Power Dynamics and Its Impact on Ethical Boundaries in the Workplace

 Jan Mikaela L. Ancheta, CPA

Michelle Monique Cleo S. Arizabal, CPA

Divine Word College of Laoag, Graduate School of Business

Abstract

This study focuses on how power dynamics influence ethical decision-making and behaviours in organizations. It highlights that unequal power distribution can significantly influence ethical practices. Theoretical frameworks like French and Raven's bases of power, Foucault's power-knowledge theory, power-dependency theory, and Leader-Member Exchange (LMX) theory provide insights into how power operates in the workplace. Misuse of power can lead to ethical violations, lower employee morale, and hostile organizational culture. The study also explores ethical theories such as deontology, utilitarianism, and virtue ethics, in order to understand their role in shaping workplace ethics. Deontology focuses on adherence to moral duties, utilitarianism on the outcomes for the majority, and virtue ethics on developing moral character. It aims to uncover strategies that organizations can employ to ensure ethical standards are maintained and power is exercised appropriately. Additionally, it emphasizes the need for ethical leadership and accountability, suggesting that addressing power imbalances is necessary for fostering a positive organizational environment and maintaining ethical standards.

Keywords: Power dynamics, ethics, power imbalances, ethical leadership, organizational culture, authority, influence

Introduction

In modern organizations, power dynamics play a significant role in shaping workplace relationships, influencing decision-making, and establishing the ethical tone of the company. Power is often distributed unequally in hierarchical organizations, creating environments where individuals may leverage authority to sway the actions of others, sometimes for personal gain (French & Raven, 1959). Understanding these power relationships is crucial for examining how they impact ethical boundaries, which are the implicit and explicit rules that define moral behaviour in the workplace (Trevino & Nelson, 2016).

Power dynamics in the workplace have significant ethical implications that require careful consideration. When power is misused, it can have detrimental effects on employee morale, engagement, and the overall work environment (Campbell, 2023). Imbalances in power can lead to ethical boundary violations, ranging from subtle pressures to comply with unethical requests to more overt abuses of authority. For instance, supervisors may exert undue influence on subordinates, compromising ethical standards through coercion or manipulation (Lammers et al., 2015). As organizations focus more on corporate governance, accountability, and ethical leadership, examining the link between power and ethical boundaries has become essential for fostering environments where integrity is upheld (Kaptein, 2019).

Power imbalances can blur the lines between acceptable and unacceptable behaviour in the workplace. Employees in positions of authority may misuse their power to exploit subordinates, leading to ethical breaches such as favouritism, harassment, or even financial misconduct. In such environments, ethical boundaries may become distorted or disregarded, potentially resulting in a toxic culture that undermines the integrity of the organization (Lammers et al., 2015). The extent to which power dynamics influence ethical decision-making and workplace conduct is an area that requires further investigation.

Understanding the relationship between power and ethics is critical for organizational leaders, HR professionals, and policymakers. By identifying how power imbalances contribute to ethical violations, this study aims to provide insights into creating more ethical, transparent, and equitable workplaces. These insights are crucial for improving leadership practices, enhancing corporate governance, and establishing stronger ethical guidelines that prevent the misuse of power.

Understanding Power Dynamics

Power dynamics refer to how power is distributed, exercised, and negotiated between individuals, groups, or institutions within a specific context. This concept explores how power influences relationships, decision-making processes, and social structures, often revealing underlying inequalities, hierarchies, and control mechanisms. Power dynamics are shaped by factors such as social status, economic resources, cultural norms, and institutional authority, which influence interactions and outcomes in various settings. (Lukes, 2020)

Power dynamics can shift based on changes in social, economic, or political conditions. Understanding this concept is vital in addressing issues of inequality, fostering effective leadership, and promoting social justice.

Theories on Power Dynamics

Power in the workplace can be understood through several theoretical lenses. One of the most well-known frameworks is French and Raven's (1959) five bases of power, which classify power into legitimate, coercive, reward, expert, and referent forms. Each of these types of power manifests differently in the workplace, influencing how leaders and employees interact. Legitimate power stems from a formal position or role within an organization, while coercive power involves the ability to impose penalties. Reward power enables the provision of incentives, expert power comes from specialized knowledge, and referent power arises from personal admiration or respect.

Foucault’s theory of power emphasizes the pervasive nature of power and its role in shaping social relationships. According to Foucault (1980), power is not only held by individuals but is diffused throughout organizational structures. His concept of “power-knowledge” suggests that power is closely linked with knowledge production and dissemination, making it a tool for controlling behaviour and defining ethical norms.

Power-dependency theory also provides a useful framework for understanding organizational dynamics. This theory posits that power is a function of dependency; those who control resources that others depend on wield power over them (Emerson, 1962). In the workplace, this dependency can manifest in various forms, such as access to information, decision-making authority, or control over career progression. Consequently, those in positions of power may influence ethical decisions by leveraging these dependencies.

Moreover, Casciaro and Piskorski (2005) emphasized that dependency is not just about resources but also about access to networks and social capital. Power often lies with those who have strong relationships and access to critical information, making network dynamics an important consideration in understanding power relations (Pfeffer, 2013).

Leader-Member Exchange (LMX) theory, introduced by Graen and Uhl-Bien (1995), explores the relational dynamics between leaders and subordinates in organizational settings. Unlike traditional leadership models that treat leader-follower relationships uniformly, LMX emphasizes that leaders form differentiated relationships with their subordinates, resulting in either high-quality or low-quality exchanges (Liden, Sparrowe, & Wayne, 1997). Leaders in high-quality exchanges may exercise greater influence on their subordinates' behaviour, encouraging ethical conduct through role modelling and open communication (Mahsud, Yukl, & Prussia, 2010). However, the differentiated nature of LMX relationships can also create ethical dilemmas. For instance, employees in high-quality exchanges might receive preferential treatment, potentially fostering perceptions of favouritism and inequality, which can erode organizational justice (Scandura, 1999).

From a power dynamics perspective, LMX theory highlights the unequal distribution of power within organizations. Leaders naturally develop "in-groups" and "out-groups" based on the quality of relationships, leading to power imbalances among employees (Dulebohn et al., 2012). Martin et al. (2016) suggest that in-group members benefit from closer relationships with leaders, often gaining more leeway in decision-making, which can sometimes blur ethical boundaries, while out-group members might experience feelings of marginalization and exclusion from key resources.

Ethical Theories and Boundaries

Ethical boundaries in the workplace are shaped by the norms and values that guide behaviour. Deontological ethics, rooted in the philosophy of Immanuel Kant, focuses on the adherence to duty and moral rules rather than the consequences of actions (Kant, 1785/1997). Deontology emphasizes that individuals in the workplace, especially those in positions of power, have a moral obligation to respect universal ethical principles such as honesty, fairness, and respect for others' rights, regardless of the outcomes (Alexander & Moore, 2016). This theory is particularly relevant in contexts of power dynamics because it stresses that those with authority must act according to moral duties, ensuring that their decisions are guided by principles like justice and equality rather than self-interest or utilitarian considerations.

In power-laden environments, deontological ethics can serve as a safeguard against the abuse of authority, ensuring that power is exercised responsibly and ethically. Leaders are expected to respect ethical boundaries that protect the rights and dignity of subordinates, preventing exploitation and unfair treatment (Bednar & Spiekermann, 2023). The deontological focus on duty provides a clear ethical framework that promotes accountability, even when power is unequally distributed. This approach helps maintain ethical integrity within organizations, ensuring that actions are not justified solely by their outcomes but by their adherence to moral principles.

In contrast, utilitarianism, a consequentialist theory primarily associated with philosophers Jeremy Bentham and John Stuart Mill, evaluates the morality of actions based on their outcomes, aiming to maximize overall happiness for the greatest number of people (Mill, 2009). In the workplace, utilitarianism often informs decisions where leaders balance competing interests, striving for the best aggregate outcome. However, power dynamics complicate this process, as those in authority may have the capacity to shape outcomes that disproportionately benefit the majority while overlooking the ethical treatment of minorities or marginalized groups (Helin & Sandstrom, 2008). This can lead to ethical tensions when decisions, though beneficial for many, result in harm or unfair treatment to a few.

The relevance of utilitarianism in power-laden environments lies in its potential to justify actions that prioritize collective benefit over individual rights. This is particularly evident when leaders use their power to make decisions that appear utilitarian but inadvertently perpetuate power imbalances, such as sacrificing the well-being of lower-level employees for organizational gains (Bednar & Spiekermann, 2023). Therefore, while utilitarianism offers a framework for ethical decision-making, it also risks reinforcing unequal power structures if not critically assessed, making it crucial to balance utility with fairness and respect for individual rights.

Virtue ethics, which emphasizes the development of moral character and virtues such as honesty, courage, and empathy, plays a critical role in navigating power dynamics within the workplace. By focusing on individual character, virtue ethics encourages leaders and employees to act with integrity, fairness, and respect, regardless of their position of power. This ethical framework is highly relevant in addressing the subtle ways power can influence behaviours and decisions. For example, leaders who embody virtues like humility and justice are better positioned to foster inclusive and respectful workplace environments, mitigating the potential for abuses of power (Markkula Center for Applied Ethics, 2023).

These ethical frameworks guide how individuals perceive and respond to power dynamics. A utilitarian approach may justify the misuse of power if it is seen to benefit the majority, while a deontological stance would reject unethical behaviour regardless of the outcomes. Boundaries are thus contingent upon the ethical framework that individuals or organizations adopt. However, when power is concentrated in a few individuals, ethical standards are often compromised, and ethical breaches become more likely (Lammers et al., 2015).

Impact on Organizational Culture

Power dynamics have a reflective impact on organizational culture, influencing the establishment and maintenance of values, norms, and behaviours within an organization. The distribution and exercise of power not only shape the organizational culture but also affect employee behaviour, decision-making processes, and overall performance.

In the case of Ayala Corporation, the management’s commitment to ethical business practices and social responsibility has been involved in shaping a culture that values integrity, inclusivity, and transparency. Ayala's emphasis on ethical behaviour and social contribution has influenced its organizational culture positively, promoting a strong sense of corporate responsibility and community engagement. When those in power prioritize ethical behaviour, inclusivity, and transparency, these values are more likely to enter the broader organizational culture. (Schein, 2017).

Likewise, power dynamics have led to hierarchical and dictatorial cultures that can repress creativity and innovation. In traditional family-owned businesses, power is concentrated within a small group of top executives or family members. This concentration of power can create a culture of compliance where employees may feel pressured to conform to the expectations of those in authority, even if these expectations conflict with their personal values. This has been observed in companies like San Miguel Corporation, where a strong hierarchical structure can sometimes limit employee input and innovation (Monteiro & Joseph, 2023).

Decision-making processes within an organization are similarly affected by power dynamics. When power is concentrated among a few individuals, decisions are often made unilaterally, with limited input from other employees. Some government-owned and controlled corporations in the Philippines have been criticized for their centralized decision-making processes, which can lead to inefficiencies and a lack of employee engagement. This can result in a culture of compliance where orders are followed without question, potentially suppressing creativity and innovation. In contrast, organizations that practice inclusive decision-making, where power is shared, tend to create a culture of engagement and accountability. This approach not only enhances the quality of decisions but also contributes to better organizational outcomes (Treviño et al., 2014).

Power imbalances can also contribute to or mitigate conflict within an organization. One prominent example is NutriAsia, a major food manufacturing company in the Philippines. In 2018, NutriAsia faced intense labour disputes and employee protests over issues of unfair treatment and poor working conditions. Workers raised concerns about power imbalances, citing favouritism and lack of transparency in management practices. These issues led to strikes and a negative public image, illustrating how power imbalances can destroy trust and create a hostile working environment. When employees perceive that power is being used unfairly it can lead to conflict in an organizational culture marked by fear and resentment. Addressing power imbalances and promoting fairness can help build a culture of trust and mutual respect, thereby reducing the potential for conflict and improving overall employee morale (Foldy & Ospina, 2023).

Power dynamics define organizational culture by influencing norms and values, employee behaviour, decision-making processes, conflict levels, and long-term cultural changes. Understanding and managing these dynamics effectively is essential for creating a positive and productive organizational environment. Over time, how power is exercised within an organization can lead to significant cultural shifts. Leaders who use their power to implement changes in policies, practices, and norms can reshape the organizational culture in various ways. (Monteiro & Joseph, 2023).

Influence on Ethical Decision-Making

Ethical decision-making involves understanding how various factors influence the choices individuals or organizations make when confronted with moral dilemmas. Key influences include personal values, cultural norms, organizational culture, and situational pressures. Leaders and employees often face conflicting interests, such as balancing personal gain, social pressures, and organizational objectives, which can challenge ethical standards (Treviño et al., 2014).

An organizational culture that prioritizes ethical behaviour promotes consistent and principled decision-making. In contrast, cultures that emphasize profit over ethics may compromise those standards (Kaptein, 2011). Individual differences, such as levels of moral development, also play a significant role in shaping ethical choices (Jones, 1991).

Organizational culture, shaped by shared values, beliefs, and practices, dictates the ethical climate of a company (Schein, 2017). Power structures within organizations influence the flow of information, decision-making processes, and the enforcement of ethical standards. Cultures that encourage open dialogue and distribute power more evenly across levels are more likely to foster ethical behaviour (Kaptein, 2011).

Power dynamics are crucial in ethical decision-making. Individuals in authority can either enforce ethical norms or encourage unethical behaviour. Organizations can mitigate the risk of unethical decisions by implementing procedures that ensure accountability, transparency, and checks and balances. (Treviño et al., 2014).

The style of leadership significantly affects the ethical decisions made by employees. Transformational leaders inspire ethical behaviour by promoting shared values and motivating employees to act in the organization's best interest (Bass & Avolio, 1993). On the other hand, authoritarian leaders who concentrate power at the top often create environments where ethical boundaries are distorted, and subordinates may feel pressured to comply with unethical directives to protect their positions (Brown & Treviño, 2006).

Ethical Boundaries and Hierarchy

The hierarchy of power dynamics and ethical boundaries are intertwined, influencing how decisions are made and how power is exercised within organizations. Ethical boundaries refer to the limits of acceptable behaviour that are guided by moral principles, organizational policies, and legal standards. When these boundaries are clearly established and upheld, they contribute to the way that power is used responsibly and fairly (Kaptein, 2011).

Power dynamics can significantly impact the enforcement of ethical boundaries in hierarchical structures. Individuals at higher levels of the hierarchy often have more authority and control, which can either sustain or challenge ethical standards depending on how power is exercised. Leaders who prioritize ethical behaviour can set a positive tone for the organization, promoting a culture of integrity and accountability (Treviño et al., 2014). Conversely, when power is concentrated and unrestricted, there is a greater risk of ethical boundaries being crossed, as those in power may exploit their position for personal gain or to further organizational objectives at the expense of ethical considerations (Jones, 1991).

The hierarchy of power dynamics also affects the ability of subordinates to challenge unethical behaviour. In organizations with rigid hierarchies, lower-level employees may feel disempowered or fear retaliation if they speak out against unethical practices. This can create a culture of silence, where unethical behaviour goes unreported and unchecked, leading to potential abuses of power and deviations in ethical standards (Kaptein, 2011).

Peer Influence and Group Dynamics

Peer influence refers to how individuals affect each other’s behaviours, attitudes, and decision-making processes, particularly in group settings. Group dynamics involve the interactions among group members, which can significantly influence how power is distributed and exercised within the group.

Recent research highlights that peer influence can be a powerful driver of behavior within organizations. Peers can apply pressure on individuals to conform to group norms, which may include both ethical and unethical practices (Yu et al., 2021). When group norms support ethical behaviour, peer influence can strengthen adherence to ethical standards and create a collective commitment to integrity. On the other hand, when norms are unethical, peer influence can lead to the perpetuation of dangerous practices, even among individuals who might otherwise act ethically.

In Philippine workplaces, the "barkada" (peer group) culture significantly influences employee behaviours and work ethics. Employees may feel inclined to conform to group norms, such as working late hours or participating in after-work social gatherings. Although positive peer influence can create a supportive environment, negative dynamics may lead to toxic behaviours. Additionally, the other culture that is prevalent in many Filipino workplaces is the emphasis on group harmony and consensus, often allowing the opinions of more senior or influential members to carry more weight in decision-making processes (Reyes, 2022).

On that note, peer influence can have both positive and negative impacts on power dynamics. Individuals may conform to group norms due to peer pressure, even when those norms contradict their personal beliefs or ethical standards (Cialdini & Goldstein, 2004). The collective behaviours that may result from this conformity may not be morally righteous because it may serve to perpetuate power dynamics or distribute responsibility.

Strategies for Maintaining Ethical Standards

Maintaining ethical standards within power dynamics requires implementing strategies that promote integrity, transparency, and accountability across all levels of an organization. Recent research highlights several effective strategies.

Establishing clear ethical guidelines is essential for setting clear expectations regarding acceptable behaviour. Developing and enforcing a code of ethics that reflects the organization's core values and ethical principles is necessary. This code should be well-communicated throughout the organization, and regular training sessions should be conducted to employees to internalize these guidelines and understand their importance (Kaptein, 2011).

Encouraging ethical leadership is another fundamental strategy. Ethical leadership involves modelling ethical behaviour, making decisions that align with ethical standards, and holding others accountable. Leaders who demonstrate ethical conduct set a standard for the rest of the organization (Brown & Treviño, 2006). Leaders should also be approachable and open to feedback to create an environment where ethical concerns can be raised without fear of retaliation.

Setting up a system for accountability is essential for maintaining ethical standards, particularly within power dynamics. Establishing clear reporting structures, whistleblowing channels, and regular audits can help ensure that power is not abused and that unethical behaviour is addressed. Organizations should provide safe and anonymous ways for employees to report unethical behaviour, ensuring these reports are taken seriously and investigated promptly.

Promoting an open communication culture is also integral in identifying and addressing early signs of unethical practices. This can be achieved by fostering an inclusive environment where diverse perspectives are valued, and employees are encouraged to voice their concerns (Mayer et al., 2012). This culture helps prevent ethical issues from escalating and reinforces a collective commitment to ethical conduct.

Conducting regular ethical audits and assessments provides an additional layer of protection by continuously monitoring the organization's ethical climate. These audits can involve surveys, interviews, and focus groups to gather insights from employees about the effectiveness of current ethical practices and identify areas for improvement (Treviño et al., 2014).

Organizations can create a culture where ethical standards are maintained, and integrity is upheld at all levels by adopting these strategies.

Addressing Power Imbalances

A fair and equitable environment can only be achieved by addressing power imbalances within organizations and social groups. These imbalances can lead to unethical behavior, discrimination, and conflict, making it essential to implement strategies that promote balance and accountability.

Empowering lower-level employees or group members by providing them with more autonomy and decision-making authority is an effective way of addressing power imbalances. Decentralized decision-making processes, participative leadership, and access to resources and opportunities for professional growth are all strategies that can help redistribute power more evenly. Jollibee Foods Corporation is an example of a company that has embraced decentralized decision-making and participative leadership. Jollibee’s leadership style encourages input from employees at various levels, allowing for a more collaborative approach to decision-making. The company’s success is partly attributed to its emphasis on empowering employees through training and development programs, which provide staff with the skills and autonomy to contribute to the company’s growth. This inclusive approach helps in redistributing power and adopting a culture of mutual respect and collaboration. Organizations can reduce the risks associated with concentrated power and promote a more balanced distribution of authority by empowering subordinates (Li & Tang, 2022).

Promoting open communication is another key strategy. Encouraging transparent dialogue allows employees to express their concerns, share ideas, and provide feedback without fear of retaliation. Globe Telecom is known for its commitment to open communication and employee engagement. The company has developed several platforms to facilitate transparent dialogue, including regular meetings, online feedback channels, and employee engagement surveys. Globe Telecom’s leadership actively encourages employees to share their ideas and concerns, ensuring that feedback is considered in decision-making processes. These steps are to ensure that voices from all levels of the organization are heard and considered, contributing to a more equitable environment (Monteiro & Joseph, 2023).

Implementing checks and balances within the organizational structure is essential to prevent the abuse of power. Oversight committees, regular audits, and transparent decision-making processes involving multiple stakeholders are critical in holding those in power accountable. Ayala Corporation has established several checks and balances to ensure responsible management and decision-making. The company has an Audit Committee that oversees the financial reporting process, internal controls, and compliance with legal and regulatory requirements. This committee is part of the Board of Directors and plays a crucial role in reviewing the company's financial statements and audit reports. Additionally, Ayala Corporation has a Code of Conduct and a Whistleblower Policy that allow employees to report unethical behaviour or misconduct anonymously, further ensuring transparency and accountability. These are necessary to set boundaries in exercising power sensibly and that decisions are made in the best interest of the organization and its members (Treviño et al., 2014).

Promoting inclusive leadership practices is also necessary for mitigating power imbalances. Leaders who promote inclusivity seek out and incorporate diverse perspectives in decision-making processes. BPI has taken steps to ensure that inclusive leadership practices are embedded in its organizational culture. Their leadership style is committed to diversity and inclusion, and this commitment is reflected in its recruitment, training, and promotion practices. BPI’s inclusive leadership approach includes mentorship programs, diversity training, and policies that support the advancement of employees from underrepresented groups.  By ensuring that underrepresented groups have a voice, leaders can help level the playing field and reduce the marginalization of certain employees or group members. An environment where the concerns of those with less power are more likely to be addressed contributes to a more equitable organizational culture (Li & Tang, 2022).

Encouraging collective action among employees can also shift power dynamics. PLDT employees have engaged in collective action to address concerns about labor practices and working conditions. Employees, represented by labor unions, have collectively negotiated with management for better benefits, job security, and fair treatment. These collective bargaining efforts have led to improvements in labor conditions and reinforced the importance of employee voices in shaping company policies. The collective action of PLDT employees demonstrates how organized efforts can shift power dynamics and lead to positive changes. When employees work together, they can collectively negotiate for better working conditions, challenge unethical practices, and advocate for their rights. Collective action increases the bargaining power of employees relative to management and can be an effective way to address power imbalances within organizations (Foldy & Ospina, 2023).

Conclusion

The findings of this study illustrate that power dynamics profoundly influence ethical boundaries in the workplace. Power, when concentrated and unchecked, can lead to ethical violations, fostering environments where moral behavior may be compromised. Hierarchical structures often exacerbate these issues by restricting open communication and promoting compliance over integrity, especially in environments where authority figures exert undue influence on subordinates.

Conversely, organizations that distribute power more equitably and promote ethical leadership cultivate healthier workplace cultures. Clear ethical guidelines, decentralized decision-making, and open communication are critical in mitigating the risks of power imbalances. To mitigate the negative effects of power dynamics and maintain a positive organizational culture, it is essential to implement strategies that promote transparency, accountability, inclusivity, ethical leadership and integrity across all levels of the organization. Establishing clear ethical guidelines, encouraging open communication, and conducting regular ethical audits are key practices that can help ensure power is used appropriately.

Addressing power imbalances and reinforcing ethical boundaries requires a concerted effort from leadership, HR, and all organizational members. Implementing the strategies outlined in this research can help mitigate ethical risks associated with power dynamics, leading to more equitable and ethical workplaces.

Overall, understanding and effectively managing power dynamics is essential for cultivating an inclusive, fair, and ethical workplace. Organizations that prioritize these aspects will be better positioned to navigate challenges, build trust, and achieve sustainable success.

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