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Ethical Decision MakingLesson 04

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Lessons’ Objectives◦Identify ethical behavior and myths

of ethics◦Define ethical dilemma◦Familiar with resolving dilemma◦Identify process of Ethical decision

making

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Ethical Behavior◦Ethical behavior goes beyond the legal

requirements placed on a business, as it concerns discretionary decisions and behavior; in other words, what a business chooses to do, rather than what is forced to do.

◦Business ethics are relevant both to the conduct of an individual within an organization and to the conduct of the organization as a whole.

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Myths of Business Ethics◦It is a more religion than management◦Our employees are ethical so no need BE◦It is a discipline best led by philosophers◦It is a matter of good person preaching to

bad persons◦It is a new police-person in organization◦Ethics can't be managed◦Business ethics & CSR are same thing◦We obey to law so no need about ethics.

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Ethical Dilemma◦There are situation when there is not

simple choice between write or wrong

◦Ethical dilemma is complex judgments on the balance between the economic performance and the social performance of an organization. Have two interests - cannot purse one

without having negative impact on other Private Interest Conflicts with Corporate Business Interest Conflicts with Public.

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Ethical Dilemma◦E.g. New house purchase by employee

to reach office fast meanwhile he is considered to retrench.

When the both products are same quality to justify your high price touch drawback of competitor

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Cont...◦An ethical dilemma exists when one

is faced with having to make a choice among following alternatives: Significant value conflicts among

differing interests, Real alternatives that are equally

justifiable, and Significant consequences on

"stakeholders" in the situation.

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Characteristics of Dilemma

◦It have extended consequences◦It has multiple alternatives◦It have mixed outcomes◦It have uncertain consequences◦It have personal implications◦It is easy to make when a person is

not directly involved◦Hence EDM are not simple choice

between right and wrong.

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Paradigms of Dilemma◦Four such dilemmas are so common

to our experience that they stand as models, patterns, or paradigms. They are: Truth versus loyalty. Individual versus community. Short-term versus long-term. Justice versus mercy.

Ethics and Sri Lanka

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Classical Approach Resolving Dilemma

◦Three approaches are facilitated End-based thinking (utilitarianism) Rule based thinking Care-based thinking (value to you or

close relationships)

And Virtue ethics - instead upon execute as an alternative way

Here action is considered morally right if in carrying out the action.

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Nine ways to Resolving Dilemma

◦Rushworth Kidder

1.Recognize as moral issue and define the

problem accurately

2.Identify the affected by decision

3.Gather the facts how events happened

4.Test for right vs. Wrong issues

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Nine ways to Resolving Dilemma

5. Test for right vs. right paradigm (true vs...

6. Apply for the resolution principle (end, rule, care)

7. Investigate if is any third way out of the situation

8. Make decision & take action

9. Revisit & reflect on the decision

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Whistle blowing◦It is methods can be contributed to

identify and act of disclosing wrong in an organization

◦Like blowing a whistle to call attention to a thief or unethical practitioner

◦But it is questionable when... Dissent / disagree - Must speak out against

others in organization Breach of Loyalty - Perceived as one who

violates confidentiality and loyalty Accusation - Singles out specific individuals

as threats to organization or the public

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Whistle blowing◦Care about whistle blowing◦Make sure situation involves an

imminent threat to society or to the business

◦Document all allegations◦Examine internal whistle blowing

first◦Should you remain secret

Ethics and Our behavior

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Framework for Ethical Decision Making

◦Step 01: Describe the problem◦Step 02: Determine whether there

is an ethical issue or an ethical dilemma

◦Step 03: Identify and rank the key values and principles

◦Step 04: Gather your information◦Step 05: Review any applicable

Code of Ethics◦Step 06: Determine the options

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Framework for Ethical Decision Making

◦Step 07: Select a course of action◦Step 08: Put your plan into action◦Step 09: Evaluate the result

Don’t forget!◦Step 10: Submit cases to your

ethical review team or board regularly for review

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Effects of Ethical/Unethical Behavior

Ethical Behavior

Increases Efficiency and

Effectiveness of Production and

Trade

Increases Company Performance

Increases National Standard of Living,

Well-being, and Prosperity.

Unethical Behavior

Reduces Efficiency and Effectiveness of Production and

trade

Reduces company Performance

Reduces National Standard of Living,

Well-being, and Prosperity.

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Rules for

Ethical Decisio

n Making.

Utilitarian RuleAn ethical decision should

produce the greatest good for the greatest number of people

Justice RuleAn ethical decision should distribute

benefits and harm among people in a fair, equitable, and impartial

manner

Practical ruleAn ethical decision should be one that a manager has no

hesitation about communicating to people outside the company because the typical person in a society would think the decision

is acceptable.

Moral Rights RuleAn ethical decision

should maintain and protect the fundamental rights and privileges of

peoples.

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Ethical Decision Making Approaches

1) Utilitarian Approach – Moral behavior produces the greatest good for the greatest number

2) Individualism Approach – Acts are moral when they promote the individual’s best long-term interest, which ultimately leads to the greater good.

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Ethical Decision Making Approaches

3) Moral – Rights Approach decisions are those that best maintain the rights of those people affected by them.

4) Justice approach – Moral Decisions must be based on standards of equity, fairness, impartiality

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Three Types of Justices◦Three types of Justice Approaches:

I. Distributive Justice – In case of substantive differences, people should be treated differently in proportion to the differences among them

II. Procedural Justice – Rules should be clearly stated & consistently and impartially enforced

III. Compensatory Justice –Individuals should be compensated for the cost of their injuries by the party responsible.

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Ethical Test

1.Is it Legal

2.Benefit Cost Test

3.Categorical Imperative

4.Light of Day Test

5.Do onto Others Test

6.Ventilation Test

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Is It Legal1.Is It Legal

Ethical – Legal I Ethical-Illegal II Unethical – Legal III Unethical – Illegal IV

◦I and IV◦II and III Difficult

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• Quadrant III

• Unethical and Illegal

• Quadrant IV

• Unethical and Illegal

• Quadrant I• Ethical

and Legal

• Quadrant II

• Ethical and Illegal Codification

Manifestation

CorporateDecisions

Ethical

Unethical

LegalIllegal

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Benefit & Categorical Imperative2.Benefit Cost Test

Do the benefits exceed the costs to whomsoever they accrue?

3.Categorical Imperative Are you willing to allow to everyone to

practice the proposed action or do you want to be a special case?

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Light of Day & Do onto Others

4.Light of Day Test – What would be your reaction if the action were brought out into the open for public scrutiny

5.Do onto Others Test – Golden Rule – If you would like others to do the same to you - passes the test

6.Ventilation Test – Seek out others views. Discuss the 5 tests with them. If others feel it is OK – passes the test

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A Venn Diagram Model for Ethical Decision Making

Ethical Responsibility

Legal Responsibility

Economic Responsibility

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2a

2b

Area 1Profitable legal, ethical, Go for it

Area 2aProfitable and legal, Proceed

cautiously

Area 2bProfitable and

ethical, Probably legal, Proceed

cautiouslyArea 3

Legal, and ethical but not profitable find ways to seek

profitably .

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Thank You