Organizational Structure &

Business Ethics

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 Organizational Structure & Business
Ethics
In centralized organizations, decision-making
authority is concentrated in the hands of top level
managers and little authority is delegated to lower
levels.
In decentralized organizations, decision- making
authority is delegated as far down the chain of
command as possible.
Each structure has a unique influence on ethical
decision making and behavior.

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 Organizational Structure and BE

Company Culture Characterized by

Nike Decentralized Creativity, freedom, informality

Southwest Decentralized Fun, teamwork, loyalty

Airlines
General Motors Centralized Unions, adherence, structured

Microsoft Decentralized Creative, investigative, fast paced

Procter & Centralized Experienced, dependable, powerful

Gamble
 Centralized Organizations...
stress formal rules, policies and procedures
supported with systematic control systems
may specify the techniques for decision makers in
their codes of ethics
tend to be very bureaucratic
have a well-defined division of labor

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 Ethical Issues That May Arise in
Centralized Organizations...

blame-shifting or “scapegoating”—transferring
blame for one’s actions to others
specialization—limits the ability of the individual to
understand how one’s actions affect the overall
organization
minimal upward communication—top level managers
may not be aware of problems

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 Decentralized Organizations...
have few formal rules, and coordination and
control are usually informal and personal
are adaptable and are very aware of external
change
allow managers to react quickly to changes in the
external and internal environment

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 Ethical Issues That May Arise in
Decentralized Organizations...
difficulty in responding quickly to changes in policy
and procedures established by top management
employees have extensive decision-making
authority

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 Case : Discrimination in the work place
 Zaheera popularly called ‘Zahi’, a top graduate from Harvard University,
was hired by a major corporation and was successfully working in an
American company in the US. She enjoys her work very much.
 As an Asian, Zaheera feels isolated as there are no Asian women
managers in her company. All her colleagues have a professional
relationship with her. One night at a company party, Zaheera heard
some unhealthy critical comments about her short height and dark
colour. The employees cursed affirmative action regulations for making
the hiring of Zaheera necessary for the company.
 Zaheera was upset and planned to quit the job. She wanted to discuss
the issue with her boss Marc.
Questions:
1. Should Zaheera resign?
2. Should she confront the colleagues who made the comments?
3. Were her colleagues right?
84. What is the way to deal with such a situation?