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In an age characterised by top level scandals and ethical issues in high and low places, understanding the role of the most dominant organisational arrangement in enhancing or impeding moral agency becomes necessary. One of the very few studies that have empirically tested the direct impact of bureaucracy on moral agency is the work of Jackall, (1988), a summary of which was offered in the previous table 2.2. More specifically by interviewing 100 managers, Jackall discovered that the world of bureaucracy is not as straightforward as it appears. In fact he called it a ‘moral maze’ and concluded that bureaucracies are not helpful to individual moral agency. But, generalising all bureaucracies, as impeding moral

‘types of bureaucracies’ are stifling to moral autonomy. And if they are, could there be any good in them? As Hummel (2007) argued, if the moral ramification of bureaucracy is found to be true, it therefore transcends a mere psychological challenge into an ontological one in which our very being is questioned.

Therefore, building from the arguments of early scholars such as Hall, (1963) and Gouldner, (1959) on how bureaucracy ought to be conceptualised, a multidimensional approach which measures bureaucracy as an entity with multiple characteristics to determine the extent to which each one exists in the studied organisation will be adopted in evaluating moral issues in bureaucracy. As such, the documented impact of Weber’s ideal attributes on employees will be explored. The focus of this section will be based on two attributes of Weber’s ideal bureaucracy, at the heart of legal-rationality and also documented to have significant influence on employee morality Gajduschek, (2003): Rules (Structures, procedures and responsibilities) and Managerial Control. These also are critical within the industry context within which this research was conducted.

2.5.1 Rules

Formalisation is the extent of rules, procedures and instructions in place in organisations (Adler and Borys, 1996). It is also the standardisation of procedures, streamlined into statements of procedures and operations (Pugh, Hickson, Hinings, & Turner, 1969). Formalisation is a central feature of Weber’s bureaucratic ideal type (Jaffee, 2001) and one that has been extensively researched (Pugh and Hickson, 1976; Mintzberg, 1979) especially in line with efficiency, employee satisfaction (Arches, 1991), innovation and improved ethical conduct (Ferrell and Skinner, 1988). Organisational rules including codes of ethics are a part of the formal structure in organisations. They define relationships and guide activities thereby creating sets of mutual expectations as well as reducing uncertainties (Zhou, 1993).

In practice, formalised rules have been reported to activate role conflict among professionals because of the discrepancy that exists between the norms of a profession that ought to be espoused by its community of members across different organisations and economies and each single organisation’s norms and rule (Organ

and Greene, 1981; See also discussions on Professional Codes from Chapter 6 onwards later on). This is also known to create a moral tension between employees and their organisation. Merton, (1968) further explained that often the presence of formalised rules implies the need to strictly adhere to those rules, a behaviour called compliance. He then argued that the impact of compliance on employees is that following the rules becomes an end in itself and could cause them to lose focus on the bigger goals of the organisation. Therefore, Gouldner, (1954) in his work recognised two types of compliance: compliance based on the desire to achieve goals efficiently and compliance based on an obligation to obey the command of superiors unquestioningly. He then further argued that in the latter case, authority based on formal positions may not be sufficient to enforce the compliance of subordinates especially in cases where the subordinates are more skilful than their superiors.

Also, Thompson, (1967) and Lawrence and Lorsch, (1967) found that employees will react positively both when high levels of formalization are associated with routine tasks and when low levels of formalization are associated with non-routine tasks. This is because employees and average human beings like to be told what to do to succeed and be rewarded which makes life less hard and more conformist. This finding is in line with the prevalent presuppositions that standardising routine work in organisations should boost efficiency thereby guaranteeing employee satisfaction. However, critics still disagree with this argument because it assumes a high level correlation of goal congruence between employees and employers, a situation many have argued is rarely obtained (Pfeffer, 1981). Hence, these buttress the need to see each organisation as a unique entity with at best shared features with other organisations, therefore, care must be taken in making generalisations.

From an ethics perspective, rules have also been subject to mixed findings. For instance, rules have often been argued to grant organisations more control over the ethical behaviours of their employees (Ferrell and Skinner, 1988). In their finding, they concluded that formalisation explained the most variance in ethical behaviour with the existence of an ethical code as the major factor explaining the variation. In affirmation, corporate policies, usually codes of ethical conduct have also been

Fritzsche and Becker, 1983; Hunt, Chonko, and Wilcox 1984). Tsalikis and Fritzche, (1989), Murphy, Smith and Daley, (1992) concluded in their studies that corporate ethics inhibits unethical behaviour and that employees in these organisations were less aware of unethical or illegal activity in their organisations. Whilst this could be a positive, the fact that moral awareness is reduced is a major point of criticism, whereby employees’ individual moral agency is replaced by rules thereby limiting their capacity to recognise moral issues and make sound judgements. Therefore, this has often raised concerns about the presence of code of ethics being a mere façade to mask the real ethical issues and struggles in organisations.

A link here may be established with the theory in the previous chapter of my literature review with a focus on cognitive moral development theory (Kohlberg, 1969). Kohlberg’s cognitive moral development theory offers key insights into the moral ramifications of the rule based morality bureaucracies espouse. According to Kohlberg’s, (1969) typology of cognitive moral development, rule based morality places individuals at the pre conventional level of moral reasoning. At this basic level of moral reasoning, morality is defined in terms of avoiding to break the rules and a propensity for excessive rule conformity by the majority of (conventional) employees and managers in organisations (Kohlberg, 1969; Colby and Kohlberg, 1987), beyond which every other concern is obliterated. This behaviour may produce indeed both amoral and immoral behaviours. Employee orientation would be on reward, punishments and obedience only. However, Kohlberg’s categorisations suggest higher levels of moral development, that is the conventional and post conventional stages are more adequate in resolving significant moral dilemmas (Kohlberg, 1981). Therefore, Kohlberg’s theory argues that at the pre conventional level bureaucracies expect employees to function, orientation would be towards keeping the rules, a reasoning level that renders them incapable of making critical moral judgements. Whereas, anyone reasoning at the higher stages could for example recognise a moral issue and make a decision to leave the job based on the violation of some higher moral principle they hold in high regard. As such Kohlberg’s theory would presume from a moral standpoint that strict rule compliance in bureaucracies creates a false conscience and a rule based moral code that keeps employees bound at a lower level of cognitive moral maturity (Kohlberg, 1969; 1987). Hence, moral

capacity to see moral issues and make autonomous moral judgement is significantly curtailed.

This position has been substantiated by some empirical studies. For instance, Weber, (1990) in his study of moral reasoning among managers (which was in response to three distinct moral dilemmas given) discovered that managers typically reasoned at the conventional level, implying their thinking is done at the level of conformity. Weber, (1990) also discovered in his study that managers that worked in large organisations reasoned as a considerably low(er) level than those working in small self-employed firms thereby validating the role rules play in limiting moral capacity of employees (Jackall, 1988). Also in a review of literature by Loe, Ferrell and Mansfield, (2000), seventeen studies were found to have studied the role of code of ethics in decision-making. Results varied from those who found code of ethics as useful to the improvement of ethical behaviour (Weaver and Ferrell, 1977) to those who discovered it increased a sense of awareness and subsequent reporting of unethical incidents (Trevino and Youngblood, 1990; Barnett, 1992; Kaye, 1992) and to those who concluded it was less effective in helping ethical behaviours (Bruce, 1994; Glenn and Van Loo, 1993). However, Beneish, and Chatov, (1993) opined the contents of code vary according to industries and this could explain the variations in the findings.

2.5.2 Managerial Control and Hierarchy

Hierarchy is defined as ‘a rank ordering of individuals along one or more socially important dimensions’ (Gruenfeld & Tiedens, 2010; Magee & Galinsky, 2008; Parsons, 1940). Ranks are a system in which each level controls a lower level and itself controlled by higher levels. From this, the concept of managerial control arises which is the legitimate control managers can exert on their subordinates towards certain ends based on their position in the firm. Therefore, there can be different forms of hierarchy, based on the dimensions upon which the hierarchy is defined. For instance, hierarchy could be power or ability to influence others (French & Raven, 1959), knowledge structure (Downs, 1969), or leadership and ability to drive shared goals (Bass, 2008; Van Vugt, 2006). Hierarchies can also emerge formally in the case of power and authority being vested in some positions more than others

(Mills, 1956; Mintzberg, 1979; Tannenbaum, 1962; Anderson and Brown, 2010) or informally when differences in status, experience age and influence develop among peers working together (Bales, Strodtbeck, Mills, & Roseborough, 1951; Blau, 1955). A formal hierarchy or vertical structure is thus the basis of central planning and centralised decision making.

Most scholars agree that the existence of hierarchies in organisation tends towards some form of control (Maclagan, 2007). For instance, Downs, (1969) opined that hierarchical structures exist to settle conflicts via automatic rules of hierarchical status and power, which are inevitable in any large organisation, and also to promote efficient communication and the minimization of losses of time and resources that increase uncertainty and reduce productivity and thus short term efficiency. These conflicts could arise from differences in goals of employees even if all parties perceive reality identically and could also arise from their mode of perceiving realities even when they share the same basic goals. For instance the latter conflict could arise from differences in technical expertise as most bureaucracies tend to have mixed expertise on board. In order to settle these problems, power must be delegated to a few members of the organisation. These members are thereby given ‘superior’ authority, which is the concept of hierarchy. There could also be a communications hierarchy in which there are different knowledge levels or privileged information at each stage of the hierarchy. This is often aimed at controlling data flow or protecting sensitive data.

Studies on managerial control through hierarchies like any other bureaucratic feature have been studied in line with varying outcomes such as work satisfaction, work coordination, group performance and often with varying results (Magee & Galinsky, 2008). For instance, some studies on hierarchy have shown managerial control facilitates better group performance and coordination, yet a larger number of studies have proven hierarchies and ensuing control lead to poor group performance (Anderson and Brown, 2010) in the case of slowing down transaction or process speed (Ackroyd, Batt, Thompson and Tolbert, 2004). Also, the phenomenon of groupthink by (Janis, 1982) suggests that in groups, ‘loyalty requires each member to avoid raising controversial issues’ (p.12) which advances the need for conformity among members even if the decision made is dysfunctional, weak in even

conventional aspects and irrational. This limits individual moral autonomy and capacity, particularly when such groups have hierarchies and superiors exercise control, the tendencies for the group think effect is often more pronounced as group members may not want to openly oppose their leaders, thereby producing morality of the herd to the detriment of individual morality (Janis, 1982). These have often led to the conclusions in literature that managerial control is not universally good or bad for organisations but that its effects could depend on a variety factors including personalities, organisational objectives, culture, and industry among others. (Argyris, 1973; Burns & Stalker, 1961; Galbraith, 1973; Hage, 1965; Lawrence & Lorsch, 1967; Pugh, et al, 1969).

Likewise, the role of managerial control in the ethical behaviour of employees has been variously studied in different dimensions. It is often discussed under what Maclagan, (2007) referred to as a control oriented position implied in most of business ethics. Thus, it is a correlate of ethical behaviour and can give managers leverage over individual behaviours. It therefore logically follows that hierarchy, like training programs, codes, leadership style influences employee decisions and conducts (Weber 1993, Trevino & Nelson 1995, Ferrell and Fraedrich, 2014). Brenner and Molander, (1977) in their study concluded that the behaviour of senior managers served as a signpost for the ethical choices of junior managers. Likewise, Harris, (1990) McDonald and Zepp, (1989) and Trevino, (1986) submit that top management in emphasising and clarifying appropriate behaviour can overtly influence subordinates’ behaviour. Harris, (1990) studied businesspersons using their years of business experience as a surrogate for managerial position within organisational hierarchy. He found significant differences in the ethical values of managers by years of experience for all five construct he measured. Respondents with over 21 years of experience were found to be less tolerant to questionable business practices than the junior level ones. However more recent studies (e.g Anand, Ashfort, and Joshi 2004) have discovered trends to the contrary. As Posner and Schmidt, (1984) submitted, the longer individuals stay in a firm and rise through the ranks, the more blurred the distinction between personal and organisational values get. The moral ramifications of this transformation are huge especially regarding moral awareness and capacity to make objective moral judgements at

In a study of fortune 500 executives, Lincoln, Pressley and Little, (1982) reported that a majority of organisational employees admitted compromise in personal values to achieve other organisational goals relevant to efficiency linked with individual performance objectives. In a study of organisational pressures at different hierarchical levels, Posner and Schmidt, (1984) submitted that first level managers, that is supervisors felt more pressure than middle level managers and the senior managers. This finding collaborates that of Jackall, (1988) who posited that in the bureaucracies he studied, senior managers often pushed down the work load and pressure whilst the accolades rise up to them. The logic as Jackall explained is to get the subordinates (including lower /middle level management) to do any dirty work and there can be then some ‘fall guy’ when things don’t go as planned (Jackall, 1988). Furthermore, Anand, Ashforth & Joshi, (2004) in their study observed that most immoral acts reported in corporations are perpetrated by individuals (usually top executives) who are upstanding members of society, giving to charities, are caring parents and don’t share the image of typical criminals. More puzzling also is the finding of Elm and Nichols, (1993) that older managers have lower moral judgement scores than younger, less experienced employees, a position that has since been confirmed by other studies like that of Trevino and Weaver, (2003). According to Kohlberg’s cognitive moral development theory, the reverse of these findings is meant to be the case, as older, more experienced employees are expected in principle to hold themselves accountable to higher moral standards. This is further buttressed by empirical findings that confirm moral reasoning to be lower in work-related dilemmas compared to non-work dilemmas (Weber, 1990; Elm & Nichols, 1993).

Thus, managerial control through hierarchies undermines the genuineness and quality/frequency of moral discourse in organisations (Jackall, 1988). Besides the documented impacts senior management have on their subordinates, varying demands and pressures at different levels of hierarchy could also have varying moral implications. At lower levels, for instance, full integration into the system and its ways may not have fully occurred hence some measure of individual morality can still govern action. Whereas, as employees rise through the ranks, the demands of their roles could cause a blur between individual ethical reasoning and moral values in the moral code the organisation. As Jackall (1988) claimed that ‘organisational life

makes managers unable to see most issues that confront them as moral, even when the problems they face are presented in moral terms’ Tsahuridu, (2006). At that height, the dilution of values creates complex individuals whose capacity to make objective moral judgements could be significantly hindered.