BUS101 Introduction to Business Chapter 4

 Designing Organizational Structures: A Comprehensive Guide

Organizational structure is the backbone of any business. It defines how tasks, roles, and responsibilities are organized and distributed within an organization. A well-designed organizational structure not only clarifies reporting relationships but also influences the overall efficiency, communication, and adaptability of an organization. We will explore the intricacies of designing organizational structures, the various types of structures, and the factors to consider when creating or re evaluating your organization's structure.

Table of Contents:

What is Organizational Structure?

The Importance of Organizational Structure

Key Elements of Organizational Structure

Hierarchy and Reporting Relationships

Departmentalization

Span of Control

Centralization vs. Decentralization

Types of Organizational Structures

Functional Structure

Divisional Structure

Matrix Structure

Team-Based Structure

Network Structure

Flat Structure

Hierarchical Structure

Factors to Consider in Designing Organizational Structures

Organizational Size

Industry and Market Dynamics

Company Culture

Strategic Goals and Objectives

Leadership Style

Workforce Characteristics

Regulatory and Compliance Requirements

The Design Process

Step 1: Define Your Objectives

Step 2: Analyze Your Current Structure

Step 3: Choose the Appropriate Type of Structure

Step 4: Design the Hierarchy

Step 5: Determine Departmentalization

Step 6: Establish Reporting Relationships

Step 7: Allocate Decision-Making Authority

Step 8: Communicate and Implement the New Structure

Challenges and Pitfalls in Organizational Structure Design

Rigidity and Lack of Adaptability

Confusion and Overlapping Responsibilities

Poor Communication

Resistance to Change

Cultural Misalignment

Case Studies

Successful Organizational Structure Transformations

Common Mistakes and Their Consequences

Tools and Models for Organizational Design

McKinsey 7S Framework

Galbraith's Star Model

Mintzberg's Organigraph

Future Trends in Organizational Design

Agile and Adaptive Structures

Remote and Hybrid Work Arrangements

Digital Transformation and Automation

Conclusion

The Ongoing Evolution of Organizational Structure

The Role of Leadership in Successful Organizational Design

1. Introduction

What is Organizational Structure?

Organizational structure refers to the framework of roles, responsibilities, and relationships that shape how an organization operates. It defines the hierarchy of authority, the flow of communication, and the distribution of tasks and functions within the organization. Essentially, it is the blueprint that outlines how the various components of the organization work together to achieve its goals.

The Importance of Organizational Structure

An effective organizational structure is crucial for several reasons:

Clarity and Accountability: It clarifies who is responsible for what within the organization, ensuring that tasks don't fall through the cracks.

Efficiency: A well-designed structure optimizes the use of resources and reduces duplication of efforts.

Communication: It establishes clear lines of communication, helping information flow smoothly within the organization.

Adaptability: A flexible structure can adapt to changes in the business environment, enabling the organization to respond to challenges and opportunities.

Employee Engagement: A well-structured organization can enhance employee satisfaction and engagement by providing a clear understanding of roles and opportunities for growth.

In the following sections, we'll delve into the key elements of organizational structure, the various types of structures, and the factors to consider when designing or re evaluating your organization's structure.

2. Key Elements of Organizational Structure

Organizational structure is not a one-size-fits-all concept. It can vary significantly from one organization to another, depending on its size, industry, goals, and other factors. However, there are some fundamental elements that are common to most organizational structures:

Hierarchy and Reporting Relationships: A crucial aspect of organizational structure is the hierarchy that defines who reports to whom. It establishes the chain of command and ensures that each employee has a direct supervisor.

Departmentalization: This element defines how the organization groups similar functions and activities. Departmentalization can be based on functions, products, geography, customer segments, or processes.

Span of Control: Span of control refers to the number of employees or subordinates that a manager or supervisor can effectively oversee. A narrow span of control means fewer employees report to a single manager, while a wide span of control involves more employees reporting to one manager.

Centralization vs. Decentralization: Organizational structures can be centralized, with decision-making authority concentrated at the top, or decentralized, where decision-making authority is dispersed throughout the organization.

These elements interact to create a structure that aligns with the organization's goals, culture, and industry requirements. In the next section, we'll explore the various types of organizational structures.

3. Types of Organizational Structures

Organizational structures can take on various forms, and each has its advantages and drawbacks. The choice of structure should align with the organization's goals and industry dynamics. Here are some common types of organizational structures:

Functional Structure: In a functional structure, the organization is divided into departments based on the functions they perform, such as marketing, finance, and human resources. This structure is often used in smaller organizations or those with a single product or service line.

Divisional Structure: In a divisional structure, the organization is divided into distinct divisions, each responsible for a specific product, service, market, or geographic region. This structure allows for greater autonomy and specialization within each division.

Matrix Structure: The matrix structure is a hybrid in which employees have dual reporting relationships. They report both to a functional manager (e.g., in marketing) and a project or divisional manager (e.g., in a specific product line). This structure is common in complex organizations where cross-functional collaboration is essential.

Team-Based Structure: In a team-based structure, the organization is organized around self-managed teams or workgroups. Each team is responsible for a specific set of tasks or projects. This structure promotes collaboration and employee empowerment.

Network Structure: A network structure relies on external partnerships and alliances to perform key functions. It is common in industries where outsourcing and collaboration with external entities are integral to the business model.

Flat Structure: A flat structure has few hierarchical layers, with a wide span of control. It is often associated with startups and small organizations where decision-making is decentralized.

Hierarchical Structure: The hierarchical structure is characterized by a clear chain of command, with multiple levels of management and strict reporting relationships. This structure is typical in large, traditional organizations.

The choice of structure can significantly impact an organization's performance, culture, and ability to adapt to change. Factors such as the organization's size, industry, and strategic goals influence the selection of an appropriate structure. We'll explore these factors in detail in the next section.

4. Factors to Consider in Designing Organizational Structures

Designing an organizational structure is not a one-size-fits-all process. It requires careful consideration of various factors that influence how the organization operates and achieves its goals. Here are the key factors to take into account:

Organizational Size: The size of an organization plays a significant role in determining its structure. Smaller organizations may have flatter structures with fewer layers of management, while larger organizations often require more complex structures to manage their scale.

Industry and Market Dynamics: The nature of the industry in which an organization operates can influence its structure. For example, highly regulated industries like healthcare may require more centralized structures to ensure compliance, while creative industries may favor more flexible and team-based structures to foster innovation.

Company Culture: The existing culture of the organization can impact the choice of structure. For example, an organization that values collaboration and employee empowerment may opt for a team-based or matrix structure, while a more traditional and hierarchical culture may align with a hierarchical structure.

Strategic Goals and Objectives: The organization's strategic goals and objectives should be in sync with its structure. For example, if the goal is to expand into new markets, a divisional structure that aligns with geographic regions or product lines may be suitable.

Leadership Style: The leadership style of the organization's top executives can shape the structure. Leaders who favor a more hands-on approach may prefer a centralized structure, while those who encourage autonomy and innovation may opt for a flatter or team-based structure.

Workforce Characteristics: The characteristics and skills of the workforce can influence the structure. An organization with a highly specialized and skilled workforce may require a structure that facilitates cross-functional collaboration and knowledge sharing.

Regulatory and Compliance Requirements: Industries subject to strict regulatory and compliance requirements may need more centralized structures to ensure adherence to regulations and standards. Compliance-related roles and functions may be consolidated in such structures.

The interplay of these factors results in a structure that best serves the organization's needs. Designing or reevaluating an organizational structure requires a thorough understanding of the organization's unique context and objectives.

5. The Design Process

Creating or redesigning an organizational structure is a deliberate and systematic process. It involves a series of steps aimed at aligning the structure with the organization's goals and needs. Here is a step-by-step guide to the design process:

Step 1: Define Your Objectives

Begin by clearly defining the objectives of the organizational structure redesign. What are the primary goals you aim to achieve with the new structure? This could include improving efficiency, enhancing communication, fostering innovation, or preparing for expansion. The objectives will guide the entire design process.

Step 2: Analyze Your Current Structure

Before making changes, it's essential to thoroughly assess your current organizational structure. This involves understanding the existing hierarchy, departmentalization, and decision-making processes. Evaluate what is working and what needs improvement. Collect feedback from employees, as they often have valuable insights.

Step 3: Choose the Appropriate Type of Structure

Based on your objectives and the factors mentioned earlier, select the type of structure that best aligns with your goals. Consider the pros and cons of each type and how they relate to your organization's size, industry, and culture.

Step 4: Design the Hierarchy

Create a clear and logical hierarchy that outlines reporting relationships and lines of authority. Determine how many management layers are necessary and how employees will report to supervisors or managers.

Step 5: Determine Departmentalization

Decide how you will group similar functions or activities within your organization. Will you use functional departmentalization, product-based departmentalization, geographic departmentalization, or a combination of these? The choice should align with your objectives.

Step 6: Establish Reporting Relationships

Define the reporting relationships for each position in the organization. This includes specifying who each employee reports to and who has decision-making authority over specific tasks and projects.

Step 7: Allocate Decision-Making Authority

Determine the extent of decision-making authority at different levels of the organization. Consider the balance between centralization and decentralization based on your goals and industry requirements.

Step 8: Communicate and Implement the New Structure

Once the new structure is designed, it's crucial to communicate the changes to employees effectively. Explain the reasons behind the restructuring and how it will impact their roles. Implement the changes gradually and provide support for employees as they adapt to the new structure.

6. Challenges and Pitfalls in Organizational Structure Design

While a well-designed organizational structure can enhance an organization's performance, there are common challenges and pitfalls to be aware of:

Rigidity and Lack of Adaptability: Some structures, particularly highly centralized or hierarchical ones, can become rigid and resistant to change. This lack of adaptability can hinder innovation and responsiveness to market dynamics.

Confusion and Overlapping Responsibilities: Poorly designed structures can lead to confusion among employees regarding roles and responsibilities. Overlapping duties or unclear reporting relationships can result in inefficiency and conflict.

Poor Communication: Inadequate communication is a significant risk in any structure. If reporting relationships are not clearly defined, or if communication channels are ineffective, it can lead to misunderstandings and misalignment of efforts.

Resistance to Change: Employees may resist structural changes, particularly if they perceive the changes as a threat to their roles or job security. Managing this resistance is a critical aspect of successful structural design.

Cultural Misalignment: If the new structure does not align with the existing organizational culture, it can lead to cultural clashes and hinder collaboration and employee engagement.

Incorporating feedback from employees and conducting regular evaluations of the structure can help identify and address these challenges. Successful organizations are those that continuously adapt their structures to evolving needs and remain responsive to internal and external dynamics.

7. Case Studies

To gain a deeper understanding of the real-world impact of organizational structure design, let's explore a couple of case studies:

Successful Organizational Structure Transformations:

Apple Inc.: Apple's transformation under Steve Jobs included a shift to a more streamlined, functional structure. This allowed for a more focused approach to product development, resulting in innovations like the iPhone and iPad.

Netflix: Netflix's transition to a functional and team-based structure enabled the company to thrive in the digital streaming industry. This structure supported rapid decision-making and innovation in content production and distribution.

Common Mistakes and Their Consequences:

Enron: Enron's complex matrix structure contributed to the company's downfall. The structure created confusion, enabling unethical practices and financial misconduct to go undetected.

General Motors (GM): GM's hierarchical structure and siloed departments were criticized for impeding innovation and responsiveness. The company faced financial difficulties and bankruptcy in part due to its structural inflexibility.

These case studies underscore the significance of organizational structure in shaping the destiny of organizations. The right structure can foster innovation, growth, and success, while the wrong structure can lead to inefficiency and even the downfall of a company.

8. Tools and Models for Organizational Design

Several tools and models can assist in the process of organizational design. These frameworks help organizations assess their current structures, plan for changes, and align their structures with their strategic goals. Here are a few widely used models:

McKinsey 7S Framework: The McKinsey 7S Framework considers seven key elements of an organization: strategy, structure, systems, staff, skills, style, and shared values. It emphasizes the interplay among these elements and how they should align to achieve organizational effectiveness.

Galbraith's Star Model: Jay R. Galbraith's Star Model focuses on five critical design areas: strategy, structure, processes, rewards, and people. These five areas should align to support the organization's strategy and objectives.

Mintzberg's Organigraph: Mintzberg's Organography is a visual tool that represents the informal and formal aspects of an organization. It helps organizations visualize their structures and understand how formal roles and informal networks interact.

These models and tools provide valuable frameworks for assessing, designing, and communicating organizational structures. They help organizations approach structural design with a systematic and holistic perspective.

9. Future Trends in Organizational Design

Organizational structure design is not static; it evolves with changes in technology, the business environment, and workforce preferences. Here are some future trends and considerations in organizational design:

Agile and Adaptive Structures: In a rapidly changing business landscape, organizations are adopting more agile and adaptive structures. These structures facilitate quick decision-making, flexibility, and the ability to respond to emerging opportunities and challenges.

Remote and Hybrid Work Arrangements: The rise of remote work has led to adjustments in organizational structures. Many organizations are reevaluating the need for physical offices and exploring structures that support remote and hybrid work arrangements.

Digital Transformation and Automation: The integration of technology, data analytics, and automation into business processes is changing how organizations operate. This shift is influencing the design of structures, particularly in roles related to IT and data management.

As organizations continue to adapt to these trends, the role of organizational design will remain critical in shaping how work is organized and executed. It will be essential to design structures that foster collaboration, innovation, and the effective use of technology.

Organizational structure design is an ongoing process that requires careful consideration of an organization's goals, culture, and external factors. The right structure can enhance efficiency, communication, and adaptability, while the wrong structure can lead to confusion and inefficiency.

Leaders and decision-makers should approach structural design with a clear understanding of the organization's unique context and objectives. By leveraging the appropriate tools, models, and best practices, organizations can create structures that empower employees, drive innovation, and position the organization for success in a dynamic and ever-changing business environment.

As businesses continue to evolve, so too will their organizational structures. By staying attuned to industry trends, technological advancements, and workforce preferences, organizations can ensure that their structures remain aligned with their strategic goals and responsive to the demands of the future.

In conclusion, organizational structure design is a dynamic and essential aspect of organizational management. When done thoughtfully and strategically, it can be a powerful tool for achieving an organization's mission and goals.

Managing Human Resources and Labor Relations: A Comprehensive Guide

Table of Contents:

Introduction

The Role of Human Resources in Organizations

The Significance of Labor Relations

Key Functions of Human Resource Management

Recruitment and Selection

Training and Development

Performance Management

Compensation and Benefits

Employee Relations

Legal Compliance

Labor Relations: A Historical Perspective

The Emergence of Labor Unions

The Evolution of Labor Relations Legislation

The Collective Bargaining Process

Unionization and Collective Bargaining

Preparing for Collective Bargaining

The Negotiation Process

The Collective Bargaining Agreement

Current Trends in Human Resource Management

Diversity and Inclusion

Technology and HR

Employee Wellbeing and Mental Health

Remote Work and Hybrid Models

Challenges in Human Resource Management and Labor Relations

Labor Shortages and Talent Scarcity

Changing Employment Laws and Regulations

Conflict Resolution in the Workplace

Case Studies

Successful HR Management in Innovative Organizations

Managing Labor Relations in Changing Industries

Strategies for Effective Human Resource Management

Recruitment and Retention

Employee Engagement

Compliance and Risk Management

Leadership and Communication

Conclusion

The Ongoing Evolution of HR Management and Labor Relations

The Importance of Adaptability and Employee-Centric Approaches

1. Introduction

The Role of Human Resources in Organizations

Human resources (HR) management is a vital function within organizations that focuses on the recruitment, development, and management of employees. HR professionals are responsible for a wide range of activities, including hiring, training, performance evaluation, benefits administration, and employee relations. The quality of HR management significantly impacts an organization's success, as it plays a crucial role in ensuring that an organization's workforce is engaged, motivated, and aligned with its goals.

The Significance of Labor Relations

Labor relations, on the other hand, concern the interactions between management and labor unions or employee representatives. Labor relations encompass collective bargaining, labor agreements, dispute resolution, and the creation of a fair and harmonious work environment. Effective labor relations are essential to maintain a positive and productive working environment while addressing the needs and concerns of employees.

In this comprehensive guide, we will explore the key functions of human resource management, delve into the historical context of labor relations, discuss the collective bargaining process, examine current trends in HR management, and address the challenges HR professionals face in today's dynamic workplace. We will also present case studies illustrating effective HR management and labor relations, followed by strategies for success in these critical areas.

2. Key Functions of Human Resource Management

Effective human resource management involves several core functions that are essential for attracting, retaining, and developing a high-performing workforce. Let's examine these functions in detail:

Recruitment and Selection: HR professionals are responsible for attracting and identifying qualified candidates to fill job vacancies. This includes creating job descriptions, advertising job openings, conducting interviews, and making job offers. Recruitment efforts should align with the organization's strategic goals and promote diversity and inclusion.

Training and Development: HR plays a pivotal role in identifying the training and development needs of employees. This involves creating training programs, facilitating workshops, and offering opportunities for skill enhancement. A robust training and development program can improve employee performance and job satisfaction.

Performance Management: HR professionals work with managers to establish performance expectations, conduct performance evaluations, and provide feedback to employees. Performance management systems help employees understand their roles and responsibilities and provide a basis for recognizing and rewarding outstanding performance.

Compensation and Benefits: HR is responsible for designing compensation structures, managing payroll, and administering employee benefits programs. Competitive compensation and benefits packages are vital for attracting and retaining top talent.

Employee Relations: HR professionals are mediators in employee relations matters. They address employee grievances, conflicts, and concerns while promoting a positive and inclusive work culture. Employee relations initiatives foster collaboration and teamwork.

Legal Compliance: HR ensures that the organization complies with employment laws and regulations. This includes adherence to anti-discrimination laws, wage and hour laws, workplace safety regulations, and more. Compliance helps protect the organization from legal risks and reputational damage.

3. Labor Relations: A Historical Perspective

The Emergence of Labor Unions: Labor unions have a rich history, dating back to the industrial revolution when workers sought protection from harsh working conditions, long hours, and unfair treatment by employers. Unions played a critical role in advocating for workers' rights and negotiating better working conditions, wages, and benefits.

The Evolution of Labor Relations Legislation: Over the years, labor relations legislation has evolved to address the needs and rights of employees and employers. Key laws, such as the National Labor Relations Act (NLRA) in the United States, have established the legal framework for collective bargaining, unionization, and the protection of employees' rights to organize.

4. The Collective Bargaining Process

Unionization and Collective Bargaining: Collective bargaining is a process in which labor unions negotiate with employers on behalf of the employees to determine the terms and conditions of employment. Unionization is the act of employees joining a labor union to collectively bargain for better wages, working conditions, and benefits.

Preparing for Collective Bargaining: Effective preparation is crucial for successful collective bargaining. Both labor and management must gather information, define their priorities, and assemble negotiation teams. This stage also involves setting negotiation dates and locations.

The Negotiation Process: The negotiation process involves bargaining sessions during which labor and management representatives present their proposals and counterproposals. Negotiators work to reach an agreement on various issues, including wages, benefits, working conditions, and dispute resolution procedures.

The Collective Bargaining Agreement: Once an agreement is reached, the terms are formalized in a collective bargaining agreement (CBA). The CBA outlines the rights and responsibilities of both parties and provides a framework for labor relations over a specified period.

5. Current Trends in Human Resource Management

Human resource management is continually evolving to address changing workforce dynamics, technology, and employee expectations. Several trends are shaping the field of HR:

Diversity and Inclusion: Organizations are increasingly recognizing the importance of diversity and inclusion in the workplace. HR plays a central role in promoting diversity, ensuring equity, and creating an inclusive work environment.

Technology and HR: The integration of technology, including HR software and data analytics, is streamlining HR processes, making recruitment, performance management, and data-driven decision-making more efficient.

Employee Wellbeing and Mental Health: HR professionals are increasingly focusing on employee wellbeing and mental health initiatives, recognizing that a healthy and happy workforce is more productive.

Remote Work and Hybrid Models: The COVID-19 pandemic accelerated the adoption of remote work and hybrid work models. HR is tasked with managing the complexities of remote work, including virtual onboarding, remote performance evaluations, and fostering a sense of belonging among remote employees.

6. Challenges in Human Resource Management and Labor Relations

HR professionals face several challenges in their efforts to manage human resources effectively and maintain positive labor relations. Some of these challenges include:

Labor Shortages and Talent Scarcity: In various industries, there is a shortage of skilled labor, making recruitment and retention more competitive. HR must devise strategies to attract and keep top talent.

Changing Employment Laws and Regulations: Employment laws and regulations are subject to change, requiring HR to stay updated and ensure compliance. The consequences of non-compliance can be costly.

Conflict Resolution in the Workplace: HR is tasked with resolving conflicts and disputes in the workplace, which can be complex and emotionally charged. Effective conflict resolution is essential to maintain a harmonious work environment.

7. Case Studies

Successful HR Management in Innovative Organizations:

Google: Google is known for its innovative HR practices, including offering generous benefits, creating a diverse and inclusive work culture, and fostering a creative and collaborative environment.

Zappos: Zappos has gained recognition for its unique approach to HR, emphasizing employee empowerment, culture fit, and employee happiness.

Managing Labor Relations in Changing Industries:

Amazon: Amazon, a global e-commerce giant, has had to navigate labor relations challenges due to its rapid growth. It has faced unionization efforts, and HR plays a key role in addressing labor-related issues.

Tech Startups: Many tech startups have distinct HR challenges, such as attracting and retaining tech talent, fostering innovation, and establishing unique organizational cultures.

8. Strategies for Effective Human Resource Management

To navigate the complex landscape of human resource management and labor relations, organizations should consider the following strategies:

Recruitment and Retention: Implement effective talent acquisition and retention strategies to attract and keep skilled employees.

Employee Engagement: Foster an engaged and motivated workforce through initiatives that prioritize employee wellbeing, recognition, and career development.

Compliance and Risk Management: Stay updated on employment laws and regulations, and establish robust compliance processes to mitigate legal risks.

Leadership and Communication: Develop strong leadership that emphasizes open and transparent communication with employees, addressing their concerns and promoting a positive workplace culture.

9. Conclusion

Human resource management and labor relations are integral components of organizational success. They encompass the recruitment, development, and management of employees, as well as the interactions between labor and management. As organizations face ever-evolving workforce dynamics and legal landscapes, it is imperative to adapt and innovate in these areas.

The role of HR professionals in managing human resources effectively, promoting diversity and inclusion, leveraging technology, and supporting employee wellbeing is more critical than ever. Likewise, labor relations play a pivotal role in creating fair and equitable workplaces, addressing the concerns of employees, and fostering collaborative relationships between labor and management.

In conclusion, the ongoing evolution of human resource management and labor relations requires organizations to prioritize adaptability and employee-centric approaches. By effectively managing human resources and labor relations, organizations can create environments that drive productivity, satisfaction, and long-term success.

An ethical dilemma is a situation in which a person or organization is faced with a choice between two or more morally conflicting options. These dilemmas can arise in various contexts, such as personal relationships, business, healthcare, and more. Ethical dilemmas often require individuals to make decisions that balance competing values, principles, or obligations. Here are a few common examples of ethical dilemmas:

The Trolley Problem: In a thought experiment, you are at the controls of a trolley heading towards five people tied up on the tracks. You have the option to divert the trolley to another track where only one person is tied up. What do you do? This dilemma forces a choice between the greater good (saving five lives) and the principle of not directly causing harm to others.

Business Ethics: An employee discovers that their company is engaged in unethical practices, such as environmental pollution or fraud. They face the dilemma of whether to report the misconduct, potentially risking their job and the well-being of their colleagues, or to remain silent and be complicit in the unethical behavior.

Healthcare: A doctor is faced with a patient who requires a life-saving organ transplant, but the only available organ donor is a death row inmate. The doctor must decide whether to use the organ, which may save a life, or refuse it on ethical grounds.

Family and Personal Dilemmas: An individual may face ethical dilemmas in their personal life, such as deciding whether to disclose a friend's secret that could harm someone or confronting a family member about their harmful behavior.

Resolving ethical dilemmas often involves careful consideration of the principles involved, seeking advice and guidance, and making a choice that aligns with one's own values and the broader principles of ethics, such as honesty, integrity, fairness, and the greater good. Ethical decision-making is a complex process that may involve moral reasoning and a willingness to accept the consequences of one's choices. It's important to consider the ethical frameworks and principles that guide one's decisions when faced with such dilemmas.

The term "ethical tone" refers to the prevailing moral and ethical atmosphere or culture within an organization or community. It reflects the organization's commitment to ethical principles and values in its operations, decision-making, and interactions. Establishing and maintaining a strong ethical tone is essential for fostering trust, integrity, and responsible behavior within an organization. Here are key aspects and strategies related to cultivating an ethical tone:

Leadership Commitment: Leadership plays a pivotal role in setting the ethical tone. Executives and senior management should lead by example and consistently demonstrate ethical behavior. Their commitment to ethics sends a clear message to employees that ethical conduct is a top priority.

Code of Ethics: A well-defined code of ethics is a fundamental tool for establishing an ethical tone. It outlines the organization's core values, ethical principles, and expected behaviors. The code serves as a guide for employees in making ethical decisions.

Ethical Training and Education: Provide ongoing training and education on ethical matters. This helps employees understand the organization's ethical expectations and empowers them to navigate ethical dilemmas.

Open Communication: Encourage open and transparent communication within the organization. Employees should feel comfortable discussing ethical concerns, reporting unethical behavior, and seeking guidance on ethical issues.

Accountability: Hold individuals and groups accountable for ethical conduct. Establish clear consequences for ethical violations, while also providing avenues for redemption and learning from mistakes.

Ethical Decision-Making Frameworks: Equip employees with ethical decision-making frameworks and tools. These resources help individuals assess the ethical implications of their actions and make ethical choices in complex situations.

Ethical Role Models: Highlight and recognize employees who consistently exhibit ethical behavior. Celebrate their contributions as role models for others to follow.

Zero Tolerance for Unethical Behavior: Create a culture where unethical behavior is not tolerated. Address ethical violations promptly and impartially, reinforcing the importance of ethical conduct.

Alignment with Values: Ensure that the organization's values are integrated into its operations, policies, and procedures. Ethical values should be reflected in how the organization conducts its business, treats its employees, and interacts with its stakeholders.

Ethical Considerations in Decision-Making: Integrate ethical considerations into the decision-making process. Encourage employees to think about the ethical implications of their choices and the potential impact on stakeholders.

Stakeholder Engagement: Consider the interests and perspectives of various stakeholders, including employees, customers, suppliers, and the community, in decision-making processes. An ethical tone should prioritize the welfare of all stakeholders.

Ethical Risk Assessment: Periodically assess potential ethical risks and vulnerabilities within the organization. This proactive approach helps identify and address ethical challenges before they escalate.

External Reporting and Transparency: Maintain transparency in reporting on the organization's ethical performance. This includes disclosing efforts to uphold ethical standards and address ethical concerns.

Ethical Support Systems: Offer resources and channels for employees to seek guidance and report ethical concerns confidentially. These support systems create a safety net for employees facing ethical dilemmas.

Continuous Improvement: Foster a culture of continuous improvement in ethical practices. Regularly review and update ethical policies and procedures to adapt to changing circumstances and ethical challenges.

Cultivating an ethical tone is an ongoing process that requires the commitment and active participation of all members of the organization. It is not only about compliance with rules and regulations but also about promoting a culture where ethical conduct is an integral part of the organization's identity and mission. An ethical tone contributes to a positive organizational reputation, employee satisfaction, and long-term success.

 by its actions. Stakeholders can be classified into several categories, and they include:

Internal Stakeholders:

Employees: Employees are a fundamental internal stakeholder group. Their well-being, satisfaction, and engagement are essential for the organization's success.

Management and Executives: Senior management and executives often have a significant influence on an organization's strategic direction and decision-making.

Shareholders: Shareholders, including individual investors and institutional investors, have a financial stake in the organization's performance.

External Stakeholders:

Customers: Customers are critical stakeholders whose preferences and satisfaction impact the organization's success. Meeting customer needs is a top priority.

Suppliers: Suppliers provide the resources and materials necessary for an organization's operations. Effective supplier relationships are vital.

Investors: Investors, including venture capitalists and angel investors, provide funding for startups and new initiatives.

Regulators and Government Agencies: Organizations must comply with laws and regulations set by government agencies and regulators. Non-compliance can lead to legal and financial consequences.

Community: The local community can be affected by an organization's operations, and its support or opposition can have consequences for the business.

Competitors: Competitors have a direct interest in the organization's activities, as they can impact market dynamics and competition.

Media and Public Opinion: Media outlets and public opinion can significantly influence an organization's reputation and brand image.

Special Interest Groups:

Advocacy Groups: Advocacy groups or NGOs (Non-Governmental Organizations) advocate for specific causes or issues and may pressure organizations to align with their goals.

Environmental Groups: Organizations that impact the environment often interact with environmental groups concerned with sustainability, conservation, and eco-friendly practices.

Trade Unions and Labor Associations:

Labor Unions: Labor unions represent the interests of workers and can influence labor negotiations and workplace conditions.

Professional Associations:

Industry Associations: Industry-specific groups or associations, such as the American Medical Association or the American Bar Association, may establish standards and best practices within their respective fields.

Financial Institutions:

Banks and Lenders: Organizations may have financial relationships with banks, lenders, and financial institutions that require adherence to specific financial terms and obligations.

Legal Advisors and Consultants:

Legal Counsel: Legal advisors and consultants may provide guidance and support on legal matters, including contracts and compliance.

Understanding and managing the needs and expectations of various stakeholders is essential for building trust and maintaining strong relationships. Effective stakeholder engagement involves communication, responsiveness, and a commitment to addressing concerns and interests. By doing so, organizations can enhance their reputation, minimize risks, and achieve their goals more effectively.

Organizational culture refers to the shared values, beliefs, norms, customs, behaviors, and assumptions that characterize an organization and guide the interactions and decisions of its members. It is the collective personality of an organization and significantly influences how employees perceive and engage with their work, colleagues, and the organization's mission. Here are key components and characteristics of organizational culture:

Values and Beliefs: The core values and beliefs that the organization holds dear. These often serve as the guiding principles for decision-making and behavior.

Norms and Customs: Established patterns of behavior, both formal and informal, that are considered standard within the organization. This includes work hours, communication practices, and how conflicts are resolved.

Symbols and Artifacts: Physical and visible manifestations of culture, such as office layout, dress code, office decor, and logos. These elements often convey underlying values and expectations.

Language and Communication: The words, phrases, and jargon used within the organization. The way people communicate, the tone of messages, and the emphasis on transparency all contribute to the culture.

Leadership Style: The leadership approach and behaviors of top management, which can set the tone for the entire organization. Leaders influence the culture through their actions and decisions.

Employee Behavior: How employees interact with one another, customers, and stakeholders. Cultural norms affect employee behavior and collaboration.

Innovation and Risk-Taking: The degree to which the organization encourages creativity, experimentation, and taking calculated risks. This influences the organization's adaptability and ability to innovate.

Customer Focus: The extent to which the organization prioritizes customer needs and strives to deliver exceptional service or products.

Ethical Standards: The organization's commitment to ethical conduct, integrity, and social responsibility.

Inclusivity and Diversity: How the organization values and promotes diversity, equity, and inclusion in its workforce. This is an increasingly important aspect of modern organizational culture.

Learning and Development: The emphasis on ongoing learning, training, and professional development opportunities for employees.

Adaptability: The organization's ability to respond to changes in its external environment and the willingness of employees to embrace change.

Organizational culture can vary widely from one organization to another, and it can be categorized into different cultural types, such as:

Clan Culture: Characterized by a family-like environment, with a strong emphasis on teamwork, collaboration, and employee development. It values flexibility and employee well-being.

Adhocracy Culture: This culture encourages innovation, risk-taking, and entrepreneurship. It is dynamic, with an emphasis on creativity and adaptability.

Market Culture: Focused on competitiveness, achievement, and getting results. This culture values winning and market success and is often characterized by a results-oriented approach.

Hierarchy Culture: Emphasizes stability, predictability, and control. It values efficiency, consistency, and well-defined roles and processes.

The importance of organizational culture cannot be overstated. A positive culture can lead to increased employee satisfaction, motivation, and retention. It can also drive innovation, performance, and the achievement of organizational goals. Conversely, a negative or toxic culture can result in low morale, high turnover, and poor organizational performance.

Leaders play a crucial role in shaping and maintaining the organizational culture. They must embody the desired cultural values and norms, communicate them effectively, and create an environment where employees can thrive and contribute to the organization's success. Cultivating a healthy and positive culture is an ongoing process that requires attention, reinforcement, and alignment with the organization's mission and goals.

Corporate philanthropy, often referred to as corporate giving, involves a company's commitment to making charitable donations and contributions to support social and community causes. It is a form of corporate social responsibility (CSR) where organizations allocate a portion of their resources, such as money, products, services, or volunteer time, to benefit charitable initiatives and nonprofit organizations. Corporate philanthropy serves several purposes, including:

Social Impact: One of the primary aims of corporate philanthropy is to make a positive impact on society and address pressing social issues. This may include contributing to causes such as education, healthcare, poverty alleviation, environmental conservation, and disaster relief.

Community Engagement: Corporate philanthropy strengthens the company's ties with the communities in which it operates. By investing in local initiatives, organizations demonstrate their commitment to being responsible corporate citizens.

Brand Reputation: Companies that engage in philanthropic activities often enjoy improved brand image and reputation. It can help build trust with customers, employees, and stakeholders who appreciate a company's commitment to social and environmental responsibility.

Employee Engagement: Corporate philanthropy programs can boost employee morale and engagement. Many employees prefer to work for companies that support social causes, and they may participate in volunteering or fundraising efforts.

Stakeholder Expectations: As public awareness of social and environmental issues grows, stakeholders, including customers, investors, and regulators, increasingly expect companies to address these concerns. Corporate philanthropy demonstrates a company's responsiveness to these expectations.

Types of Corporate Philanthropy:

Direct Donations: This involves a company making financial contributions to charitable organizations or causes. These contributions may be in the form of grants, endowments, or sponsorships.

Matching Gifts: Companies may match their employees' charitable contributions, effectively doubling the impact of their donations. This encourages employee giving.

In-Kind Donations: Companies donate products, services, or expertise to nonprofit organizations. For example, a technology company might donate computers to schools.

Employee Volunteer Programs: Companies support employee volunteerism by allowing them paid time off to engage in charitable activities or organizing volunteer events and initiatives.

Cause Marketing: Companies partner with nonprofit organizations to promote social causes while also promoting their products or services. A portion of sales proceeds may go to the cause.

Challenges of Corporate Philanthropy:

Resource Allocation: Balancing philanthropic efforts with financial performance can be challenging. Companies need to allocate resources without negatively impacting profitability.

Measuring Impact: Assessing the effectiveness of corporate philanthropy programs and determining their impact on social and environmental issues can be complex.

Alignment with Values: Ensuring that philanthropic efforts align with the company's values and are not perceived as mere PR stunts is crucial for maintaining trust.

Choosing the Right Partners: Selecting the right nonprofit partners and initiatives that align with the company's mission and have a meaningful impact is essential.

Corporate philanthropy is an evolving field with a growing emphasis on strategic giving and the integration of philanthropic efforts into a company's core values and business operations. Companies that are committed to making a difference in the world often develop comprehensive CSR strategies that include philanthropy as one component of their broader social and environmental responsibility efforts.

Globalization has significantly influenced and reshaped the way ethics and social responsibility are understood and practiced in the business world. This interconnectedness of economies, cultures, and societies has both positive and negative implications for how organizations approach ethical behavior and social responsibility:

Positive Impacts:

Increased Awareness and Accountability: Globalization has made information more accessible, enabling stakeholders, including consumers and investors, to scrutinize companies' ethical behavior. This heightened scrutiny has pushed many organizations to be more accountable and transparent in their actions.

Cross-Cultural Understanding: As businesses operate in diverse global markets, they are increasingly exposed to different cultures and norms. This exposure can lead to a better understanding and appreciation of diverse perspectives, fostering cross-cultural empathy and respect.

Environmental Responsibility: Global environmental challenges, such as climate change and resource depletion, have necessitated global cooperation. Organizations are increasingly recognizing their role in environmental stewardship and pursuing sustainable practices to address these challenges.

Human Rights and Labor Standards: Global supply chains have brought attention to labor practices in different countries. This has led to efforts to improve working conditions and labor standards worldwide. Initiatives like the United Nations' Guiding Principles on Business and Human Rights emphasize corporate responsibility for human rights.

Challenges and Concerns:

Ethical Dilemmas: Companies may face ethical dilemmas when operating in countries with different ethical standards or facing situations where local laws and practices conflict with global ethical norms. Striking the right balance can be complex.

Social Inequality: While globalization has contributed to economic growth in many regions, it has also exacerbated income inequality, both within and between countries. Ethical concerns arise when businesses benefit from such disparities.

Cultural Sensitivity: Navigating different cultural norms and values can be challenging. What is considered ethical in one culture may not be in another, which requires companies to adapt their practices and policies.

Environmental Concerns: Globalization can lead to increased resource consumption and environmental degradation. Ethical challenges arise when organizations prioritize profits over environmental sustainability.

Global Supply Chain Complexity: Managing a global supply chain brings challenges related to labor standards, working conditions, and ethical sourcing of materials. Ensuring responsible practices throughout the supply chain is a significant task.

Social and Political Pressure: Companies are under pressure from various stakeholders, including governments and advocacy groups, to address ethical and social responsibility concerns. Failure to do so can result in reputational damage and legal consequences.

In summary, globalization has made ethics and social responsibility more prominent in the business world. While it has created opportunities for greater accountability, cross-cultural understanding, and environmental responsibility, it has also presented challenges related to ethical dilemmas, social inequality, cultural sensitivity, and complex supply chain management. Companies that navigate these complexities and prioritize ethical behavior and social responsibility are better positioned to thrive in the globalized marketplace and build long-term trust with stakeholders.

An ethical dilemma is a situation in which an individual or group is faced with a choice between two or more morally conflicting options. Resolving an ethical dilemma can be challenging because it requires individuals to make a decision that balances competing ethical principles, values, or obligations. Here are some common examples of ethical dilemmas:

The Trolley Problem: In this classic thought experiment, a person is standing next to a lever that can divert a runaway trolley. The person must decide whether to pull the lever, which would save several people on one track but result in harm to one person on another track. This dilemma raises questions about the moral implications of taking action to minimize harm.

Whistleblowing: An employee discovers that their employer is engaging in illegal or unethical activities. They face a dilemma: report the misconduct and potentially risk their job and career, or remain silent and be complicit in the wrongdoing.

End-of-Life Care: A family is faced with the decision of whether to continue life-sustaining medical treatment for a terminally ill loved one or to withdraw treatment and allow them to pass away. This dilemma involves questions of autonomy, quality of life, and the sanctity of life.

Conflict of Interest: A public official is in a position to influence a government contract. They have a personal financial interest in the company that might be awarded the contract. They must decide whether to recuse themselves to avoid a conflict of interest or proceed with the contract, potentially benefiting financially.

Truth-Telling in Healthcare: A doctor knows that sharing a terminal diagnosis with a patient may cause extreme distress. They face a dilemma about whether to disclose the full truth to the patient or provide a more optimistic but less accurate prognosis.

Privacy vs. Security: In the context of surveillance and data collection, society faces dilemmas regarding the balance between individual privacy and national security. Decisions about government surveillance programs and data sharing can raise ethical concerns.

Allocation of Limited Resources: In healthcare, when there are not enough resources (e.g., ventilators, medications) to treat all patients, healthcare professionals must make decisions about resource allocation. This dilemma involves principles of justice and maximizing the greater good.

Environmental Ethics: Industries often face dilemmas when considering economic growth and environmental preservation. Balancing the need for economic development with protecting the environment raises ethical concerns.

Resolving ethical dilemmas often involves engaging in moral reasoning, considering the potential consequences of each choice, and assessing the ethical principles and values involved. Different ethical theories and frameworks, such as utilitarianism, deontology, virtue ethics, and care ethics, can guide individuals and organizations in their decision-making processes. The best approach to resolving an ethical dilemma may vary depending on the specific circumstances and the values of the individuals involved.

Universal ethical standards, also known as global ethical standards, refer to a set of moral principles and values that are considered to apply universally to all individuals, organizations, and cultures across the world. These standards are expected to transcend cultural, national, and organizational boundaries and serve as a common foundation for ethical behavior. While there may be variations in ethical practices and cultural norms, universal ethical standards are intended to provide a shared ethical framework that can guide decision-making and behavior on a global scale.

Some examples of universal ethical standards include:

Respect for Human Rights: Universal ethical standards demand respect for the fundamental human rights of all individuals, regardless of their nationality, ethnicity, gender, religion, or other characteristics. This includes the right to life, liberty, and security, as well as the right to be free from discrimination and torture.

Honesty and Truthfulness: Honesty is generally considered a universal ethical standard. Individuals and organizations are expected to be truthful and transparent in their communications and actions. Deception, fraud, and false representation are typically viewed as ethically unacceptable.

Integrity: Integrity involves maintaining consistency and alignment between one's values, principles, and actions. It includes a commitment to ethical conduct even when facing challenges or pressures to compromise.

Justice and Fairness: Universal ethical standards advocate for justice and fairness in all interactions and transactions. This means treating all individuals with equity, providing equal opportunities, and upholding the rule of law.

Non-Harm (Do No Harm): This principle is rooted in the concept of not causing harm to others intentionally. It aligns with the principle of avoiding actions that could lead to physical, emotional, or financial harm to individuals or the environment.

Social Responsibility: Universal ethical standards emphasize the responsibility of individuals and organizations to contribute positively to society. This includes environmental stewardship, philanthropy, and contributing to the well-being of the communities in which they operate.

Respect for Dignity: Every individual is entitled to respect and dignity, irrespective of their background or circumstances. Treating others with respect and recognizing their intrinsic worth is a universal ethical principle.

Beneficence (Do Good): This principle encourages individuals and organizations to engage in actions that promote the well-being and welfare of others. It emphasizes positive contributions to the betterment of society.

It's important to note that while these principles are considered universal, the interpretation and application of ethical standards can vary across cultures and societies. Some ethical dilemmas may arise due to differing cultural values or perspectives on how to prioritize these principles. In practice, achieving consensus on universal ethical standards can be challenging, and there may be ongoing debates about the scope and specifics of such standards.

Nevertheless, the pursuit of universal ethical standards serves as a valuable framework for encouraging ethical behavior on a global scale, promoting respect for human rights, and fostering responsible and ethical conduct by individuals and organizations worldwide.

Gore's Informal Structure:

Gore's informal structure is critically important due to the company's unique and unorthodox approach to organization. The lack of a formal structure means that much of the company's operations rely on informal networks and relationships. In a formal structure, roles and responsibilities are clearly defined, and there are established reporting lines. However, at Gore, associates are encouraged to self-organize and collaborate based on their skills and interests. This informality fosters a culture of personal responsibility, innovation, and open communication. Associates have the freedom to pursue projects that interest them, collaborate across functions, and make decisions collectively. This informal structure empowers employees to take ownership of their work and fosters a sense of autonomy and self-management, which can be highly motivating and conducive to innovation.

Mechanistic or Organic Organization:

W.L. Gore can be considered an organic organization. Organic organizations are characterized by flexibility, adaptability, and a more decentralized decision-making process. At Gore, there is a notable lack of hierarchy and formal authority. Associates have the freedom to pursue projects and initiatives that align with their interests and expertise. They self-organize into small, cross-functional teams and make collective decisions. The lack of formal titles and the absence of traditional management structures contribute to the organic nature of the organization.

Examples from the Case:

In the case, the organization's founder, Bill Gore, created a "lattice" structure where there are no traditional bosses or reporting lines. This structure is designed to encourage open communication and collaboration across the organization. For instance, associates are encouraged to approach any other associate, regardless of their formal position, to discuss ideas and projects. This promotes an organic and collaborative work environment.

The lack of formal titles and offices contributes to the organic nature of the organization. Associates at all levels are referred to as "associates," and there is no formal hierarchy based on titles. This fosters a culture of equality and allows for ideas to flow more freely across the organization.

Flat Organizational Structure and Innovation:

Gore's flat organizational structure has a significant positive impact on innovation. The absence of a traditional hierarchy means that there are fewer barriers to the flow of information and ideas. Associates are not constrained by rigid reporting lines or bureaucratic processes. They have the freedom to connect with colleagues from different parts of the organization, fostering cross-pollination of ideas.

In a flat structure, decision-making is often faster and more agile. Associates can make decisions at the team level without the need for approval from multiple layers of management. This agility allows the company to respond quickly to market changes and customer demands.

Furthermore, the culture of personal responsibility and autonomy that the flat structure promotes encourages associates to take ownership of their projects and innovations. Associates are not micromanaged, and this autonomy can be a powerful motivator for creativity and problem-solving.

In conclusion, Gore's informal, organic, and flat organizational structure is essential to the company's success. It fosters a culture of collaboration, innovation, and personal responsibility. The absence of formal hierarchy and the emphasis on open communication create an environment where ideas can flow freely and decisions can be made quickly, making it an ideal structure for promoting innovation.

Read the following case study and answer the questions that follow.

Respond to at least two of your peers with meaningful content.

Gore’s Flat Structure Works Well

Imagine an organization with more than 10,000 employees working in 30 countries around the world—with no hierarchy structure. W. L. Gore & Associates, headquartered in Newark, Delaware, is a model of unusual business practices. Wilbert Gore, who left Dupont to explore new uses for Teflon, started the company in 1958. Best known for its breathable, weather proofs Gore-Tex fabric, Glide dental floss, and Elixir guitar strings, the company has no bosses, no titles, no departments, and no formal job descriptions. There is a managerial hierarchy at Gore, and top management treats employees, called associates, as peers.

In 2005, the company named 22-year associate Terri Kelly as its new chief executive officer. Unlike large public corporations, Gore’s announcement was made without much fanfare. Today, more than 12 years later, Kelly continues as chief executive but is the first to admit that it’s not about the CEO at Gore—it’s about the people who work there and their relationships with one another.

The company focuses on its products and company values rather than on individuals. Committees, comprised of employees, make major decisions such as hiring, firing, and compensation. They even set top executives’ compensation. Employees work on teams, which are switched around every few years. In fact, all employees are expected to make minor decisions instead of relying on the “boss” to make them. “We’re committed to how we get things done,” Kelly says. “That puts a tremendous burden on leaders because it’s easier to say ‘Just do it’ than to explain the rationale. But in the long run, you’ll get much better results because people are making a commitment.”

Because no formal lines of authority exist, employees can speak to anyone in the company at any time. This arrangement also forces employees to spend considerable time developing relationships. As one employee described it, instead of trying to please just one “boss,” you have to please everyone. Several years ago the company underwent a “strategy refresh,” conducting surveys and discussions with employees about how they fit into the organization’s culture. Not surprisingly, there was a cultural divide based on multiple generations of workers and length of service stature, which Kelly and her associates have worked hard to overcome. She realizes that not everyone will become a “lifer” at Gore, but recognizes the importance of younger employees who have helped the company become more tech-savvy in communications and stay well-connected in a fast-moving business world.

The informal organizational structure continues to work well. With revenues of $3 billion, the company produces thousands of advanced technology products for the electronics, industrial, fabrics, and medical markets. Its corporate structure fosters innovation and has been a significant contributor to associate satisfaction. Employee turnover is a low 3 percent a year, and the company can choose new associates from the thousands of job applications it receives annually. In 2017, Gore was named one of the 12 legends on Fortune’s “100 Best Companies to Work For.” These companies have made Fortune’s list for all 20 years the magazine has published its annual “Best” rankings.

 

Critical Thinking Questions

1. Given the lack of formal structure, how important do you think Gore’s informal structure becomes?
2. Is L. Gore a mechanistic or an organic organization? Support your answer with examples from the case.
3. How do you think Gore’s flat organizational structure affects innovation at the company?

By not having formal structure it makes Gore's structure more important for organizational process it helps to lower the amount of professional and social relationships that are required to run the business.  It also helps make an environment that leads to faster decision making since idea's don't have to be run through a board of people to get the idea in motion. It also helps to motivate employees since it gives a more flexible environment and allows them to come up with innovative ideas and creates productive work.  And with less structure it also makes for less conflicts within the company. Many employee's fights often are with management restricting or micromanaging them but in a informal structure there's better organizational communication and less chiefs trying to manage and run the show which creates less conflicts. There's also an added bonus of workers morale being boosted in a positive way through building social relationships with each other and lets them achieve goals together as a group without needing formal structure.

The individual as well as organizational goals are organic organizational structure. The employee's don't have supervisors and instead work in teams they develop jobs which address functional roles in the organization they also make decisions such as firing and hiring and compensation and they are rotated to different teams which helps build an ecosystem that employee's don't stay static in a certain area of the organization which reduces favoritism or other negative effects.

Since all of the employee's can talk to whoever they want it lets them build those special relationships. Since the organization has open communication with all employees it's another advantage to building social relationships there's no levels of intermediate management. This creates a smaller amount of hierarchy and takes away the micromanagement which can make employees feel like they don't have a say or that their opinion doesn't matter. Barriers are broken down by not having distinct job titles and by having employee's move every so often to different teams it stops there from being social clicks which could lead to favoritism over time. It helps let the company adapt to changes more quickly and waist less time dealing with inefficient communications.

Chapter 4 Quiz

_____ apply to everyone across a broad spectrum of situations regardless of political, religious, class, and ethnic divisions.

Universal ethical standards

_____ are among the most challenging issues faced by companies and individuals that are involved in international businesses.

_____ concern(s) the obligation of a business to contribute to society.

Social responsibility

_____ is the use of marketing partnerships between businesses and nonprofit organizations. The partnerships are designed to spike sales for the company and raise money for the nonprofit organization.

Cause-related marketing

A _____ establishes expectations for ethical behavior at all levels of the organization.

code of ethics

A canoe and recreation club recently filed suit against a number of manufacturing plants located along the Missouri River.  In the suit, the club claimed that the plants failed to adequately treat the waste that is being dumped into the streams and waterways, thus adversely affecting the recreational opportunities available to club members.  The canoe and recreation club is an example of a(n)  _____ of the manufacturing companies that operate these plants.

stakeholder

A couple of weeks ago, your boss had a private conversation with you.  She explained that  the company’s financial performance is poor, and the firm is looking at the possibility of layoffs.  She then asked for you to help her determine whether positions in your division should be cut—and if so, which ones. After analyzing the situation, you believe that cutting jobs would almost certainly improve the company’s profitability. However, several of the workers who are most likely to be cut are good friends, and you know they would suffer significant financial hardship if they lost their jobs. Your report to your boss is due tomorrow. It appears that you are facing a(n)

ethical dilemma.

Deliberately designing a product to fail in order to shorten the time between consumer purchase and repurchase is known as

planned obsolescence.

Developing and promoting environmentally sound products and practices to gain a competitive edge is called

green marketing.

Globalization has made ethics and social responsibility _____ for workers at every level.

even more complicated

Home Depot employs more Olympic hopefuls than any other U.S. company through its Olympic Job Opportunities Program.  The business offers athletes full-time pay and benefits for a flexible 20-hour work week in order to accommodate demanding training schedules.  This is an example of: 

corporate responsibility.

J.H. Marshall, the CEO of ANS Oil Drilling, Inc., has decided to set aside $100,000 of company profit each year to donate to nonprofit organizations in the local area.  These donations are an example of

corporate philanthropy.

Janet reasons, “It’s wrong to lie, However, it’s okay to overstate my expense account on my last trip because I really need the money, and the company hasn’t given me a raise in the past year.”  This is an example of an employee who applies _____ to fit the situation at hand.

relative ethical standards

Research indicates that the organizational culture

has significant influence on the individual employee’s ethical behavior.

Stakeholders are

groups or individuals with a personal interest in the performance and actions of a business.

The _____ of a company that produces gourmet coffee include its employees, coffee bean growers who supply the company, people who drink its gourmet coffee, and the people who live in the community where the company produces the coffee.

stakeholders

The role of the CEO in setting the ethical tone for a company is

The spectrum of how firms address issues concerning social responsibility ranges from firms that never contribute to socially responsible causes to firms that choose to integrate social responsibility into their strategic plans.

Which of the following is NOT an important step in the successful implementation of a code of ethics?

Establish different standards for workers in different regions or countries in order to take cultural differences into account.

Which of the following would be described as an ethical dilemma?

Horatio is in middle management and has to assign a project to his team.  He wants the best results he can get, but also knows that the company will roll out a new downsizing strategy after the project is turned in, and most of his team will be terminated.  Now one of them has asked him for advice about a confidential job offer from a competitor.