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08. making ethical decisions in business
- 1. Making Ethical Decisions inBusiness Preparedby: Hamdoon Hussain B.Sc (Economics), MBA HRM. Karachi University Business School (K.U.B.S)
- 2. Key Objectives ā¢ Whatis Ethics? ā¢ What are Ethical Decisions? ā¢ Classification of Business Decisions ā¢ Ethical Decision Making Styles ā¢ Framework for Ethical Decision Making in Business oEthical Issue Intensity oIndividual Factors oOrganizational Factors oOpportunity oBusiness Ethics Evaluations and Intentions ā¢ Using Framework to improve Ethical Decisions ā¢ Influence of Leadership Styles on Ethical Decisions
- 3. What is Ethics? ā¢Ethics provides a set of standards for behavior that helps us decide how we have to act in a range of situations. ā¢ In a sense, we can say that ethics is all about, a- making choices b- providing reasons why we should make these choices.
- 4. Classification of BusinessDecisions ā¢ Ethical but Illegal ā¢ Ethical and Legal ā¢ Unethical but Legal ā¢ Unethical and Illegal
- 5. Classification of BusinessDecisions 1)Ethical but Illegal: ā¢ It refers to providing rock-bottom prices only to distributors in underserved areas. ā¢ Collaborating with other medical clinics to guarantee low prices in low-income countries. 2) Ethical and Legal: Producing top quality products ā¢ Rewarding integrity ā¢ Providing employee benefits ā¢ Contributing to community ā¢ Establishing recycling programs
- 6. Classification of BusinessDecisions 3) Unethical but Legal: ā¢ Promoting PG rated movies to young teens ā¢ Producing products that you know will break before their time 4) Unethical and Illegal: ā¢ Embezzling money ā¢ Engaging in sexual harassment ā¢ Practicing collusion with competitors ā¢ Encouraging fraudulent accounting
- 7. What is EthicalDecision Making? ā¢ Ethical decision-making refers to the process of evaluating and choosing among alternatives in a manner consistent with ethical principles. ā¢ In making ethical decisions, it is necessary to perceive and eliminate unethical options and select the best ethical alternative.
- 8. The process ofmaking ethical decisions requires: 1- Commitment: The desire to do the right thing regardless of the cost. 2- Consciousness: The awareness to act consistently and apply moral convictions to daily behavior. 3- Competency: The ability to collect and evaluate information, develop alternatives, and foresee potential consequences and risks.
- 9. Ethical Decision MakingStyles Some of the decision making styles are as follows: ā¢ Individualism ā¢ Altruism ā¢ Pragmatism ā¢ Idealism
- 11. ā¢ Individualism: Individualismin decision-making entails making a choice that best serves your long-term self-interest. In this decision making style, self is the source of all actions. ā¢ Altruism: Altruism in decision making is concerned with other people. In this style, decision makers relinquished their own security and self for others.
- 12. ā¢ Pragmatism: Pragmaticdecisions are adjusted and viewed according to the state of the world. The decision makers are concerned with situation at hand, not with the self or other. ā¢ Idealism: This style is driven by principles, rules and values. Their decisions does not change with the circumstances. Any reason, circumstances or situations does not change those decisions.
- 13. Framework for Ethical DecisionMaking in Business
- 15. The Ethical Frameworkis a set of principles and values that provide a solid foundation for safe and ethical practice within the organizations. 1- Ethical Issue Intensity 2- Individual Factors 3- Organizational Factors 4- Opportunity Framework for Ethical Decision Making in Business
- 16. Framework for EthicalDecision Making in Business 1- Ethical Issue Intensity: Ethical issue intensity can be defined as the importance of an ethical issue in the eyes of the individual or organization. Administrative authority contribute significantly to intensity, which can influenced by managementās use of rewards and punishments or corporate policies.
- 17. Framework for EthicalDecision Making in Business 2- Individual Factors To resolve ethical issues people, people often base their decisions on their own principles of right or wrong, which they learn through the socialization process. a- Gender b- Age c- Education d- Locus of control
- 18. a- Gender: womenseem to be more sensitive to sensitive scenarios and less tolerant of unethical actions. b- Education: the more education or work experience that one has, the better he or she is at ethical decision making. c- Age: we believed that age was positively correlated with ethical decision making. In other words, the older you are, the more ethical you are.
- 19. Framework for EthicalDecision Making in Business d- Locus of control: It relates to individual differences in relation to a generalized belief. Locus of control is further sub divided as: a- External control: They believe that the events in their lives are due to uncontrollable forces. Like luck and chance etc. b- Internal control: They believe that they control the events in their lives by their own effort and skill.
- 20. Framework for EthicalDecision Making in Business 3- Organizational Factors: Organizationās values often have greater influence on decisions than a personās own values. The more ethical employees perceive an organizationās culture to be, the less likely they are to make unethical decisions. 4- Opportunity: Opportunity describes the conditions in an organization that limit or permit ethical or unethical behavior. The absence of punishment essentially provides an opportunity for unethical behavior because it allows individuals to engage in such behavior without fear of consequence.
- 21. Framework for EthicalDecision Making in Business Business Ethics Evaluations and Intentions ā¢ The results of an ethical decision are often uncertain; no one can always tell us whether we have made the right decision. ā¢ An individualās intentions and the final decision regarding what action he or she will take are the last steps in the ethical decision making process. ā¢ When the individualās intentions and behavior are inconsistent with his or her ethical judgment, the person may feel guilty.
- 22. Framework for EthicalDecision Making in Business Ethical or Unethical Behavior? ā¢ Guilt or uneasiness is the first sign that an unethical decision has occurred. The next step is changing oneās behavior to reduce such feelings. ā¢ This change can reflect a personās values shifting to fit the decision or the person changing his or her decision type the next time a similar situation occurs. Finally, one can eliminate some of the situational factors by quitting.
- 23. Using Ethical DecisionMaking Framework to Improve Ethical Decisions ā¢ The Ethical Decision making framework presented cannot tell you if a business decision is ethical or unethical. The Framework is not a guide for how to make decisions but is intended to provide you with insight and knowledge about typical ethical decision making processes in business organizations.
- 24. Using Ethical DecisionMaking Framework to Improve Ethical Decisions ā¢ It is unlikely that an organizationās ethical problem will be solved strictly by having a thorough knowledge about how ethical decisions are made. ā¢ We propose that gaining and understanding of typical ethical decision making in business organizations will reveal several ways that such decision making could be improved.
- 25. Using Ethical DecisionMaking Framework to Improve Ethical Decisions ā¢ One important conclusion that should be taken from our framework is that ethical decision making within an organization does not rely strictly on the personal values and morals of individuals.
- 26. Influence of LeadershipStyle in Ethical Decisions
- 27. Influence of LeadershipStyle in Ethical Decisions ā¢ Leadership styles influence many aspects of organizational behavior, including employeesā acceptance of and adherence to organizational norms and values. ā¢ Ethical leaders need both knowledge and experience to make decisions.
- 28. Influence of LeadershipStyle in Ethical Decisions ā¢ Strong ethical leaders have right kind of moral integrity, such integrity is transparent, or in other words, they do not publicize othersā issues and keep them private. ā¢ The ethical leader creates a balance that all the people should be involved in decision making and are working as a team.
- 29. Influence of LeadershipStyle in Ethical Decisions ā¢ Such a person is always concerned with stakeholders as well as lowest paid employee. He maintains a balance to give fair chance of speaking to all the people in the organization. ā¢ Experience shows that no leader can always be right or judge everyone or even the stakeholders correctly. Similarly, this is also not mandatory that all the decisions taken by those leaders will be entirely correct.
- 30.