Chapter- 16

Ethical Decision Making

16.1 Ethical Decision Making

Ethical issues arise out of every day business decisions. An
ana the moral atmosphere of the
bellels
individual's inpersonalone
which works signilicantly after the behaviour one
organisation
ehlbits. Many philosophers. organisational relationships. and
opportunity iniluence Denaviour, as does the organisational

environment.

Organisationa Opportunity
Environment

Individual
Behaviour

oral

Organisalional Philosophy
Behaviour

Fig. 16.1 Individual Behaviour Components

(Factors Influencing Behaviour)

Decisions, How Are They Made? involved

such decision making has classically
determinaure ol
nation and weighing of four lactors:
 410: Business Ethics

The end t h e outcome sought

The means t h e methods

employcd
The motive t h e urge makes the
first place decision
sion
The loreseeable conscquences
necessary In the
of these factors was
wrong h e entyFe action was im
Example: If any garment manulacturer
Indiawhere their is no
industry and make
selects nimoral a

inprovements Dlace
through: the placein

Brought a higher standard ot iving to the

local people
Provided with opportunities ple
Provided skill
Produced quality products ata
competitive price
Products used by local people also to meet
their
But
paid kickback to the local state
requiremente
government officials for
operation.
The Ten Commandments of legal and
ethical intelligence gathering
by Fuld and company (published its Own guide ng
lines) are as under:
1. Thou shalt not lie when
representing thyself.
2. Thou shalt observe thy company's legal guidelines as set forth
by the Legal Department.
3. Thou shalt not tape record a conversation.
4. Thou shalt not bribe.
5. Thou shalt not plant eavesdropping devices.
6. Thou shalt not deliberately mislead anyone in interview.

obtain from
Thou shalt neither
price intormation.
nor give thy competitor any

8. Thou shalt not swap misintormation,

9 Thou shalt not steal a trade secret (or steal employees a
in hopes ol learning a trade s e c r e .

10. Thou shalt not knowingly press someone for information

may Jeopardise that persons job or reputation.

16.2 The Role of Moral Philosophies in Decision Makin

Moral philosophy is a set of principles setting forth w l
believed to be the right way to behave. Role is something t ofora
study ol
conforms to standard of acceptability. A
a
pnio als learn une
Beneral principles of a subject, such as moralily. Inav 5, an
Prnciples through socíallsation by family members, socl Bo
formal cducaton.
 Ethical Decísion Making : 4I1

ers in this philosopliy secks the greatest satisfaction

Belleve Der ol ndividuals.
for the
liargest n

Boliovors in the
Ulilarian
o k s tho

or
ion
thelar
Moral numbor of individunls
PnoOpny

Humanistic

Fig. 16.2 Moral Philosophy

Utilltarlan philosopny as per Mr.speck sald in the Wrath of Khan

ecds of the many outweign h e needs ol the lew...or the one."

This philosophy
1s ilustrated by actions

16.3Suggestions for Ethical Decision Making

Top Management can improve behaviour: Businesses are
beginning to set standards and establish ethical principles to be
A mplemented within the organisations. One reason businesses have
been slow to consider elhical prineiples in thelr decision making is
the lack of underslanding ol how managers develop their moral
phllosophles Robert Lomon once said T never thought ethics was
something that could be lormaly taught. lt was something you learned
growing up at home, in school, and in temple, church.
Lomon, learned the hard way that ethics s something that top
thmanagement must be concerned about on a daily basis. In 1985, his
hor Company pleaded guilty to two thousand counts of fraud as a result of
cheque overdralts. Some executives thought they were doing Lomon a
avour by increasing profits through the overdraft scheme.
Codes of ethics improves decision making: Businesses
dstablilsh codes of ethics and corporate policies on ethics to foster ethical
Pcon making by reducing the opportunity for unethical activity.
c e m e n t of corporate policies is a common way of dealing with
thProDiems. The establishment of corporate policies and codes of
s h e l p s employees understand what is expected of them.
how
whatndng
ethe
individuals choose their standards of ethics, and
1Dpt a person to engage in unethical behaviour may reverse
Current trend towards unethical activity in business.

nteraction witth peers and other colleagues: People, learn

and otheIOur from interacting with individuals in soelal, business
Se h groups. Thus businesses, should examine thelr structure to
Wilho cies, rewards and punishments affect ethical behavlour
base oilh any wide standards for behaviour, employees generally
ecislons on their observation of peers and management.
 412: Business Ethies

Codes of cthics are lormal statenents of what the co

from its cmployecs. to encourage ethical behavlour. y ex
needs to eliminate opportunities lor nethical behavlour and age
rules and operaung procedures. forale
nalize
(iv)
(iv) Control System: la conpany 1s to maintain ethicalt
Conto standards must
s controlehavlour,
be worked nto
Reducing unethical benaV1Our Sa Dusiness goal, not syste
y
ditferent The
protits. business
Irom nereasing
greater ethical behaviour amons company employces-and l e n
sets a oaly uch
the outcome.

then
Number otnotmaKing Ethical company to

Employees Decisions nvestigate Why

Take
h o
orrective
acton

Fig. 16.3 Control System

Ethical behaviour only

occurs when plan
a is
developed and
successfully implemented.
Through stronger reinforcement of current standards and
policies.

16.4 The Ethical Organisation

An organisation is by definition, organised. It is not just a group or
mass of people. It has structure which enables it to make collectuve

decisions and act on those

decisions
People are generally moral agents. Their actions are governed
ruics. explicit or implicit, vhlch can be subjected to ethical appra

BCing Couriaguous
People may be praiset tor charitabio
or condemned sensilivd

gnanus
ma neithor nor
praise uldno

4A y ruspuniule lur far

#nvy
wiat 1h-ey dd
Devidua

Moral Agents
Flg. 16.4 People as
 Ethical Decision Making: 415

shical Issues that Arise for Manag

h e ethio
teciues that arise for managers are indeed for
all
ncludingemploy
es. customers,
consumers and members of the people.
fect us all, and so the conduct of public.
porate actlvitie.

for everyone with a stake in

for business is a
be examining are ethical management.
c o n c e r n

matter ol we wil
ethical
15sues those considered
The in the ordinary course of their work, but by
anagersed in the parliament and scrutinised they also major
s debol issues in business are by courts. this is
wanea

closely tied to important matters

becaue Dolicy
o f public
and to the legislauve and
judicial processes of the
ent.

16.6 Difficulties in Decision Making

ta cnite of the positive benelits ol
blems do occur in business. Some of good
ethical practices, ethical
pro the main reasons are:

Cross-cultural contradictions
Personal gain
Some of the knottiest ethical problems Dubious character
OCCur as corporations do business in
Personal
other societies where ethical
some
gain
ethical
or
even greed,
causees
standards differ from those at home problems. BusinesS
sometimes employs people
whose
personal values are less than desirable
Competitive
Pressures
SourcesO
Ethical Individual values in conflict
Problemns wilh organisational goals
Wnen companies are
squeezed by severee
competition, managers Ethical conflicts in business
sometim.as engage in Trequently occur when a company
eca activities to Managers values Pursues goals or uses methods
0eal oul and Atributes that are not acceptable to some of
a
competitopr
its employees
Managers are the
key people to investigate whether a company will act
unetnicaly. AS
major decision makers and ethically or
than others to set an policy makers, they have more opportunities
ethical time for their company.

Fig. 16.8 Sources

of Ethical Problems
16.7 How to use Ethical
Reasoning
wnat business needs is a set of guidelines for thinking about
Ihe guidelines should help corporate managers and employees.
identify the nature of the ethical problem
Decide which course of action is likely to produce the most
ethical results
hree methods of ethical reasoning ac

Utilltarian
Rights
Justice