1. 1 Making Ethical Decisions David Long Canterbury Christ Church University IPW Helsinki Metropolia Business School, Finland May 13 – 17 2013

2. 2 Aims of this Lecture To explore: Why both ethical and unethical decisions get made in the workplace; Individual differences shaping ethical decision- making; The effect of situational influences on ethical decision-making.

3. Pluralism? For practical purposes of making effective decisions in business: There is no one theory or approach which is the best or true view of a moral dilemma A variety of theoretical approaches throw light from different angles on any particular problem Theories and views about ethics should be regarded as complementary rather than mutually exclusive Pluralism is a middle ground between moral absolutism and relativism Crane & Matten, 2010

4. Recognise Moral Issue Make Moral Judgement Establish Moral Intent Engage in Moral Behaviour Stages in Ethical Decision Making Source: Crane & Matten 2010 The Ethical Decision Making Process:

5. 5 Influences on Ethical Decision-Making Two broad categories: individual and situational (Ford and Richardson 1994):   Individual factors - The unique characteristics of the individual actually making the relevant decision.   birth factors   acquired by experience and socialisation   Situational factors - The particular features of the context that influence whether the individual will make an ethical or unethical decision. the ethical framing of the issue. the issue itself (such as the intensity of the moral issue).

6. Personal Values Opportunity Significant Others: Managers & Peers Ethical Decisions Significant Others are the Most Influential Factor in Ethical, Organisational Decision Making Source: Ferrell, Fraedrich & Ferrell 2002

7. 7 Individual Ethical Decisions Age and Gender National and Cultural Characteristics Education & Employment Personal Values and Integrity Moral Imagination Psychological Factors (source: Crane & Matten 2007 p137) Individual Influences on Ethical Decision-Making Locus of Control

8. 8 Kohlberg’s Cognitive Moral Development: different levels of ethical reasoning Stage 2 Follow rules only if in own interests Stage 1 Obey rules And avoid punishment Stage 3 Conform To meet expectations of others Stage 4 Broader Consideration of social accord Stage 5 Understand rights and values are relative Stage 6 Autonomous decisions act with integrity Pre-Conventional Usually associated with children Conventional Most people think This way Post-Conventional Virtuous people with a strong internal moral compass Moral Development e.g unofficial covering for a colleague e.g personal use of company resources e.g not purchasing products tested on animals (source: Crane & Matten 2007 p142)

9. 9 So, Why do Good People Make Unethical Choices? Challenge of how to hold on to your integrity and values, despite organisational pressures that create moral dilemmas! Reality is often making the ‘least worst’ choice Factors contributing to organisational misconduct:   Bad examples   Alien cultural environment   Blaming the victim   Failure of individual moral responsibility (Green R The Ethical Manager).

10. 10 Pressures in the Workplace Pressure to perform   From superiors   ‘Bottom line’ management Rewards and punishment   Do people get promoted for ethical behaviour?   People generally do what is rewarded   Less likely to do what is punished Peer pressure   To go with the crowd   Group norms   Need to be accepted and fear of being ostracized.

11. 11 Explaining Unethical Behaviour   Ethical distance Moral conscience diluted by psychological distance   Diffused Responsibility No single individual responsible in a group/team ‘Group think’ shared decisions Obscured by hierarchies   Rationalisation of unethical behaviour ‘Everyone’s doing it’ People are more likely to recognise acts as unethical if there is a social consensus.

12. 12 Abstraction to Escape Moral Responsibility  Gabriel Marcel (1962) Man Against Society  ‘Abstraction’ – a way of distancing ourselves from ethical problems  Power of abstraction – at the root of war  Use of abstract terms – the enemy, terrorists etc  The more we remove ourselves from regarding others as human beings, the more we will be willing to do outrageous things to them.

13. 13 The Concept of Neutralisation A term used to explain behaviour that is at odds with an individual’s preferred option or is incongruent with accepted social norms. Typical examples might be: Delinquent behaviour The moral injunction of killing does not apply in war Consumer choices at the supermarket (Source: Chatzidakis et al Journal of Business Ethics (2007) 74: 89-100)

14. 14 Five Categories of Neutralisation 1.Denial of responsibility – “its not my fault” 2.Denial of injury or benefit – “what’s the big deal?” 3.Denial of victim – “its their fault” 4.Condemning the condemners – “it’s a joke after what they’ve done” 5.Appeal to higher authorities – “I did it for you” (Source: Chatzidakis et al Journal of Business Ethics (2007) 74: 89-100)

15. 15 Managing Ethical Behaviour   Loyalty to the group   Can be powerful and difficult to counteract   Roles   Role models and setting of standards   Professionalism (ethical behaviour more likely)   Use of power   Conflicting roles (can lead to unethical behaviour).

16. Institute of Business Ethics Decision Making Framework   Transparency – Do I mind others knowing what I have intended?   Effect - Who does my decision affect or hurt?   Fairness – Would my decision be considered fair by those affected? (Institute of Business Ethics 2011)

17. “All that is necessary for evil to triumph is for good men and women to do nothing”. Edmund Burke

18. 18 Making Ethical Decisions -Summary In this lecture we have:   Discussed the stages of ethical decision- making in business   Outlined individual and situational influences on ethical decision-making   Evaluated why good people often make unethical decisions in business.