This document discusses how organizational structure and corporate culture can influence ethics within a business. It describes two main organizational structures - centralized and decentralized - and some of the ethical issues that may arise within each. A centralized structure concentrates decision-making at the top and uses formal rules and procedures, which can lead to issues like blame-shifting and limited understanding of impacts. A decentralized structure delegates authority throughout the organization and relies more on informal coordination, allowing for quick reactions but potentially difficulties responding to policy changes. The document also discusses how corporate culture, defined by the values and behaviors within a company, strongly influences ethics, and the four types of cultures that can emerge based on concerns for people and performance. Effective leadership is needed to develop an

1. Organization & Business Ethics
Lesson 05

2. Lesson's Objectives
◦ Identify ethics with organizational
structures
◦ Identify corporate culture with ethics
◦ Leadership practices to ethical conduct of
business

3. 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.

4. Centralized Organizations
◦ in centralized organizations, decisionmaking 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

5. 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

6. 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

7. 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

8. 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

9. 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.

10. 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

11. 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

12. 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

13. 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

14. 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

15. Performanc
e
(Physical &
mental)
High
Leaders Arouse Stress
Best
(Optimum)
performance
Mediu
m
Laid
back
Anxious
Stress
zone
Inactive
Panic, anger, o
r violence
Low
Low (under load)
Mediu
High (overload)

16. 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

17. 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.

18. Optimum level of conflict leads to
effective decision making and high
performance.
Level of organizational performance
High
Low
Low
Too little conflict causes performance to
Suffer
Level of conflict
High
Too much conflict causes performance to
Suffer

19. 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

20. Informal
Communication
Definition
Intentional
Message
Intentional
Setting
Speech
Style
Publication
E-mail blast
Informal
Communication
Random
message
Relational Setting
Conversation
Personal note
Overheard
comment