Organizational Factors: The Role of Ethical Culture and Relationships (Chapter 7) - LWC1 - Business Ethics

What is the influence of corporate culture on business ethics?

Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and rituals that take place in the organization. It gives the members of the organization meaning as well as the internal rules of behavior. When these values, beliefs, customs, rules, and ceremonies are accepted, shared, and circulated throughout the organization, they represent its culture. All organizations, not just corporations, have some sort of culture, and thus we use the terms organizational culture and corporate culture interchangeably.

whistle-blowing

Whistle-blowing means exposing an employer's wrongdoing to outsiders (external to the company) such as the media or government regulatory agencies. The term whistle-blowing is also used for internal reporting of misconduct to management, especially through anonymous reporting mechanisms, often called hot lines.

What is the relationship between individual and group ethical decision making?

Many people find it hard to believe that an organization's culture can exert so strong an influence on individuals' behavior within the organization. In our society, we want to believe that individuals control their own destiny. A popular way of viewing business ethics is therefore to see it as a reflection of the alternative moral philosophies that individuals use to resolve their personal moral dilemmas. However, ethical decisions within organizations are often made by committees and formal and informal groups, not by individuals. Decisions related to financial reporting, advertising, product design, sales practices, and pollution-control issues are often beyond the influence of individuals alone. In addition, these decisions are frequently based on business rather than personal goals.

How does leadership, power, and motivation relate to ethical decision making in organizations?

Organizational leaders use their power and influence to shape corporate culture. Power refers to the influence that leaders and managers have over the behavior and decisions of subordinates. An individual has power over others when his or her presence causes them to behave differently. Exerting power is one way to influence the ethical decision-making framework. There are five power bases from which one person may influence another: (1) reward power, (2) coercive power, (3) legitimate power, (4) expert power, and (5) referent power. These five bases of power can be used to motivate individuals either ethically or unethically. A leader's ability to motivate subordinates plays a key role in maintaining an ethical organization. To create motivation, an organization offers incentives to encourage employees to work toward organizational objectives. Understanding motivation is important to the effective management of people, and it also helps explain their ethical behavior.

reward power

Reward power refers to a person's ability to influence the behavior of others by offering them something desirable. Typical rewards might be money, status, or promotion.

How do work groups influence ethical decision?

Work groups are used to subdivide duties within specific functional areas of a company. Work groups and teams provide the organizational structure for group decision making. One of the reasons why individuals cannot implement their personal ethical beliefs in organizations is that so many decisions are reached collectively by work groups. However, those who have legitimate power are in a position to influence ethics-related activities. The work group and team often sanction certain activities as ethical or define others as unethical.

motivation

a force within the individual that focuses his or her behavior toward achieving a goal. To create motivation, an organization offers incentives to encourage employees to work toward organizational objectives. Understanding motivation is important to the effective management of people, and it also helps explain their ethical behavior.

centralized organization

decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels. Responsibility, both internal and external, rests with top-level managers. This structure is especially suited for organizations that make high-risk decisions and whose lower-level managers are not highly skilled in decision making.

decentralized organization

decision-making authority is delegated as far down the chain of command as possible. Such organizations have relatively few formal rules, and coordination and control are usually informal and personal. They focus instead on increasing the flow of information.

formal group

defined as an assembly of individuals that has an organized structure accepted explicitly by the group.

informal group

defined as two or more individuals with a common interest but without an explicit organizational structure.

expert power

derived from a person's knowledge (or the perception that the person possesses knowledge). Expert power usually stems from a superior's credibility with subordinates.

coercive power

essentially the opposite of reward power. Instead of rewarding a person for doing something, coercive power penalizes actions or behavior.

referent power

may exist when one person perceives that his or her goals or objectives are similar to another's. The second person may attempt to influence the first to take actions that will lead both to achieve their objectives. Because they share the same objective, the person influenced by the other will perceive the other's use of referent power as beneficial.

differential association

refers to the idea that people learn ethical or unethical behavior while interacting with others who are part of their role-sets or belong to other intimate personal groups.

growth needs

satisfied by creative or productive activities

relatedness needs

satisfied by social and interpersonal relationships

group norm

standards of behavior that groups expect of their members. Just as corporate culture establishes behavior guidelines for an organization's members, so group norms help define acceptable and unacceptable behavior within a group. In particular, group norms define the limit allowed on deviations from group expectations.

legitimate power

stems from the belief that a certain person has the right to exert influence and that certain others have an obligation to accept it. The titles and positions of authority that organizations bestow on individuals appeal to this traditional view of power.