Module 2 Reviewer
Module 2 Reviewer
As earlier stated, ethics refers to standards of behavior that tell us how people should
act in the many situations in which they find themselves – as children, parents, friends,
professionals, citizens, and so on.
Ethics and feelings are not the same. Feelings provide relevant insight for our ethical
choices. Some people have deeply rooted habits that make them feel bad when they do
something wrong, but many people are apathetic even though they are doing something
wrong. Our feelings will often caution us it is awkward to do the right thing if it is difficult.
Ethics is not religion. Many people may not be religious, but ethics is a concern to all.
Most religions do promote high ethical standards however generally do not deal with all
the sort of issues we tend to face.
Ethics does not mean just following the law. A good judicial system does include many
ethical standards, but at times the law can digress from what is ethical. It can deviate to
becoming ethically corrupt, as some authoritarian regimes have made it. It can serve
power alone and the interests of selected groups. The law may have a challenge
designing or imposing standards in some vital areas, and may be slow to address new
problems.
Ethics does not only mean pursuing traditionally accepted norms. Some traditions are
relatively ethical, but others become corrupt or oblivious to certain ethical matters.
Ethics is not science. Even if social and natural science can provide essential data to
help us make better ethical choices, it alone does not tell us what we should do. Ethics
provides grounds for how people should act.
If our ethics are not based on feelings, religion, law, accepted social norms, or science,
what are they based on? Five different sources of ethical standards are suggested.
Managers must steer clear of interfering with the fundamental rights of others in making
ethical decisions.
Distributive justice is a concept that holds that different treatment of people should not
be based on arbitrary characteristics. In the case of considerable differences, people
should be treated differently in consideration with the differences among them.
Procedural justice is one that rules should be clearly stated and consistently and
impartially enforced.
Each of the approaches helps us decide what standards of behavior can be deemed
ethical. However, there are still problems to be solved.
First, we may not concur on the content of some of these particular approaches. We
may not all be in agreement with the same set of human and civil rights.
We may not see eye to eye on what represents the common good. We may not even
agree on what is a good and what is bad.
Chapter 2: ETHICAL DECISION-MAKING: PERSONAL & PROFESSIONAL CONTEXTS
Second, the different approaches may not all answer the question "What is ethical?" in
the same way. Nonetheless, each approach gives us vital insight on what is ethical in a
particular circumstance. More often, the various approaches do point to similar answers.
Making Decisions
The more difficult the ethical choice we have to make, the more we need to discuss and
consult with others about the situation. Only by careful evaluation of the problem with
others, can we make good ethical choices.
The following is a framework for ethical decision-making which is a useful method for
evaluating ethical situations and identifying ethical courses of action.
Which alternative will generate the most good and produce the least harm? (The
Utilitarian Approach)
Which alternative respects most the rights of all who have a stake? (The Rights
Approach)
Which alternative treats people equally or fairly? (The Justice Approach)
Which alternative best serves the community as a whole, and not just some members?
(The Common Good Approach)
Which alternative leads me to act as the sort of person I want to be? (The Virtue
Approach)
Normally, one may think that there’s a lot of fortune and inspired leadership behind
successful choices such as Southwest’s. But if you examine closely, that’s not exactly
true. The leadership teams at AOL and Time Warner were hardly foolish.
Good decisions, like Southwest’s, are nearly always a consequence of healthy decision
processes. Similarly, decisions that go wrong, such as Time Warner’s, nearly always
result from procedural or organizational failures.
These five mistakes account for the vast majority of poor decisions:
An idealistic search for silver-bullet solutions. Most business problems are complex. But
many managers badly want a simple action that will leapfrog the competition or boost
an organization’s performance in one fell swoop. One example is when the corporation
reorganizes. Companies are reorganized by nearly half of CEOs in the first two years of
Chapter 2: ETHICAL DECISION-MAKING: PERSONAL & PROFESSIONAL CONTEXTS
their tenure. Many preside over various reforms. Yet less than one-third of these acts
produce any significant improvement in performance.
Before Fiat bought into Chrysler, it reorganized three times in the thirty-six months prior
to its sale. Each time, management believed the reorganization would turn around the
ailing automaker. Each time, nothing happened.
So the next time you are asked, “Is there an easy resolution to this problem?” be
prepared to answer, “Perhaps not.”
Failure to consider alternatives explicitly. Business is a play of choices, and you can’t
make good choices without worthy alternatives. However, most organizations do not
clearly formulate and evaluate alternatives in making big decisions. What do you think
might have happened if the team at Time Warner had considered other alternatives for
venturing into the world wide web: strategic partnerships, joint-venture deals, even
increased growth of the company’s own capabilities. The habit of formulating and
evaluating clear alternatives greatly improves the quality of decision-making.
Too many people involved. Vital decisions are difficult to make in large groups. At times,
crucial points don’t get discussed thoroughly. Different personalities interfere with
reason and argument.
In fact, research highlights the “Rule of 7”: for every individual you add to a group
beyond seven, decision effectiveness declines by 10 percent. Apple Computer and
Facebook are successful because of their highly streamlined decision-making models.
At Ford Motor Co., the senior leadership team attends to the company’s most important
decisions in “special attention” meetings for a small group of executives.
The next time you receive a notice of meeting with more than fifteen invitees, ask
yourself: “Are we really going to be productive and make significant decisions in this
forum?”
Failure to consider opportunity cost. The decision to begin doing something different is
only one form of high-stakes decision. Another—often with equally big results—is to
continue what you’re doing. The decision not to terminate an uncompetitive product line
or leave an unprofitable market can consume whatever little management time and
other resources there are. Yet few executives value the opportunity cost associated with
pursuing with a losing project. Blockbuster’s failure to shut down its legacy bricks-and-
mortar operations and transfer attention to home delivery and digital downloading
doomed the once-powerful retailer.
Chapter 2: ETHICAL DECISION-MAKING: PERSONAL & PROFESSIONAL CONTEXTS
The next time you are considering keeping an ailing operation, ask yourself: “Where
else could we invest the resources that this business is eating up?”
The next time you are thinking through a big-stakes decision ask yourself: “What
happens first thing Monday morning? What behaviors will have to change?”
When big-stakes decisions go awry, it is typically because the organization has fallen
victim to one or more of these failures. Success will not come by avoiding them but it
will greatly increase the chance of a better decision.
Let’s not forget that managers are responsible for advocating ethical standards in their
own behaviors and decisions. Managers may be required to follow a separate
professional code of ethics, depending on their role, responsibilities, and training, in
addition to following the organization's ethical code.
Managers are also responsible for interacting with external stakeholders such as
customers, local community, government officials, suppliers, or owners. In those
interactions, managers may be tasked to explain a decision or a planned action in
connection with ethical considerations. The stakeholders will be interested to hear how
Chapter 2: ETHICAL DECISION-MAKING: PERSONAL & PROFESSIONAL CONTEXTS
the organization took ethics into account, and in those cases it is the manager's duty to
speak on the company's behalf.
Stakeholder Map
Employees
Owners Customers
The
Corporation
Suppliers Local
Community
Government