minds perpetrate the most sophisticated financial crimes?
With the recent explosion in insider trading activity, an important set of moral issues is brought to the fore.  Are inside traders glowing examples of selfish criminals exploiting society and the economy for personal gain, with no regard for the effect on others? What are the moral implications of insider trading?
Insider trading phenomena is controversial and is bringing a lot of discussion around itself.  Some claims that it is both unethical and illegal to use information, which is not putted into public knowledge, while others argue that insider trading increases market efficiency and does not cause any harm to anybody.
So the question remains, should insider trading be legal or illegal in the stock market? If it was to be legal, is it then considered moral or immoral as a practice? This article will discuss the morality of insider trading and stating numerous principal ethical arguments against insider trading.
Insider Trading
“Insider trading” as the term is usually used, means the act of buying or selling a company’s stock on the basis of “inside” information about the company.  “Inside” or :”insider” information about a company is confidential or proprietary information about a company that is not available to the general public outside the company, but which would have a material or significant impact on the price of company’s stock (Velasquez, 1998).
Donaldson (1990) also defined insider trading as “exploiting advance knowledge of an important development to buy or sell stock before the public knows about it” – is illegal and is almost universally thought to be immoral.  However, the concept of insider trading itself, as well as the immorality of insider trading may be more difficult to explain than is generally thought.
Accordingly, insiders really do exploit their knowledge.  There are three forms of evidence supporting this phrase.  First, there have been well-publicized convictions of principals in insider trading schemes.  Second, there is considerable evidence of “leakage” of useful information to some traders before any public announcement of that information.  A third form of evidence on insider trading has to do with returns earned on trades by insiders (Bodie, Kane and Marcus, 2013).
Ethical Arguments against Insider Trading
Fairness
Probably the most common reason to thinking that insider trading is unethical is that the information advantage of the insider really is “unfair or unjust”.  According to Moore (1990), there are two versions of the fairness argument: the first argues that insider trading is unfair because two parties do not have equal information; the second argues that insider trading is unfair because the two parties do not have equal access to information.
Taking first the unequal information, it states that insider trading is unfair since the two parties to a transaction do not have equal information.  According to this view, both parties should have the same material information about the conditions that are essential for this transaction.  The second argument is that the information is not available to the shareholder to ascertain the suitability of buying and selling securities in the marketplace.  This argument is more concerned that this information should be public in the sense that hard work on the part of potential dealers in the market will be able to extract it (Teacher, Law, 2013).

In addition, the stock market depends on the assumption that all information relevant to potential investors is public.  The stock market is supposed to be a fair market, one in which everyone potentially has equal access to all information.  It is claimed that the general public’s faith in the stock market would undermined if there was a general belief among investors that the stock market is rigged, or at least the plaything of a privileged few insiders.  Such a belief can be the result of evidence of widespread insider trading, or stock manipulation (Donaldson, 1990).
According to Daniel Fischel, a teacher of corporate law at the University of Chicago, argued that the idea that the stock market should be a level playing field, with everyone having equal access to information and an equal chance to profit, is rubbish.  Obviously, a market professional who spends all his time analyzing stocks is going to have an advantage over the casual investor, and there’s nothing illegal about that.  The point in fairness argument is not whether you knew but whether you could have known.

Proprietary Rights
Some argue that inside trading involve misappropriation of information, a form of stealing.  It is frequently argues, under the rubric of a view known as the “agent-principal thesis”, that employees or outside consultants are implicitly or explicitly obligated to maintain the privacy and secrecy of information gleaned while on the job (Donaldson, 1990).
Morality demands confidentiality of records, whether or not one signs a contract not to divulge such information.  From the moral point of view, one is not free to divulge such information casually, for personal profit, for monetary gain, or even to feel important.  Therefore, an insider who takes confidential information and uses to enrich himself is in effect a thief stealing what is not his.  Like, any common thief who violates the moral rights of those from whom he steals, the insider trader is violating the moral rights of all shareholders, especially those shareholders who unwittingly sell him their stock.
Harm
The argument from harm, popular among the law and economics scholars who dominate securities scholarship in law schools, is not a deontological argument.  Instead, it maintains that insider trading is wrong because of the social harm it causes, given that we understand “causing harm” expansively, as causing a failure to attain optimal social welfare or social good (Strudler, 2009).
Velasquez (1990) mentioned that both empirical and theoretical studies have shown that insider trading has two effects on the stock market that are harmful to everyone in the market and to society in general.  First, insider trading tends to reduce the size of the market, and this harms everyone.  This means that when people suspect that insider trading is going on in the market, the more they will tend to leave the market and the smaller it will get.  The second effect is that it increases the costs of buying and selling stocks in the markets and this is also harmful.  This means that when a specialist, an intermediary who buy and sell stocks for others, senses an insiders are coming to him, he would have to increase his fee he charges for his services to cover from potential future losses for the stocks he would have to hold for others which might later turn out to be worth for less.
Hence, other things being equal, the person with the best information about what is being bought or sold stands in the best position to find bargains and get the best price. Competing against inside traders, who possess superior information, thus increases the risk that one loses.  Ordinary traders will be hesitant at the risk of trading against insiders, and insider trading, then, will undermine confidence in the stock market and deter investment, increasing the price a company must pay to raise capital and hindering both a company's development and a society's economic growth.

Fiduciary Duty
A fiduciary duty is, roughly, a duty of utmost loyalty and trustworthiness that an agent may be said to owe to his principal.  These duties are a staple of legal analysis, have rich moral content, and consistently play a role in judicial thinking about insider trading.  One of the arguments against insider trading is the jeopardizing of fiduciary relationship of an agent and its principal.
Kennon (2019) argued that to be accused of insider trading, you must usually be someone who has a fiduciary duty to another person, institution, corporation, partnership, firm, or entity.  You can get in trouble of you making an investment decision based upon information related to that fiduciary duty that is not available to everyone else.
Donaldson (1990) also added that insider trading is generally conceived of as involving stock transactions based on privileged information gained by someone with a fiduciary responsibility to the company and its stockholders.
So, when an employee of a company fills a certain position within the organization, they cannot morally do what is immoral, even if they are expected or commanded to do so as part of their job. While filling any position in a company, individuals should remain moral beings and persons.  Immanuel Kant argues, “to act in the morally right way, people must act from duty”.  Individuals who do not act out of respect for the moral law do so because they lack duty to do so or choose to act outside of duty.  When individuals choose to act outside of their fiduciary duties, there arises a conflict of interest.
Deception
Courts have always seen insider trading as a kind of fraud, namely, securities fraud.  Historically, wrongful deception forms the heart of fraud.  On the deception argument, insiders deceived shareholders by buying stock from them while concealing material, nonpublic information relevant to the valuation of the securities (Strudler, 2009).
Deception can be understood as inherently wrong, apart from any harm it causes.  Indeed, a standard philosophical analysis of the wrong in deception identifies it as a vicious kind of manipulation.  One person may wrongly deceive another when he intentionally causes that person to have a false belief in a way that compromises the autonomy of his decision making, even if doing so benefits that other person.
Hence, honesty does not always require full disclosure in a competitive business environment, even when a failure to disclose denies benefits to others.  So we are left with the question: what is the moral basis for this duty to disclose? Nothing in argument from deception begins to answer this question, however, the fiduciary duties invoked as the basis of a duty to disclose in securities transactions.

Conclusion
Inside information exists for the benefit of the company and its shareholders.  It is therefore presumptive theft for an insider to trade on this information without the agreement of its owners.  Based on the arguments raised in this paper, we can now conclude that most of the arguments explaining the reasons why it is unethical really do not stand, except the argument regarding the jeopardizing of fiduciary relationships.  This is because fiduciary relationships are critical to the way business operates.  If insider trading were to be legalized, it would place a strain on the relationship between corporate insiders and shareholders and individuals would be much less likely to trust the corporate world and less likely to buy share and invest in companies. And that wouldn’t be good for the company, shareholders or for society in general.
References
Bodie, Z., Kane, A. and Marcus, A. (2013). Essential of Investments (Ninth Edition). McGraw-Hill Companies, Inc. New York.
De George, R. (1999). Business Ethics (Fifth Edition). Prentice Hall, Inc. New Jersey.
Donaldson, T, (1990). Case Studies in Business Ethics (Second Edition). Prentice Hall, Inc. New Jersey.
Velasquez, M. (1998). Business Ethics: Concepts and Cases (Fourth Edition). Simon & Schuster Asia Pte Ltd:Singapore.
Kennon, J. (2019). What Is Insider Trading and Why Is It Illegal. https://www.thebalance.com/what-is-insider-trading-and-why-is-it-illegal-356337
Moore, J. (1990). What is Really Unethical About Insider Trading? https://page-one.springer.com/pdf/preview/10.1007/BF00382642?fbclid=IwAR3FZcPyboPXxct0mG9SHL2NoTQ5aGX0dUih7zuEUdbotM1BTPr3uySkhQI
Strudler, A. (2009). The Moral Problem In Insider Trading. https://repository.upenn.edu/cgi/viewcontent.cgi?article=1056&context=lgst_papers
Teacher, Law. (2013). Insider Trading: Legality & Morality. https://www.lawteacher.net/free-law-essays/company-law/insider-trading-legality-morality-company-law-essay.php?vref=1

Environment: The unaccounted cost of doing business

HEIDIE LONGBOY-PAGUIRIGAN, MBA

 ABSTRACT This paper argues that capitalists are often motivated by their self-interest and they mainly focus on the profits they may acquire from their business. With their avarice to maximize their profit or wealth, they tend to overlook the real costs and externalities caused by their economic activities. These unaccounted costs are attributed to the environment. The advent of growth and development made even worst the state of our life support system. Manufacturing companies, industries and other businesses are all contributors to excessive pollution in land, water and air due to their indiscriminate disposal of wastes, illegal discharge of untreated wastewaters, irresponsible release of greenhouse gases to the atmosphere and others. These capitalists ought to take into account these cost of pollution attributed to the course of their business. The moral obligation of the firm to third parties should be taken into great consideration especially if the action or decision will pose imminent peril to the general public. 

Keywords: Environment, Externalities, Social Cost


INTRODUCTION

The environment is everything we depend on. Whether it be the trees that give us oxygen, the land we live upon and the rivers that provide us with water. The environment is crucial for the society and businesses together. We all have a responsibility to conserve and protect the environment. And whether it be governments, businesses, consumers, workers or other members of society, each must contribute to stop the environment from polluting further (https://www.toppr.com/guides/business-studies/social-responsibilities-of-business/business-ethics-and-environment-protection/).

According to Gromko, G. (2013), businesses contributed $7.3 trillion - 13% of global GDP - in damages to the world's "natural capital" in 2009. That's the headline finding from the new The Economics of Ecosystems and Biodiversity (TEEB) for Business report on the unaccounted for costs of doing business. This figure is so high because of the value that ecosystems provide to human well-being.

When a business purchases a building or hires workers, these costs are privatized - only the business pays. However, when the costs of production are not paid for by the business (or government or community or individual), the costs are socialized. These "externalities" are what TEEB is measuring. Socialized costs don't have to be environmental, but that is what TEEB is focusing on. An easy example is a coal plant. The owner of the plant buys the coal, the plant itself, the machinery needed to operate the plant, and hires the people needed to run the plant. What the owner doesn't pay for is the damages done by production to society. These costs can be local - if particulate emissions from the plant damage nearby communities' health. Or they can be global - the CO2 emitted by the plant contribute to climate change and the associated costs (http://naturalcapital1.blogspot.com/2013/04/unaccounted-for-costs-of-doing-business.html).

As businesses are evidently the major contributor of pollution due to the operation of their economic activities, it is right and just for them to help in the repair of the environment; and heed their obligation to third parties particularly stakeholders living in that certain community.
It is significant to note that one renowned firm i.e., PUMA got a head start by being the first company to implement the Environmental Profit and Loss Account – the EP&L since 2011. With this, they treat the environment as an equal partner who bills them for providing clean water and air, restoring soils and the atmosphere, and decompose waste (https://about.puma.com/en/sustainability/environment).

This good practice should be replicated by all establishments particularly those which operations have direct impact to the environment. Climate change as we know has been a universal plight that strikes all walks of life on earth, thus, it is just but fitting that the national government shall order the enactment of laws that mandates business establishments to be equally responsible to the society and environment as a whole by paying the pollution they create or contribute that worsen the quality of our environment.

Social costs and the Environment

Business activity has an impact on the natural environment to include resources such as timber, oil and metals which are being used to manufacture goods; manufacturing can have unintended spillover effects on others in the form of noise and pollution; and land is lost to future generations when new houses or roads are built on greenfield sites. The unintended negative effects of business activity on people and places are called social costs (https://www.bbc.co.uk/bitesize/guides/zkc9jxs/revision/1).
Social cost is the cost related to the working of the firm but is not explicitly borne by the firm instead it is the cost to the society due to the production of a commodity. The social cost is used in the social cost-benefit analysis of the overall impact of the operations of the business on the society as a whole and do not normally figure in the business decisions.

It is assumed that the disutility created through pollution is equal to the total private and public expenditure incurred by the firm to safeguard the public from the health hazards and social tension created by the production process. But however, these indicators, total cost, and public expenditure, does not give a true measure of the public disutility or the social cost (https://businessjargons.com/social-cost.html).

Ethical businesses are and should be careful to minimize the impact of their behavior on the environment. Further, government laws are used to protect the environment. For example, firms must apply for planning permission before building factories or offices on greenfield sites. Grants are available to encourage firms to locate on brownfield sites, run down areas in need of regeneration (https://www.bbc.co.uk/bitesize/guides/zkc9jxs/revision/1).

The moral obligations of business to third parties

Historically, the relationship between business interests and the community has been awkward. Connecting with community has often been viewed as a charitable thing to do and not necessarily core to ‘real’ business. There is a natural tension between the profit motive and social impact. However, when we consider that companies sit within the broader community and that the relationship is one of inter-dependence rather than independence, then there is a strong case for putting social strategies high on the corporate agenda. The real question is: how can it be done in a way that aligns the objectives of shareholders with the needs of community?

Milton Friedman, the 1976 Nobel Prize-winning economist, took a stance against the idea that companies had social responsibility, arguing that they should focus on maximizing profit within the ‘rules of the game’. Two decades later, Peter F Drucker, affirmed that profit was the primary motive for business, but not the only motive. He asserted that business has responsibilities to the communities it touches in the same way that a school has responsibilities that go beyond the primary goal of educational performance (https://www.theaustralian.com.au/business/business-spectator/news-story/the-moral-obligations-of-business/cb99ed9848c689bca65cbbe0655caf88).

Social responsibility is an ethical theory, in which individuals are accountable for fulfilling their civic duty; the actions of an individual must benefit the whole of society. In this way, there must be a balance between economic growth and the welfare of society and the environment. If this equilibrium is maintained, then social responsibility is accomplished (https://www.pachamama.org/social-justice/social-responsibility-and-ethics).

Why should business care about climate change?

Every year since 2011, the World Economic Forum’s Global Risks Report has identified climate-related risks as a top threat to business. In 2018, failure of climate change mitigation and adaptation was ranked within the top 10 global risks, alongside extreme weather events and natural disasters. Climate-related risks are wide-ranging, persist throughout value chains, and can be expected to pose severe financial threats to companies worldwide (https://www.bsr.org/en/our-insights/blog-view/climate-change-health-impacts-why-business-should-care-and-how-to-act).

As climate change progresses, it will continue to trigger more intense storms, drought, wildfires, sea-level rise, species extinction, and crop failure. While these devastating environmental changes come to mind first when discussing climate change, there’ll also be potentially disastrous downstream effects on businesses—and they don’t seem to be taking the threat seriously.

Most companies have a conservative view of the risks caused by climate change—companies’ predictions only scratched the surface of what experts predict might happen in global markets. For instance, while many companies included in their public disclosures that climate change might affect their supply chains, they rarely accounted for predictions that climate change will decrease average incomes and consumption, which would likely lead to decreased demand for products.

Polluter Pays Principle

Political pressure is mounting to make businesses pay for the damage they cause to the environment, and the latest UN study assessing the impact of the world's biggest companies is almost certainly the first stage in a concerted campaign to calculate how much damage is caused, what it is worth and ultimately how it can be stopped (Jowit, 2010).

The Polluter Pays Principle aims to deter and reduce greenhouse gas emissions by taxing the industries responsible for the emissions. The Polluter Pays Principle has received strong support from many member countries of both the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD). The reasoning behind the principle is that those responsible for the pollution, either industry or person, should bear the cost of dealing with that pollution, removing the burden from the government, and in turn the taxpayers (https://www.worldatlas.com/articles/what-is-the-polluter-pays-principle.html).

However, Bergevin (2018) also cited that one of the issues surrounding the Polluter Pays Principle is the limited ability of the government in forcing those responsible to cover the costs of both preventative and remedial action. Although many countries around the world have enacted the Polluter Pays Principle into law, in reality, there are limited mechanisms in place to ensure those responsible fully engage in appropriate action in regards to environmental damage.


CONCLUSION
Venturing into business must always be coupled with moral responsibilities, not only to your employees, to your customers but above all should be to the environment. The latter has been the prime source of all amenities and raw materials needed by a certain business; ironically, it is also one of the most neglected assets because it is significantly undervalued by most of us.
Morality demands our deep concern to our stakeholders particularly our life support system – the environment, which will be directly or indirectly be affected by our decisions in our business operations. Considering the business’ primordial concern of profit maximization, it should also consider an ecologically-balanced environment, hence, pay the costs or damages it conveys to the society due to the production and operation of the business.
It is a given fact that a person’s self-interest benefits the society thru the job opportunities it gives to the people, the income it indirectly provides to the worker’s family and its contribution to economic prosperity in a certain community. However, a single business cannot stand alone without the existence of groups, organizations and individuals in the society; tantamount to saying that it will not prosper without the involvement and cooperation of third parties. This can be reflected to Pope Francis’ Encyclical Letter (2015) “Laudatu Si’, mi Signore” – Praise be to you, my Lord”, thus, “Because all creatures are connected. Each must be cherished with love and respect for all of us as living creatures are dependent on one another”. Further, given the opportunity to establish a business in a certain community, it is just and fair for us to return the favor to the society where we belong noting the fact that we are the stewards of God’s Creation.


REFERENCES
WEB ARTICLE
Bergevin, K. (2018). What is the Polluter Pays Principle? Retrieved from https://www.worldatlas.com/articles/what-is-the-polluter-pays-principle.html, downloaded September 21, 2019.
Gromko, D. (2013). Natural Capital. Retrieved from http://naturalcapital1.blogspot.com/2013/04/unaccounted-for-costs-of-doing-business.html, downloaded September 17, 2019.
Hu, J. (2018). Companies are seriously underestimating how climate change will affect business. Retrieved from https://qz.com/1490034/companies-corporate-disclosures-underestimate-climate-change/, downloaded September 26, 2019.
Jowit, J. (2010). Time to clean up: UN study reveals environmental cost of world trade. Retrieved from https://www.theguardian.com/environment/2010/feb/19/business-environmental-damage, downloaded September 17, 2019.
Oger, C. (2018). The Impacts of Climate on Health: Why Business Should Care and How to Act. Retrieved from https://www.bsr.org/en/our-insights/blog-view/climate-change-health-impacts-why-business-should-care-and-how-to-act, downloaded September 26, 2019.
Pope Francis. (2015). Encyclical Letter Laudato Si’. Retrieved from http://w2.vatican.va/content/francesco/en/encyclicals/documents/papa-francesco_20150524_enciclica-laudato-si.html, downloaded September 26, 2019.
Preston, P. (2011). The moral obligations of business. Retrieved from https://www.theaustralian.com.au/business/business-spectator/news-story/the-moral-obligations-of-business/cb99ed9848c689bca65cbbe0655caf88, downloaded September 21, 2019.
https://businessjargons.com/social-cost.html, downloaded September 21, 2019.
https://www.pachamama.org/social-justice/social-responsibility-and-ethics, downloaded September 26, 2019.
https://www.toppr.com/guides/business-studies/social-responsibilities-of-business/business-ethics-and-environment-protection/, downloaded September 17, 2019.

Managing Diversity in the Workplace


By: Joseph D. Corpuz
2018-12958
Abstract
Everyone and everything has their own differences. Diversity is a reality created by individuals and groups from a broad spectrum of demographic and philosophical differences. Though we may share things in common with other individuals, at the end of the day, everyone is their own person. Having unity in an organization seems to be more beneficial than working in everyone’s differences. Diversity in the workplace is vital for employees because it manifests itself in building a great reputation for the company, leading to increased profitability and opportunities for workers. Diversity is one of the best environments to encourage employees to use their creativity to its full potential to a career. There will likely be challenges to creating a more diverse work environment. Transitions in the diversification of a workplace can be difficult but finding it’s worth the effort and the investment and that the results are both morally and financially rewarding.

Keywords: Diversity, Workplace, differences, organization, diverse work environment,

Introduction
Diversity is present everywhere; in our population, in the workforce, and in healthcare. Diversity is an important component of business and workplace success that should be valued by all. Managing diversity in the workplace involves the recruiting process, training and supporting of individuals, as well as enabling a work environment to achieve the full potential of its people. An organization’s success and competitiveness often depend upon its ability to embrace diversity and realize its benefits. Organizations should actively assess their handling of workplace diversity issues. Organizations must work to overcome perceptual, cultural, and language barriers for their diversity programs to succeed. Having unity in an organization seems to be more beneficial than working in everyone’s differences. But diversity is unavoidable and nothing’s all the same. Despite of the differences of everything in an organization, there are still ways to be efficient on work thus, becoming coordinated. Effective diversity processes should reach all employees, creating a workplace culture that is inclusive regardless of similarities or differences. Although developing and maintaining a diverse workplace environment may require effort, there are many ways that we can model our workforce so that all viewpoints are valued.

Diversity Defined.
Talk of diversity in the workplace is nothing new, but as more individuals, organizations, and politicians speak about feminism, immigration, gender identity, and the gender pay gap, it is coming to the forefront of business news once again. According to Rock and Grant (2016), the more diverse a workplace is, the more success it achieves, and organizations are looking to learn more about how to increase diversity and manage diversity.

According to Pantaleo (2018), the concept of diversity encompasses acceptance and respect. It means understanding that each individual is unique, and recognizing our individual differences. These can be along the dimensions of race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities, religious beliefs, political beliefs, or other ideologies. It is the exploration of these differences in a safe, positive, and nurturing environment. It is about understanding each other and moving beyond simple tolerance to embracing and celebrating the rich dimensions of diversity contained within each individual.

The word “diversity” can have so many meanings. Diversity in workplace means that the company employs different varieties of employees. Diversity refers to both an obvious fact of human life—namely, that there are many different kinds of people—and the idea that this diversity drives cultural, economic, and social vitality and innovation.

Diversity is a reality created by individuals and groups from a broad spectrum of demographic and philosophical differences. It is extremely important to support and protect diversity because by valuing individuals and groups free from prejudice, and by fostering a climate where equity and mutual respect are intrinsic. (Pantaleo, 2018)
"Diversity" means more than just acknowledging and/or tolerating difference. Diversity is a set of conscious practices that involve:
·         Understanding and appreciating interdependence of humanity, cultures, and the natural environment.
·         Practicing mutual respect for qualities and experiences that are different from our own.
·         Understanding that diversity includes not only ways of being but also ways of knowing;
·         Recognizing that personal, cultural and institutionalized discrimination creates and sustains privileges for some while creating and sustaining disadvantages for others;
·         Building alliances across differences so that we can work together to eradicate all forms of discrimination.

Diversity includes, therefore, knowing how to relate to those qualities and conditions that are different from our own and outside the groups to which we belong, yet are present in other individuals and groups. These include but are not limited to age, ethnicity, class, gender, physical abilities/qualities, race, sexual orientation, as well as religious status, gender expression, educational background, geographical location, income, marital status, parental status, and work experiences. We acknowledge that categories of difference are not always fixed but also can be fluid, we respect individual rights to self-identification, and we recognize that no one culture is intrinsically superior to another. (Pantaleo, 2018)

Importance of Diversity in Workplace
According to Mayhew (2019), as workforce demographics shift and global markets emerge, workplace diversity inches closer to becoming a business necessity instead of a banner that companies wave to show their commitment to embracing differences and change. Employees reap tangible and intangible benefits from workplace benefits, not the least of which include respect from co-workers and business gains.

Workplace diversity fosters mutual respect among employees. Whether employees work in groups or teams comprised of co-workers with varied work styles, disabilities or who represent different cultures or generations, a synergistic work environment becomes the norm. Although an idyllic atmosphere may be difficult to achieve as Mayhew said, employees nevertheless recognize the many strengths and talents that diversity brings to the workplace and they gain respect for their colleagues’ performance.

Also, Mayhew mentioned that many members of the workforce have been marginalized due to racism, ageism and discrimination against people with disabilities. Not only is this discrimination unethical and illegal, it also has serious economic consequences. When people are unable to find work, or are not able to earn a wage that is consistent with their training and abilities, their standard of living suffers and they become less financially secure. This not only has an impact on individuals and their families but can also take its toll on the community at large, as talents go unused and there is less money being circulated in the local economy.

Diversity in the workplace is vital for employees because it manifests itself in building a great reputation for the company, leading to increased profitability and opportunities for workers. Workplace diversity is important within the organization as well as outside. Business reputations flourish when companies demonstrate their commitment to diversity through aggressive outreach and recruiting efforts. (Mayhew, 2019)

According to Cheah (2019), employees stand to experience more personal growth in an environment where they are exposed to differences in culture, opinions and ideas. “The more you know, the more you know you don’t know,” goes the Aristotelian saying. The following can is also be said: The more you know, the better your capacity to test and refine your own perspectives and opinions. Employers will have to improve their ability to adapt to different circumstances in a diverse environment. They have to work through differences in personality, culture and background. Underlying ethno-centric notions may finally be brought to the fore and confronted as they learn to work with different styles and cultures.

An organization known for its ethics, fair employment practices and appreciation for diverse talent is better able to attract a wider pool of qualified applicants. Other advantages include loyalty from customers who choose to do business only with companies whose business practices are socially responsible. (Mayhew 2019)

The importance of workplace diversity cannot be overstated when it comes to an organization’s ability to reach markets in foreign countries also said by Mayhew (2019). The appeal of global markets creates two kinds of opportunities for employees: opportunities for promotion and employee development. A global marketplace opens doors for employees of different ages, physical and mental abilities, and ethnic backgrounds to build global profit centers. Employees interested in learning multinational business strategy and who are available for possible expatriate assignments may also find new and challenging career opportunities.

A diverse workplace offers more than exposure to employees from different cultures and backgrounds. Employees learn from co-workers whose work styles vary and whose attitudes about work varies from their own. This is particularly true for employees within multigenerational work environments, as well as those who work in environments that are accessible to those with disabilities.

Benefits of a Diverse Workplace
Though we may share things in common with other individuals, according to Deering (2019), at the end of the day, everyone is their own person and can bring different things to the table, which is why diversity is so important among a team. By hiring people with different personalities and at varied stages of their career, it can help to foster creativity and offer a range of perspectives and ideas.

Individuals from diverse backgrounds can offer a selection of different talents, skills, and experiences that may be of benefit to the organization and their work performance. Though some crossover of skills can be beneficial when it comes to assisting each other, it’s important to hire people with the appropriate skills to fit each of the roles within the company. A variety of skills and experiences among the team also means that employees can learn from each other. Along with attracting top talent, diversity will help you improve your company's culture and retain current employees long-term. By encouraging diversity, you're allowing every employee to feel comfortable being authentic. (Deering, 2019)

According to Gallagher (2019), diversified workplaces have higher ratios of employee engagement. Since engaged employees deliver a higher level of productivity, they’re more likely to have higher tenures in your organization. During their tenure, they’re able to enhance their professional skills. With increased corporate exposure, they are competent enough to increase their client base, thus increasing the company’s profitability as a whole.

A company who embraces diversity will attract a wider range of candidates to their vacancies, as it will be viewed as a more progressive organization and will appeal to individuals from all walks of life said Deering (2019). Naturally, as the number of applicants for each vacancy rises, the chances of finding an exceptional candidate increases too. It can also help with employee retention, as people want to work in an environment who are accepting of all backgrounds and promote equality.

According to Martic (2019), diversity in the workplace ensures a variety of different perspectives. Since diversity in the workplace means that employees will have different characteristics and backgrounds, they are also more likely to have a variety of different skills and experiences. Consequently, employees in a company with higher workplace diversity will have access to a variety of different perspectives, which is highly beneficial when it comes to planning and executing a business strategy.

Diversity creates and leads to higher innovation rate. By working alongside people of different backgrounds, experiences and working styles, creative concepts can be born from bouncing ideas off of each other and offering feedback and suggestions. Whereas one person may be great at generating exciting, out of the box ideas, another individual may have the necessary experience to execute it; so it is essential to play on each individual’s strengths and collaborate with others in the team.  In a diverse workplace, employees are exposed to multiple perspectives and worldviews. When these various perspectives combine, they often come together in novel ways, opening doors to innovation. (Martic &Deering, 2019)

According to Sling (2019), problem solving is a major speed bump for most teams. Inefficient problem solving can lead to delays in the workflow, ineffective solutions, and, ultimately, loss of revenue. Why does this occur? Lack of diversity in the workplace. With a homogenous (non-diverse) team, employees only have access to a limited range of experiences and viewpoints. That can delay them from reaching the best solution, or even prevent them from reaching a solution at all. But with a heterogeneous (diverse) team, employees have access to a wide range of experiences and viewpoint. They can draw on that knowledge and those life experiences to create more diverse solutions in a shorter amount of time than the homogenous team. And when you have more options right out of the gate, the problem-solving process runs much smoother and much faster.

Companies with higher workplace diversity solve problems faster said Martic (2019). Harvard Business Review found diverse teams are able to solve problems faster than cognitively similar people. Employees from diverse backgrounds have different experiences and views, which is why they are able to will bring diverse solutions to the table. Thus, the best solution can be chosen sooner, which leads to faster problem-solving. According to Forsey (2018), it's critical you have diverse perspectives to enable your team to brainstorm out-of-the-box solutions to complex problems, or challenge each other's way of thinking. According to Martic (2019), when employees with different background and perspectives come together, they come up with more solutions, which leads to more informed and improved decision-making process and results.

Diversity in workplace improves employee performance. Employees are more likely to feel comfortable and happy in an environment where inclusivity is a priority. Equality in the workplace is important for encouraging workers from all backgrounds to feel confident in their ability and achieve their best. The higher the team morale, the more productive employees are. (Deering 2019)

According to Forsey (2018), diversity can help you become a global leader. It's likely you already work with clients or vendors from other countries. As your competitors scale up globally, it's critical you're able to do the same. By having employees who speak other languages or understand other cultures, you're more likely to succeed in the global market. According to Deering (2019), language barriers and cultural differences can often act as a bit of an obstacle for a company who want to expand their business over shores; however, by hiring employees who speak different languages it can make it possible for a company to work on a global basis and interact with a broader client base. Representing a number of nationalities within your company can also help to make it more relatable. You'll need a diverse team of employees, with unique cultural backgrounds, to combat foreign challenges and satisfy clients from other countries said Forsey (2018).

Issues, Challenges and Issues of Diversity in the Workplace
According to Hood (2019), workforce recruitment companies always battle diversity issues every day. While some believe that diversity in the workplace is as simple as meeting the required quotas for employee race and gender, it’s much, much more than that. However, as the workplace becomes more diverse, more issues arise accordingly. HR personnel and recruitment professionals need to be aware of the various challenges associated with diversity so that it can be prevented and addressed.
A fundamental value that contributes to a successfully diversified workplace is respect among workers and employees. When there is a lack of acceptance of the diverse culture and beliefs among employees, conflicts may arise. Sometimes, this conflict turns to animosity and may even effectuate situations of violence. When employees accept the differences between each other, it results in a sharing of ideas and effective collaboration. Acceptance fosters mutual respect and prevents conflicts from arising. Acceptance of individual differences is essential in creating a copacetic and productive work environment. Acceptance leads to respect, and ultimately opportunity. Diversity training will help employees understand, accept, and respect each other’s differences. (Hood, 2019)

Hood (2019) also said that diversity in cultural, spiritual, and political beliefs can sometimes pose a challenge in a diverse workplace. Employees need to be reminded that they shouldn’t impose their beliefs on others to prevent spats and disputes. Though one's personal life should typically not affect their job performance, lifestyle acceptance is sometimes an issue in the workplace. Unfortunately, even though many employers now provide extended benefits to "alternative lifestyle partners," sometimes gay and lesbian workers experience disrespect and discrimination from coworkers. Such behavior leads to an uncomfortable working atmosphere and poor productivity. They also need to make sure to keep their ethnic and personal beliefs independent of their work responsibilities and duties.

According to Dhuppar (2015), some individuals harbor unfair prejudices against people of different colors, cultures, ethnicity or religion than their own. Such prejudice should not be tolerated in the workplace – much less anywhere – and should be dealt with in a firm and prompt manner. Firm company policies and appropriate training help build acceptance and respect among a well-diversified employee body. Cultural sensitivities training and diversity awareness programs in the workplace can help address this issue.

One the oldest and most common diversity issues in the workplace is the "men vs. women" topic. Over the years, a new element in the disputes over equal pay and opportunity is the transgender employee. Some corporations have trouble dealing with the fact that a man in women's clothing or a woman in the stages of "becoming a man" may perform equally as well on the job done as those in traditional gender roles said Renee (2019). According to Hood (2019), in the past, women were paid less than men, but the Equal Pay Act has changed that. In recent years, there has been an influx of women in the workplace. Employers need to prevent gender discrimination and maintain equality regarding hiring, salary, opportunities, and promotions.

Harassment can sometimes be an issue in a diversified work environment, but should absolutely never be tolerated. Recognizing harassment is key in preventing and eliminating discrimination from the workplace. Even the slightest comment made in jest can be considered harassment if any – even remotely vague – any racial, sexual or discriminatory connotation is made. For example, "I love Asian women" or "We should have hired a man." (Renee, 2019)

Renee (2019) added that even when no prejudice exits among employees, a diversified workplace can bring about certain communication issues. Hiring immigrants who speak little or no English can reduce productivity by creating a communication barrier among team members. Employing some form of communication training and hiring sufficiently bilingual workers helps encourage and improve staff interaction. According to Hood (2019), language and communication barriers are ever-present in companies with a diverse workforce. This can lead to miscommunication and productivity loss. Language training for non-native English speakers can often prevent this from happening. Hiring multilingual or bilingual employees can also help bridge the gap.

According to Edge (2018), each year, new workers are entering the workforce while others are retiring. Employees from other generations may have difficulties adapting to changes in the workplace and the work culture that the younger generation are bringing about. This denotes a huge shift in the workforce, often resulting in showcasing key distinctions between the different generations, as well as different perceptions among each group. According to Hood (2019), in larger diversified corporations, staffs are often made up of workers who range in age from teenagers to senior citizens. Inevitably, generation gaps can become an issue and the age differences can trigger "cliques" and separation of the company as a unit. Bridging the gap between multiple generations of workers can sometimes become an issue for employers attempting to establish teamwork. There may also be times that workers from different generations may disagree with how things should be done. To maintain teamwork and collaboration, create an open communication culture within your organization to help bridge the gap between generations.

Workers who are mentally or physically handicapped sometimes encounter discriminatory behavior from insensitive coworkers. In some cases, employers innocently overlook handicapped workers’ needs, such as ramps or special needs equipment. Often, disabled employees have a difficult time navigating through their workplace because proper accommodations as simple as wheelchair ramps are not available. Some special needs employees also have service dogs, and some office buildings don’t allow them inside. Make arrangements for service dogs to be permitted in your place of work. Creating a fair and comfortable work environment for disabled employees is important in a diversified workplace (Renee, 2019). Have procedures in place for people with physical or mental disabilities. Some companies have a “quiet room” so that when employees start to feel anxious, they can use that room to ease their anxiety. Be supportive to your disabled employees and avoid discriminatory or derogatory remarks. Ensuring a fair and comfortable work environment for employees with physical and mental disabilities helps successfully create a more diverse workforce. (Hood, 2019)

Encourage Workplace Diversity
Diversity allows each team member to focus on their strengths. If an employer can create diversity in the workplace, then each worker will have their strengths complement those of everyone else on the team. That means assignments can be handed out with greater specificity so that the quality of the work improves. Supervisors aren’t forced to guess at who might be the best option for an assignment because each person has a unique skill that they bring to the table. Diversity in the workplace allows for strengths and weaknesses to be spread out so that their effects are maximized and minimized respectively. No matter what the requirements of a project might be, there is someone who can step up to lead the team toward a successful result. (Regoli, 2019)

According to Regoli (2019), diversity in workplace increases the number of job opportunities for minority workers. Diversity in the workplace looks at all population demographics when hiring for an open position. That means employers have an opportunity to find the best possible person for a job because they are not limited to a specific group of individuals. This advantage makes it possible to have more women working in society and promotes the hiring of minority groups. It applies at all levels of employment, from the local small business to multinational firms.

According to Emma (2019), if everyone acts and thinks alike, you’re likely to see the same-old, same-old when it comes to approaches to products, distribution, marketing, management and sales. However, when several people approach problems and challenges from varied perspectives, you’ll discover more creative solutions. Research suggests that diversity increases innovation and improves market growth.

Companies have access to more talent. When diversity in the workplace is a top priority for an organization, then supervisors and hiring managers can expand their applicant screening processes to include more people. There are fewer restrictions on geographic location, educational accomplishments, or previous work histories. The top priority in the hiring process focuses on the talent and skills of the individual, and then how that person could fit into the team. Instead of trying to hire the best possible candidate from a group of applicants, diversity in the workplace encourages managers to find the best person for the job. (Regoli, 2019)

Diversity in the workplace creates more revenue-earning opportunities. The companies which focus on diversification are the businesses which tend to see more sales and revenues because of their efforts. Emphasizing multiple language fluency for a team can boost their profits by 10% for every fluent language that is spoken (Regoli, 2019). Gender diversity can help revenues grow by 40% in the first year of this effort. This advantage can open new markets for the organization that can help profits to start climbing as well without a significant increase in the work of the team. Diversity in the workplace goes beyond skin color or gender. These benefits occur when lifestyle differences, spiritual perspectives, and other unique life factors are taken into account during the hiring process. You cannot exclude employees from a job because of their differences, but you can look for people who can fit into a specific role for you.

Diversity is one of the best environments to encourage employees to use their creativity to its full potential to a career because it offers numerous perspectives that can enhance the brainstorming sessions. The biggest complainers about a lack of creative energy in the modern workplace are those who limit the diversity of their teams (Regoli, 2019). Having different perspectives can create conflict at times, but the unique interpretation of life that each person brings is invaluable to the employer and their team. The need to create change or embrace differences is what leads to an environment that encourages innovation.

Diversity in the workplace exposes societal bias. Bias is what destroys diversity in the workplace before it can establish itself. Hiring managers tend to bring men on more than women, even if the qualifications of each candidate are equal. During a study funded by Harvard and Princeton, managers were given a set of applications and qualifications, but they did not reveal the gender of each identity. During this blind process, women were preferred over their male counterparts when gender was not part of the hiring process. When everyone has a chance to work if that’s what they want to do, then a secondary benefit of this advantage is that it diversifies the wages and productivity of the economy. This process reduces the amount of risk communities face if an unexpected recession were to occur. (Regoli, 2019)

Customers are attracted to diversity in the workplace. Over forty percent of employees say that their company has the right amount of diversity or that their teams should try to become more unique. Although it can be challenging to share a workplace environment with someone who is uniquely different, the advantages typically outweigh the problems which can develop over time. When everyone comes from the same perspective, then the daily routine becomes dull (Regoli, 2019). Going to work becomes a boring experience. People can even lose their passion for what they do because there is a lack of diversity present on their team. There are immediate benefits to consider when hiring managers make diversity a top priority. It can lower the levels of burnout which are present in the workplace, improve the quality of each project, and boost the levels of community exposure that are present.

Productivity levels improve because of diversity in the workplace. Even when a team doesn’t like the idea of being diverse, their productivity levels can rise by more than Thirty percent. When people have co-workers who are different from them, then there is an increase in the sensitivity levels that are present in the workplace (Regoli, 2019). People start to look for ways to find common ground. There is more time given to each team member to share ideas, and a higher emphasis on hiring women occurs. The fastest way for an employer to encourage a higher level of productivity is to add diversity throughout their organization. Even when there are moments where the work levels decline, the overall benefit never disappears.

Disadvantages of Diversity in Workplace
If your company is just beginning to recognize the potential of diversification, there will likely be challenges to creating a more diverse work environment. Old ways of thinking and entrenched prejudices may hinder your efforts and create tension and conflict (Emma, 2019). Additionally, as cultures collide, there may be misinterpretations of meanings. What’s funny to one culture may be considered disrespectful to another. Management needs to buy in and educate employees across the board if workplace diversity is to have its first measure of success.

Hiring managers focus on leadership qualities too often. Diversity in the workplace seeks out experts who excel in their chosen career, job function, and team environment. The goal is to create a series of strengths that allows everyone to grow over time (Regoli, 2019). These are all advantages, but it can become a problem if hiring managers are bringing in people who all want to be in charge. Competition can be healthy, but it can also be dangerous when it spirals out of control. When the goal is to promote the individual instead of the team, then a diversity initiative fails. You must go beyond what you see to create a team that complements one another. That means there must be leaders, people who are content with their current position, and individuals who come to work because of their passion. There must be emotional diversity too.

Depending on how long you’ve been in business, you may have already learned a great deal about accommodations in the workplace. Just as the employees with Disabilities Act brought significant changes to some businesses at a financial cost, so will diversity require some flexibility (Emma, 2019). For example, if you have employees who are practicing Muslims, you’ll need to give them time and space for daily prayer. Transgender employees may need their own bathrooms. As your employees become more diverse, you may face associated costs that you hadn’t considered. Although the transition to a diverse workplace can be difficult, employers across the country and the globe are making moves to diversify. They’re finding it’s worth the effort and the investment and that the results are both morally and financially rewarding.

Managing Diversity in the Workplace
Managing diversity in the workplace is a critical skill for leaders to hone as companies spend significant time, energy, and resources driving workplace diversity and inclusion. Even so, many leaders talk the talk when it comes to diversity and inclusion, but too few walk the walk. This is because knowing that you need a diverse workforce is not the same as understanding how to manage diversity. According to Blakemore (2018), the biggest mistake managers make is applying the same management style for each person on their team. This results in poor management, which can have a negative impact on a company, from low morale to high turnover--the exact opposite of what a dynamic, well-managed diverse workforce can deliver.

According to Ortiz (2019), you cannot be averse to diversity at the hiring stage and then expect the same thing you shun to work for you later on – that would be absurd. The inroads into the organization for any aspiring employee should reflect what the organization is trying to achieve in terms of diversity. Let your employees resemble the country or community your company is based in as much as possible. This can only be possible by ensuring your recruitment policies encourage and embrace diversity. To hire for diversity, you will need to overcome bias in the assessment and interviewing process. This can only be achieved by creating a diverse interview panel that will ensure that the candidate selection process is free of prejudices and biases and that candidates are strictly selected based on merit. Fair recruitment is crucial if diversity will be managed successfully later on.
Everyone is driven differently. Connect with your employees and find out what motivates them. People like to be heard and understood. Making the effort to inquire about them personally and see what they are passionate about may uncover their motivating lever. When you understand what works, you can engage each team member by providing them the information they need, the way they need to receive it (Blakemore, 2018). Ensure that all employees understand your policies, procedures, safety rules, and other important information. Work to overcome language and cultural barriers. Have key materials, such as safety information, translated when possible. Use pictures and symbols on warning signs so that everybody can understand (Kilbourne, 2010).

Set your team up for success by clearly identifying company and department goals. Communicate what is expected of them to deliver on those goals--and then let them creatively collaborate around how to achieve them. Take advantage of the different viewpoints you have on your team, creating opportunities for people to express ideas and provide feedback (Blakemore, 2018). According to Ortiz (2019), it’s only through interactions with one another can diverse groups of people really understand, appreciate and respect the differences that exist among them. Encourage your employees to collaborate with colleagues who are “different” from them.One way of implementing this is by creating work groups that reflect the diversity that exists in the workplace. This will not only help your employees know and value each other as individuals but will also expand the views and experiences of team members helping them appreciate the strength of their combined perspectives and talents.

Conclusion
From our discussion, we can conclude that diversity is very beneficial to and individual or an employee, but also to the whole workplace itself. Workplace diversity fosters mutual respect among employees. Working on everyone’s differences requires time and effort. Diversity provides more options, thus giving more opportunities, better outputs. Not only diversity is beneficial to an organizations outputs but also to the well-being of the members. Diversity allows members of an organization to assess their weakness and strengths thus having an advantage for competitive growth. Workplace diversity is important within the organization as well as outside. A diverse workplace offers more than exposure to employees from different cultures and backgrounds. Everyone is their own person and can bring different things, which is why diversity is so important among a workplace. Individuals from diverse backgrounds can offer a selection of different talents, skills, and experiences that may be of benefit to the organization and their work performance. Diversified workplaces have higher ratios of employee engagement and performance. Companies with higher workplace diversity solve problems faster. Diversity is one of the best environments to encourage employees to use their creativity to its full potential to a career because it offers numerous perspectives that can enhance the brainstorming sessions. There will likely be challenges to creating a more diverse work environment. Competition can be healthy, but it can also be dangerous when it spirals out of control. Managing diversity in the workplace is a critical skill for leaders. Transitions in the diversification of a workplace can be difficult but finding it’s worth the effort and the investment and that the results are both morally and financially rewarding.

References
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