Designing an ethical organisation

It's not often I get asked about the bearing that organisation design has on the ethical operation of an organisation. But it's a topic I'm now thinking about. I took a look at the Institute of Business Ethics Briefing on Ethical Concerns and Lapses 2014. 478 were reported during the year, and I'm guessing there were others that went unreported. (There's also a short webcast on it ).

It's interesting that the IBE defines business ethics as 'the values, principles and standards that govern how an organisation conducts its business'. This definition seems to be focused towards a moral obligation for individuals to behave in a 'good' way within certain parameters. It seems to focus on the individual, for example, requiring him or her to sign a 'Code' or subscribe to given values. But where 'concerns or lapses' (what a delightful phrase to hide things behind) occur it is often because of one or more of three things. The organisation design and infrastructure:

  • is non-supportive of an individual choosing to be ethical
  • is not picking up when breaches occur
  • is preventing the right thing happening

In searching around for more on this I read an article Reinforcing Ethical Decision Making Through Organizational Structure. The abstract reads:

In this paper I examine how the constituent elements of a firm's organizational structure affect the ethical behavior of workers. The formal features of organizations I examine are the compensation practices, performance and evaluation systems, and decision-making assignments. I argue that the formal organizational structure, which is distinguished from corporate culture, is necessary, though not sufficient, in solving ethical problems within firms. At best the formal structure should not undermine the ethical actions of workers. When combined with a strong culture, however, the organizational structure may be sufficient in promoting ethical conduct. While helpful, ethics training and corporate codes are neither necessary nor sufficient in promoting ethical behavior within firms.

The author suggests that the formal organisational structure comprises three 'distinct but related aspects' – all of which pertain to organisation design:

  1. The structure of monetary and non-monetary rewards
  2. The performance evaluation, monitoring and control processes for individuals and business units
  3. The systems of partitioning and assigning decision making rights and responsibilities to workers, including job design and the level of empowerment.

In another research paper Organizational Structure, Communication, and Group Ethics the author concludes that

'The data support our main predictions: (1) horizontal, averaging structures are more ethical than vertical structures (where subordinates do not feel responsible) and than consensual structures (where responsibility is dynamically diffused); (2) communication makes vertical structures more ethical (subordinates with voice feel responsible); (3) with communication, vertical structures are more ethical than consensual structures (where in-group bias hurts the outsider).'

How often do we consider these aspects of the ethics of hierarchies or networks or matrix organisations?

A third paper I read Framing the Questions of E-Government Ethics: An Organizational Perspective makes the provocative statement that 'technology impacts moral decision making at the organisational level in ways that we have yet to adequately understand. Extreme digitalization leaves little valuable room for contextual sensitivity and can sustain unreasonable degradation to moral responsibility'.

As private and public sector organisations become increasingly structured around or through technology, sometimes to the point of 'digital by default' we need thoughtful discussion and reflective action on designing our organisations to operate and deliver ethically.

Your view? Let me know.

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