Ethical Decision Making and Ethical Leadership Ethical Decision Making For Business 8e Fraedrich/Ferrell/Ferrell C H A P T E R 5 CHAPTER 5 Ethical Decision Making and Ethical Leadership

Framework for Understanding the Ethical Decision Making Process in Business

Ethical Issue Intensity 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

Individual Factors People‘s own values and principles of right or wrong Research: women are generally more ethical than males (gender) 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

Organizational Factors Corporate culture 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

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

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 Organizations take on a culture of their own, which have a significant influence on business ethics

Leadership in Corporate Culture 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 Source: © Jack Hollingsworth/Corbis

The Managerial Role in Developing Ethics Program Leadership

Leadership Styles Coercive leaders (強制性領導) Authoritative leaders (權威式領導) Affiliative leaders (關係式領導) Democratic leaders (民主式領導) Pacesetting leaders (先導式領導) Coaching leaders (教練式領導) The most successful leaders do not rely on one style of leadership but alternate their technique based on the characteristics of the situation.

Types of Leaders Transactional leaders Transformational leaders create employee satisfaction through bartering (交換、交易) 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

Habits of Strong Ethical Leaders

The essential of leadership Leaders see the way. Leaders see connections. Leaders see others. Leaders see within. A short film about leadership https://www.youtube.com/watch?v=TF0uSL-EWeU