Decision Making in an Ethical Dilemma William J. Wilhelm College of Business Indiana State University

Ethical Problem vs. Ethical Dilemma right versus wrong choices Dilemma: right versus right choices

“morality” and “ethics” Morality – refers to the standards of behavior in relation to others by which people are judged Ethics – encompasses the system of beliefs that supports a particular view of morality (Hosmer, 2003) Moral behavior – a person alone in the desert, isolated from everyone else, might act in a way that was immature, demeaning, or stupid, but he or she could not truly be said to have acted immorally since the behavior could have no impact upon others, unless it were to waste water or some other resource needed by travelers in the future. Ethics – If I believe that a person should not smoke in a crowded room, it is because I have accepted the research findings of most scientists and the published statements of the Surgeon General that tobacco smoke is harmful to health. My acceptance of those findings is my ethic for that particular situation. Hosmer, L. (2003). The ethics of management. Boston: McGraw-Hill Irwin.

The Four Components of Moral Behavior (Rest & Narvaez, 1979) Moral sensitivity Moral judgment Moral motivation Moral character Moral sensitivity (interpreting the situation, role taking how various actions would affect the parties concerned, imagining cause-effect chains of event, and being aware that there is a moral problem when it exists) Moral judgment (judging which action would be most justifiable in a moral sense) Moral motivation (the degree of commitment to taking the moral course of action, valuing moral values over other values, and taking personal responsibility for moral outcomes) Moral character (persisting in a moral task, having courage, overcoming fatigue and temptations, and implementing subroutines that serve a moral goal). Morality consists of ALL of these components (capacities). If one is missing, the individual will not behave morally except by chance. Rest, J. R. & Narvaez, D. (1979). Development in judging moral issues. Minneapolis: University of Minnesota Press.

Theory of Cognitive Disequilibrium (Piaget, 1965) We all have existing belief structures. When new truths challenge our belief structures we can: 1. assimilate new ideas of truth into our existing belief structures or 2. adapt our belief structures to accommodate the new ideas of truth. Piaget, J. (1965). The moral development of the child. New York: Free Press.

Stages of Moral Development (Kohlberg, 1969) CHARACTERISTICS Stage 1: Punishment and Obedience Orientation Right (good) and wrong (bad) defined by Adults Physical consequences determine goodness or badness Right is a matter of obedience Stage 2: Instrumental Relativist Orientation Right is what satisfies one’s own needs while being aware of others’ needs Fairness is reciprocal Adults sometimes hold Truth Stage 3: “Good Boy-Good Girl” Orientation Right is what helps in one’s Group Right behavior earns approval Cooperation with peers is moral Right must involve others’ feelings Moral reasoning is developed through maturity. Mature adults can naturally progress to about stage 4. Education will help individuals advance through the later stages because of cognitive disequilibrium (cognitive dissonance). Kohlberg, L. (1969). Stage and sequence: The cognitive developmental approach to socialization. In D. Goslin (Ed.), Handbook of socialization theory and research, 347-480. Chicago: Rand McNally

Principle Orientation Stage 4: “Law and Order” Orientation Right is doing one’s duty in social order Society’s laws replace peer group’s laws Laws of society followed without question Breaking the law is never justified Stage 5: Universal Ethical Principle Orientation Principles are abstract and ethical (Golden Rule) Laws and values of society are somewhat arbitrary and particular to that society. Laws are necessary to preserve social order and ensure basic rights Stage 6: Social Contract Right is defined in terms of individual rights for all in the society. Ethical principles based on abstract concepts of justice, equality and human rights. Laws that violate these principles should be disobeyed.

So how do we make decisions in situations involving ethical dilemmas? The same way we make decisions involving non-ethical matters. We look at the situation, assess alternative courses of action, evaluate outcomes and probabilities, and choose the best course of action.

How do we EVALUATE alternatives? Steps in making a judgment How do we EVALUATE alternatives? Problem recognition Identification of alternative courses of action Evaluation of alternative courses of action Estimation of outcome probabilities Calculation of expected values Justification of course of action chosen

We use evaluation TOOLS. For example, in management decisions we use tools such as: return on investment cost-benefit analysis time-to-market analysis net present value S.W.O.T. analysis etc.

We also use evaluation TOOLS in ethical decision making: Universal duty towards others Greatest good for the greatest number Conventional cultural moral rules and codes Characteristics of a good person Kant’s categorical imperative Bentham & Mill’s utilitarianism The Golden Rule, laws, codes of ethics, etc. There are two basic kinds of ethical judgments. The first have to do with duty and obligation. For example: "Thou shalt not kill, lie, or steal." "You just keep your promises." These judgments often uphold minimal standards of conduct and (partly for that reason) assert or imply a moral ‘ought.’ The second kind of judgment focuses on human excellence and the nature of the good life. These judgments employ as their most general terms "happiness," "excellence," and perhaps "flourishing" (in addition to "the good life"). For example: "Happiness requires activity and not mere passive consumption." "The good life includes pleasure, friendship, intellectual development and physical health." I take these to be the two general types of ethical judgment, and all particular ethical judgments to be examples of these. The third approach deals with ethical standards of behavior established by a society. These come into existence as a result of the previous two evaluative processes. The first three approaches to ethics on this slide are the theories that deal with how we “ought” to behave. The last deals with personal characteristics of excellence – how one should life.. Aristotle’s virtue theory: bravery, honesty, temperance, generosity, justice, pride.

Kant’s categorical imperative categorical = universal, no exceptions imperative = duty An act is morally correct only if it can be applied as a universal rule of conduct in all situations and have the same result. This iteration of the categorical imperative stresses that an act is morally correct only if it can be applied as a universal rule of conduct in all situations and have the same result, i.e. that of moral correctness. For example, giving one’s promise to repay a loan with no intention of repaying it could not possibly be made into a universal rule because promises would cease to be meaningful if everyone made them and no one intended to keep them. Promises, in that situation, would become a logical contradiction and, therefore, would cease to exist. What if everyone did that?

Kant’s second formulation of the categorical imperative All people, including oneself, must be treated with dignity and respect, and not used merely as a means to accomplish another’s objectives. Does an action treat all people with the dignity they deserve as human beings? This second iteration of the categorical imperative stresses all people, including oneself, must be treated with inherent dignity and respect and not used merely as a means to accomplish another’s end objectives. For example, it would be morally wrong to sell someone something that they did not want or need since this approach is solely focused on accomplishing only the objectives of the commission salesperson.

Utilitarian Theory (Bentham & Mill) The “greatest happiness principle” holds that actions are right in proportion as they tend to promote happiness; wrong as they tend to produce unhappiness. Does an action produce the greatest good for the greatest number of people?

Act vs. Rule Utilitarianism Act utilitarians believe that each individual action is to be evaluated. Rule utilitarians believe that behavior is best evaluated by rules that, if universally followed, would lead to the greatest good for the greatest number. Someone goes to the doctor. The person is ill, experiences pain and dysfunction. The doctor performs a series of test and examinations. The person returns to the doctor's office to learn of the results, the diagnosis and prognosis. The doctor is aware that the tests all show that the person has a disease that is incurable and life threatening. In fact even under the most aggressive treatment option there is a survival rate of less than 15% for two years. The doctor is considering what would be GOOD to tell the person. Should the person know the truth or should the person be told something other than the truth? Which is better? Which is the right thing to do? What would be GOOD to do? The act utilitarian might calculate that in telling the truth there will be a great deal of pain and hardly any pleasure at all The person will be upset, their family will be upset, the doctor will be upset in informing the ill person that there is nothing that the doctor can do to alter their condition. The doctor's staff will be upset seeing the person come in for whatever treatment there may be. On the other hand if the doctor makes up a story concerning the diagnosis and prognosis that is not true but that gives the ill person more time to enjoy life before the illness makes it obvious that the end is near, well then the results are different. The doctor is not so upset in seeing the person, the doctor's staff is not upset . The family and friends of the person have some more time with that person to enjoy things instead of being morose and depressed. So the ACT utilitarian might calculate that the GOOD is to lie.   The rule utilitarian would need to consider what would the long term consequences be if doctors were to lie to those who come to them and have life threatening, incurable illnesses. The rule utilitarian might calculate that people would no longer be able to trust their doctors and this would break down the confidence they need for their therapies to be effective. The RULE utilitarian might calculate that there is far more harm in lying and so the GOOD is to tell the truth. 

Conventional Moral Rules Classic moral rules that have withstood the test of time: The Golden Rule Thou shall not kill Thou shall not steal Does an action violate any rules or laws that promote the common good? Derived from rule utilitarian theory. Many become our laws… …because they work within a society to promote the common good.

Personal Virtue Ethics (Aristotle) One should live one’s life virtuously: bravery, honesty, temperance,, justice, openness, generosity and pride. Does your choice of an action demonstrate personal characteristics that your Mother would be proud of? Because a virtuous person is likely to act ethically.

A Framework for Moral Decision Making Problem recognition Identification of alternative courses of action Evaluation of alternative courses of action Estimation of outcome probabilities Calculation of expected values Justification of course of action chosen Categorical imperative Utilitarianism Virtue theory Conventional rules Refer to Wilhelm essay for a discussion of each of these six steps. However, the following slides address the EVALUATION OF ALTERNATIVES using the four ethical criteria: Kant’s categorical imperative, utilitarian ethics, virtue theory and conventional moral rules (and laws). Once students have applied the ethical criteria at step 3, they should have a good idea of the correct alternative. From there it is a matter of estimating the probability of the projected outcomes occurring, estimating costs and values, and then WRITING a justification. The written justification ensures that the reflective analysis has, indeed, taken place. This written justification also serves management well in communicating their decision to all stakeholders. Although all stakeholders might not agree with the decision chosen by management, they likely to react with less resistance than if the justification is not provided.

b) Which alternative will produce the most good and the least harm? a) Which alternative respects the rights and dignity of the stakeholders and can be universally applied? b) Which alternative will produce the most good and the least harm? a) For each decision alternative, identify the ramifications if everyone were to follow the principle that underlies that alternative. For each decision alternative, determine if you are respecting the stakeholders and not treating them merely as objects. b) Identify and weigh the costs and benefits to each stakeholder and determine if there is a solution that promotes the greatest good for the all of people. If there is no alternative that results only in good and no harm, choose the alternative that produces the most good and causes the least harm to all stakeholders. c) These are the types of rules that we find in many great religious traditions, such as rules against killing, stealing, and lying. Others rules are more local and particular to specific cultures such as rules about proper dress, relations between the sexes, respect for established authority, and so on. d) Will adopting this decision allow you to be at peace with yourself and improve your relationships with others? How would you feel when you share your decision with your most respected mentors, family members, friends? How would you feel if your actions were reported on the front page of The Wall Street Journal? c) Do any of the alternatives violate a conventional moral rule or law? d) Which alternative can you personally live with?

Ethical Dilemma: Beverage Sales in Schools and Overweight Children At this point a case should be introduced to the students and analyzed using the ethical decision-making criteria. This case is something that most students can readily empathize with since they are all familiar with high schools and vending machines on high-school campuses. Dr. Chia-An Chao, Indiana State University

Beverage Sales in Schools Soda sales supplement school budgets Up to 1/4 quarter of some schools’ budgets Exclusive access = significant fees GAO report: vending machines in schools 99% high schools 97% middle schools 83% elementary schools Facts. Source: Laborers’ Health and Safety Fund of North America.

Overweight Children and Adolescents Poor dietary habits and inactivity linked to increasing rates of obesity among children and adolescents Overweight children = > 85th percentile BM Index; Obese children = > 95th percentile 30% of children and adolescents are overweight; 15% are obese Facts. Source: CDC, National Center for Health Statistics, National Health and Nutrition Examination Survey.

Overweight Children and Adolescents An article in the International Journal of Pediatric Obesity predicted nearly 50% of North American children will be overweight by 2010 All are increasing Percentage of Obese Children Percentage of Obese Adolescents Boys Girls 1999 – 2000 16.0 14.5 1988 – 1994 11.6 11.0 1971 –1974 4.3 3.6 M F 1999 – 2000 15.5 1988 – 1994 11.3 9.7 1971 –1974 6.1 6.2 Facts. Source: CDC, National Center for Health Statistics, National Health and Nutrition Examination Survey.

Weight-Related Health Risks asthma diabetes hypertension orthopedic complications psychosocial effects and stigma Facts. Source: American Obesity Association.

Removing Sugary Beverages from Schools In May 2006, American Beverage Association (ABA) agreed to stop nearly all soda sales in public schools over a four-year period ABA plans to implement the changes at 75% of the nation’s public schools by the 2008 – 2009 school year, and 100% public schools a year later. Facts. Source: Laborers’ Health and Safety Fund of North America.

Case Study: Beverage Sales in Schools and Overweight Problems Middleburg High School (MHS) is in its second year of a five-year contract with a local beverage distributor. Under the current contract, MHS receives a minimum annual commission of $65,000. MHS uses the fund to supplement various operating expenditures and student clubs. If MHS renegotiates the contract to exclude unhealthy beverages, the commission may be lower. Ethical Dilemma: Should MHS continue its current contract until it terminates by 2010, or change it now? Ethical dilemma scenario.

A Framework for Moral Decision Making Problem recognition Identification of alternative actions Evaluation of alternative actions Estimation of outcome probabilities Calculation of expected values Justification The four ethical evaluation criteria (Kant’s categorical imperative, utilitarian theory, virtue theory and conventional moral rules will now be applied to each alternative:

Step 1. Problem recognition. Continuing the contract to sell unhealthy beverages to students or deciding NOT to continue the current contract, but then end up loosing money for the school. Actors: Students and MHS Other Actors: parents, community, society

Step 2. Identify alternative courses of action Alternative 1: Continue sales contract until its expiration. Alternative 2: Renegotiate current contract and stop selling unhealthy beverages.

Step 3. Evaluation of alternative courses of action

a) Which alternative respects the rights and dignity of the stakeholders and can be universally applied? What would happen to students and the obesity problem if all schools postpone halting the soda sales? Does continuing the sale of potentially unhealthy beverages to overweight students treat them with dignity? Does halting beverage sales treat non-overweight students with dignity? This is the application of Kant’s categorical imperative.

b) Which alternative will produce the most good and the least harm? By continuing the contract, MHS and its students will receive substantial financial benefits over the next three years. However, what would be the cost to the students? Families? MHS? Community? What would be the effects if renegotiating the contract to eliminate soda sales now? This is the application of utilitarian theory.

c) Do any of the alternatives violate a conventional moral rule? Would MHS violate any conventional moral rule or law should it choose to continue the soda sales contract until 2010? What about if it decided to stop soda sales? This tests whether any alternative breaks conventional moral rules. [Laws are established based on conventional moral rules. Conventional moral rules are derived from act utilitarian decisions. These decisions that best serve the needs of a society often become laws (such as swearing to tell the whole truth in a court of law).

d) Which alternative can you personally live with? Knowing the likely outcomes of continuing the current contract, would you feel good about the decision? How would you feel if it were in the newspaper? This is the application of Aristotelean virtue theory.

Step 5. Estimation of outcome probabilities Step 6. Calculation of expected values Step 7. Justification of action chosen Step 5. What is the likelihood that the outcomes will be as you estimate them to be? If there is very little chance of the outcomes actually occurring, the alternative should be considered with as much weight as other alternatives. Step 6. Do a cost and benefit analysis for each alternative and its likely effects (good and bad) on each actor. Step 7. WRITE OUT the justification of the alternative action chosen. The writing process ensures that the decision maker has engaged in serious reflective analysis and considered all steps and criteria. This written justification also serves as evidence that the analysis has been thorough. Further, it can be used to support the decision when explaining it to persons affected by the decision.

What did you decide? Can you justify your decision?

Questions

Additional Case Study Ideas International Business: what are the appropriate actions for dealing with unlicensed software use at a foreign subsidiary General Business/Business Law: should a company require its employees to quit smoking or else lose their jobs? Marketing: should a sales person sell a product that a customer doesn’t really need?