1. Ethical Decision Making
Chapter Five
Ethical Decision Making
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Copyright © John Wiley & Sons

2. Describe individual characteristics that impact ethical beliefs, sensitivities, intentions, and behaviors
Analyze the processes by which general ethical beliefs and sensitivities lead to the formation of specific ethical intentions
Apply a systematic rational ethical decision-making framework to arrive at a moral conclusion
Facilitate a negotiation between competing ethical perspectives
Recognize warning signs that an unethical decision is approaching
Chapter 5
Learning Objectives
Chapter 5: Collins, Business Ethics

3. Ethical Behavior Model
James Rest has developed a four-component
model sequentially showing that an individual
is likely to behave morally if he or she:
Is aware that an ethical dilemma has arisen
Forms a moral judgment
Develops motivation to do something about it and
Is a person of high moral character
As noted by business ethicist Marvin Brown, “Most people do what they think is right, considering the world they think they live in.”
When a person says “I know this is wrong but I’m going to do it anyway,” the person is quickly translating the apparent wrong behavior as the right thing to do in the moment
Chapter 5: Collins, Business Ethics

4. Exhibit 5.1 Decline from Ethical Belief to Ethical Action
In general, ethical beliefs generate ethical intentions and result in ethical behaviors. But there is typically a drop off going from one step to the next.
Insert Exhibit 5.1
Chapter 5: Collins, Business Ethics

5. Ethical Behavior Model
The gap between ethical belief and ethical intent in Exhibit 5.1 can be caused by not wanting to create a negative relationship with the coworker
Another big gap exists between “should” and “did”
Why did a large percentage of managers who claimed they would report the cheater not follow up on the ethical intention?
Chapter 5: Collins, Business Ethics

6. Exhibit 5.2 Ethical Behavior Model
Insert Exhibit 5.2
Chapter 5: Collins, Business Ethics

7. Ethical Behavior Model
Individual Characteristics (A)
Individual factors that have the largest impact
on ethical decision making are:
More education
More work experience
Religion
Reasoning at a higher level of moral development
A higher score for deontology or idealism
A lower score for relativism, teleology, economic orientation, or Machiavellianism
Some evidence suggests that being a woman, having a high internal locus of control, and being a U.S. citizen are positively related to ethical decision making as well
Chapter 5: Collins, Business Ethics

8. Exhibit 5.3 Individual Characteristics
Insert Exhibit 5.3
Chapter 5: Collins, Business Ethics

9. Ethical Behavior Model
Ethical Beliefs and Sensitivities (B)
A belief is a mental state that guides behaviors
Ethical sensitivity refers to an individual’s awareness that a particular situation raises ethical concerns
Ethical beliefs and sensitivities are the result of a host of individual characteristics, such as age, education, moral development level, or work experience
How much effort an employee exerts at work is an ethical issue. Not working hard can add to the work burdens of other employees, which is not fair. But not everyone is sensitive to that dynamic
Ethical sensitivities are essential because they impact behavior and the lives of other people
People cannot intend to behave ethically if they do not think there is an ethical issue at stake
Chapter 5: Collins, Business Ethics

10. Ethical Behavior Model
Ethical Intuitions (C)
Ethical intuition is a quick insight independent of any reasoning process about right and wrong
Professor Jonathan Haidt concludes that many ethical decisions are the result of intuitive reactions rather than deep reflection
According to Haidt, our quick intuitive ethical judgments are the result of habituated patterns, emotions, and internalized teachings
To understand the nature of ethical intuitions, Haidt and his colleagues researched the apparent large difference in ethical intuitions liberals and conservatives have to public policy issues (see next slide)
Chapter 5: Collins, Business Ethics

11. Exhibit 5.4 Liberal and Conservative Ethical Intuitions-What Matters Most
Insert Exhibit 5.4
Chapter 5: Collins, Business Ethics

12. Ethical Behavior Model
Theory of Planned Behavior (D)
According to Icek Ajzen’s theory of planned behavior, formulating an intention to act ethically is a function of a person’s attitudes toward the behavior, subjective norms, and perceived behavioral control
The theory of planned behavior is useful for understanding precursors to ethical behavior
Employees will behave ethically if the desired behavior fits their belief system, they personally have a strong desire to behave ethically, others at work desire the ethical behavior, and the employee has the ability and resources available to follow through on the ethical behavior
Chapter 5: Collins, Business Ethics

13. Ethical Behavior Model
Issue’s Moral Intensity (E)
Moral intensity refers to issue-related factors, rather than individual or organizational factors, that are likely to determine the magnitude of a person’s moral approval or disapproval
According to business ethics scholar Tom Jones, an issue’s moral intensity is likely to vary based on six factors
Chapter 5: Collins, Business Ethics

14. Ethical Behavior Model
The six factors:
Magnitude of consequences
Social consensus
Probability of effect
Temporal immediacy
Proximity
Concentration of effect
Magnitude of consequences refers to the total sum of harms and benefits generated by an act
Social consensus refers to the degree of social agreement that an act is good or bad
Probability of effect refers to the probability that an act’s effect will actually occur or cause the predicted harm
Temporal immediacy refers to the length of time between an act and the onset of consequences
Proximity refers to the nearness of an act to its victims and beneficiaries
Concentration of effect refers to the amount of harm an act will create in a concentrated area
Chapter 5: Collins, Business Ethics

15. Ethical Behavior Model
Organization Characteristics (F)
O’Fallon and Butterfield, in their extensive review of the business ethics research literature, found four organizational characteristics associated with ethical behaviors
Codes of Ethics
Ethical Climate/Culture
Organization Size
Rewards and Sanctions
Employees of organizations with a Code of Ethics, an ethical climate, and whose managers reward ethical behavior and punish unethical behaviors are more likely to make better ethical decisions
Chapter 5: Collins, Business Ethics

16. Ethical Behavior Model
Ethical Intentions (G)
An ethical intention is determining mentally to take some action that is morally appropriate
But even if an intention to act ethically is solidified, an individual still may not follow through on the ethical intention
Second doubts can arise and the decision maker reanalyzes the importance or anticipated outcomes of some of the previous mediating factors between ethical beliefs and intentions
Obstacles that divert someone from not acting on an ethical intention include second doubts, weakness of will, lack of moral courage, and old habits
Chapter 5: Collins, Business Ethics

17. Rational Ethical Decision Making
Rational Ethical Decision Making (H)
After an initial intention is formed, some people pause and apply a more rational approach to ethical decision making
Rational ethical decision-making frameworks help individuals analyze the ethical basis of their decisions and actions
Employees arrive at organizations with a set of preconceived ideas about right and wrong
People develop ethical intentions based on ethical intuitions and other extenuating circumstances
Chapter 5: Collins, Business Ethics

18. Rational Ethical Decision Making
Rotary International’s Four-Way Test:
Of the things we think, say, or do,
Is it the TRUTH?
Is it FAIR to all concerned?
Will it build GOODWILL and BETTER FRIENDSHIPS?
Will it be BENEFICIAL to all concerned?
The Four-Way Test was created in 1932, when Chicago businessman Herbert Taylor met with four of his managers, each practicing a different religion, to develop a set of ethical principles to guide managerial decisions and ensure business success
Chapter 5: Collins, Business Ethics

19. Rational Ethical Decision Making
Raytheon’s Ethics Quick Test:
Is the action legal?
Is it right?
Who will be affected?
Does it fit Raytheon’s values?
How will I feel afterwards?
How would it look in the newspaper?
Will it reflect poorly on the company?
Chapter 5: Collins, Business Ethics

20. Rational Ethical Decision Making
A Systematic Rational Ethical Decision-Making Framework
Insert Exhibit 5.5
The seven-question framework can help managers reach a moral conclusion regarding the rightness or wrongness of any decision
Note how the “legal” answer is not the highest ethical theory (Question 4)
Chapter 5: Collins, Business Ethics

21. Rational Ethical Decision Making
The Six Ethical Theories
Insert Exhibit 5.6
People naturally make decisions based on self-interest
Individuals tend to be very concerned about how their actions and the actions of others impact their own well-being
People have strong preference for actions that improve their financial condition, and an aversion for actions that worsen their financial condition
Chapter 5: Collins, Business Ethics

22. Rational Ethical Decision Making
The “Trolley Problem”: A series of three ethical dilemmas developed by moral philosophers that highlight the tension between utilitarianism and deontology
Organizations need managers who are deontologists, ensuring that every stakeholder is respected all the time
Chapter 5: Collins, Business Ethics

23. Rational Ethical Decision Making
Insert Exhibit 5.7
Chapter 5: Collins, Business Ethics

24. Rational Ethical Decision Making
The six ethical theories parallel Lawrence Kohlberg’s six levels of moral reasoning
As shown in Exhibit 5.9 (next slide), moral reasoning in Stages 1 and 2 reflects egoism, Stage 3 moral reasoning reflects social group relativism, Stage 4 moral reasoning reflects cultural relativism, stage 5 reflects utilitarianism and deontology, and Stage 6 reflects deontology and virtue ethics
Chapter 5: Collins, Business Ethics

25. Exhibit 5.9 Kohlberg’s Stages of Moral Development and Ethical Theories
Insert Exhibit 5.9
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26. Rational Ethical Decision Making
Rushworth Kidder and his colleagues have found strong consensus among five values, or virtues, that are common worldwide
Insert Exhibit 5.10
No matter where in the world a person may be, people in that nation value individuals who are responsible, fair, respectful, compassionate, and honest
Chapter 5: Collins, Business Ethics

27. Rational Ethical Decision Making
Each ethical theory raises important issues for the decision maker to consider, and each theory has strengths and weaknesses
Applying the seven questions (see next slide) to the most salient ethical dilemmas will likely reveal that each decision option has strengths and weaknesses, and ethical trade-offs might be required
Chapter 5: Collins, Business Ethics

28. Exhibit 5.11 Critical Thinking Decision-Making Process Table
Insert Exhibit 5.11
Chapter 5: Collins, Business Ethics

29. Persuading Others
A manager’s failure to engage employees who apply different ethical theories can damage employee morale and result in unethical behaviors and lawsuits
Insert Tips and Techniques “Achieving Ethical Consensus”
Most people are very comfortable with the ethical theory they intuitively rely on, and they may feel annoyed when others question their decisions
Chapter 5: Collins, Business Ethics

30. Ten “Ethical Hazard Approaching” Signs
Michael Josephson describes 10 common rationalizations for unethical acts
Insert Exhibit 5.12
Train employees to recognize these rationalizations
Chapter 5: Collins, Business Ethics