SESSION 5

APPROACHES TO ETHICAL DECISION MAKING (Stakeholder Impact Analysis)

Copyright Houghton Mifflin Company. All rights reserved. 1-1

FUNDAMENTAL INTEREST OF STAKEHOLDERS

WELL-OFFNESS: The proposed decision should result in more benefit than costs FAIRNESS: The distribution of benefits and burdens should be fair RIGHT: The proposed decision should not offend the rights of stakeholders and the decision makers
Copyright Houghton Mifflin Company. All rights reserved. 1-2

What is a stake?
An interest or a share in an undertaking and can be categorized as:
Interest Right
Legal

Ownership

Moral

Copyright Houghton Mifflin Company. All rights reserved.

1-3

Who Are Business Stakeholders?

Primary and Secondary Stakeholders
Primary stakeholders are those stakeholders that have a direct stake in the organization and its success Secondary stakeholders are those that have a public or special interest stake in the organization

Copyright Houghton Mifflin Company. All rights reserved.

1-4

Who Are Business Stakeholders?

Production and Managerial Views

Copyright Houghton Mifflin Company. All rights reserved.

1-5

Who Are Business Stakeholders?

Copyright Houghton Mifflin Company. All rights reserved.

1-6

Figure 4.1: External Stakeholders, Moral Stakes, and Corporate Responsibilities

Copyright Houghton Mifflin Company. All rights reserved.

1-7

ETHICAL DECISION MAKING FRAMEWORK

Utilitarian Principle Rights Principle Justice Principle Stakeholder impact analysis Motivation or virtues expected Virtue ethics

Copyright Houghton Mifflin Company. All rights reserved.

1-8

DECISION MAKING APPROACH

1. 2. 3. 4. 5.

5-QUESTIONS APPROACH: Profitable? Legal? Fair? Right? Going to further sustainable development?

Copyright Houghton Mifflin Company. All rights reserved.

1-9

MORAL STANDARD APPROACH 1. Utilitarian: Maximize net benefit to society as a whole 2. Individual Right: Respect and protect 3. Justice: fair distribution of benefit and burdens

Copyright Houghton Mifflin Company. All rights reserved.

1-10

1. 2.

3. 4.

PASTINS APPROACH Ground rule ethics: individual and organizations have ground rules of fundamental values that govern their behavior End-point ethics: to determine the greatest net good for all concerned Rule- ethics Social contract ethics
Copyright Houghton Mifflin Company. All rights reserved. 1-11

COMMON PITFALL IN ETHICAL DECISION MAKING

Focusing on short term profit and shareholder impact Focusing on legalities Limits to fairness Limits to rights canvassed Conflict of interest

Copyright Houghton Mifflin Company. All rights reserved.

1-12

Three steps of Ethical Decision Making

Identify the facts and all stakeholder Rank the stakeholders and their interest Asses the impact

Copyright Houghton Mifflin Company. All rights reserved.

1-13

Seven Steps of Ethical Decision Making

Determine the facts Define the ethical issues Identify major principles, rules, and values Specify the alternatives Compare values and alternatives Asses the consequences Make your decision
Copyright Houghton Mifflin Company. All rights reserved. 1-14