This document discusses ethical decision making in organizations. It covers several topics including: 1) Factors that influence behavior such as opportunities, organizational environment, individual behavior, and moral philosophy. 2) How ethical decisions are made by considering the end, means, motive, and consequences. 3) The role of moral philosophies like utilitarianism and humanism in decision making. 4) Suggestions for improving ethical decision making through codes of ethics, interaction with colleagues, and control systems.

1. Ethical Decision Making in
Organizations

2. built – in values from school, home, religion…

3. ethics: rules of conduct
practiced in a particular culture
morals: rules of individual behavior
Moral dilemmas: disagreements
about ethical principles in a situation

4. Factors Influencing Behaviour
opportunity
Organizational Individual Moral
environment Behavior philosophy
Organizational
behaviour

5. How are they Made?
• End –the outcome sought
• Means – the methods employed
• Motive- the urge in making the decisions
• Foreseeable consequences

6. The Role of Moral Philosophies in
Decision making
Moral Philosophy
A set of principles setting forth what is believed to
be the right way to behave
Role
It is something that is moral conforms to a standard
of acceptability
Philosophy
A study of the general principles of a subject such
as morality

7. Moral Philosophy
• Believers in the
philosophy seeks the
Utilitarian greatest satisfaction
for the largest
number of individuals
Moral Philosophy
Humanistic

8. Suggestions for ethical Decision
Making
• Top Management can improve behaviour
• Codes of ethics improve decision making
• Interaction with peers and other colleagues
• Control system

9. The Ethical Organization
Courageous charitable
People just sensitive
magnanimous
Not fully Foolishness
responsible for envy
what they did Deviousness

10. Difficulties in Decision Making
Cross –Cultural
Contradictions
Personal
Competitive
gain/Dubious
pressures
Charcter
Sources
of Ethical
Problems
Individual
Managers values in
Values and conflict with
Attributes organizational
goals

11. 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

12. Difficulties in Decision Making
• Managers Values and Attributes
Managers 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

13. 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

14. Difficulties in Decision Making
• Personal gain/Dubious Character
Personal gain or even greed, causes some ethical
problems. Business sometimes employs
people whose personal values are less than
desirable

15. How to use Ethical Reasoning?
• Identify the nature of the ethical problem
• Decide which course of action is likely to
produce the most ethical results
Three methods
• Utilitarian
• Rights
• justice

16. Different Methods
Method Critical determining An action is ethical Limitations
factor when
Utilitarian Comparing benefits Net benefits exceed Difficult to measure
and costs costs some human and
social costs.
Majority may
disregard rights of
minority
Rights Respecting rights Basic human rights Difficult to balance
are respected conflicting rights
Justice Distributing fair Benefits and cost Difficult to measure
shares are fairly benefits and costs.
distributed Lack of agreement
on fair shares

17. Levels of Decision Making
• Levels of the individual
• Levels of the organization
• Levels of the business system

18. Kohlberg’s Seven Stages
Pre-Conventional Moral Development
 Stage 0
 Stage 1
 Stage 2
Conventional Moral Development
 Stage 3
 Stage 4
Post-Conventional Moral Development
 Stage 5
 Stage 6
 Stage 7

19. 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

20. 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

21. 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

22. Stage 3
At 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

23. 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

24. Stage 5
At 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

25. Stage 6
At 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

26. Stage 7
At 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

27. 7 step moral reasoning model
1. relevant facts
2. ethical issues - broad systemic, corporate and
personal issues
3. primary stakeholders affected by the ethical
decision
4. possible alternatives
5. ethics of each alternative How will each affect
stakeholders? Apply the philosophies here
6. practical constraints that limit implementation
7. which alternative should be taken?

28. Influences of Ethical Decision Making
• Work place ethics
• Nature of ethical issues
• Personal values and ethical decision making
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. citizenship

29. CONTINUED
• Corporate values and ethical Decision making
• Role of corporate governance in ensuring
ethics in work place

30. Frame work of Ethical decision making
• Take choices seriously
• Good decisions are both ethical and effective
• Discernment and discipline

31. 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

32. ford pinto case
photo courtesy of cgearannex