1. Organizational Culture and Ethical Decision Making
Chapter 6
Organizational Culture and Ethical Decision Making

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. The Role of Power
exerting power is one way to influence ethical behavior
reward power
coercive power
legitimate power
expert power
referent power

16. 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