Ch:4 Ethical Decision – making in Business:

• Ethical Models that Guide Decision making,

• Ethical Models that Guide Decision making ,Which Approach to use,
• Ethical Decision Marking with Cross – holder conflicts and competition,
• Applying Moral Philosophy to Ethical Decision Making,
• Kohlberg’s Model of Cognitive Moral Development,
• Influences on Ethical Decision Making,
• Personal values and Ethical Decision Marking
Ethical Models that Guide Decision making
 Introduction
• Ethical decision-making models provide a suggested mechanism for critical thinking and
planning for the resolution of ethical dilemmas.
• An ethical decision-making model is a tool that can be used by business providers to help
develop the ability to think through an ethical dilemma and arrive at an ethical decision.
• A number of models are presented in the ethics literature, most of which are similar in
design and content.
• The goal of each model is to provide a framework for making the best decision in a
particular situation.
• Most of these models use principle-based reasoning, an approach derived from the work
of philosophers .
•  These models consider ethical principles, obligations and values. They advocate the use of
resources such as published evidence, clinical data and consulting colleagues in dentistry.
• The process of decision-making is dynamic, evolving as additional information comes to
light.
 Six-Step Decision-making Model

1. Identify the Ethical Dilemma or Problem. 

Step 1 is the most critical step in the process as awareness of an issue must
occur to move through the steps. Many situations are simply never perceived to
be ethical problems or dilemmas. Once the problem has been recognized, the
decision maker must clearly and succinctly state the ethical question,
considering all pertinent aspects of the problem. If the ethical question does not
place principles in conflict, it is a simple matter of right and wrong and no
process of ethical decision-making is required. Proceeding to step 2 is not
necessary if a clear determination of right or wrong has been made.
 Six-Step Decision-making Model

2. Collect Information. The decision maker must gather information to

make an informed decision. This may be factual information about the
situation as it developed, and it may come from more than one source.
Information regarding the values of the parties involved, including those of
the health care provider, is needed.
 Six-Step Decision-making Model

3. State the Options. After gathering all the necessary information, one

may proceed to the third step, which involves brainstorming to identify as
many alternatives or options as possible. Often the best decision is not the
first one that comes to mind. Also, a tendency exists to think that a
question has only one answer. This step forces us to stop and view the
situation from all angles to identify what other people might see as
alternative answers to the problem. An enlightened and open mind is
required to recognize often more than one answer to a problem exists .
 Six-Step Decision-making Model
4. Apply the Ethical Principles to the Options. Focus on the ethical principles
(autonomy, beneficence, non-maleficence, justice, veracity) and ethical values
and concepts (paternalism, confidentiality, and informed consent). In general,
one or more of these will be involved in any ethical decision.

State how each alternative will affect the ethical principle or rule by developing
a list of pros and cons. first, show alternatives that protect or hold inviolate each
principle or value. Second , state how an alternative could violate the principle
or value. Do this for each option. This process will enable you to see which
ethical principles are in conflict in this situation. Refer to the appropriate code of
ethics for guidance. Often discussing the issue with a trusted colleague can help
one gain a better-rounded appraisal of the situation and subsequent solutions.
 Six-Step Decision-making Model

5. Make the Decision. When each alternative has been clearly outlined in

terms of pros and cons, a reasonable framework is apparent for making a
decision. Each option must then be considered in turn, with attention to
how many pros and cons would attend each decision. The seriousness of
the cons must then be weighed by the organization, remembering that, as
a professional, he or she is obliged to put the customers interest first.
Simply by examining the options in a careful way, the best solution to an
ethical dilemma frequently becomes obvious. Before implementing the
decision, the practitioner should replay each principle against the decision
to see if the decision holds up to this evaluation.
 Six-Step Decision-making Model

6. Implement the Decision. The final step involves acting on the decision

that has been made. The decision process will have been futile if no action
is taken. Many appropriate decisions are never implemented because this
step is omitted. Remember that no action represents tacit approval of a
situation.
Ethical Models that Guide Decision making ,Which Approach to use

• Introduction:
• Ethics provides a set of standards for behavior that helps us decide how we
ought to act in a range of situations. In a sense, we can say that ethics is all
about making choices, and about providing reasons why we should make
these choices.
• Ethics is sometimes conflated or confused with other ways of making choices,
including religion, law or morality. Many religions promote ethical decision-
making but do not always address the full range of ethical choices that we
face. Religions may also advocate or prohibit certain behaviors which may not
be considered the proper domain of ethics.
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• A good system of law should be ethical, but the law establishes precedent in trying
to dictate universal guidelines, and is thus not able to respond to individual
contexts.
• Law may have a difficult time designing or enforcing standards in some important
areas, and may be slow to address new problems.
• Both law and ethics deal with questions of how we should live together with others,
but ethics is sometimes also thought to apply to how individuals act even when
others are not involved. 
• Finally, many people use the terms morality and ethics interchangeably.  Others
reserve morality for the state of virtue while seeing ethics as a code that enables
morality.
• Another way to think about the relationship between ethics and morality is to see
ethics as providing a rational basis for morality, that is, ethics provides good reasons
for why something is moral.
 TRADITIONAL ARRANGEMENT OF THE FIELD OF
ETHICS
• There are many systems of ethics, and numerous ways to think about right and
wrong actions or good and bad character.  The field of ethics is traditionally
divided into three areas:
1.) meta-ethics, which deals with the nature of the right or the good, as well as
the nature and justification of ethical claims;
2.) normative ethics, which deals with the standards and principles used to
determine whether something is right or good;
3.) applied ethics, which deals with the actual application of ethical principles to
a particular situation.  While it is helpful to approach the field of ethics in this
order, we might keep in mind that this somewhat “top down” approach does
not exhaust the study of ethics. Our experience with applying particular ethical
standards or principles can inform our understanding of how good these
standard or principles are.
 Three Broad Types of Ethical Theory:

• Ethical theories are often broadly divided into three types:

• i) Consequentialist theories, which are primarily concerned with the ethical
consequences of particular actions;
• ii) Non-consequentialist theories, which tend to be broadly concerned with the
intentions of the person making ethical decisions about particular actions; and
• iii) Agent-centered theories, which, unlike consequentialist and non-
consequentialist theories, are more concerned with the overall ethical status
of individuals, or agents, and are less concerned to identify the morality of
particular actions.
• Each of these three broad categories contains varieties of approaches to
ethics, some of which share characteristics across the categories.
 Three Broad Types of Ethical Theory:

• i) Consequentialist theories:- The Utilitarian Approach

The Egoistic Approach
The Common Good Approach
• ii) Non-consequentialist theories: The Duty-Based Approach
The Rights Approach
The Fairness or Justice Approach
The Divine Command Approach
iii) Agent-Centered theories: The Virtue Approach
The Feminist Approach
 1. Consequentialist theories
1.The Utilitarian Approach:
• The Utilitarian Approach assesses an action in terms of its consequences or
outcomes; i.e., the net benefits and costs to all stakeholders on an individual
level. It strives to achieve the greatest good for the greatest number while
creating the least amount of harm or preventing the greatest amount of
suffering.  It holds that every entity’s interests should be considered equally
when making the decision, and this includes those of other species since they
also are capable of suffering.
• So for any set of options it would view the most ethical option as the one
which produces the best balance of benefits over harm for the most
stakeholders. Outcomes may be quantified in such terms as contentment and
suffering, the relative value of individual preferences, monetary gain or loss, or
the short-term and long-term effects of an action.
 Continue….

• Utilitarian believe that the purpose of morality is to make life better by increasing the amount of
good things (such as pleasure and happiness) in the world and decreasing the amount of bad things
(such as pain and unhappiness).
• They reject moral codes or systems that consist of commands or taboos that are based on customs,
traditions, or orders given by leaders or supernatural beings. I
• instead, utilitarians think that what makes a morality be true or justifiable is its positive contribution
to human (and perhaps non-human) beings.

• Both Bentham and Mill suggested that ethical actions are those that provide the greatest
balance of good over evil. 
• To analyze an issue using the utilitarian approach, we first identify the various courses of action
available to us.
• Second, we ask who will be affected by each action and what benefits or harms will be derived
from each.
• And third, we choose the action that will produce the greatest benefits and the least harm.
• The ethical action is the one that provides the greatest good for the greatest number
2. The Egoistic Approach:

• Ethical egoism is the normative ethical position that moral agents ought to act
in their own self-interest. It differs from psychological egoism, which claims
that people can only act in their self-interest.
• Ethical egoism also differs from rational egoism, which holds that it is rational
to act in one's self-interest.
• This approach is about self interest,it will produce greatest amount of good for
him or herself.
• This approach shows selfishness about self interest, self respect and at a same
time this approach is not thinking the same for other people.
• Ex: different advertisement ,their main motive is to get maximum profit for
their company & they are not thinking about other people.
3. The Common Good Approach:

The common good approach refers to actions that are taken or policies that are
put into place in order to benefit not only a certain group of individuals, but the
society as a whole. It is seen as the best decision that will bring positive and
beneficial results.

Examples of particular common goods or parts of the common good include an

accessible and affordable public health care system, an effective system of public
safety and security, peace among the nations of the world, a just legal and
political system, an unpolluted natural environment, and a flourishing economic
system ...
• This approach to ethics assumes a society comprising individuals whose own good
is inextricably linked to the good of the community. Community members are
bound by the pursuit of common values and goals.
• The common good is a notion that originated more than 2,000 years ago in the
writings of Plato, Aristotle, and Cicero. More recently, contemporary ethicist John
Rawls defined the common good as “certain general conditions that are…equally
to everyone’s advantage.”
• In this approach, we focus on ensuring that the social policies, social systems,
institutions, and environments on which we depend are beneficial to all. Examples
of goods common to all include affordable health care, effective public safety,
peace among nations, a just legal system, and an unpolluted environment. Appeals
to the common good urge us to view ourselves as members of the same
community, reflecting on broad questions concerning the kind of society we want
to become and how we are to achieve that society. While respecting and valuing
the freedom of individuals to pursue their own goals, the common-good approach
challenges us also to recognize and further those goals we share in common.
 2.Non-consequentialist theories:
1. The Duty-Based Approach:
Duty based ethics is a concept in moral philosophy, the study of human values we
use for deciding rights and wrongs and the choices people make in pursuing or
ignoring these values. Duty theory holds that a person should adhere strictly to a
set of moral rules that establish their personal value of what is right and what is
wrong. Duty based ethics can be summarized succinctly as Do the right
thing, along with it's converse, Don't do the wrong thing.
Duty based ethics has a certain fundamental appeal. This is, after all, how we tend
to teach our children: lying is wrong, stealing is wrong, hurting other people is
wrong, so don't do these things. However, living life by strict adherence to this
philosophy, whether your personal life or your workplace choices or both, can be
quite challenging. If your moral rule is Don't lie because lying is wrong, and if doing
the right thing means always telling the truth, then a little white lie is never
acceptable, no matter how convenient it may be.
• In clear contrast to duty based ethics, there is the common expression that The
ends justifies the means. This encompasses the belief that one wants to arrive
at the right outcome. That is, we want an outcome that is in line with one's
values regarding right and wrong and what is important in the world. If getting
a good outcome means taking a few less-than-noble steps along the way, some
moral shortcuts, so to speak, then so be it.
• Someone committed to duty based ethics does not allow themselves the
option of deciding that the end justifies the means.
2. The Rights Approach:
• The second important approach to ethics has its roots in the philosophy of the
18th-century thinker Immanuel Kant and others like him, who focused on
the individual’s right to choose for herself or himself.

• According to these philosophers, what makes human beings different from

mere things is that people have dignity based on their ability to choose freely
what they will do with their lives, and they have a fundamental moral right to
have these choices respected.
• People are not objects to be manipulated; it is a violation of human dignity to
use people in ways they do not freely choose. Of course, many different, but
related, rights exist besides this basic one. These other rights (an incomplete
list below) can be thought of as different aspects of the basic right to be
treated as we choose.
Continue…
• The right to the truth: We have a right to be told the truth and to be informed
about matters that significantly affect our choices.
• The right of privacy: We have the right to do, believe, and say whatever we
choose in our personal lives so long as we do not violate the rights of others.
• The right not to be injured: We have the right not to be harmed or injured
unless we freely and knowingly do something to deserve punishment or we
freely and knowingly choose to risk such injuries.
• The right to what is agreed: We have a right to what has been promised by
those with whom we have freely entered into a contract or agreement.
• In deciding whether an action is moral or immoral using this second approach,
then, we must ask, Does the action respect the moral rights of everyone?
Actions are wrong to the extent that they violate the rights of individuals; the
more serious the violation, the more wrongful the action.
3. The Fairness or Justice Approach:

• The fairness approach assumes that people should be treated equally regardless of
their station in life, that is, they should not be subject to discrimination.

• The fairness or justice approach to ethics has its roots in the teachings of the ancient
Greek philosopher Aristotle, who said that “equals should be treated equally and
unequals unequally.”
• The basic moral question in this approach is: How fair is an action? Does it treat
everyone in the same way, or does it show favoritism and discrimination? Favoritism
gives benefits to some people without a justifiable reason for singling them out;
discrimination imposes burdens on people who are no different from those on whom
burdens are not imposed. Both favoritism and discrimination are unjust and wrong.
4.The Divine Command Approach:
• Philosophers both past and present have sought to defend theories of ethics
 that are grounded in a theistic framework.
• Roughly, Divine Command Theory is the view that morality is somehow
dependent upon God, and that moral obligation consists in obedience to God’s
commands.
• Divine Command Theory includes the claim that morality is ultimately based
on the commands or character of God, and that the morally right action is the
one that God commands or requires.
• The specific content of these divine commands varies according to the
particular religion and the particular views of the individual divine command
theorist, but all versions of the theory hold in common the claim that morality
and moral obligations ultimately depend on God.
 3. Agent-Centered theories:

• 1. The Virtue Approach:

• The virtue approach describes an assumption that there are higher orders of goodness to which
man should aspire, and that only moral actions will help us achieve that higher level.
• Ethical problem solving involves accumulating all the facts surrounding an issue and considering
• what the possible solutions to the problem are, and what benefits and harms result from each
and whom they affect;
• what rights each of the parties to the problems has;
• what solutions to the problem treat all parties equally;
• what course of action promotes the common good;
• and, what actions develop moral virtues.
• The virtue approach to ethics assumes that there are certain ideals toward
which we should strive, which provide for the full development of our
humanity. These ideals are discovered through thoughtful reflection on what
kind of people we have the potential to become.
• Virtues are attitudes or character traits that enable us to be and to act in ways
that develop our highest potential. They enable us to pursue the ideals we
have adopted. Honesty, courage, compassion, generosity, fidelity, integrity,
fairness, self-control, and prudence are all examples of virtues. Virtues are
like habits; that is, once acquired, they become characteristic of a person.
Moreover, a person who has developed virtues will be naturally disposed to act
in ways consistent with moral principles. The virtuous person is the ethical
person.
• In dealing with an ethical problem using the virtue approach, we might ask,
What kind of person should I be? What will promote the development of
character within myself and my community?
2.The Feminist Approach:

• This approach gives the importance of women. whatever the decision taken by
company, should think about female workers, think about their rights, privacy
policy ,job hours etc.
• Feminist theories of ethics have enlarged the scope of business ethics both
philosophically and empirically. Feminist scholarship is also generating greater
awareness of how businesses treat, nurture, and represent the voices and
concerns of diverse segments of society, including minority groups, women
and so on.
 Ethical Decision Making Models

• Sometimes, people consider understanding the obligations of public

relations professionals as a science. The ability to apply ethical reasoning
into a tapestry of various situations, however, is truly an art. In an attempt
to address this, many scholars have proposed ethical decision-making
processes, based on ethical frameworks previously addressed. The following
are three popular models that are designed specifically for professionals to
understand how to apply their ethical commitment in action.
 Bowen's Model for Strategic Decision
Making
• This model for ethical decision-making is specifically designed to help
with issues management.
• In other words, it helps professionals make correct decisions in a
management process in order to avoid ethical problems and crises.
• In this model, Bowen suggests first ensuring that the professional is
autonomous in the decision making process.
• In other words, it is important in this model that the public relations
professional is free of outside influences that may change what choices they
would make. Then the model guides the professional into making a decision
based on considerations for the key duties to the client and publics.
 Continue…
• In making the decision, professionals are encouraged to consider whether
others in similar situations could be obligated to perform the same way,
whether they would still make the same decision if they were on the receiving
end of the choice, and whether similar situations like this have been faced
before.
• After making the decision, there is also guidance on how to communicate the
choice. Questions that a professional should consider include “am I doing the
right thing?” and “am I proceeding with a morally good will?”
 TARES Ethical Persuasion
• Often, public relations professionals are communicating messages designed to
influence values, opinions, beliefs and behaviors. When using persuasive
communication, there are certain ethical obligations that the communicator
holds. The TARES model is a guide for this kind of communication. TARES,
suggests using the following acronym as a guide:
• “Truthfulness (of the message)
• Authenticity (of the persuader),
• Respect (for the persuader),
• Equity (of the persuasive appeal) and
• Social Responsibility (for the common good).” In other words, the public relations
professional needs to make sure their communication aligns with each of these
five areas prior to using it.
 The Potter Box: Making the Right Decisions

• Ralph Potter Jr.,a professor of social ethics at Harvard Divinity School, created
the Potter Box to provide guidelines in helping people with ethical decision
making. It focuses on four dimensions of ethical reasoning that include facts,
values, principles, and loyalties. In that order, the tool offers simple steps to
reason through ethical dilemmas and make a justified decision. Here’s how it
works:
• Step One – Look at the Facts: What do you know to be true about this situation?
• Step Two – Examine Values: What do you value most? By being clear in what values are
important to you, you have a solid way to evaluate potential actions.
• Step Three – Examine Principles: By looking at your values through the lens of a different
system of ethics, you can develop a range of possible actions. Some examples of principles
include (but are not limited to):
• Aristotle’s Doctrine of the Mean
• Kant’s Categorical Imperative
• Mill’s Principle of Utility
• Step Four – Determine Loyalties: Who or what are you loyal to in your situation? Establishing
this will clarify your thinking and help set a clear direction for how to act accordingly.
• These steps can be repeated as many times as needed to ensure alignment in the four areas.
• Once a decision has been reached, all there is left to do is determine how to carry it out in a
manner that is both effective and respectful. While the process above is very high level, when
in doubt, check it out. The Potter Box might just be the golden ticket to keeping those high
standards of ethical decision making intact.
 Potter’s Box for Decision Making
• This is perhaps one of the most simple but often employed models for making
ethical decisions. This model was developed by social ethics professor, Ralph
Potter and is often used in a variety of professions.
• This process guides individuals through a four step process involving
• 1) examining the issue at play in the situation;
• 2) identifying values that should be employed,
• 3) recognizing guiding principles and
• 4) ascertaining loyalties that should be employed. This model is one that rests
on professionals understanding principles, values and loyalties in order to be
able to navigate the ethical choice correctly.
 Kohlberg's Stages of Moral Development
• Level 1 - Pre-conventional morality
• At the pre-conventional level (most nine-year-olds and younger, some over nine),
we don’t have a personal code of morality. Instead, our moral code is shaped by the
standards of adults and the consequences of following or breaking their rules.
• Authority is outside the individual reasoning is based on the physical consequences
of actions.
• Stage 1. Obedience and Punishment Orientation. The child/individual is good in
order to avoid being punished. If a person is punished, they must have done wrong.
• • Stage 2. Individualism and Exchange. At this stage, children recognize that there is
not just one right view that is handed down by the authorities. Different individuals
have different viewpoints.
 Kohlberg's Stages of Moral Development
• Level 2 - Conventional morality
• At the conventional level (most adolescents and adults), we begin to internalize
the moral standards of valued adult role models.
• Authority is internalized but not questioned, and reasoning is based on the
norms of the group to which the person belongs
• Stage 3. Good Interpersonal Relationships. The child/individual is good in order
to be seen as being a good person by others. Therefore, answers relate to the
approval of others.
• • Stage 4. Maintaining the Social Order. The child/individual becomes aware of
the wider rules of society, so judgments concern obeying the rules in order to
uphold the law and to avoid guilt.
 Kohlberg's Stages of Moral Development

• Level 3 - Post-conventional morality

• Individual judgment is based on self-chosen principles, and moral reasoning is
based on individual rights and justice. According to Kohlberg this level of moral
reasoning is as far as most people get.
• Only 10-15% are capable of the kind of abstract thinking necessary for stage 5 or
6 (post-conventional morality). That is to say, most people take their moral views
from those around them and only a minority think through ethical principles for
themselves.
Stage 5. Social Contract and Individual Rights. The child/individual becomes
aware that while rules/laws might exist for the good of the greatest number,
there are times when they will work against the interest of particular
individuals. 
• The issues are not always clear-cut. For example, in Heinz’s dilemma, the
protection of life is more important than breaking the law against stealing.
Stage 6. Universal Principles. People at this stage have developed their own set
of moral guidelines which may or may not fit the law. The principles apply to
everyone.
• E.g., human rights, justice, and equality. The person will be prepared to act to
defend these principles even if it means going against the rest of society in
the process and having to pay the consequences of disapproval and or
imprisonment. Kohlberg doubted few people reached this stage.
 Factors influencing Business Ethics
• 1. Personal Code of Ethics
• A man’s personal code of ethics that is what one considers moral is the
foremost responsible factor influencing his behavior.
• 2. Legislation
• It is already stated that the Government will intervene and enact laws only
when the businessmen become too unethical and selfish and totally ignore
their responsibility to the society. No society can tolerate such misbehavior
continuously. It will certainly exert pressure on the Government and the
Government consequently has no other alternative to prohibit such unhealthy
behavior of the businessmen.
 Continue….
• 3. Government Rules and Regulations
• Laws support Government regulations regarding the working conditions,
product safety, statutory warning etc. These provide some guidelines to the
business managers in determining what are acceptable or recognized
standards and practices.
• 4. Ethical Code of the Company
• When a company grows larger, its standard of ethical conduct tends to rise.
Any unethical behavior or conduct on the part of the company shall endanger
its established reputation, public image and goodwill. Hence, most companies
are very cautious in this respect. They issue specific guidelines to their
subordinates regarding the dealings of the company.
 Factors influencing Business Ethics
5. Social Pressures
• Social forces and pressures have considerable influence on ethics in business. If a
company supplies sub-standard products and get involved in unethical conducts,
the consumers will become indifferent towards the company. Such refusals shall
exert a pressure on the company to act honestly and adhere strictly to the 
business ethics. Sometimes, the society itself may turn against a company.
6. Ethical Climate of the Industry
• Modern industry today is working in a more and more competitive atmosphere.
Hence only those firms, which strictly adhere to the ethical code, can retain its
position unaffected in its line of business. When other firms, in the same industry
are strictly adhering to the ethical standards, the firm in question should also
perform up to the level of others. If the company’s performance is below than
other companies, in the same industry, it cannot survive in the field in the long
run.
 Factors influencing Business Ethics
Individual factor:
1.Demographics(Gender, Age, Geography)
2.Moral Philosophy and values
3.Stages of moral Development
4.Motivation
5.Experience & Achievements
6.Goals(long term & short term)
7. Personality & Professionalism
8. Knowledge & education
 Factors influencing Business Ethics
organizational factor:
1.Organizational culture
2.Mission,vision,moral philosophy and values of organization
3.Peers,superiors, subordinates
4.Executive leadership
5.Rewards and recognition
6.Authority and power
7. Nature of work
 Personal values & Ethical Decision making
Trustworthiness
Honesty
• Communication
• truthfulness
• Sincerity
• Frankness
• In conduct- Integrity
• Reliability
- Avoid bad-faith excuses
- Avoid unwise commitments
- Avoid unclear commitments
Loyalty:
-Expectations from relationship
-Prioritizing loyalties
-Safeguarding confidential information
-Avoiding conflict of Interest
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Respect:
- Civility
- Courtesy
- Decency
• Responsibility:
- Accountability
- Pursuit of Excellent
- Diligence
- Perseverance
- Continuous Improvement
- Self-Restraint
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• Fairness
- Process
- Impartiality
- Equity
• Caring
- Care for others
- Care for self
• Citizenship:
- Fair dealing
- Be a part of community