individula i organization

8/11/2019 Individula i OrganizaTION

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Dr. Keith Y.N. NgPh.D., MBA, MCIM

THINKING AND MANAGING ETHICALLY

THE INDIVIDUAL IN

THE ORGANISATION

TME 7


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The Rational Organisation

Rational" model of the business organization is a structure

of formal relationships designed to achieve a goal efficiently.

A firm's organizational chart, identifying the formal

hierarchies of authority, exemplifies the fundamental reality

of the organization

At the bottom of the organization is the operational layer of workers

who directly produce the goods or provide the services.

Above this are levels of middle managers who direct those belowthem and are, in turn, directed by those above.

At the top of the pyramid is the top management: the CEO, the board

of directors, and their staff.


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3TME 7

The Rational Organisation

This model presupposes that information will be gathered

from the lower levels and rise to the top for policy making

The glue that holds these layers together is contracts:

each employee freely and knowingly agrees to accept the

organization's formal authority.

employees have a moral responsibility to obey the employer in

pursuing the organization's goals,

employer has a moral responsibility to provide the employee with thepay and benefits they have promised (including fair working

conditions).


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4TME 7

The Employees Obligations to the Firm (1)

Employee's main moral duty is to work toward the

goals of the firm.

This view is called "the law of agency," whichspecifies the legal duties of employees toward

their employer.

The employee, must pursue the firm's goals and do

nothing that conflicts with them while working for

the firm.


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5TME 7

The Employees Obligations to the Firm (2)

An employee might fail to live up to this

duty in several ways:

might steal outright from the firm,

act on a conflict of interest,

use his position to leverage illicit benefits out of

others through extortion or bribery.


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6TME 7

Conflicts of Interest (1)

Conflicts of interest arise when:

employees have a private interest in the outcome of a task

antagonistic to the firm's interests

it might affect the employee's independent judgment on the firm'sbehalf.

The result is that self-interest induces employees to act in ways

that may not be in the best interests of the firm.

employees hold another job or consultancy outside the firm.


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7TME 7

Conflicts of Interest (2)

Conflicts can be either actual or potential

Actual conflicts occur when a person discharges his or herduties in a manner prejudicial to the firm.

A potential conflict occurs when a person is merelymotivated or tempted to do so.

If contractual agreements impose moral duties, then actualconflicts of interest are clearly immoral.

Potential conflicts of interest may or may not be ethical,depending on the probability that the employee's judgmentwill be affected (or seem to be affected) by the conflict ofinterest.


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8TME 7

Commercial Bribes/Extortion and Gifts

Bribes and extortion are unethical and create clear conflictsof interest.

Accepting gifts may or may not be ethical, depending on a

number of factors: What is the value of the gift?

What is the purpose of the gift?

What are the circumstances under which the gift was given?

What is the position of the recipient?

What is the accepted practice in the area?

What is the company's policy?

What is the law?


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9TME 7

Employee Theft and Computers

Employees contractual agreement to accept only specific

benefits in return for services and to use the firm's

resources for the good of the firm.

Use of company resources and other appropriation of

benefits counts as theft.

Though theft is often petty (e.g. stealing of stationeries or

padding of expense accounts), it extends to white-collar

crimes such as embezzlement, larceny, fraud, and forgery.


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10TME 7

Computer Theft

More recent forms of theft involve forms of

information and company computers.

Copying a company's software or data, or

using a company computer for personal

business (unless explicitly allowed) are

examples of unethical forms of theft.


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11TME 7

Trade Secrets

Propriety information or "trade secrets" is

information that the company owns

concerning its activities, which it explicitlyindicates that it does not want others to

have.

Sharing such information is also unethical.


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Insider Trading

Information can lead to other types of unethical behavior.

Insider trading, the act of buying or selling company stockon the basis of confidential or proprietary information, is

illegal and unethical. Some argue that insider trading is actually ethical and

socially beneficial; it does not harm anyone and helps thestock price reflect its true value, they maintain.

These arguments ignore basic facts about insider trading: theinformation being proprietary, does not belong to the trader(stolen property).

Research shows that insider trading violates people's rights,based on unjust advantage, harms overall utility of society.


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The Firms Duties to the Employee

A firm's main moral duty to its employees is to

provide them with

a fair wage fair working conditions.

Both issues are aspects of the compensation

employees receive from their service and relate to

the question of whether the employee contractedto take a job freely and knowingly


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Wages

Setting a fair wage is both important and difficult,

so employers will need to consider these factors:

What is the going wage in the industry and the area? What are the firm's capabilities?

What is the nature of the job?

What are the minimum wage laws?

What are the other salaries in the firm?

Were wage negotiations fair?

What are the local costs of living?


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Working Conditions: Health & Safety (1)

Working conditions are equally important.

Ten percent of the U.S. job force suffers a job

related injury or illness each year. More attention needed on worker safety due to

rising occupational accident rates


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Working Conditions: Health & Safety (2)

Risks are sometimes unavoidable and acceptable, as long

as employees are fully compensated

If wages are not proportional to the risks, or the risk is

accepted unknowingly, contract between employer and

employee is unfair, and

Fair working conditions require: Studying and eliminating job risks

Compensating for risk

Informing worker of known risk

Insuring workers against unknown risks


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Working Conditions: Job Satisfaction (1)

Because Rational model of the organization puts high

value on efficiency, jobs are specialized and job

satisfaction can suffer.

Jobs can be specialized either horizontally (by restricting

the range of tasks contained in the job and increasing the

repetition of this narrow range) or vertically (by restricting

the range of control and decision-making that the job

requires).


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Job specialization can have debilitating effects.

Not all workers are equally affected by job specialization.

Older workers and workers in urban areas are more tolerant

Only about one quarter of workers would choose the same jobagain if they could start over.

Highly specialized work presents a problem of justice

Narrowly specialized forms of work are those that requirethe least skills (specialization means dispense with needfor training)

Research shows that excessive job specialization can bedetrimental to efficiency.


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To lessen the negative effects of specialization, employersshould expand jobs along these five dimensions:

Skill variety - the job should require a variety of challenging

activities. Task identity - the job should require a whole and identifiable

piece of work.

Task significance - the job should have an impact on the lives ofothers.

Autonomy - the job should give the worker freedom to determinehow he/she will carry it out.

Feedback - the worker should get information about the value ofhis/her efforts.

These dimensions suggest deepening most jobs vertically

and expanding them horizontally


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20TME 7

The Political Organization (1)

Rational model of organisation accounts for

much of the behavior of an organization

A great deal of organizational behavior isneither goal directed, efficient, or rational.

A different model: the firm as a political

organization is needed to understand thisbehavior


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This model is newer than the rational model.

Unlike that model, it does not look only at the formal linesof authority but emphasizes the informal lines of influence

Sees the organization as a system of competing powercoalitions.

Focus on the competitive nature of different factionswithin a firm.

The goals of the firm are the goals established by the mostpowerful or dominant coalition

Fundamental reality of the organization is not formalauthority or contract, but power.


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If power is the main organizational reality, then

the primary ethical problems in an organization

are connected with acquiring and exercisingpower.

The two main questions become:

What are the moral limits to the power managers

acquire and exercise over their subordinates?

What are the moral limits to the power employees

acquire and exercise on each other?


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Employee Rights (1)

Corporate management is similar to a government: they are centralized decision-making bodies

they have power and authority to enforce their decisions on

subordinates concerning the distribution of resources, benefits, andburdens.

Observers hold that this power is comparable that morallimits placed on governmental officials must extend tomanagers as well.

As government must respect the civil rights of citizens,managers must respect the moral rights of employees: therights to privacy, consent, and freedom of speech, amongothers.


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Employee Rights (2)

There are important differences between corporations and

governments.

Governmental power is based on consent, corporate power is

based on ownership.

Managers' power rests on property rights, they have the right

to impose whatever conditions they choose on their

employees who freely and knowingly contract to work there.

Managerial power (unlike governmental power) is limited by

the power of unions,


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Employee Rights (3)

Employees can leave firms more easily than citizens can

change countries.

Safeguards afforded to citizens not easily carried over to

employees.

Employee rights advocates counter that dispersed ownership

means that managers no longer function as agents for the

owner of a firm (there is no single owner), so property rights

are no longer relevant.

Unions do not protect many workers, and changing jobs can

be a very difficult and traumatic experience.


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The Right to Privacy

Employees have some certain rightsthe right to privacy

Because of technical innovations, employees right to privacyis under attack.

This must be balanced against employers' rights to knowcertain information about their activities.

Three elements are relevant when considering this balance:

Relevance - the employer must limit his inquiry to areas that aredirectly relevant to the issue at hand.

Consent - employees must be given the opportunity to give orwithhold consent before their private lives are investigated and should

be informed of any surveillance.

Methods - employers must use ordinary and reasonable methods ofinquiry unless circumstances are extraordinary.


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Freedom of Conscience

Workers may think they have freedom of conscience,

If they found their firm doing something that harms

society, few legal options available if management does

nothing

Company has legal right to punish employee who informs

against the firm with firing or blacklisting.

May have a clear violation of an individual's right to

freedom of conscience, the law states that employee's duty

is to maintain loyalty and confidentiality towards employer


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Whistleblowing

Whistle blowing - attempt by employee to disclosewrongdoing in an organization,

Take two forms:

Internal - reported only to management within organization. External - reported to others (such as governmental agencies or the

media).

Can have heavy personal costs,

justified when there is clear evidence that the firm's activity is

seriously harming others reasonable attempts to prevent it by informing management have

failed,

reasonably certain that whistle blowing will prevent the harm

the harm is serious enough to justify the injuries it will bring upon

the whistleblower.


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The Right to Participate andParticipatory Management (2)

Management theorists urged managers urge to

adopt participatory leadership style assumed:

employees want responsibility; can develop the capacity to accept responsibility,

are ready to support organizational goals, can determine

the best means of achieving them.


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Following the theory of Douglas McGregor, RaymondMiles distinguishes three models of sets of assumptions thatmanagers can make about employees:

1. Traditional - employees dislike work, are not capable of beingcreative or self-directed, and care only about what they earn.

2. Human relations - employees want to belong and feel recognized,useful, and important; meeting these needs is more important thanwhat they earn.

3. Human resources - employees like work, want to contribute tomeaningful goals that they help establish, and can be creative andresponsible.


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Another theorist, Rensis Likert, posits not three but four"systems of organization."

Exploitive Authoritative

Benevolent Authoritative Consultative

Participative

Leadership ranges from absence of trust to complete mutualtrust; from no employee involvement to full employee

involvement If such management styles are more effective/productive,

then on utilitarian grounds firms ought to adopt them.

However, research on this issue is not yet conclusive.


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The Right to Due Process VsEmployment at Will (1)

Another democratic right, the right to due process of the

law, is countered in business by the principle of

employment at will.

Employment at Will: employers may dismiss their

employees whenever they desire, for good or no cause,

even for morally wrong causes.

This principle has recently come under attack, and the

trend is towards the view that employees have some rightto due process, a fair process by which decisions about

their employment are made.


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The Right to Due Process VsEmployment at Will (2)

This is a vitally important right, since if it is not respected,the employees have little chance of seeing any other rightrespected.

Due process plays a central role in the hearing ofgrievances.

Theorists identify five essential features of an effectivegrievance procedure:

1. Three to five steps of appeal

2. A written account of the grievance

3. Alternate routes of appeal beyond the immediate supervisor

4. A time limit for each step

5. Permission for the employee to be accompanied by another


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Employee Rights and Plant Closings (1)

As plant closings become common, the rights of

employees need to be considered.

Plant closings impose high costs on workers, sowhen plant closings are inevitable, workers' moral

rights should continue to be respected.

Utilitarian principles suggest that the harm caused

by layoffs should be minimized, which means thatthe costs of plant closings should be borne by

those best able to bear them namely the company.


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Employee Rights and Plant Closings (2)

Considerations of justice further imply that workers andcommunities should be repaid by the firms not unjustlyabandoning pension, health, and retirement plans.

Companies that have to close plants can minimize the harmthey cause individuals and their communities by giving advance notice,

severance pay,

health benefits,

early retirement,

transfers, retraining,

and phasing out local taxes.


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Unions and the Right to Organize (1)

Owners have right to establish and run business to achieve

their morally legitimate ends,

Workers have the right to associate with each other to

establish and run unions to achieve their own morally

legitimate ends.

The worker's right to organize derives from the right to be

treated as a free and equal person.

Unions have traditionally been justified as an important

and legitimate means of balancing the power of large

corporations.


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Unions and the Right to Organize (2)

Workers have the right to form unions and to strike as

well.

Though unions have been important in the establishing of

worker rights in the U.S. and around the world, unions

represent a dwindling percentage of American workers.

Opposition to unions is on the rise, and the use of illegal

tactics against them is rising.

As the effectiveness of unions shrinks, it is likely that we

will need more laws to secure the rights that unions had

previously protected.


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Organizational Politics

Organizational politics is defined as the process by which

individuals or groups within an organization use non-

formally sanctioned tactics (political tactics) to advance

their own aims

Such aims are not necessarily in conflict with the best

interests of the organization.

Because organizational politics aim to advance the

interests of an individual or group, political individualstend to be covert, which means that they can easily become

deceptive or manipulative.


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Political Tactics in Organisations

Some of the most frequent political tactics

encountered in business organizations are:

1. Blaming or attacking others. 2. Controlling information.

3. Developing a base of support for one's ideas.

4. Image building.

5. Ingratiation.

6. Associating with the influential.

7. Forming power coalitions and developing strong allies.

8. Creating obligations.


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The Ethics of Political Tactics (1)

Such behavior can easily become abusive, manipulative, or

deceptive, seriously injuring others.

It can also be used to advance laudable organizational and

social goals,

however, sometimes the only defense a person in an

organization has is to fight fire with fire.

The dilemma is knowing where the line is that separates

the moral from the immoral use of political tactics.


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The Ethics of Political Tactics (2)

Perhaps the best way to approach them is to testthem against the four standards of ethics:

the utilitarian question (are the goals of the tactics

socially beneficial?);

the rights question (do the tactics treat othersconsistently with their moral rights?);

the justice question (will the tactics lead to an equitable

distribution of benefits and burdens?); the caring question (what impact will the tactics have

on the web of relationships within the organization?).


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The Caring Organization (1)

This chapter examined organizations as hierarchical power relationships or

crisscrossing lines of power.

The Caring Organization is a network of connected

individuals all concerned with each other.

The primary goal of the organization is not profit, but

caring for those individuals who make up the organization

and with whom the organization interacts

Some theorists believe that organizations in such

relationships exhibit better performance.


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The Caring Organization (2)

The essential ethical concerns that arise from this model:

The problem of caring too much

leading to burnout

Conflict is between the needs of others and the needs of self The needs of those for whom we care can demand a response that

conflicts with what we may feel we owe others (e.g. caring for a

friend who is violating companys policy)

The problem of not caring enough

because of fatigue to live up to the demands of caring self-interest

disinterest

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