BUS 304: Organizational Behavior &

Leadership

ETHICAL Decision Making

Designed by: Dr. Payam Saadat
City University of Seattle
Winter 2019-20
 Learning Objectives
• Define ethics and ethical leadership.
• Apply ethical decision making.
• Explain the concept of subtractive knowledge.
• Compare Machiavellians to ethical leaders.
• Understand and apply Consequentialism and Deontology as ethical
perspectives.
 Key Terms
• Ethics: Judgements about whether human behavior is right or wrong
(Johnson, 2015).

• Ethical Leadership: “The demonstration of normatively

appropriate conduct through personal actions and interpersonal
relationships, and the promotion of such conduct to followers
through two-way communication, reinforcement, and decision-
making” (Brown, Trevino, & Harrison, 2005, p. 120).
 Key Terms
• Ethical Decision Making: It represents a process through
which an individual reaches a resolution by incorporating
multiple perspectives into his/her analysis of the situation
and by preventing cognitive biases from manipulating his/her
thinking and judgment (Johnson, 2014; Morgan, 2006; Smith,
2006).
What Is Our Plan to Learn about Ethical Decision
Making and Leadership?
• Plan: We will use the “subtractive knowledge” approach.

• What is “subtractive knowledge”?

• It is a recipe for what to avoid, what not to do; subtraction, not addition (Taleb, 2012).

• What is the logic behind “subtractive knowledge”?

• We know what is WRONG with more certainty than we know what is right (Taleb,
2012).

• Logic: It’s very simple! We are going to learn about ethical leadership and
decision making by identifying and avoiding what is NOT ethical!
 Let’s Look at Some Examples!
• One can more easily become rich by avoiding enormous debt,
expensive divorces, and get-rich-quick schemes (i.e., things to avoid)
compared to trying to come up with the next brilliant idea.

• Steve Jobs: “You have to pick carefully. I'm actually as proud of the
things we haven't done as the things I have done.”
 Let’s Use Subtractive Knowledge!
(i.e., Identify What Is Not Ethical)
• Revisiting our logic:
• Q: What Is NOT Ethical Leadership?
• A: Machiavellianism

Avoiding Machiavellianism = Becoming an Ethical Leader

 “Machiavellianism” Defined
• “The use of guile, deceit, and opportunism in interpersonal relations”
(Christie, 1970, p. 1).

• Machiavellian leaders (Machs) intend to manipulate others in order to

accomplish their personal objectives (Brown & Trevino, 2006).
Machs and Ethical Leaders at a Surface Level

• Both are in the upper division of the

strategic sector;
• Both go beyond their official job
descriptions to influence key
organizational decisions; and
• Both utilize the informal and formal
workforce networks to impact various
situations (DeLuca, 1999).
Machs vs. Ethical Leader through a More
Accurate Lens
Machs Ethical Leaders
Manipulates Influences
Creates losers Creates winners
Lone wolf Team player
Power for its own Power to accomplish collective
sake goals
Promotion as goal Promtoions as outcome
Hidden agendas Open agendas
Word as tool Word as bond
Calculating Strategist
Gossip Relay
Politician Statesman
Takes credit Spreads credit
Careless and selfish Honest, caring, and principled
 A Holistic Comparison
Mach Ethical Leader
Continuum of Influence
Manipulation Ethical Impact

Ethical leaders believe that the fundamental role of the firm is

to align the interests of individuals with strategic objectives; Ethical leaders focus on ensuring the well-being
therefore, exploring the win-win in situations and building of the organization as a whole.
alliances become a priority for them (Walumbwa et al., 2011).

Machs assume a group’s success translates into another group’s

loss and failure; therefore, Machs frequently assess the Machs manipulate the firm’s network to fulfill
dynamics of situations to elevate their image or lower someone personal goals.
else’s credibility (Judge, Piccolo, & Kosalka, 2009).
 Key Points Regarding Ethical Decisions
• Base your actions on informed, sound, and responsible judgment.
• Consult with colleagues or seek supervision.
• Keep your knowledge and skills current.
• Engage in a continual process of self-examination.
• Remain open.
• In making ethical decisions, as much as possible and when appropriate, include
your internal and external stakeholders (e.g., client) in the process.
• Key stakeholders need enough information to be able to make informed
choices.
• The key is to make ethical decisions with the stakeholders, not simply for them.

(Corey, Corey, & Haynes, 1998)

 Eight Steps in Making Ethical Decisions
1. Identify the problem or dilemma.
2. Identify the potential issues involved. For details regarding each
step, please refer to
3. Review the relevant ethical codes. Corey, Corey, & Haynes’
(1998) book section on
4. Know the applicable laws and regulations. Ethical Decision Making,
which is part of this
5. Obtain consultation. week’s lecture materials.
6. Consider possible and probable courses of action.
7. Enumerate the consequences of various decisions.
8. Decide on what appears to be the best course of action.

(Corey, Corey, & Haynes, 1998)

 Ethics Heuristics/Rules of Thumb
• Hammurabi’s Rule: The idea that a builder has more knowledge than the inspector
and can hide risks in the foundations where they can be most invisible; the remedy
is to remove the incentive in favor of delayed risk (Taleb, 2012).

• Skin in the Game (related to Machs): This relates to the unethical transfer of risk
from one party to another, with one getting the benefits, the other one
(unknowingly) getting the harm (i.e., collecting large benefits/gains when the party
is right and having others pay the price or deal with the downside when the party is
wrong). “Skin in the game” reflects situations in which decision makers share in the
costs and benefits of their decisions that might affect other. This structure and
framework encourages the decision maker to make careful and sensible decisions
as opposed to situations that allow the decision maker to impose costs on others.
 Ethics Heuristics/Rules
of Thumb

• DeLuca’s (1999) rule of thumb:

Taleb on “Skin in the Game”
 Two Primary Philosophies in Ethics:
Deontology and Consequentialism
• Consequentialism: The consequences of one’s conduct determine
its rightness or wrongness.

• Deontology: The morality of a behavior is assessed based on the

action’s adherence to independent moral rules or duties (e.g., justice
and integrity).
Consequentialism Defined
Deontology Defined
A Point of Convergence: How Does Ethical
Leadership Contribute to High Performance?
Key Priorities of an Ethical Leader
• Fostering employee autonomy, trust, team-building, and participative/collective decision making.
• Caring about stakeholders’ needs and interest.
• Promoting diversity and learning, maintaining an open and welcoming working environment, and
emphasizing sharing information and knowledge exchange.
• Developing quality relationships with employees and unleashing their energy and intelligence.
• Seeking input and reaching consensus prior to making decisions.
• Building a sense of community (de Waal & Sivro, 2012; Ehrhart, 2004; Stone, Russell, & Patterson, 2004).

Facilitative Proper Stakeholder Fostering Learning

Management MGMT and Innovation

Practices That Are Linked to High Performance and Organizational Effectiveness

(Baldrige National Quality Program, 2009; de Waal, 2007; Sterling Criteria for Performance Excellence)
 Ethics & Organizational Effectiveness
• Those working for ethical leaders are more satisfied and are more committed to their organizations and their
managers. They work harder, are more willing to report problems to management, and are more productive.

• Members of work groups led by moral leaders are less likely to engage in theft, sabotage, cheating, and other
deviant behaviors.

• Ethical leadership enhances organizational trust levels, fostering perceptions that the organization is
competent, open, concerned for employees, and reliable. Such trust leads to improved organizational
performance and greater profitability.

• Employees who consider their leaders to be moral persons and moral managers also believe that their
organizations are effective.

• Ethical leadership fosters an ethical organizational climate, which, in turn, increases job satisfaction and
commitment to the organization.

(Johnson, 2015)
 Employee Commitment, Trust,
and Enhanced Performance

Organizational
Ethics Shareholder Loyalty and Trust

Customer Satisfaction and

Trust
Effectiveness