Ethical Decision Making in Business

Ethical Decision Making

in Businessin BusinessOverview

….is the process of evaluating decisions, either pre or post, with respect to the moral standards of a society’s culture.

Business Ethics

or

…’How are we to relate to each other in order to ensure that our individual and collective well-being is enhanced?’

• Need to go outside, or beyond one’s self interest in reaching a decision.

• An ethical judgment is one that can be “universalised”.

• Ethical opinions are not subject to a ‘vote’.

What is involved in correct moral opinion

• Ethical opinions are not subject to a ‘vote’.

• Moral opinions are centrally about evaluating behaviour and prescribing ways in which people should behave.

• Requires one to think about consequences of one’s action.

Chart of Theories

Ethical Theories

Consequentialist Non Consequentialist

The Golden Ethical Egoism

Utilitarianism

Act

Rule

TheologyThe Golden

RuleKantianism

• Consequential• The good or evil results of an action

– Egoism• Self-interest is the proper goal (long term?)

– Utilitarian

Consequentialist Theory

– Utilitarian• Greatest good for the greatest number

– Feminism (Individualism)• Philosophy of caring

• Effect on the individuals

• It is based on what is right, or what one ought to do , driven to act in accordance with one’s own self-interest.

• Tells us what people should do.

Ethical Egoism

• It advocates the long term self interest of the individual.

• Founder was Jeremy Bentham (1748 – 1832) thinker and social reformer. Pleasure and pain principle.

• An act is only morally right if and only if it maximises utility.

Act Utilitarianism

• Utlity – intrinsic goodness, satisfactions, preferences and desires.

• The ratio of benefit to harm calculated by taking everyone affected by the act into consideration is greater than the ratio of benefit to harm resulting from any alternative act.

Calculation Yield Results

P1P1 P2P2 P3P3 TotalTotal

A1A1 +4+4 --55 +8+8 +7+7

A2A2 +6+6 +2+2 --33 +5+5

A3A3 --22 --55 +4+4 --33

• An act is right if and only if it is in conformity with a particular moral rule, and the rule is chosen because, of all alternative rules, it maximises utility.

Rule Utilitarianism

• i.e. “We must not hold a person accountable for a crime he has not committed”

• Deontological (Means Duty)– Immanuel Kant and the Categorical Imperative

• Each person should act in a manner that his or her actions could become universal law

• Duty is more important than result

• Other Theories

Non Consequentialist Theories

• Other Theories– The Golden Rule

– Virtue Ethics

• German Philosopher – Immanuel Kant (1724-1804).

• Developed a theory of duty – intellectual justification for the golden rule.

• He believed in a science of morals is

Kantianism

• He believed in a science of morals is possible because humanity has the use of freedom and reason.

• When using people to accomplish your purposes, you have a duty to respect them as human beings and to promote their ability to realise their desired potential or goals.

• Asserts that an act is right if, more than any alternative open to the agent at the time, it is the most consistent with what God wills, either directly or indirectly.

Theologism

• Theologism provide us with a set of rules (e.g., the Ten Commandments) that express God’s will.

• The Golden Rule “Do unto others as you would have them do unto you” is a most widely accepted moral principle.

• Confucianism “That which you do not want

The Golden Rule

done to yourself, do not do to others” (Analects)

• Islam “No one is a believer unless he loves for his brother what he loves for himself (Traditions)

• Buddhism “Hurt not others with what pains yourself”

• In surveys of business people the Golden Rule is cited more often than any other

The Golden Rule (c’tnd)

principles the basis of proper ethical behavior.

• Dates back to Aristotle

• It stresses the kind of moral abilities that put us in a position to act morally, whether after weighty deliberation or quick reaction.

• It views the character of the person

Virtue Ethics

• It views the character of the person performing the action and rejects applying the correct theory.

• The General decision making structure is:

Individual or Company X has a Problem P.

The alternative solution to P are S1….Sn.

Ethics Related Decision Making

The alternative solution to P are S1….Sn.

S1 is the best solution to P.

X should do S1

1. Gather the facts carefully to determine whether there is an ethical problem.

2. If there is a problem, try to state it as clearly as possible.

3. Determine whether the problem has an ethical dimension.

4. Identify those affected by the problem.

5. In many cases you will need to demonstrate the

Ethical Problem Framework

5. In many cases you will need to demonstrate the seriousness of your problem, since there is no need to deliberate at the length of a trivial problem.

6. In many cases we are interested in determining what caused the problem.

7. Develop solution

8. Recommendation

• Ethics can be divided into Consequentialism and

Non Consequentialism theories of ethics.

• At the end of the day the business leaders must

make informed business decisions weighing up the

impact of self interest over the greater good for

Summary

impact of self interest over the greater good for

society.

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