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Chapter 6

Organizational Culture and


Ethical Decision Making
Organizational Structure &
Business Ethics
in centralized organizations, decision-making
authority is concentrated in the hands of top level
managers & 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 & behavior
Centralized Organizations...

stress formal rules, policies & procedures


supported with systematic control systems
codes of ethics may specify the techniques for
decision makers
tend to be very bureaucratic
the division of labor is well defined
Ethical Issues That May Arise in
Centralized Organizations...
blame-shifting or ‘scape-goating’-transferring
blame for ones’ actions to others
specialization limits the ability of the individual to
understand how their actions affect the overall
organization
because of minimal upward communication, top
level managers may not be aware of problems
Decentralized Organizations...

have few formal rules, and coordination and


control are usually informal and personal
are adaptable and are very aware of external
change
managers can react quickly to changes in the
external and internal environment
Ethical Issues That May Arise in
Decentralized Organizations...
difficulty in responding quickly to changes in
policy & procedures established by top
management
employees have extensive decision making
authority
The Role of Corporate Culture in
Ethical Decision Making
culture gives members of an organization
meaning & provides them with rules for behaving
within the organization
a company’s history & unwritten rules are a part
of its culture
some cultures are so strong they dictate the
character of the entire organization to outsider
Organizational Culture...
may be explicit statements of values, beliefs,
and customs coming from upper management in
the form of memos, codes, handbooks, manuals,
forms & ceremonies
may be expressed informally through direct &
indirect comments that convey management’s
wishes: dress codes, promotions, legends,
extracurricular activities
Ethics as a Component of
Corporate Culture...
top management provides the blueprint of what a
corporate culture should be
organizational ethical decisions have a strong
impact on corporate culture
a failure to monitor & manage corporate culture
may lead to questionable behavior
rewards & punishment need to be consistent with
the corporate culture
Two Basic Dimensions Determine
an Organization’s Culture...
concern for people-the organizations’ efforts to
care for its employees well being
concern for performance-the organizations’
efforts to focus on output and employee
productivity
Four Different Cultures Can
Emerge
apathetic-shows minimal concern for people or
performance
caring-exhibits high concern for people, but minimal
concern for performance
exacting-shows little concern for people, but high
concern for performance
integrative-high concern for people and
performance
Role of Leadership
a leader must respect followers and provide a
standard of ethical conduct
leadership style influences how employees act
leadership influence affects ethical behavior
managers can use rewards & punishment
to encourage employees in behaviors
that support the organization’s goals
Reward & Punishment
Dimensions
performance contingent reward behavior -positive
reinforcement for good behavior
contingent punishment behavior-negative
reinforcement for poor behavior
noncontingent reward behavior-positive
reinforcement regardless of behavior
noncontingent punishment behavior-negative
reinforcement regardless of behavior
Role of Motivation

offers incentives to encourage employees to


work toward organizational objectives
career stage, age, organization size, and
geographic location influence needs
an individual’s hierarchy of needs
may influence motivation & ethical
behavior
The Role of Power

exerting power is one way to influence ethical


behavior
reward power
coercive power
legitimate power
expert power
referent power
Group Influences
formal groups-committees, work groups, teams, quality
circles
informal groups-‘grapevine’
group norms-standards of behavior acceptable in the
group, define acceptable behavior, fosters conformity,
may conflict with the organizational culture, & sanctions
may be necessary to bring a nonconforming group into
line with organizational expectations

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