ORGANIZATIONAL FACTORS:

THE ROLE OF ETHICAL CULTURE AND RELATIONSHIP

Internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job, role or subject, or to make an effort to attain a goal.

FACTORS

1.Intensity of desire or need .

2. Incentive or reward value of the goal and;

3. Expectations of the individual and of his or her peers.

MASLOW’S HEIRARCHY OF NEEDS

HOW TO MOTIVATE ETHICAL BEHAVIOR IN THE WORKPLACE Step 1: Analyze your current work

environment

Step 2: Solicit the input of each employee

Step 3: Gain the support of top management to reword any unclear goals and to add or develop an ethics program in your company

Step 4: Provide ethics training

HOW TO MOTIVATE ETHICAL BEHAVIOR IN THE WORKPLACE Step 5: Clearly define the repercussions for

wrongdoing.

Step 6: Provide a hotline or other anonymous reporting system

Step 7: Provide encouragement and protection to any employee

Step 8: Set up ongoing workshops and mandatory meetings that discuss emerging ethics issues.

ORGANIZATIONAL STRUCTURE AND BUSINESS ETHICS

An organization’s structure is important to the study of business ethics because the various roles and job descriptions that comprise the structure may create opportunities for unethical behavior.

Two Categories of Organizational Structure

1. Centralized Organization

2. Decentralized Organization

TYPES OF GROUPS

Formal Groups

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

VS

INFORMAL GROUPS

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

Types of Groups

FORMAL GROUPSa. Committees ~ a committee is a formal group of individual assigned to a

specific task.b. Work Group and Teams ~ are used to subdivide duties within specific functional

areas of a company.

INFORMAL GROUPSGRAPEVINE = important source of information for individual to assess ethical behavior within their organization.GROUP NORMS ~ are standard of behavior that group expected of their members.

Variation in Employee Conduct

10% 40% 40% 10%

Follow their own values and beliefs; believe that their values are superior to those of others in the company.

Always try to follow company policies.

Go along with the work group.

Take advantage of situations if the penalty is less than the benefit and the risk of being caught is low.Table 7-7 Variation in Employee Conduct

The table 7-7 shows the variation of employee conduct in a company.

Executive/Company Trial OutcomeFranklin Brown, former general counsel, Rite Aid Convicted and sentenced to 10 years in prison.Bernard Ebbers, former chairman and CEO, WorldCom

Convicted and sentenced to 25 years to life in prison.

Dennis Kozlowski, former CEO, Tyco Mistrial in first trial; in second convicted and sentenced to 8⅓ years to 25 years in prison.

Jamie Olis, former vice president of finance, Dynegy

Convicted and sentenced to 25 years in prison without the chance of parole; the sentenced was tossed out on appeal.

Table 7-8 Penalties for Convictions of Organizational Wrongdoing

Frank Quattrone, former investment banker, CSFB Convicted in second trial, but conviction over turned due to error in jury instructions.

John Rigas, founder, Adelphia Convicted and sentenced to 15 years in prison.

Richard Scrushy, founder, HealthSouth Acquitted by the Justice Department but found guilty by an Alabama jury; awaits sentencing.

Theodore Sihpol, broker, Bank of America Acquitted on twenty-nine of thirty-three criminal counts; no retrial on remaining counts.

Martha Stewart, founder, Martha Stewart Living Omnimedia

Convicted and sentenced to 5 months in prison and 5 months of home confinement.

While, Table 7-8 summarizes the penalties that corporate executives have experienced over the past several years.

CORPORATE CULTURE

Describes and governs the ways a company’s owners and employees think, feel, and act. You own business culture maybe based on belief’s spelled out in your mission statement.

ETHICAL DECISION W/IN CORPORATION RRE OFTEN MADE BY:

Committees

Formal Groups

Informal Groups

Decisions related to the ff. are often beyond the influence of individual alone

Financial Reporting

Advertising

Sales Practices

Pollution Control Issue

Bureaucratic Information

Is one rigid and tight procedures, policies and constraints. This is a type of business structure popular among government and public administrations. 

Corvette

Is a sort car by the Chevrolet of General Motors (GM) that had been produced by 7 generation.

IMPORTANT FOR

SUCCESSFUL

ETHICAL DECISION

MAKING

Honesty

Refers to a facet of moral character and connotes positive and virtuous attributes such as integrity, truthfulness, and straightforwardness, including straightforwardness of conduct. 

*Open Discussion of Ethical Issues

-They should have a group discussion about

the problem or situation of their company.

Is a structure of organization where 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.

Is a structure of organization where 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. As a result, one of the main strength of decentralized organizations is their adaptability and early recognition of external change