ORGANIZATION
SIZE:
An organization's structure is
important to the study of business ethics. In a Centralized organization,
decision- making authority is concentrated in the hands of top- level managers,
and little authority is delegated to lower levels. Responsibility, both
internal and external, rests with top management. This structure is especially
suited for organizations that make high-risk decisions and whose lower- level
managers are not highly skilled in decision making. It is also suitable for
organizations in which production processes are routine and efficiency is of
primary importance.
These
organizations are usually extremely bureaucratic, and the division of labour is
typically very well de fined. Each worker knows his or her job and what is
specifica lly expected, and each has a clear understanding of how to carry out
assigned tasks. Ce ntralized organizations stress formal rules, policies, and
procedures, backed up with elaborate control systems. Their codes of ethics may
specify the techniques to be used for decision making.
Because
of their top-down approach and the distance between employee and decision
maker, centralized organizational structures can lead to unethical acts. If the
centralized organization is very bureaucratic, some employees may behave
according to "the letter of the law" rather than the spirit.
In
a decentralized organization, decision- making authority is delegated as far
down the chain of command as possible. Such organizations have relatively few
formal rules, and coordination and control are usually informal and personal.
They focus instead on increasing the flow of information. As a result, one of
the main strengths of decentralized organizations is their adaptability and
early recognition of external change. With greater flexibility, managers can
react quickly to changes in the ir ethical environment. Weakness of
decentralized organizations is the difficulty they have in responding quickly
to changes in policy and procedures established by top management. In addition,
independent profit centers within a decentralized organization may deviate from
organizational objectives.
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