Is there a relationship between how a company is structured and
the degree of ethical behavior displayed within an organization?
Research indicates that such a link exists. Specifically, when
corporate culture is too rigid and hierarchical, employees have
fewer opportunities to develop their moral intelligence.
Understanding what is ethical or not requires employees to be
regularly confronted with ethical dilemmas. When employees do not
have any autonomy to make decisions, and when such decisions are
usually referred to a higher level, they do not find the
opportunity to experience moral development, which may have
implications for the degree of ethical behaviors demonstrated by
employees (White, 1999).
Organizational change is a time when managers are expected to
behave ethically, because many moral dilemmas are likely to emerge
when an organization is faced with change. One of the common issues
occurs when organizational change takes the form of downsizing or
rightsizing. Many organizations realize the human impact of
downsizing on employees and prefer to deal with the rising cost of
human resources in other ways. Retraining employees in different
areas, early retirement programs, hiring freezes, and job sharing
are all alternatives to downsizing. There are also ethical issues
that arise when the decision to terminate some employees is made,
such as whether employees are going to be given advance notice
regarding the layoffs, if they will be allowed to return to their
work stations and say good-bye to their colleagues, or if they will
be escorted to the door by security. If the company takes
precautions to soften the blow of layoffs, such downsizing is
likely to be perceived as more ethical.
Organizational Structure and Change Around the Globe
Organizations around the globe are not uniform in terms of
organizational structure. In fact, there seem to be systematic
differences in how companies are structured based on the country of
origin. For example, one study compared Japanese, Swedish, and
British organizations and found significant differences in the
degree of centralization and formalization of these structures.
Japanese organizations were much more centralized, as evidenced by
a decision making system named ringi. The ringi system involves
proposals at lower levels being signed and passed along to higher
level management in an effort to build consensus (Lincoln, Hanada,
& McBride, 1986). In another study, organizations in the United
States and Australia were found to be characterized by higher
levels of decentralization, whereas organizations in Singapore and
Hong Kong emphasized group-centered decision making and higher
levels of centralization. These differences can be traced to the
degree of individualism inherent in the national culture.
Individualistic cultures attach greater importance to autonomy and
personal freedom. Therefore, in these cultures, structures giving
responsibility to lower level employees will be more common
(Harrison et al., 1994).
How change is instituted depends at least partly on national
culture. Cultures differ in the degree to which they are open to
change. Cultures that are uncertainty avoidant (such as Germany and
France) are relatively uncomfortable with change and prefer
structured situations that reduce ambiguity, whereas cultures low
in uncertainty avoidance (such as the United States and China) are
more comfortable with change.
Additionally, the way in which change is introduced to an
organization is likely to differ across cultures. Research shows
that in the United States, change agents are more likely to use
inspirational appeals and rational persuasion (such as “This change
will ensure that we will remain competitive in the marketplace.”).
On the other hand, in China a more effective influence strategy
seems to be asking for the help of a higher level person to ensure
the success of the change process. The change agent may visit the
higher status individual outside the work environment (such as
going to the person’s home to discuss the issue), and then the
cooperation of this person becomes instrumental in achieving change
(Yukl, Fu, & McDonald, 2003).
Key Takeaways
Structure has implications for the degree of ethical behaviors
that may be found in an organization. Moreover, organizational
change involves events during which a company’s ethics may be put
to test. National culture is one reason companies are structured in
a certain way, and individualistic societies may have a greater
frequency of organizations that are decentralized. National culture
affects the extent to which organizations are open to change and
how change is executed within an organization.
Exercises
- What is an ethical way of conducting layoffs?
- Do you believe that it is an organization’s ethical obligation
to share all information about the planned changes with employees?
Why or why not?
- What is the relationship between organizational change and
national culture?
References
Harrison, G. L., McKinnon, J. L., Panchapakesan, S., &
Leung, M. (1994). The influence of culture on organizational design
and planning and control in Australia and the United States
compared with Singapore and Hong Kong. Journal
of International Financial Management & Accounting,
5, 242–261.
Lincoln, J. R., Hanada, M., & McBride, K. (1986).
Organizational structures in Japanese and U.S. manufacturing.
Administrative Science Quarterly,
31, 338–364.
White, R. D. (1999). Organizational design and ethics: The
effects of rigid hierarchy on moral reasoning. International Journal of Organization Theory &
Behavior, 2, 431–457.
Yukl, G., Fu, P. P., & McDonald, R. (2003). Cross-cultural
differences in perceived effectiveness of influence tactics for
initiating or resisting change. Journal of
Applied Psychology, 52, 68–82.