1

A Framework for Ethical Decision

Making

ADMI 3009
Prof. Maritza Soto
INTRODUCTION

• Businesses should be careful to do more than just comply

with the laws.
• Consumers and shareholders are requiring companies to do
what is “ethical” which sometimes may impose additional
duties required by law.
• Historically, law and ethics were synonymous-today they
may not be.
• In other words, BECAUSE SOMETHING MAY BE
LEGAL DOES NOT MEAN IT IS ETHICAL
NATURE OF BUSINESS ETHICS

• Ethics is the study of right and wrong behavior in the world

of business; the fairness, rightness or justness of a course of
conduct.
• In business, ethical decisions are the application of moral
and ethical principles to the marketplace and workplace.
DEFINING BUSINESS ETHICS

• Morals are universal guidelines or “revealed” truths.

• Ethics is a reasoned set of principals of conduct derived
from morals.
• Ethical Reasoning - the process by which an individual
links her moral and ethical convictions to the choice of
actions to be taken in a particular situation.
CONFLICTING DUTIES

• Directors and Officers owe a complex set of ethical duties

to the company, shareholders, customers, community,
employees, and suppliers.
• When these duties conflict, ethical dilemmas are created.
FRAMEWORK FOR UNDERSTANDING THE ETHICAL
DECISION-MAKING PROCESS IN BUSINESS
ETHICAL ISSUE INTENSITY

• Ethical issue intensity

• the perceived relevance or importance of an ethical issue to the individual, work
group, and/or organization
• Reflects the ethical sensitivity of the individual or work group
• Triggers the ethical decision process

• Moral Intensity
• relates to a person’s perception of social pressure
INDIVIDUAL FACTORS

• People‘s own values and principles of right or wrong

• Locus of control
• relates to individual differences in
relation to a generalized belief about how
one is affected by internal versus external
events or reinforcements
• Can be external or internal
ORGANIZATIONAL FACTORS

• Corporate culture
• a set of values, norms, and artifacts that
members (employees) of an organization
share
• Those who have influence in a work group
(e.g. managers, coworkers, subordinates) are
referred to as significant others
• Obedience to authority helps to explain
why many employees simply follow the
directives of a superior

Source: Digital Vision

 OPPORTUNITY

• Describes the conditions in an organization

that limit/permit ethical/unethical behavior
• Relates to individuals’ immediate job
context
• Where they work, with whom they work, and
the nature of the work

• Opportunities for misconduct can be reduced

by establishing formal codes, policies, and
enforced rules

Source: Triangle Images

USING THE FRAMEWORK TO IMPROVE
ETHICAL DECISIONS
• It is impossible to objectively determine right and
wrong
• Having a thorough knowledge about how ethical decisions
are made will not solve ethical problems
• Business ethics involves value judgments and
collective agreement about acceptable patterns of
behavior
• Organizations take on a culture of their own, which
have a significant influence on business ethics
ETHICAL DECISION

• Ethical Decision-Making Process is the processes of choosing the best

alternative for achieving the best results or outcomes compliance with
individual and social values, moral, and regulations.
MAKING ETHICAL DECISIONS

• Making good ethical decisions to solve Ethical

Dilemma requires a trained sensitivity to ethical issues
and a practiced method for exploring the ethical
aspects of a decision.
• Having a method for ethical decision making is
absolutely essential.
• Ethical decision should be based on ethical principles
and codes rather than on emotions, thoughts, fixed
policies.
ETHICAL DILEMMA

• Ethical dilemma: is a situation with

uncertainty about what is right to do from a moral
or ethical perspective.
• For example, the manager of a company may be put in a
position in which he must choose between the interests of
his employees and his investors. Give more profits or
increase the salary?
ETHICAL DILEMMA DEFINED

• Example 2 :

• A new technology is being launched which is good for the company

as well as the customers. But, if this is brought into use, a lesser man-
power is required for the organization.
• The entrepreneur is now in an ethical dilemma whether he wants to
better his clients with good services or be loyal to his employees who
have helped the company grow.
• The unpleasantness of the situation arises when neither the clients nor
the employees deserve to suffer and it is the entrepreneur’s call to
take.
THE FRAMEWORK OVERVIEW

• Step One: Describe the problem

• Step Two: Determine whether there is an ethical issue or an ethical dilemma
• Step Three: Identify and rank the key values and principles
• Step Four: Gather your information
• Step Five: Review any applicable Code of Ethics
• Step Six: Determine the options
• Step Seven: Select a course of action
• Step Eight: Put your plan into action.
• Step Nine: Evaluate the results.
STEP ONE: DESCRIBE THE
PROBLEM

• You must first describe the problem and ensure

that it’s actually a moral dilemma that needs to
follow an ethical model.
• Consider the nature of the problem and any signs
of the problem and ensure that you’re attempting
to solve the issue and not just it’s signs
• Circumstances affect the problem definition (for
whom does the problem exist? What is the
surroundings?)
STEP TWO: DETERMINE WHETHER
THERE IS AN ETHICAL DILEMMA

• Dilemma becomes ethical when the good or bad

options seem to have a moral component
(e.g. privacy vs. avoidance of harm,
freedom vs. safety).
• Terms of an ethical dilemma must be ethical in nature,
not legal.
• If something is a law, you then have the ethical choice
to follow the law or not.
STEP THREE: IDENTIFY AND RANK
THE KEY VALUES AND PRINCIPLES

• What reasons can you provide for prioritizing

one competing value over another?
• Understand that a decision to a dilemma
which goes against an individual’s personal
set of values has very little chance of success.
STEP FOUR: GATHER YOUR
INFORMATION

• Do you have all the known facts?

• Do you understand the applicable laws or legalities?
• Do you have all relevant policies available to review?
• Are you clear about the individual’s views and personal
values?
* Don’t hesitate to seek out consultation.
STEP FIVE: REVIEW ANY
APPLICABLE CODE OF ETHICS

• Look for the following:

-- mission statement
-- values base of the organization
-- ethical principles to guide practice
-- ethical standards
• Codes can be revised or updated as needed
STEP SIX: DETERMINE THE
OPTIONS

• List all possible actionable options

• Weigh the cost/benefits of each option
• Seek out additional points of view
STEP SEVEN: SELECT A COURSE
OF ACTION

1) Remove the least desirable option.

2) Remove any which you can not put into
action.
3) Remove any options which break the values
systems of those affected.
4) Recognize that your final choice will be
impacted by your personal values.
STEP EIGHT: PUT YOUR PLAN
INTO ACTION

• Think about the outcomes with a sense that

you have truly approached this ethical
dilemma with the best of intentions and to
the best of your ability.
STEP NINE: EVALUATE THE
RESULTS

• Evaluate the cost for each person involved

(client, family members, co-workers,
agency, etc.)
• Consider submitting your most difficult
cases to an ethics review board for
feedback.