Ethical Decision Making&

Ethical Leadership

Framework For Ethical Decision Making In Business

Model of Ethical Decision making includes 4 basic

pillars;

Ethical-Issue Intensity

Individual Factors

Organizational Factors

Opportunity

Framework For Understanding Ethical Decision Making in Business

Ethical Intensity

Individual Factors

Organizational Factors

Opportunity

Business Ethics

Evaluations &

Intentions

Ethical or

Unethical

Behavior

Ethical Issue Intensity

The relevance or importance of an ethical issue in the eyes of

the individual, workgroup or organization

How intense the dilemma is Reflects the ethical sensitivity of the

individual or work group that faces the ethical decision making process

“Spheres of Influence”

(Workplace, Family, Religion, Legal System, Community &

Profession)

Ethical Issue Intensity (Cont’d)

Moral Intensity relates to a person’s perceptions of

social pressure and the harm the decision will have on

others

Difference of opinion sets stage for Ethical Issue

Perception of Ethical Issue Intensity can be influenced

by; Management’s use of rewards & punishments Corporate Policies Corporate Values

Individual FactorsFactors that are more relevant to an individual

perceptions & personality Personal issues more typically involve;

Honesty Conflicts of Interest Discrimination Nepotism Theft of Organizational Resources

Some professions are perceived to be less ethical (Telemarketers, Advertising Agencies, Salesperson, Brokers)

Individual Factors (Cont’d) Few Individual factors are;

i. Education Education Vs. Working Experience Education is irrelevant of impact on ethicsii. Nationality Legal relationship between a person and the country MNCs try hiring businesspeople who can make decisions

regardless of nationalityiii. Age “The older you are, the more ethical you are”iv. Locus of Control Relates to Authority/ Power External Control Vs. Internal Control

Organizational Factors

Ethical choices in business are more often made jointly, in work groups and committees or in the conversations

The outcome of this learning depends on;a) Strength of person’s personal valuesb) The opportunity to behave unethicallyc) The exposure he/she has to others who behave

ethically or unethically

Organizational Factors (Cont’d)

Corporate Culture a set of values, beliefs, goals, norms, and ways

to solve problems that an organization’s members share.

What is unique about the corporate cultures of Wal-Mart, McDonald’s, Hershey Foods, and Southwest Airlines?

Ethical Culture Reflects whether the firm also has an ethical

conscience

Organizational Factors (Cont’d)

Significant Others those who have influence in a work group

including peers, managers, coworkers, and subordinates

Any corporate examples in which a “bad apple” spoiled a barrel? (when a key organizational member damaged the organizational reputation in the ethics/legal area)

Organizational Factors (Cont’d)

Obedience to Authority Helps to explain why many employees resolve

business ethics issues by simply following the directives of their supervisors

The bigger the company, the more unethical it has the potential to become

Opportunity conditions that limit or permit ethical or

unethical behavior

opportunity to engage in unethical behavior can be limited through formal codes of ethics, policies, and rules that are adequately enforced

Immediate Job Context –

“Carrots & Sticks” Opportunity also comes from knowledge “Gatekeepers”

Business Ethics Evaluations & Intensions

Ethical dilemmas are uncertain No magic formulas, no substitute for critical

thinking When an individual’s intentions and

behaviors are inconsistent with his/her ethical judgment, the person may feel guilty