04 ethical decision making
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Ethical Decision MakingLesson 04
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Lessons’ Objectives◦Identify ethical behavior and myths
of ethics◦Define ethical dilemma◦Familiar with resolving dilemma◦Identify process of Ethical decision
making
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Ethical Behavior◦Ethical behavior goes beyond the legal
requirements placed on a business, as it concerns discretionary decisions and behavior; in other words, what a business chooses to do, rather than what is forced to do.
◦Business ethics are relevant both to the conduct of an individual within an organization and to the conduct of the organization as a whole.
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Myths of Business Ethics◦It is a more religion than management◦Our employees are ethical so no need BE◦It is a discipline best led by philosophers◦It is a matter of good person preaching to
bad persons◦It is a new police-person in organization◦Ethics can't be managed◦Business ethics & CSR are same thing◦We obey to law so no need about ethics.
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Ethical Dilemma◦There are situation when there is not
simple choice between write or wrong
◦Ethical dilemma is complex judgments on the balance between the economic performance and the social performance of an organization. Have two interests - cannot purse one
without having negative impact on other Private Interest Conflicts with Corporate Business Interest Conflicts with Public.
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Ethical Dilemma◦E.g. New house purchase by employee
to reach office fast meanwhile he is considered to retrench.
When the both products are same quality to justify your high price touch drawback of competitor
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Cont...◦An ethical dilemma exists when one
is faced with having to make a choice among following alternatives: Significant value conflicts among
differing interests, Real alternatives that are equally
justifiable, and Significant consequences on
"stakeholders" in the situation.
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Characteristics of Dilemma
◦It have extended consequences◦It has multiple alternatives◦It have mixed outcomes◦It have uncertain consequences◦It have personal implications◦It is easy to make when a person is
not directly involved◦Hence EDM are not simple choice
between right and wrong.
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Paradigms of Dilemma◦Four such dilemmas are so common
to our experience that they stand as models, patterns, or paradigms. They are: Truth versus loyalty. Individual versus community. Short-term versus long-term. Justice versus mercy.
Ethics and Sri Lanka
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Classical Approach Resolving Dilemma
◦Three approaches are facilitated End-based thinking (utilitarianism) Rule based thinking Care-based thinking (value to you or
close relationships)
And Virtue ethics - instead upon execute as an alternative way
Here action is considered morally right if in carrying out the action.
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Nine ways to Resolving Dilemma
◦Rushworth Kidder
1.Recognize as moral issue and define the
problem accurately
2.Identify the affected by decision
3.Gather the facts how events happened
4.Test for right vs. Wrong issues
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Nine ways to Resolving Dilemma
5. Test for right vs. right paradigm (true vs...
6. Apply for the resolution principle (end, rule, care)
7. Investigate if is any third way out of the situation
8. Make decision & take action
9. Revisit & reflect on the decision
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Whistle blowing◦It is methods can be contributed to
identify and act of disclosing wrong in an organization
◦Like blowing a whistle to call attention to a thief or unethical practitioner
◦But it is questionable when... Dissent / disagree - Must speak out against
others in organization Breach of Loyalty - Perceived as one who
violates confidentiality and loyalty Accusation - Singles out specific individuals
as threats to organization or the public
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Whistle blowing◦Care about whistle blowing◦Make sure situation involves an
imminent threat to society or to the business
◦Document all allegations◦Examine internal whistle blowing
first◦Should you remain secret
Ethics and Our behavior
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Framework for Ethical Decision Making
◦Step 01: Describe the problem◦Step 02: Determine whether there
is an ethical issue or an ethical dilemma
◦Step 03: Identify and rank the key values and principles
◦Step 04: Gather your information◦Step 05: Review any applicable
Code of Ethics◦Step 06: Determine the options
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Framework for Ethical Decision Making
◦Step 07: Select a course of action◦Step 08: Put your plan into action◦Step 09: Evaluate the result
Don’t forget!◦Step 10: Submit cases to your
ethical review team or board regularly for review
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Effects of Ethical/Unethical Behavior
Ethical Behavior
Increases Efficiency and
Effectiveness of Production and
Trade
Increases Company Performance
Increases National Standard of Living,
Well-being, and Prosperity.
Unethical Behavior
Reduces Efficiency and Effectiveness of Production and
trade
Reduces company Performance
Reduces National Standard of Living,
Well-being, and Prosperity.
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Rules for
Ethical Decisio
n Making.
Utilitarian RuleAn ethical decision should
produce the greatest good for the greatest number of people
Justice RuleAn ethical decision should distribute
benefits and harm among people in a fair, equitable, and impartial
manner
Practical ruleAn ethical decision should be one that a manager has no
hesitation about communicating to people outside the company because the typical person in a society would think the decision
is acceptable.
Moral Rights RuleAn ethical decision
should maintain and protect the fundamental rights and privileges of
peoples.
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Ethical Decision Making Approaches
1) Utilitarian Approach – Moral behavior produces the greatest good for the greatest number
2) Individualism Approach – Acts are moral when they promote the individual’s best long-term interest, which ultimately leads to the greater good.
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Ethical Decision Making Approaches
3) Moral – Rights Approach decisions are those that best maintain the rights of those people affected by them.
4) Justice approach – Moral Decisions must be based on standards of equity, fairness, impartiality
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Three Types of Justices◦Three types of Justice Approaches:
I. Distributive Justice – In case of substantive differences, people should be treated differently in proportion to the differences among them
II. Procedural Justice – Rules should be clearly stated & consistently and impartially enforced
III. Compensatory Justice –Individuals should be compensated for the cost of their injuries by the party responsible.
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Ethical Test
1.Is it Legal
2.Benefit Cost Test
3.Categorical Imperative
4.Light of Day Test
5.Do onto Others Test
6.Ventilation Test
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Is It Legal1.Is It Legal
Ethical – Legal I Ethical-Illegal II Unethical – Legal III Unethical – Illegal IV
◦I and IV◦II and III Difficult
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• Quadrant III
• Unethical and Illegal
• Quadrant IV
• Unethical and Illegal
• Quadrant I• Ethical
and Legal
• Quadrant II
• Ethical and Illegal Codification
Manifestation
CorporateDecisions
Ethical
Unethical
LegalIllegal
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Benefit & Categorical Imperative2.Benefit Cost Test
Do the benefits exceed the costs to whomsoever they accrue?
3.Categorical Imperative Are you willing to allow to everyone to
practice the proposed action or do you want to be a special case?
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Light of Day & Do onto Others
4.Light of Day Test – What would be your reaction if the action were brought out into the open for public scrutiny
5.Do onto Others Test – Golden Rule – If you would like others to do the same to you - passes the test
6.Ventilation Test – Seek out others views. Discuss the 5 tests with them. If others feel it is OK – passes the test
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A Venn Diagram Model for Ethical Decision Making
Ethical Responsibility
Legal Responsibility
Economic Responsibility
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2a
2b
Area 1Profitable legal, ethical, Go for it
Area 2aProfitable and legal, Proceed
cautiously
Area 2bProfitable and
ethical, Probably legal, Proceed
cautiouslyArea 3
Legal, and ethical but not profitable find ways to seek
profitably .
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Thank You
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