Organization & Business Ethics

Lesson 05

Lesson's Objectives◦Identify ethics with organizational

structures◦Identify corporate culture with ethics◦Leadership practices to ethical

conduct of business

Structure & Business Ethics

◦Organizational structure is the typically hierarchical arrangement of lines of authority, communications, rights and duties of an organization. In centralized organizations In decentralized organizations

◦Each structure has a unique influence on ethical decision making & behavior.

Centralized Organizations◦ in centralized organizations, decision-

making authority is concentrated in the hands of top level managers & little authority is delegated to lower levels.

◦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◦Blame-shifting 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

◦In decentralized organizations, decision making authority is delegated as far down the chain of command as possible

◦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◦Difficulty in responding quickly to

change in policy & procedures established by top management

◦Employees have extensive decision making authority

◦Some occasions consider only human side instead of owner's profit

Corporate Culture in Ethical Business

◦Organizational culture is the values and behaviors that contribute to the unique social and psychological environment of an organization

◦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

Corporate Culture in Ethical Business

◦It may be explicit statements of values, beliefs, and customs coming through memos, codes, handbooks, manuals, forms & ceremonies.

◦It may be expressed informally through direct & indirect comments that convey management's wishes: dress codes, promotions, legends, extracurricular activities.

Corporate Culture in Ethical Business

◦A failure to monitor & manage corporate culture may lead to questionable behavior

◦Rewards & punishment need to be consistent with the corporate culture

◦It concern for people - the organizations' efforts to care for its employees well being

◦It concern for performance-the organizations' efforts to focus on output and employee productivity

Corporate Culture in Ethical Business

◦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

Leadership with Culture◦A leader must respect followers and

provide a standard of ethical conduct◦Managers can use rewards &

punishment to encourage employees in behaviors that support the organization's goals An individual's hierarchy of needs may

influence motivation & ethical behavior Stick or Carrot approach to motivation Reinforcement theory

Leadership with Culture◦They can use (RCELR)to arouse

employees towards ethics or goal achievement Reward power Coercive power Expert power Legitimate power Referent power

Ethic Vs. Stress◦Stress is your mind and body's response

or reaction to a rear or imagined threat, event or change

◦Eustress or positive stress occurs when your level of stress is high enough to motivate you to move into action to get things accomplished.

◦Distress or negative stress occurs when your level of stress is either too high or too low and your body and/or mind begin to respond negatively to the stressors.

◦ Is it ethical

Leaders Arouse StressPerformance(Physical & mental)High

Medium

Low

Low (under load) High (overload)Medium

Inactive Panic, anger, or violence

Best (Optimum)

performance

Stress zone

AnxiousLaid back

Ethic Vs Conflict◦A conflict is a situation in which

someone believes that his or her own needs have been denied.

◦Conflict is a state of discord caused by the actual or perceived opposition of need, values and interests.

◦Today managers create conflicts within the organization to arouse the high performance of the organization

◦Is it ethical

Ethic Vs. Conflict◦Interpersonal Conflict

Conflict between individuals due to differences in their goals or values.

◦Intragroup Conflict Conflict within a group or team

◦Intergroup Conflict Conflict between two or more teams or

groups. Managers play a key role in resolution of this

conflict

◦Interorganizational Conflict Conflict that arises across organizations.

High

Low

Low HighLevel of conflict

Optimum level of conflict leads to effective decision making and high performance.

Too little conflict causes performance to Suffer

Too much conflict causes performance to Suffer

A

B

C

Lev

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Ethic Vs. Informal Management

◦Leaders have aware about the value of informal behaviors than formal behaviors

◦Higher consideration is given to Informal communication Informal group Sub culture behaviors

Definition

Style

Intentional Message

Intentional Setting

SpeechPublicationE-mail blast

Informal Communication

Random messageRelational Setting

ConversationPersonal note

Overheard comment

Informal Communication

Thank you