GEETHO01X

Ethical Decisions
Topic Outline
 
Ethical decision making
Types of decisions
Knowledge of outcome
Characteristics of good decision making
Problems faced by a management in the decision making process
Ethical decision making framework
Factors affecting decision making
Steps in decision making
Ethical dilemmas in organization
Ethical guidelines
Tools for ethical management
College of Business Administration
GEETH01X – Business Ethics
 Ethical Decision Making
College of Business Administration
GEETH01X – Business Ethics
 The following should be kept
Ethical decision- in mind while making ethical
making is a decisions:
method of • Identify and eliminate unethical
evaluating and options in the alternatives.
choosing the • Identify complex, ambiguous
alternatives and incomplete facts and try to
avoid them.
decided by ethics • Determine the ethical dilemma
management. and resolve it.
• Select the best ethical alternative.

College of Business Administration

GEETH01X – Business Ethics
• Business strategies are an
important part of
businesses, firms and
industries. To make a
business strategy, all
businesses firms and
industries need to develop
a strategic plan once a
year.
College of Business Administration
GEETH01X – Business Ethics
Business strategies are used for the
following purposes:
• They help determine the products and
services that an organization needs to
provide.
• They help determine the various
industries in which the organization
competes.
• They help identify the competitors,
suppliers and customers of the
organization.
• They help analyze the long-term goals of
the firm.
SIMON DECISION-MAKING MODEL

Steps in the decision-

making model:
Three phases of the model:
1. Identifying the
problem.
2. Generating
alternative solution.
3. Selecting a solution.
Herbert A. Simon
4. Implementing and
evaluating the
solution.

College of Business Administration

GEETH01X – Business Ethics
 “
THE INTELLIGENCE
PHASE
Problem searching: In this phase, the difference
A decision-maker gets to between the expected and real result is obtained
learn about the after making a decision that helps recognize the
environment where a problem. The formula for problem searching is as
problem occurs. The
follows:
scanning of environment
may be continuous or Deviation = Expected - Actual
irregular.
Problem formulation: In this phase, the
problem is identified properly to avoid the
risk of solving the wrong problem. Here, the
problem is clearly stated and well understood.

College of Business Administration

GEETH01X – Business Ethics
 THE DESIGN PHASE
In this phase, various
alternatives are developed in
order to get the best possible
alternative to solve a particular
problem. The decision-maker
makes a detailed analysis of
each and every alternative
before taking the final decision.
College of Business Administration
GEETH01X – Business Ethics
THE CHOICE PHASE
In this phase, an alternative, which
was developed in the design phase,
is selected. This selection helps the
decision-maker in taking
appropriate decisions. After
making a decision, the decision
is implemented. However, at any
phase, the decision-maker may
return to the previous phase.
 Types of Decisions
Organizational decisions involve selecting
the best alternative from amongst the
available alternatives. Organizational
decisions are classified into the following
categories:

1. Strategic planning decisions

• These are the decisions in which a
decision-maker develops objectives and
allocates resources for achieving these
objectives.
2. Management control decisions
• These are the decisions taken by the management
control-level managers, who are at the middle
level of the management hierarchy in an
organization.
College of Business Administration
GEETH01X – Business Ethics
3. Operational control decisions
• These are the decisions that deal with the day-to-day problems that affect the operation of
an organization.

4. Structured decisions
• These are the decisions that are well defined and require application and implementation of
some specified procedure or decision rule in order to reach a decision.

5. Unstructured decisions
• These are the decisions which are not well defined and have no pre-specified procedure or
decision rule.

6. Semi-structured decisions
• These are the decisions that are. These decisions fall somewhere between neither
structured nor unstructuredthe structured and unstructured decisions.

College of Business Administration

GEETH01X – Business Ethics
 KNOWLEDGE OF OUTCOMES

1. Under certainty 2. Under risk 3. Under uncertainty

• Decision-making under
certainty takes place when
the outcome of each
alternative is fully
known and there is only
one outcome for each
alternative.
• Decision-making under
• Decision-making under risk
occurs when there is a
possibility of multiple
outcomes of each alternative,
and a probability of occurrence
can be attached to each
outcome.
uncertainty takes place
when there are many
outcomes for each
alternative and the
probabilities of
occurrence of the
alternatives are not
known. Decision making
under uncertainty arises
when different people in
an organization take
decisions by applying
different decision rules.

College of Business Administration

GEETH01X – Business Ethics
  Decision problems should be grabbed by the
management both in space and time. This
means the decision problem should be
analyzed thoroughly by the
management.
CHARACTERISTICS  The decision made by the decision-maker
OF GOOD should keep him in a state of calm.
DECISION-MAKING
 Decisions made by the management should
contribute to harmony in the organization.
 Self-interest and self-orientation should
not come in the way of decision-making
College of Business Administration
GEETH01X – Business Ethics
Problems faced by a management in
the decision-making process
• Insufficient information
It refers to the lack of information which affects the
performance and quality of the management in an
organization.

• Insufficient knowledge
It refers to the difference between available knowledge
and the required information for the management to take a
decision.

• Lack of time
It refers to the pressure on the management to make
decisions. If time is limited, then the management needs to
take hasty decisions.
• Poor communications
It leads to the problem that arises due to improper
communication of information.

College of Business Administration

GEETH01X – Business Ethics
 ETHICAL DECISION-MAKING
FRAMEWORKS
1. Consequence-based
decision making
• A useful approach for
decision-making
managers.
• Beneficial for all the
persons who are affected
by this approach.
• Requires an appraisal of
the effects of decision-
making and forecasting
of outcomes.
College of Business Administration
GEETH01X – Business Ethics
2. Duty-based decision-making
• Based on categorical imperative
statement of Kant.
• This approach states that one
should do to others only that
which one would want done to
oneself.
• This approach focuses on the
people.
• It also considers ethics of duty.
3. Virtue-based decision
making
• This is where a person
thinks about the
appropriate virtue or good
in a particular decision,
such as honesty,
generosity and justice.
Factors Affecting Decision-Making
1. Programmed versus non-programmed decisions.
programmed decisions – are made in predictable circumstances and
managers have clear parameters and criteria.
Non-programmed decisions – are made in unique circumstances and
the results of such decisions are often unpredictable.

2. Information inputs.
It is very important to have adequate and accurate information about
the situation for decision-making; otherwise, the merit of the decision will
suffer.
College of Business Administration
GEETH01X – Business Ethics
3. Prejudice

• Prejudice and bias are introduced in our decisions by our perceptual

processes and may cause us to make ineffective decisions.

4. Cognitive constraints

• A human brain, which is the source of thinking, creativity and decision-

making, is limited in capacity in a number of ways.

5. Attitudes about risk and uncertainty

• These attitudes are developed in a person, partly due to certain

personal characteristics and partly due to organizational
characteristics.

College of Business Administration

GEETH01X – Business Ethics
 Steps in Decision-Making
•All decisions involve a series of
sequential steps that lead to a particular
result. These steps are generally followed
to make systematic, objective, analytical
and unemotional decisions and some
management scholars have called this
process a ‘rational decision-making
process’.

College of Business Administration

GEETH01X – Business Ethics
 1. Perception and diagnosis of the problem

2. Generation of alternate solutions

Steps in
decision- 3. Evaluation of alternatives and selecting a
course of action

making 4. Implementation of the decision

5. Monitoring feedback

College of Business Administration

GEETH01X – Business Ethics
 Ethical Dilemmas in
Organization
•Dilemma – is a situation where there is a difficult
choice between two or more options

•Ethical dilemma – is a moral problem with

potential right or wrong answers. It occurs in
business when a business has a decision to make
that weighs values and morals against profitability
and competitiveness.

College of Business Administration

GEETH01X – Business Ethics
 Downsizing of staff
Pollution control
Disposal of toxic waste
Examples of Depletion and allocation of scarce resources
ethical Product safety
dilemmas: Changes in law and technology
Employee rights
Discrimination against women and minorities

College of Business Administration

GEETH01X – Business Ethics
 How Can Business Resolve
Ethical Dilemmas?

Resolving ethical dilemmas requires honesty, the

ability to work cooperatively, respect for others,
pride in one’s work, willingness to learn,
dependability, responsibility for one’s actions,
integrity, and loyalty. It may help to respond to
the following questions when seeking a resolution:
• Who will be helped by what you do?
• Who will be hurt?
• What are the benefits and problems of such a decision?
• Will the decision survive the test of time?

College of Business Administration

GEETH01X – Business Ethics
 Primary reasons for bad
decisions by good managers
• No co-relation between Managerial Ability and Ethics.
• Greed
• Short term focus
• Inadequate moral development
• Misplaced loyalty
• Peer pressure
• Company’s policies

College of Business Administration

GEETH01X – Business Ethics
Ethical Guidelines

Tell the Truth: To build and

Obeying the law: Obedience
maintain long-term, trusting
to the law, preferably both the
and win-win relationships
letter and spirit of the law.
with relevant stockholders.

Uphold human dignity: Giving

Adhere to the golden rule:
due importance to the
“Do unto others as you would
element of human dignity and
have others do unto you”.
treating people with respect.

College of Business Administration

GEETH01X – Business Ethics
 Premium Non-Nocere: (Above all, do not
harm)

Ethical Allow Room for participation: Soliciting the

participation of stakeholders rather than

Guidelines
paternalism. It emphasizes the significance
of learning about the needs of stakeholders.

Always Act When You Have Responsibility:

Managers have the responsibility of taking
action whenever they have the capacity or
adequate resources to do so.

College of Business Administration

GEETH01X – Business Ethics
Tools for Ethical Management

Top Management Ethics

Code of Ethics
Commitment Committees

Ethics Audits Ethics Training Ethics Hotline

College of Business Administration

GEETH01X – Business Ethics
Reference/s:
• Sergote, Jessie F., 2019, Essentials of Business Ethics, Unlimited Books
Library Services

College of Business Administration

GEETH01X – Business Ethics
 Thank you End of discussion

QUESTIONS?
for listening

College of Business Administration

GEETH01X – Business Ethics