ARC MGMT 374 Week 8 Presentation
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Transcript of ARC MGMT 374 Week 8 Presentation
© 2013 Cengage Learning. All Rights Reserved. 1
Part Three: The Decision Making Process
Chapter 7: Organizational Factors: The Role of Ethical Culture and Relationships
Ethical Corporate Culture
Corporate culture has many definitions 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
Gives organizational members meaning and sets the internal rules of behaviorAll organizations have culture
© 2013 Cengage Learning. All Rights Reserved. 2
Sarbanes-Oxley 404
Culture is codified by the Sarbanes-Oxley 404 compliance section 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
© 2013 Cengage Learning. All Rights Reserved. 3
Corporate Culture
May be formal through statements of values, beliefs, and customs Comes from upper management Memos, codes, manuals, forms, ceremonies
May be informal through direct or indirect comments conveying management’s wishes Dress codes, promotions, extracurricular activities
The “tone at the top” is crucial in creating ethical corporate culture
© 2013 Cengage Learning. All Rights Reserved. 4
Two Dimensions of Organizational Culture
Concern for people The organization’s efforts to care for its
employees’ well-being Concern for performance
The organization’s efforts to focus on output and employee productivity
© 2013 Cengage Learning. All Rights Reserved. 5
© 2013 Cengage Learning. All Rights Reserved. 6
Perceived Tone and Culture of the CEO and other Executives
Four Organizational Culture Types
Apathetic: Minimal concern for people or performance
Caring: High concern for people; minimal concern for performance
Exacting: Minimal concern for people; high concern for performance
Integrative: High concern for people and performanceA cultural audit is an assessment of the organization’s values• Usually conducted by outside consultants; can be
handled internally© 2013 Cengage Learning. All Rights Reserved. 7
© 2013 Cengage Learning. All Rights Reserved. 8
Company Examples of Organizational Culture Types
Ethics and Corporate Culture
Ethical corporate culture is a significant factor in ethical decision making
If a firm’s culture encourages/rewards/does not monitor unethical behavior, employees may act unethically
Management’s sense of an organizational culture may differ from that guiding employees
© 2013 Cengage Learning. All Rights Reserved. 9
Compliance versus Values-Based Culture
Compliance-based cultures use a legalistic approach to ethics Revolve around risk management, not ethics Lack of long-term focus and integrity
Values-based cultures rely on mission statements that define the firm and stakeholder relations Focus on values, not laws Top-down integrity is critical
© 2013 Cengage Learning. All Rights Reserved. 10
Differential Association
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
© 2013 Cengage Learning. All Rights Reserved. 11
Whistle-Blowing
Exposing an employer’s wrongdoing to company outsiders
Some legal protections exist The Sarbanes-Oxley Act, the FSGO, and the
Dodd-Frank Act have institutionalized whistle-blowing protections to encourage discovery of misconduct Whistle-blowers fear retaliation
© 2013 Cengage Learning. All Rights Reserved. 12
© 2013 Cengage Learning. All Rights Reserved. 13
Questions to Ask Before Engaging in External Whistle-Blowing
© 2013 Cengage Learning. All Rights Reserved. 14
Forms of Retaliation Experienced as a Result of Reported Misconduct
© 2013 Cengage Learning. All Rights Reserved. 15
To Whom Do Employees Report Misconduct?
Leaders Can Influence Corporate Culture
An effective leader is one who does well for the stakeholders of the corporation Effective leaders are good at getting followers to
common goals effectively and efficiently Power refers to the influence that leaders and
managers have over the behavior and decisions of subordinates An individual has power when his/her presence
causes people to behave differently
Power and influence shape corporate culture
© 2013 Cengage Learning. All Rights Reserved. 16
Five Power Bases
Reward power: Offering something desirable to influence behavior
Coercive power: Penalizing negative behavior Legitimate power: The consensus that a
person has the right to exert influence over others
Expert power: Derives from knowledge and credibility with subordinates
Referent power: Exists when goals or objectives are similar
© 2013 Cengage Learning. All Rights Reserved. 17
Motivation
A force within the individual that focuses behavior toward achieving a goal Job performance: A function of ability and
motivation An individual’s hierarchy of needs may influence
motivation and ethical behavior Relatedness needs: Satisfied by social and
interpersonal relationships Growth needs: Satisfied by creative or productive
activities
Needs or goals may change over time© 2013 Cengage Learning. All Rights Reserved. 18
Centralized Organizational Structure
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
© 2013 Cengage Learning. All Rights Reserved. 19
Decentralized Organizational Structure
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
© 2013 Cengage Learning. All Rights Reserved. 20
© 2013 Cengage Learning. All Rights Reserved. 21
Structural Comparisons of Organizational Types
© 2013 Cengage Learning. All Rights Reserved. 22
Example of Centralized/Decentralized Corporate Cultures
Groups in Corporate Structure and Culture
Formal groups Committees, work groups, and teams
Informal groups The grapevine
Group norms Standards of behavior that groups expect of
members Define acceptable/unacceptable behavior within
the group
© 2013 Cengage Learning. All Rights Reserved. 23
© 2013 Cengage Learning. All Rights Reserved. 24
Variation in Employee Conduct
Can People Control Their Own Actions Within a Corporate
Culture?Ethical decisions are often made by committees and formal and informal groups
Many decisions are beyond the influence of individuals
Congruence between individual and organizational ethics–increases potential for making ethical decisions
Individuals need experience to understand how to resolve ethical issues
© 2013 Cengage Learning. All Rights Reserved. 25