Copyright © 2003 by South- Western, a division of Thomson Learning1 Chapter Three Ethical Principles, Quick Tests, And Decision- Making Guidelines

Copyright © 2003 by South-Western, a division of Thomson Learning2 Chapter Topics 1.What is ethical Dilemma 2.Decision criteria for ethical reasoning 3.Ethical relativism: A self-interest approach 4.Utilitarianism: A consequentialist (results-based) approach 5.Universalism: A deontological (duty-based) approach 6.Rights: An entitlement-based approach 7. Justice: Procedures, compensation, retribution 8.Immoral, amoral, and moral management 9.Four social responsibility roles 10.Individual ethical decision-making styles 11.Quick ethical tests 12.Concluding comments

Ethical Dilemma An ethical dilemma is a problem or issue that confronts a person, group or organization and that requires a decision or choice among competing claims and interests, all of which may be unethical (i.e., against all parties’ principles). Copyright © 2003 by South-Western, a division of Thomson Learning3

Ethical Dilemma n Decision Making Ethical dilemmas involving many stakeholders require a reasoning process that clearly states the dilemma objectively, and then proceeds to articulate the issues and different solution alternatives. Copyright © 2003 by South-Western, a division of Thomson Learning4

LEVELS AND TYPES OF ETHICAL ISSUES AND DILEMMAS Three types of risk (faced by employees and companies) associated with different types of misconduct that can result in ethical dilemmas. three categories: 1. “severe risk (happens frequently and usually goes unreported), 2. high risk (happens often and often goes unreported), and guarded 3. risk (happens less frequently and may go unreported). Copyright © 2003 by South-Western, a division of Thomson Learning5

LEVELS AND TYPES OF ETHICAL ISSUES AND DILEMMAS Ethical issues and dilemmas result from pressures that are experienced at four levels. 1. At the individual or professional level 2. At the organizational level 3. At the industry level 4. At the The societal, international, and global level. Copyright © 2003 by South-Western, a division of Thomson Learning6

LEVELS AND TYPES OF ETHICAL ISSUES AND DILEMMAS Copyright © 2003 by South-Western, a division of Thomson Learning7

Moral Creativity relates to the need for and skill of recognizing the complexity of some ethical dilemmas that involve interlocking, conflicting interests, and relationships from the point of view of the person, group, and/or organization facing a decision to be made. Copyright © 2003 by South-Western, a division of Thomson Learning8

An ethical decision typically involves choosing between two options: one we know to be right and another we know to be wrong. A defining moment, however, challenges us in a deeper way by asking us to choose between two or more ideals in which we deeply believe. Such challenges rarely have a “correct” response. Rather, they are situations created by circumstance that ask us to step forward and, in the words of the American philosopher John Dewey, “form, reveal, and test” ourselves. We form our character when we commit to irreversible courses of action that shape our personal and professional identities. We reveal something new about us to ourselves and others because defining moments uncover something that had been hidden or crystallize something that had been only partially known. And we test ourselves because we discover whether we will live up to our personal ideals or only pay them lip service. Copyright © 2003 by South-Western, a division of Thomson Learning9

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Framework for Understanding Ethical Decision Making in Business Ethical Issue Intensity perceived importance to the decision maker. SIX areas of influence” when confronted with ethical choices—the workplace, family, religion, legal system, community, and profession Individual Factors The more likely individuals are to perceive an ethical issue as important, the less likely they are to engage in Questionable or unethical Behavior. Gender Education Nationality Age Copyright © 2003 by South-Western, a division of Thomson Learning12

Framework for Understanding Ethical Decision Making in Business Organizational Factors the workplace the organization’s values often have greater influence on decisions than a person’s own values. Corporate culture Ethical Culture Opportunity describes the conditions in an organization that limit or permit ethical or unethical behavior. 13

Framework for Understanding Ethical Decision Making in Business Ethical dilemmas involve problem-solving situations in which decision rules are often vague or in conflict. The results of an ethical decision are often uncertain; no one can always tell us whether we have made the right decision. There are no magic formulas, nor is there computer software that ethical dilemmas can be plugged into for a solution. Copyright © 2003 by South-Western, a division of Thomson Learning14

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Copyright © 2003 by South-Western, a division of Thomson Learning16 Decision Criteria for Ethical Reasoning A first step in addressing ethical dilemmas is to identify the problem and related issues. Laura Nash developed twelve questions to ask yourself during the decision-making period to help clarify ethical problems. These twelve questions can help individuals: Openly discuss the responsibilities necessary to solve ethical problems Facilitate group discussions Build cohesiveness and consensus Serve as an information source Uncover ethical inconsistencies Help a CEO see how managers think Increase the nature and range of choices

Copyright © 2003 by South-Western, a division of Thomson Learning17 Decision Criteria for Ethical Reasoning The following three criteria can be used in ethical reasoning: Moral reasoning must be logical Factual evidence cited to support a person’s judgment should be accurate, relevant, and complete Ethical standards used should be consistent A simple but powerful question can be used throughout your decision-making process in solving ethical dilemmas: What is my motivation for choosing a course of action?

Copyright © 2003 by South-Western, a division of Thomson Learning18 Decision Criteria for Ethical Reasoning A major aim of ethical reasoning is to gain a clearer and sharper logical focus on problems to facilitate acting in morally responsible ways. Two conditions that eliminate a person’s moral responsibility for causing harm are: Ignorance Inability Mitigating circumstances that excuse or lessen a person’s moral responsibility include: A low level of or lack of seriousness to cause harm Uncertainty about knowledge of wrongdoing The degree to which a harmful injury was caused or averted

Copyright © 2003 by South-Western, a division of Thomson Learning19 Ethical Relativism: A Self-Interest Approach Ethical relativism holds that no universal standards or rules can be used to guide or evaluate the morality of an act. This view argues that people set their own moral standards for judging their actions. This is also referred to as naïve relativism. The logic of ethical relativism extends to culture.

Copyright © 2003 by South-Western, a division of Thomson Learning20 Ethical Relativism: A Self-Interest Approach Benefits include: Ability to recognize the distinction between individual and social values, customs, and moral standards Problems include: Imply an underlying laziness Contradicts everyday experience Relativists can become absolutists Relativism and stakeholder analysis.

Copyright © 2003 by South-Western, a division of Thomson Learning21 Utilitarianism: A Consequentialist (Results- Based) Approach The basic view holds that an action is judged as right, good, or wrong on the basis of its consequences. The moral authority that drives utilitarianism is the calculated consequences or results of an action, regardless of other principles that determine the means or motivations for taking the action. Utilitarianism includes other tenets.

Copyright © 2003 by South-Western, a division of Thomson Learning22 Utilitarianism: A Consequentialist (Results- Based) Approach Problems with utilitarianism include: No agreement exists about the definition of the “good” to be maximized No agreement exists about who decides How are the costs and benefits of nonmonetary stakes measured? Does not consider the individual Principles of rights and justice are ignored Utilitarianism and stakeholder analysis.

Copyright © 2003 by South-Western, a division of Thomson Learning23 Universalism: A Deontological (Duty-Based) Approach This view is also referred to as deontological ethics or nonconsequentialist ethics and holds that the means justify the ends of an action, not the consequences. Kant’s principle of the categorical imperative places the moral authority for taking action on an individual’s duty toward other individuals and humanity. The categorical imperative consists of two parts.

Copyright © 2003 by South-Western, a division of Thomson Learning24 Universalism: A Deontological (Duty-Based) Approach The major weaknesses of universalism and Kant’s categorical imperative include: Principles are imprecise and lack practical utility Hard to resolve conflicts of interest Does not allow for prioritizing one’s duties Universalism and stakeholder analysis.

Copyright © 2003 by South-Western, a division of Thomson Learning25 Rights: An Entitlement- Based Approach Moral rights are based on legal rights and the principle of duty. Rights can override utilitarian principles. The limitations of rights include: Can be used to disguise and manipulate selfish, unjust political interests and claims Protection of rights can be at the expense of others Limits of rights come into question Rights and stakeholder analysis.

Copyright © 2003 by South-Western, a division of Thomson Learning26 Justice: Procedures, Compensation, Retribution The principle of justice deals with fairness and equality. Two recognized principles of fairness that represent the principle of justice include: Equal rights compatible with similar liberties for others Social and economic inequality arrangement Four types of justice include: Compensatory Retributive Distributive Procedural

Copyright © 2003 by South-Western, a division of Thomson Learning27 Justice: Procedures, Compensation, Retribution Problems using the principle of justice include: Who decides who is right and who is wrong? Who has moral authority to punish? Can opportunities and burdens be fairly distributed? Justice, rights, and power are really intertwined. Two steps in transforming justice: Be aware of your rights and power Establish legitimate power for obtaining rights Justice and stakeholder analysis.

Copyright © 2003 by South-Western, a division of Thomson Learning28 Immoral, Amoral, Or Moral Management Immoral management means intentionally going against ethical principles of justice and of fair and equitable treatment of other stakeholders. Amoral management happens when others are treated negligently without concern for the consequences of actions or policies. Moral management places value on equitable, fair, and just concern of others involved.

Copyright © 2003 by South-Western, a division of Thomson Learning29 Four Social Responsibility Roles Figure 3.3 illustrates four ethical interpretations of the social roles and modes of decision-making. The four social responsibility modes reflect business roles toward stockholders and stakeholders. Two social responsibility orientations of businesses and managers toward society include: Stockholder model Stakeholder model

Copyright © 2003 by South-Western, a division of Thomson Learning30 Individual Ethical Decision-Making Styles Stanley Krolick developed a survey that interprets individual primary and secondary ethical decision-making styles, that include: Individualism Altruism Pragmatism Idealism

Copyright © 2003 by South-Western, a division of Thomson Learning31 Quick Ethical Tests The Center for Business Ethics at Bentley College suggests six questions to be asked before making a decision. Classical ethical tests: The Golden Rule The Intuition Ethic The Means-End Ethic Test of Common Sense Test of One’s Best Self Test of Ventilation Test of Purified Idea