Ethical Decision Making 1 Ethical Decision Making Dhanasekhar Damodaram Course: MGT/350 – Critical Thinking: Strategies in Decision Making -UoP Instructor: John R. Sessions September 29, 2003 Ethical Decision Making 2 Ethical Decision Making Introduction Ethical decision-making is about acting with integrity and taking responsibility in every decision one makes in personal and professional life. It is about doing one’s moral duty keeping the values, principles and beliefs in mind. An ethical conflict arises when the values, principles and beliefs are in conflict. In my workplace, everyone is expected to do what is right by considering every aspect of business and make decisions by taking into account every stakeholders needs. Recent high-profile corporate scandals like Enron, WorldCom have damaged investor confidence in public companies. Fallout from these scandals includes lawsuits, bankruptcies and some of the most wide-ranging corporate governance legislation ever. While ethical behavior and decision making is important in its own right, it is very important for business as it fosters customer and client trust and avoids such fallouts. It is very important to have code of ethics and continue to live and make decisions by the code of ethical conduct. Important of Ethical Decision It is important to remember that a strong value system based on integrity and accountability is vital for the success of the individual as well as the organization. Never the company’s reputation for integrity and business ethics should be taken for granted. To maintain that reputation, everyone in the organization must follow all of the established ethical codes and business guidelines and exercise good judgment in every decisions and actions that involves them. It's no exaggeration to say that a company’s integrity and reputation are in the employee hands. That includes every one including starting from the senior management to first line of employees. If the aspect of ethics is left unattended, it will impact the organizational health. On the contrary, effective ethics management will lead to long-term business results and employee/customer satisfaction. Ethical Decision Making 3 It is apparent from recent corporate compliance and ethical failures that the need to focus organizations on compliance, business conduct and ethics has never been more critical. Recent ethical failures by corporations, and the resulting crisis in public and investor confidence, have had detrimental effects on our economy and society. Moreover, rapid changes in the industry also present new ethical and legal challenges. It therefore becomes very important to consider all aspects while interpreting a data and applying the ethical code of conduct before making a decision. Ground Rules on Ethics Having said how important it is to make ethical decisions, in order to facilitate the ethical decision making for everyone in the organization, it is important to have set of ethical ground rules established. The responsibility of establishing such guidelines lies with leaders in the organization. In my workplace, leaders set the standards for ethical excellence, not just for products and services and "meeting the numbers." Ethics creates a framework for correct actions and links corporate employees, customers, suppliers, shareholders, the community, and future generations. The ethical element of leadership bonds these stakeholders together, especially when times are tough. Good business ethics is the ability to reason and operate within a sound ethics system with clarity and consistency. A well-defined ethics policy along with an outline of related standards of conduct provides the framework for ethical, moral behavior within a company. To build such a guideline, it is recommended to use the values recommended by “Six Pillars of Character” developed by The Josephson Institute of ethics namely Trustworthiness: honesty, integrity, promise-keeping, loyalty Respect: autonomy, privacy, dignity, courtesy, tolerance, acceptance Responsibility: accountability, pursuit of excellence Ethical Decision Making 4 Caring: compassion, consideration, giving, sharing, kindness, loving Justice and fairness: procedural fairness, impartiality, consistency, equity, equality, due process Civic virtue and citizenship: law abiding, community service, protection of environment Keeping the above said ethical values as the framework; we can workout specific guidelines that apply to the workplace. In our organization, we have a well-developed ethics program, which is capable of nurturing ethically grounded policies and procedures, competent ethics resources, and broader corporate support for ethical action. Our programs seek to encourage all personnel to become attentive to the ethical implications of the work they are engaged in. We have business conduct guidelines that address various aspects on business including: Emphasis on personal judgment, responsibility, and accountability Ethical and lawful competition Focus on protecting organization’s intellectual property Duties to avoid conflicts of interest Respect for others Obligation to report unethical behavior All business dealings must be ethical and lawful whether it is selling, buying or representing an organization in any capacity Never make misrepresentations or dishonest statements to anyone Ensure honesty based clear communication Never make false or misleading statements Never involve in harmful disclosure of information These ground rules will help to make the individual realize that they are accountable for every actions and choices they make. It is aimed to increase the individual’s commitment Ethical Decision Making 5 to personal, professional and organizational excellence. It is also important to ensure that the employees understand that the main reason for having ethical policy and guidelines is not to provide a cookbook solution for workplace actions, but to guide them in the decision- making process for situations that involve ethical questions. Ethical Implications of the decision We have seen in the recent past many organizations and key executives lose customer trust and ultimately disappear due to ethical implications of their decisions. Enron is one such example, where its corporate executives kept telling the employees that all was well while shedding their shares as the market collapsed. The people assigned from Arthur Anderson as Enron’s corporate watchdogs helped Enron executives hide the financial problems instead of regulating the organization. The failure of Enron, Arthur Anderson and similar ethical failures caused the market and U.S. millions of dollars. So it is very important to make the right decision by applying critical thinking and taking the ethical and moral values into consideration. Any successful and established company is distinguished by its reputation and standing in the market. Once the company allows its business practices and ethics to come under question, it loses its most valuable asset – the customer’s trust. The firm Arthur Andersen stands as a testament to the fate of such companies. Impact of decision on the ground rules Whenever an unethical decision is detected, it will have an impact on the ground rules. With the growing complexity of the global organization and diverse cultures, the ethical ground rules and guidelines needs to be updated frequently to cater and address all the various possible scenarios. In the case of Enron, the decision made by the management team didn’t follow any of the basic ethical codes, there by setting the organization and the industry to fail. This failure has resulted in Securities and Exchange Commission (SEC) bringing various reforms to promote corporate accountability in order to restore the public Ethical Decision Making 6 confidence. This corrective action applies to the corporate world as well. Whenever, an unethical conduct is identified in the workplace, it is important to bring this to the attention of all the staff and to remind them about the importance of following ethical guidelines. If the identified misconduct is a new one, the ethical guidelines need to amend to address the identified situation. Concluding Thoughts In conclusion, it is very important to be aware of the impact of ethical decisions. Ethical decisions are made based on the standards an individual uses to decide what the right conduct would be. These decisions almost, always, involve morality or societies accepted norm of behavior. An ethical decision may or may not be legal and what is legally right may or may not be ethical. Every decision or action an individual makes reflects his or her moral and ethical standards. Therefore, it is very important to establish a standard code of ethics in workplace to avoid any misrepresentation by individuals. Also, Ethics is not about staying out of trouble; it is about building corporate strength. This needs to be emphasized in the ethical programs run by the organization. . Ethical Decision Making 7 Reference M. Neal Brown, Stuart M. Keeley, Morgan W. McCall, Jr., and Robert E. Kaplan. Readings in Critical Thinking, [University of Phoenix e-text]. Needham Heights, MA. Pearson Custom Publishing, 2001 Donaldson, T., & Werhane, P. H. (Eds.). (2002). Ethical issues in business: A philosophical approach (7th ed.). Upper Saddle River, NJ: Prentice Hall.