Ethical Decision Making inOrganizations

built – in values from school, home, religion…

morals: rules of individual behavior

Moral dilemmas: disagreements about ethical principles in a situation

ethics: rules of conduct practiced in a particular culture

Factors Influencing Behaviour

Individual Behavior

opportunity

Moral philosophy

Organizationalbehaviour

Organizational environment

How are they Made?

• End –the outcome sought• Means – the methods employed• Motive- the urge in making the decisions• Foreseeable consequences

The Role of Moral Philosophies in Decision making

Moral PhilosophyA set of principles setting forth what is believed to

be the right way to behaveRoleIt is something that is moral conforms to a

standard of acceptabilityPhilosophyA study of the general principles of a subject such

as morality

Moral Philosophy

Utilitarian

•Believers in the philosophy seeks the greatest satisfaction for the largest number of individualsHuma

nisticMoral Philosophy

Suggestions for ethical Decision Making

• Top Management can improve behaviour• Codes of ethics improve decision making• Interaction with peers and other colleagues• Control system

The Ethical Organization

People

Not fully responsible for what they did

Courageous charitable just sensitive

magnanimous

Foolishness envy

Deviousness

Difficulties in Decision Making

Sources of Ethical

Problems

Cross –Cultural Contradictions

Personal gain/Dubious

Charcter

Individual values in conflict with

organizational goals

Managers Values and Attributes

Competitive pressures

Difficulties in Decision Making

• Cross –Cultural Contradictions Some of the knottiest ethical problems occur as

corporations do business in other societies where ethical standards differ from those at home

• Competitive Pressures When companies are squeezed by severe

competition, managers sometimes engage in unethical activities to beat out a competitors

Difficulties in Decision Making

• Managers Values and AttributesManagers are the key people to investigate

whether a company will act ethically or unethically. As major decision makers and policy makers, that have more opportunities than others to set an ethical time for their company

Difficulties in Decision Making

• Individual values in conflict with organizational goals

Ethical conflicts in business frequently occur when a company pursues goals or uses methods that are not acceptable to some of its employees

Difficulties in Decision Making

• Personal gain/Dubious CharacterPersonal gain or even greed, causes some ethical

problems. Business sometimes employs people whose personal values are less than desirable

How to use Ethical Reasoning?

• Identify the nature of the ethical problem• Decide which course of action is likely to

produce the most ethical resultsThree methods• Utilitarian• Rights• justice

Different MethodsMethod Critical determining

factorAn action is ethical when

Limitations

Utilitarian Comparing benefits and costs

Net benefits exceed costs

Difficult to measure some human and social costs. Majority may disregard rights of minority

Rights Respecting rights Basic human rights are respected

Difficult to balance conflicting rights

Justice Distributing fair shares

Benefits and cost are fairly distributed

Difficult to measure benefits and costs. Lack of agreement on fair shares

Levels of Decision Making

• Levels of the individual• Levels of the organization• Levels of the business system

Kohlberg’s Seven Stages

Pre-Conventional Moral Development Stage 0 Stage 1 Stage 2Conventional Moral Development Stage 3 Stage 4Post-Conventional Moral Development Stage 5 Stage 6 Stage 7

Stage 0

At this stage, the individual:• Avoids pain and seeks pleasure• Has no sense of obligation to anyone else• Is self-absorbed (unaware or anyone’s needs other

than those that are self-serving)• Does what he/she wants to do• Is amoral• Is totally egocentric in assuming that the world

revolves around his/her needs and desires• Has thus no sense of cause-effect• Is typically between the ages of 0-7

Stage 1

At this stage, the individual:• Obeys rules in order to avoid punishment• Determines a sense of right and wrong by what is punished

and what is not punished• Obeys superior authority and allows that authority to make

the rules, especially if that authority has the power to inflict pain

• Is responsive to rules that will affect his/her physical well-being

• Is usually over the age of 7

Stage 2

At this stage, the individual:• Is motivated by vengeance or “an eye for an eye”

philosophy• Is self-absorbed while assuming that he/she is generous• Believes in equal sharing in that everyone gets the same,

regardless of need• Believes that the end justifies the means• Will do a favor only to get a favor• Expects to be rewarded for every non-selfish deed

he/she does• Is usually over the age of 10

Stage 3At this stage, the individual:• Finds peer approval very important• Makes moral decisions on the basis of what will please a

limited group and make the person feel included• Thus models behavior on that of the “majority” which is

the behavior of the “in crowd” or peer group• Feels that intensions are as important as deeds and expects

others to accept intentions or promises in place of deeds• Begins to put himself/herself in another’s shoes and think

from another perspective• May continue to be in this stage until him/her has reached

the 20s in age

Stage 4

At this stage, the individual:• Continues past actions and behaviors in tradition since the

maintenance of law and order is supremely important• Is a duty doer who believes in rigid rules that should not

be changed• Respects authority and obeys it without question• Supports the rights of the majority or majority rule

without concern for those in the minority• Is part of about 80% of the population that does not

progress past stage 4

Stage 5At this stage, the individual:• Is motivated by the belief in the greatest amount of good

for the greatest number of people• Believes in contracts in which both parties compromise and

yet both receive benefits• Believes in consensus (everyone agrees), rather than in

majority rule• Respects the rights of the minority especially the rights of

the individual• Believes that change in the law is possible but only through

the system• Has reached the same stage as the official morality of the

nation

Stage 6At this stage, the individual:• Loses the ability to compromise high principles and thus may

forfeit his/her life in order to uphold them• Believes that there are high moral principles than those

represented by social rules and customs• Obeys these self-chosen high moral principles• Is willing to accept the consequences for disobedience of the

social rule he/she has rejected • Uses only passive resistance and has no use for violence in

any form• Believes in granting justice and dignity to all human beings as

inalienable human rights• Respects justice for its moral nature and its legal nature• Believes that the dignity of humanity is sacred and that all

humans have value

Stage 7At this stage, the individual:• Is a “seeker of justice in an unjust world”• Has a cosmic perspective of life• Neglects any consideration for self• Focuses not on the individual but on the whole, a view of

self as part of the infinite whole and not as an individual part that is significant

• Thus is plagued with despair and sees a world of woe that he/she is inadequate to repair

• Possesses an altruism that is difficult for the world to comprehend and consequently his/her forgiveness and compassion often runs afoul of the world’s sense of justice I.e. moral level

7 step moral reasoning model

1. relevant facts2. ethical issues - broad systemic, corporate and

personal issues3. primary stakeholders affected by the ethical decision4. possible alternatives5. ethics of each alternative How will each affect

stakeholders? Apply the philosophies here6. practical constraints that limit implementation7. which alternative should be taken?

Influences of Ethical Decision Making

• Work place ethics• Nature of ethical issues• Personal values and ethical decision making1. Trustworthiness2. Respect3. Responsibility4. Fairness5. Caring6. citizenship

CONTINUED

• Corporate values and ethical Decision making• Role of corporate governance in ensuring

ethics in work place

Frame work of Ethical decision making

• Take choices seriously• Good decisions are both ethical and effective• Discernment and discipline

PROCESS OF MAKING GOOD ETHICAL DECISIONS

• Recognize and identify the kind of issue needed to resolve

• Pause and think• Make sure of goals• Get your facts right• Evaluate the choices from diferent ethical perspectives• Consider consequences• Make a decision• Act, then reflect on the decision later

ford pinto case

photo courtesy of cgearannex