There are at least two major ethical issues pertaining to organizational design.
First, there are issues having to do with what design most effectively creates an ethical atmosphere within the company. The answer, however, is not always clear. Firms in which employees are empowered may be more ethical because they are more democratic. On the other hand, they may be less ethical without firm leadership.
Second, there are issues having to do with the ethics of empowering or not empowering employees. A firm can become more ethical if it empowers its employees in the correct way. It can treat them more as valued team members and less as cogs in a machine. However, it can also become less ethical if it uses empowerment as a way to dump more responsibility on employees without giving them more pay, more training, and more support in their new roles.