Ethics at Organisation Level

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Lecture 4 Ethics at Organizational Level

Objectives
1 Identify the factors affecting an organization’s moral climate and provide examples of these factors at work. 2 Describe and explain actions or strategies that management may take to improve an organization’s ethical climate.

Bibliography
Carroll, Archie B. and Buchholtz, Ann K ( ).Business and Society. Ethics and Stakeholder Management Thomson. South-Western. Chapter 1.pp 3-28. Ferrell, O.C., Fraedrich, John Paul and Ferrell, Linda (2008). Business Ethics. Ethical Decision Making and Cases. Sixth Edition. Biztrantra: New Delhi. Lawrence,Anne T, Weber, James and Post, James E.(2005) Business and Society. Stakeholders, Ethics, Public Policy 7th Edn. Boston:McGraw-Hill. Trevino, Linda K. and Nelson, Katherine A (2004). Managing Business Ethics. Straight Talk About How To Do It Right. Wiley

Lecture 4 Ethics at Organizational Level
Ethical decision-making is at the heart of BE and it is very important to sharpen d.m. skills, if: * Amorality is to be prevented, and
* If moral management is to be achieved.
Organizational level ethics, i.e. The context in which d.m. occurs. Actions and practices that take place within the organization’s culture or climate are just as vital as d.m. in bringing about ethical business practices and results. Craig and Sandt: understanding and managing an org’n’s ethical work climate may go a long way toward defining the difference between how a company does and what kind of org’n it is. Several levels of moral climate and some key factors that come to bear on the manager as they make decisions are shown below: TRANSPARENCY. Figure 7-3 Factors Affecting the Morality of Managers and Employees.p.220 When considering the organization’s moral climate, we need to consider two major questions: 1. What factors contribute to ethical or unethical behavior in the organization? and 2. What actions or strategies might management employ to improve the organization’s ethical climate?

Factors Affecting the Organization’s Moral Climate
According to researcher Baumhart (who surveyed over 1500 Harvard Business Review readers- executives and managers), the factors which influenced or contributed to unethical behaviors were: 1. Behavior of Superiors

2. The ethical practices of one’s industry or profession. 3. Behavior of one’s peers in the organization
4. Formal organizational policy ( or lack thereof)
5. Personal financial need.
Bremer and Molander later replicated the Baumhart study using over 1200 HBR readers. They added one additional factor to the list: society’ moral climate. Posner and Schmidt surveyed over 1400 managers, again asking them to rank the list of six factors that influence or contribute to unethical behavior. Findings of the three studies above:

1. Behavior of superiors was ranked as the number one influence on unethical behavior in all three studies. 2. Behavior of one’s peers was ranked high in two of three studies 3. Industry or professional ethical practices ranked in the upper half in all three studies 4. Personal financial need ranked last in all three studies. What stands out in these studies from an organizational perspective is the influence of the behavior of one’s superiors and peers. It is assumed that society’s moral climate has a lot to do with the manager’s morality, but this factor was ranked low in the studies, i.e. it does not have a direct and immediate impact on organizational ethics. It is enlightening to know that personal financial need ranked so low. What these findings suggest is that there are factors at work over which managers can exercise some discretion. Hence the managerial dimension of BE.

Pressures exerted on Subordinates by Superiors
One major consequence of the behavior of superiors and peers is that sometimes pressure is placed on subordinates and / or other organizational members to compromise their ethics. Results of a survey...
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