Organizational Factors: The Role of Culture and Relationships C H A P T E R 7 Ethical Decision Making For Business 8e Fraedrich/Ferrell/Ferrell CHAPTER 7

Two Dimensions of Organizational Culture Concern for people –The organization’s efforts to care for its employees’ well-being Concern for performance –The organization’s efforts to focus on output and employee productivity Source: Digital Vision

Four Organizational Culture Types Apathetic ( 冷漠型 ): Shows minimal concern for people or performance Caring ( 關懷型 ): Exhibits high concern for people, but minimal concern for performance Exacting ( 苛求型 ): Shows little concern for people, but high concern for performance Integrative ( 整合型 ): High concern for people and performance A cultural audit is an assessment of the organization’s values –Usually conducted by outside consultants

Compliance versus Value-Based Culture Compliance-based cultures use their legal departments to determine ethical risk –Revolves around risk management, not ethics Values-based cultures relies on an explicit mission statement that defines the firm and stakeholder relations –Focus on values, not laws

Differential Association ( 差異聯想 ) The idea that people learn ethical/unethical behavior while interacting with others –Studies support that differential association affects ethical decision making –Superiors have a strong influence on subordinates Source: S. Pearce/PhotoLink

Whistle Blowing Exposing an employer’s wrongdoing to outsiders (external to the company) –e.g. the media or government regulatory agencies The Sarbanes–Oxley Act has institutionalized whistle-blowing to encourage discovery of misconduct –The Sarbanes–Oxley Act makes it illegal to “discharge ( 解聘 ), demote ( 降級 ), suspend ( 停職 ), threaten ( 恐嚇 ), harass ( 騷擾 ), or in any manner discriminate against ( 不公平對待 ) ” a whistle-blower and sets penalties of up to 10 years in jail for executives who retaliate ( 報復 ) against whistle-blowers.

Reasons Why Employees Do Not Report Misconduct

Leaders Can Influence Corporate Culture Power refers to the influence that leaders and managers have over the behavior and decisions of subordinates. Power and influence shape corporate culture Source: Triangle Images

Five Power Bases Reward power ( 獎賞權 ): Offering something desirable to influence behavior Coercive power ( 強制權 ): Penalizing negative behavior Legitimate power ( 法定權 ): Titles and positions of authority Expert power ( 專家權 ): Knowledge based Referent power ( 參照權 ): Exists when goals or objectives are similar

Variation in Employee Conduct (The 10/40/40/10 Rule)

Can People Control Their Own Actions Within a Corporate Culture? Organizational ethical decisions often made by committees and formal and informal groups Individuals entering the business will need several years of experience to understand how to resolve ethical issues

The Importance of Corporate Culture According to the Ethics Resource Center, corporate culture is the number one most important factor in limiting misconduct Executives must make maintaining an ethical culture a top priority Source: © Jack Hollingsworth/Corbis