1. Ethical Decision Making and Ethical Leadership
C H A P T E R 5
Ethical Decision Making and Ethical Leadership

2. The Ethical Decision Making Process
In business, people make decisions differently than at home
Organizational pressures
The ethical decision making process in business includes ethical issue intensity, individual factors, and organizational factors, such as corporate culture and opportunity
Source: Triangle Images

3. Framework for Understanding the Ethical Decision Making Process in Business

4. Ethical Issue Intensity
Ethical issue intensity is the perceived relevance or importance of an ethical issue to the individual, work group, and/or organization
Reflects the ethical sensitivity of the individual or work group
Triggers the ethical decision process
Moral Intensity relates to a person’s perception of social pressure and the harm the decision will have on others

5. Individual Factors
People often base their decisions regarding ethical issues on their own values and principles of right or wrong
Research on gender and ethical decision making women are generally more ethical than males
Education, Nationality, and Age are other individual factors
Locus of control relates to individual differences in relation to a generalized belief about how one is affected by internal versus external events or reinforcements
Can be external or internal

6. Organizational Factors
Corporate culture is a set of values, norms, and artifacts that members (employees) of an organization share
Those who have influence in a work group (e.g. managers, coworkers, subordinates) are referred to as significant others
Obedience to authority helps to explain why many employees simply follow the directives of a superior
Source: Digital Vision

7. Opportunity
Describes the conditions in an organization that limit/permit ethical/unethical behavior
Relates to individuals’ immediate job context
Where they work, with whom they work, and the nature of the work
Opportunities for misconduct can be reduced by establishing formal codes, policies, and enforced rules
Source: Triangle Images

8. Items that Employees Pilfer in the Workplace

9. Business Ethics Evaluations and Intentions
Ethical dilemmas involve decision rules which are often vague or in conflict
Critical thinking plays a key role
A person’s intentions and the final decision on what action to take is the final step in the process
If intentions and behavior are not consistent with ethical judgments, the individual may feel guilt
Most businesspeople will make ethical mistakes

10. Using the Framework to Improve Ethical Decisions
It is impossible to objectively determine right and wrong
Having a thorough knowledge about how ethical decisions are made will not solve ethical problems
Business ethics involves value judgments and collective agreement about acceptable patterns of behavior
Ethical decision making in business does not rely strictly on the personal values and morals of individuals
Organizations take on a culture of their own, which have a significant influence on business ethics

11. Leadership in Corporate Culture
Leadership: The ability or authority to guide and direct others toward achievement of a goal
Leaders are key to influencing an organization’s corporate culture and ethics
Leadership styles influence organizational behavior
Including employees’ acceptance of/adherence to organizational norms and values.
Source: © Jack Hollingsworth/Corbis

12. The Managerial Role in Developing Ethics Program Leadership

13. Leadership Styles Coercive leaders Authoritative leaders
Affiliative leaders
Democratic leaders
Pacesetting leaders
Coaching leaders
The most successful leaders do not rely on one style of leadership but alternate their technique based on the characteristics of the situation.
Source: Stockybte

14. Types of Leaders
Transactional leaders create employee satisfaction through bartering for desired behaviors/performance
Transformational leaders raise employees’ commitment and foster trust and motivation
Transformational ethical leadership is best suited for organizations with high ethical commitment among employees and strong stakeholder support for an ethical culture

15. Habits of Strong Ethical Leaders

16. Challenges of Leadership
Being a leader today is more complex and difficult than ever.