Be Chp 7 - Organizational Factors: The Role Of Ethical Culture And Relationships

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Corporate culture

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A set of values, norms, and artifacts, including ways of solving problems shared by organizational members
The shared beliefs top managers have about how they should manage themselves and other employees and how they should conduct their business

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Ethical Corporate Culture

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Gives organizational members meaning and sets the internal rules of behavior
All organizations have culture

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Sarbanes-Oxley 404

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- Includes assessment of effectiveness of controls by management and external auditors
- Forces firms to adopt a set of values that make up part of the culture
- Compliance with 404 requires cultural change, not only accounting changes

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Corporate culture may be...

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- formal through statements of values, beliefs, and customs
- comes from upper mgmt
- memos, codes, manuals, forms, ceremonies
- may be informal thru direct or indirect comments conveying wishes - dress codes, promotions

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2 Dimensions of Organizational Culture

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Concern for people
- Organizations efforts to care for its employees' well-being

Concern for performance
- Organization's efforts to focus on output and employe productivity

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4 Organizational Culture Types

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Apathetic - minimal concern for people or performance (country wide financial)
Caring - high concern for people; minimal concern for performance (Ben & Jerry's)
Exacting - minimal concern for people, high concern for performance (UPS)
Integrative - high concern for people and performance (Starbucks)

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Cultural audit

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assessment of the organization's values - usually conducted by outside consultants; can be handled internally

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Ethics and Corporate Culture details

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ethical corporate culture is a significant factor in ethical decision making
if a firm's culture encourages/rewards/does not monitor ethical behavior, employees may act unethically
Managements sense of an organizational culture may differ from that guiding employees

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Compliance based cultures

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uses a legalistic approach to ethics
- revolve around risk mgmt, not ethics
- lack of long term focus and integrity

if we get cost, how much will it cost us

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Values Based Culture

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reply on mission statements that define the firm and stakeholder relations
- focus on values not laws
- top down integrity is critical

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Differential Association

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The idea that people learn ethical/unethical behavior while interacting with others
- Studies support that differential association supports ethical decision making
- Superiors have a strong influence on subordinates
- Employees may go along with superiors’ moral judgments to show loyalty

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Whistle Blowing

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Exposing an employer's wrongdoing to company outsiders
SOX< FSGO, and Dodd-Frank - have institutionalized whistle-blowing protections to encourage discovery of misconduct

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Effective leaders

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One who does well for the stakeholders of the corporation
Are good at getting followers to common goals effectively and efficiently

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Power

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Refers to the influence that leaders and managers have over the behavior and decisions of subordinates

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Power and Influence...

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shape corporate culture

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Five Power Bases 1

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1. Reward Power - offering something desirable to influence behavior

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Power bases 2

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Coercive power: Penalizing negative behavior

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Power base 3

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Legitimate power: The consensus that a person has the right to exert influence over others

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Power base 4

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Expert power: Derives from knowledge and credibility with subordinates

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Power base 5

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Referent power: Exists when goals or objectives are similar

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Motivation

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A force within the individual that focuses behavior toward achieving a goal

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Job performance

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A function of ability and motivation

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individual’s hierarchy of needs

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may influence motivation and ethical behavior
- Relatedness needs: Satisfied by social and interpersonal relationships
- Growth needs: Satisfied by creative or productive activities

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Centralized Organizational Structure

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Decision making authority is concentrated in the hands of top-level managers
- Little authority delegated to lower levels
Best for organizations
- That make high-risk decisions
- Whose lower-level managers are not skilled in decision-making
- Where processes are routine
May have a harder time responding to ethical issues because information doesn't flow up
i.e., Military

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Decentralized Organizational Structure

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Decision making authority is delegated as far down the chain of command as possible
- Flexible and quicker to recognize external change
- Can be slow to recognize organizational policy changes
Units may diverge and develop different value systems; ethical misconduct may result

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Formal Groups

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Committees, work groups, and teams

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Informal groups

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The grapevine

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Group norms

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Standards of behavior that groups expect of members
Define acceptable/unacceptable behavior within the group