This document discusses how organizational structure and culture can influence ethical decision making. It describes two main organizational structures - centralized and decentralized. Centralized organizations concentrate decision making authority at the top and rely on formal rules, which can lead to issues like blame-shifting. Decentralized organizations delegate authority more widely and are informal, but employees may have too much autonomy. Organizational culture is shaped by leadership and provides norms for employee behavior. Reward and punishment systems should reinforce the culture. Groups within the organization can also influence ethics through establishing norms.

1. 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 behaviornegative 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