Chapter 2: ETHICAL DECISION-MAKING: PERSONAL & PROFESSIONAL CONTEXTS

A Decision-making Process for Ethics

We all have a picture of how we are when we act ethically or are "at our best." We
probably also have an idea of what an ethical business, an ethical community, an
ethical government, or an ethical society should be. Ethics is involved in all these levels
– acting decently as individuals, promoting ethical organizations and governments, and
making the world as a whole ethical in the way it interacts with everyone.

As earlier stated, ethics refers to standards of behavior that tell us how people should
act in the many situations in which they find themselves – as children, parents, friends,
professionals, citizens, and so on.

It is helpful to identify what ethics is NOT:

Ethics and feelings are not the same. Feelings provide relevant insight for our ethical
choices. Some people have deeply rooted habits that make them feel bad when they do
something wrong, but many people are apathetic even though they are doing something
wrong. Our feelings will often caution us it is awkward to do the right thing if it is difficult.

Ethics is not religion. Many people may not be religious, but ethics is a concern to all.
Most religions do promote high ethical standards however generally do not deal with all
the sort of issues we tend to face.

Ethics does not mean just following the law. A good judicial system does include many
ethical standards, but at times the law can digress from what is ethical. It can deviate to
becoming ethically corrupt, as some authoritarian regimes have made it. It can serve
power alone and the interests of selected groups. The law may have a challenge
designing or imposing standards in some vital areas, and may be slow to address new
problems.

Ethics does not only mean pursuing traditionally accepted norms. Some traditions are
relatively ethical, but others become corrupt or oblivious to certain ethical matters.

Ethics is not science. Even if social and natural science can provide essential data to
help us make better ethical choices, it alone does not tell us what we should do. Ethics
provides grounds for how people should act.

Why Identifying Ethical Standards is Hard

There are two fundamental problems in identifying the ethical standards we are to
follow:
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1. On what do we build our ethical standards?

2. How do those standards get applied to specific situations we experience?

If our ethics are not based on feelings, religion, law, accepted social norms, or science,
what are they based on? Five different sources of ethical standards are suggested.

Criteria for Ethical Decision-making

The Utilitarian Approach
The utilitarian approach espouses that moral behavior generates the greatest good for
the vast majority. Under this approach, a decision-maker considers the consequence of
each decision on all concerned and selects the one that amplifies the satisfaction for the
greatest number of people. Some emphasize that the ethical action is the one that
imparts the most good or carries out the least harm.

The Rights Approach

The moral rights approach emphasizes that human beings have basic rights and
liberties that cannot be taken away by one’s decision. Thus, an ethically correct decision
is one that best upholds and respects the moral rights of those affected.

Six moral rights should be regarded during decision-making:

1. Individuals are to be considered only as they knowingly and freely consent to be

treated.
2. Individuals can decide to do as they please away from work and have command of
information about their personal life.
3. Individuals may desist from carrying out any directive that violates their moral or
religious norms.
4. Individuals may truthfully evaluate the ethics or validity of actions of others.
5. Individuals have a right to an fair hearing and treatment.
6. Individuals have a right to live without endangerment or violation of their health and
safety.

Managers must steer clear of interfering with the fundamental rights of others in making
ethical decisions.

The Fairness or Justice Approach

The justice approach maintains that moral decisions must be based on standards of
equity, fairness, and impartiality. Managers are concerned with three types of justice,
namely: distributive justice, procedural justice, and compensatory justice.
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Distributive justice is a concept that holds that different treatment of people should not
be based on arbitrary characteristics. In the case of considerable differences, people
should be treated differently in consideration with the differences among them.

Procedural justice is one that rules should be clearly stated and consistently and
impartially enforced.

Compensatory justice is a concept that individuals should be compensated for the

damages of their injuries by the liable party and that individuals should not be held
responsible for matters over which they have no control.

The Common Good Approach

The Greek philosophers have contributed the belief that life in community is good in
itself and our deeds should add to that life. This approach suggests that linked
relationships of society are the foundation of ethical reasoning and that reverence and
concern for all others are conditions of such grounds.

The Virtue Approach

An old approach to ethics is that ethical actions should be consistent with certain virtues
that provide for the full development of humankind. These virtues are beliefs and habits
that enable us to act according to the best of our character and on behalf of values like
honesty and truth. Beauty, empathy, courage, generosity, patience, love, loyalty,
integrity, justice, self-control, and prudence are all examples of virtues. Virtue ethics
asks of any action, "What kind of person am I if I do this?" or "Is this action consistent
with my living at my best?"

Putting the Approaches Together

Each of the approaches helps us decide what standards of behavior can be deemed
ethical. However, there are still problems to be solved.

First, we may not concur on the content of some of these particular approaches. We
may not all be in agreement with the same set of human and civil rights.

We may not see eye to eye on what represents the common good. We may not even
agree on what is a good and what is bad.
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Second, the different approaches may not all answer the question "What is ethical?" in
the same way. Nonetheless, each approach gives us vital insight on what is ethical in a
particular circumstance. More often, the various approaches do point to similar answers.

Making Decisions

Making sensible ethical choices requires an understanding of ethical issues and a

prepared method for discovering the ethical sides of a decision and evaluating the
alternatives that should impact our choice of action. Having a strategy for ethical
decision-making is absolutely necessary. When applied regularly, the method becomes
so common that it becomes a natural behavior.

The more difficult the ethical choice we have to make, the more we need to discuss and
consult with others about the situation. Only by careful evaluation of the problem with
others, can we make good ethical choices.

The following is a framework for ethical decision-making which is a useful method for
evaluating ethical situations and identifying ethical courses of action.

A Framework for Ethical Decision-Making

Recognize an Ethical Issue

Consider these questions in recognizing an ethical issue. Could this decision or
situation be harmful to someone or to some group? Does this decision involve a choice
between a good and bad option, or perhaps between two "goods" or two "bads"?

Ethical issues may go unnoticed through:

Normative myopia is a shortsightedness of values.
Inattentional blindness results from focusing on failures.
Change blindness occurs when decision-makers fail to see gradual changes over time.

Get the Facts

Here are questions to ponder on. What are the relevant facts of the case? What facts
are not known? What can I still learn about the situation? Are my facts enough to make
a decision? Who has an important interest in the outcome? What are the possible
courses of action? Have all the concerned personalities been consulted? Have I
identified creative alternatives?

Evaluate Alternative Actions

Assess the alternatives by asking the following questions:
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Which alternative will generate the most good and produce the least harm? (The
Utilitarian Approach)
Which alternative respects most the rights of all who have a stake? (The Rights
Approach)
Which alternative treats people equally or fairly? (The Justice Approach)
Which alternative best serves the community as a whole, and not just some members?
(The Common Good Approach)
Which alternative leads me to act as the sort of person I want to be? (The Virtue
Approach)

Make a Decision and Test It

Which choice best addresses the situation taking to account these approaches?
What would people say about the choice I made?

Act and Reflect on the Outcome

How can my decision be applied with the greatest care and attention in consideration of
the concerns of all stakeholders?
How did my decision turn out and what have I learned from this specific situation?

Decision-making Goes Wrong: Why Do “Good” in “Bad” Acts?

At some point, most management teams will make the right decision and will be
handsomely rewarded. Southwest Airline’s decision in 2007 to guard against increases
in the price of jet fuel proved remarkably prophetic. But sometimes the big decision will
go terribly erroneous. In 2007, AOL and Time Warner finally called off their $350 billion
merger that was eventually tagged as “the biggest mistake in corporate history”.

Normally, one may think that there’s a lot of fortune and inspired leadership behind
successful choices such as Southwest’s. But if you examine closely, that’s not exactly
true. The leadership teams at AOL and Time Warner were hardly foolish.

Good decisions, like Southwest’s, are nearly always a consequence of healthy decision
processes. Similarly, decisions that go wrong, such as Time Warner’s, nearly always
result from procedural or organizational failures.

These five mistakes account for the vast majority of poor decisions:

An idealistic search for silver-bullet solutions. Most business problems are complex. But
many managers badly want a simple action that will leapfrog the competition or boost
an organization’s performance in one fell swoop. One example is when the corporation
reorganizes. Companies are reorganized by nearly half of CEOs in the first two years of
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their tenure. Many preside over various reforms. Yet less than one-third of these acts
produce any significant improvement in performance.

Before Fiat bought into Chrysler, it reorganized three times in the thirty-six months prior
to its sale. Each time, management believed the reorganization would turn around the
ailing automaker. Each time, nothing happened.

So the next time you are asked, “Is there an easy resolution to this problem?” be
prepared to answer, “Perhaps not.”

Failure to consider alternatives explicitly. Business is a play of choices, and you can’t
make good choices without worthy alternatives. However, most organizations do not
clearly formulate and evaluate alternatives in making big decisions. What do you think
might have happened if the team at Time Warner had considered other alternatives for
venturing into the world wide web: strategic partnerships, joint-venture deals, even
increased growth of the company’s own capabilities. The habit of formulating and
evaluating clear alternatives greatly improves the quality of decision-making.

Too many people involved. Vital decisions are difficult to make in large groups. At times,
crucial points don’t get discussed thoroughly. Different personalities interfere with
reason and argument.

In fact, research highlights the “Rule of 7”: for every individual you add to a group
beyond seven, decision effectiveness declines by 10 percent. Apple Computer and
Facebook are successful because of their highly streamlined decision-making models.
At Ford Motor Co., the senior leadership team attends to the company’s most important
decisions in “special attention” meetings for a small group of executives.

The next time you receive a notice of meeting with more than fifteen invitees, ask
yourself: “Are we really going to be productive and make significant decisions in this
forum?”

Failure to consider opportunity cost. The decision to begin doing something different is
only one form of high-stakes decision. Another—often with equally big results—is to
continue what you’re doing. The decision not to terminate an uncompetitive product line
or leave an unprofitable market can consume whatever little management time and
other resources there are. Yet few executives value the opportunity cost associated with
pursuing with a losing project. Blockbuster’s failure to shut down its legacy bricks-and-
mortar operations and transfer attention to home delivery and digital downloading
doomed the once-powerful retailer.
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The next time you are considering keeping an ailing operation, ask yourself: “Where
else could we invest the resources that this business is eating up?”

Underestimating the challenges involved in execution and change management. The

intricacies associated with a big-stakes decision seldom end with just the decision.
Indeed, recent Bain research shows that only 12 percent of large-scale changes are
applied as intended. That’s because change is hard—and the more the change, the
bigger the risks. The launch of Healthcare.gov may be an example of underestimating
the difficulties of implementation. While the risks associated with the website were
predictable, they appear never to have been elevated to the level that demanded action.
As a result, concerned officials did not prepare the necessary precautions, and the
project failed during the weeks following its launch.

The next time you are thinking through a big-stakes decision ask yourself: “What
happens first thing Monday morning? What behaviors will have to change?”

When big-stakes decisions go awry, it is typically because the organization has fallen
victim to one or more of these failures. Success will not come by avoiding them but it
will greatly increase the chance of a better decision.

Ethical Decision-Making In Managerial Roles

Managers are accountable for the ethical conduct of those who report to them. This is
made possible by making sure employees are aware of the organization's code of ethics
and have the opportunity to validate and clarify their understanding. Employees’
behaviors are monitored in accordance with it. Managers are responsible to respond
quickly and appropriately to lessen the impression of suspected ethical violations.
Finally, managers make themselves available as a resource to counsel and coach
employees who face ethical situations.

Let’s not forget that managers are responsible for advocating ethical standards in their
own behaviors and decisions. Managers may be required to follow a separate
professional code of ethics, depending on their role, responsibilities, and training, in
addition to following the organization's ethical code.

Managers are also responsible for interacting with external stakeholders such as
customers, local community, government officials, suppliers, or owners. In those
interactions, managers may be tasked to explain a decision or a planned action in
connection with ethical considerations. The stakeholders will be interested to hear how
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the organization took ethics into account, and in those cases it is the manager's duty to
speak on the company's behalf.

Stakeholder Map

Employees

Owners Customers

The
Corporation

Suppliers Local
Community

Government

Finally, managers may be responsible for creating and/or implementing changes to an

organization's ethical codes or guidelines. These changes may be in response to an
internal determination based on the experience of employees; for instance, additional
clarification may be needed about what constitutes nepotism or unfair bias in hiring.
Alternatively, new regulations, altered public perceptions and concerns, or other
external factors may require the organization to make adjustments.