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Power, Ethics, Decision Making and CSR

Power tends to corrupt, and absolute power corrupts absolutely.

(Lord Acton, 1887, Letter to Bishop Creighton)

The quote above by Lord Acton implores that power can corrupts and with authority attractively will lead to power abuse.  In this report, abuse of power in organizations will be analyzed and explored succinctly within the context of power and authority, total institutions, ethical versus technical responsibility, bounded rationality, sustainability and corporate social responsibility (CSR) in managing power, politics, and decision-making in organizations.  An organization is defined as a group of people which is systematically managed to meet the objective of the organization.

 The Free Dictionary (2011) defines abuse of power as the improper use of authority by someone who has that authority because he or she holds a public office.  Power is recognized as “the ability of those who possess power to bring about the outcomes they desire” (Salancik and Pfeffer, 1977).  Power is often elegantly wrapped in the sphere of authority where power often used to force others to do things against their will.  Albeit power can be positive when it shapes and frames what others want to do and make it looks like their own volition (Clegg et. al., 2010).

 The source of power comes from authority bestowed to the superior from the organization where a superior has the authority to instruct the subordinate to execute a command or set of instructions and the subordinate is only in compliant because of the authority exerted and exhibited by the superior through legitimate power.  Authority attaches to forms of domination over others are viewed as legitimate (Clegg et. al., 2010) while resistance to superior is considered as illegitimate.

 The relationship between a superior and subordinate is “a central one in the world of business, one that is often a source of tension in the workplace”. Inherent in this prescribed power structure are socially constructed parameters where subordinates blindly comply their superiors and all the thinking is done by the superiors, leaving all the ‘doing’ to the employees (Morgan, 1986).  Workers become objects and have difficulty acting upon their own moral agencies (Maguire, 1999).  This power if not properly managed will invite actions which can be immoral and abuse to power.

Organizational empowerment, Ethics, Moral and Obedience

Organization empowers people to exert authority and makes people technically accountable and responsible for results which are purely quantitative.  This makes the responsible person transparent as the performance can be measured, and relieves the person from moral indeterminacy and responsibility (Clegg et. al., 2010). Questions remain as to where is the limit to organizational obedience as in contrast to the person’s own ethics and moral.  Where is the line drawn?  Organization is able to make ordinary people in organizations do morally bad things when asked to do so as proven by the Milgram experiment (1971).  Such is supported by Max Weber reputedly founding voice on power in organization studies.  He is quoted saying that, “bureaucratic administration means fundamentally domination through knowledge” (Swedberg, 2005). Gunn (1995) is quoted saying “Bureaucrats abused their power by placing their performance above reproach while holding subordinates accountable for results”.

Academicians has suggested that placing power in the hands of a few employee in the higher position of the organization provides opportunity for unethical and abuse of subordinates for personal gain (Gunn, 1995, Vredenburg & Brender, 1998).  Good organization ethics however offer a solution where being ethical is following rules for doing good business.  Ethics remain a subjective argument.  There exist actions which are considered legal but are unethical and actions which are unethical but are legal;

Decision Making and Bounded Rationality

Decision making is made every day by organizations which will fall into any of the four quadrants.  There are two decisions, programmed and non programmed decisions.  Programmed decisions are operational daily decision which already has precedence rubrics.  These are simple and are a no brainer process where it subscribes to existing procedures.  Non programmed decisions however are new and are often without precedence which made it more difficult to make (Simon, 1960).  These decisions are complex to be made and only a few is made under perfect rationality while others can be made in bounded constraint rationality where issues are ambiguous and alternatives is incomplete (Simon, 1957).

 Bousbaci (2008) explains that bounded rationality is suited to describe human actions in situations that endure some degree of uncertainty where the human mind inability to acquire all of the necessary information required by a totally rationalist decision making activity.  Proper inputs and information can help maximize the rationality of a decision and results in better judgement and execution of a decision.

Corporate Social Responsibility (CSR)

 CSR occurs when organizations seek to meet or exceed legal standards by considering the greater good of the community they exist both in local and global terms with regard to the environment, social, economic, legal, ethical and philanthropic impact of the organizations’ way of conducting business and the activities they undertake (Clegg et. al., 2010).  Xavier (2011) mentioned that CSR is often executed where the organization would be able to make gains.  He further elaborated that when organizations make donations and giving away shareholder’s money, they normally will only do it if they see profits.  Sometimes this might not be obvious but often time there is always an underlying financial motivation.

 CSR has been a focal point of controversy based on two opposing views, where businesses should maximize shareholder value and responds to social responsibility and the view that businesses have a social responsibility to society and must fulfil it.  However Lee (2008) noted that CSR activities has been excessively criticized and opposed as they view CSR in terms of costs borne by shareholders.  Lindgreen et. al, (2009) however believe that CSR should not only focus on corporate profits and interests but engage in activities that support the society which they do business.  Many organizations are now incorporating CSR in their culture as good business practice.  Gill (2008) also concluded that organizations should incorporate CSR into their decision making process where it can benefit financial investors and stakeholders.

 Corporate superiors should protect society interests and also the interests of shareholders.  In short, the idea of CSR is that corporations should go beyond maximizing shareholder’s wealth but also engage in activities that contribute to the society.  CSR can benefit organization where it offers reputation enhancement, competitive advantage, corporate size advantage and profitability.  Bondy (2008) further concluded that there is a paradox of power in CSR. CSR can offer impediment to the effective development and implementation of it in some organization where increasing the power for CSR can lead to opportunistic behaviour and result in the subversion of CSR and its benefits for stakeholders.

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