Essay: Ethical Decision-Making In Business: Transformative Skills And External Factors.

The Importance of Ethical Decision-Making

Discuss about the role of ethical decision making in becoming an effective manager.

Ethical decision-making as a term has evolved from this consideration. Managers across organizations are aware of this term and it gains increased importance with each passing day. It refers to the process by which the unethical alternatives are filtered and options that are more ethical are chosen for organizational management. One of the recent and most visible examples of ethical decision-making is the adoption of the green policy by businesses (Dane & Sonenshein, 2015). A part of the larger corporate social responsibility (CSR) that businesses include within their organizational policies, green policy is an example of ethical decision-making. Ethical decision-making is not confined to the decisions made by the group or the organization but it is also taken by the individuals on certain occasions. Whistle blowers are good examples of individual ethical decision-makers (Baker, 2017) (Appendix C).

Ethical decision-making has an important role to play in ensuring effective management as well. The vitality of ethics in decision-making – either in-group or individually – is realized when it is compensated or rewarded with increased consumer preference and consequent rewards (Vahlne & Johanson, 2017). Ethical decision-making also helps managers maintain equilibrium within the organizations where each employee feels valued. An instance of a good ethical decision made by a manager might include the provision for pregnant female employees to work as per their convenience and comfort. It could be included within the sphere of good managerial practice. Further, when managers succeed in maintaining a positive relationship with the employees, it leads to increase employee engagement and subsequent profit for the company as well.

The given essay provides a review of the literature on ethical decision-making in business and its contribution to organizational efficiency. The essay will primarily discuss the transformative skills of managers in decision-making and the external factors that influence decision-making. The succeeding sections of this essay will focus on the evaluation of personal ethical decision-making capabilities followed by the SMART goal plan.

Ethics in everyday life define the personality of individuals and distinguish them from others. In any scenario, ethics holds an important position because it shows the way people have been brought up. In the past, ethics and morality formed the basis on which every political and social decision, even economic decision was made. Many theorists and scholars over the years have proposed various skill sets that enable individuals to realize and execute ethical decisions. Wittmer (2016) states that the literature on ethical decision-making is scarce and previous studies did not encompass every element. Certain skills – both hard and soft skills – are required to be ethically competent, state the authors.   The first and crucial skill is the ability to apply diverse ethical assessment frameworks before deciding on a course of action. Another skill is the ability to visualize the different perspectives on each action taken (Howard, Tang & Austin, 2015). Apart from possessing these skills, theorists believe that individuals must also know about the various approaches that define ethical decision-making. In all, five common approaches to ethical decision-making include the utilitarian approach, the rights approach, the fairness approach, the common good approach and the virtue approach (Shapiro & Stefkovich, 2016).

Skills and Approaches to Ethical Decision-Making

The utilitarian approach states that individuals must make decisions depending on the harms and benefits it could cause to someone. In simpler words, utilitarianism states that any decision, which is morally right, produces benefits for everyone (Letwin et al., 2016). However, the approach has limitations in that it fails to take into account the benefits of everyone involved from the ‘morally right’ decision. In the contemporary and complex world, a morally right decision for one individual might be unethical for another individual. The rights approach on the other hand, bases itself on the moral rights of individuals. This approach states that some rights of the people must be acknowledged even if it not considered legal or constitutional. The fairness approach deals mostly with justice. Decision-making in life is largely based on the idea of justice. It refers to the treatment individuals receive based on certain characteristics. The common good approach is somewhat similar to the fairness approach barring the fact that common good refers to equal treatment or benefit for all whereas fairness does not ensure equality for all. The fifth and the final approach is the virtue approach that describes there are some ideals to which people should dedicate and commit. Virtues are the goodness that people possess.

In ethical decision-making, these approaches assist in establishing the ground on which decisions that are more important could be made. Lawton and Páez (2015) comment that the two approaches in particular – fairness approach and common good approach are helpful in making organizational decisions.   In the business context in particular, ethics is one of the most crucial elements of organizational management. Organizations are relied on the response they receive from their clients and customers who form their stakeholders’ base. Therefore, the decisions made within the organizations are taken considering the interests of both the shareholders and the larger community. According to Lehnert et al. (2016) ethical decision-making in the context of business, involve three categories that succeed the ethical decision behaviors. The three categories include individual differences, interpersonal variables and organizational variables. The author further presents contradictions regarding the approaches to ethical decision-making in business stating that multifarious approaches define the decision-making process. Ethical behaviors are influenced by individual differences. Individual differences refer to the different traits of personality that is unique to each individual. Sometimes, these unique personality traits collide and prove a barrier to ethical decision-making. As Uhlmann, Pizarro and Diermeier (2015) put it, the varying traits of personality result in the ethical dilemma while making any decision. Many instances are there within organizations where managers as well as employees are confronted with ethical dilemmas. The ethical dilemma also surfaces when the values upheld within the organization contrasts with the values upheld by an individual employee. The employee then enters into a dilemma of whether to support the organization in order to save his or her job or whether to hold on to his or her own ethical values. When an employee is mistreated at a company based on his or her racial or sexual orientation, it leads to a breach of ethics on part of the organization. Ethical dilemma happens when other employees realize the discrimination but struggle to decide whether to save their own job or support the discriminated employee.

Influence of Personality on Ethical Decision-Making

Personality is a factor that significantly influences the ethical decision-making process within an organization (Ruiz-Palomino & Banón-Gomis, 2016). It depends on the personality of the leader mostly whether the organizational decisions concern individual interest or the interests of the larger community. Nei et al. (2018) studied the different personalities of managers and leaders and found that negative personality like narcissism and cynicism resulted in poor ethical decision-making whereas positive personality like conscientiousness and agreeableness produced good outcomes. The findings further revealed that personality was linked to many of the social-behavioral response patterns that might further make managers aware of the influence of personality on ethical decision-making. Özba? (2016) on the other hand analyzed the five factor personality traits and its association with ethical decision-making and leadership. The author provided instances of companies like Enron and WorldCom to show the ways in leaders react to ethical scandals such as these. During the 2000s, Enron Corp, the energy company based in the U.S. was accused of forging financial statements in order to hide its losses (Cbc.ca, 2018). Enron CEO Jeffrey Skilling was charged with fraudulent activities that led to the company’s downfall. WorldCom, the U.S. telecom giant received similar fate during the same period when the audit team revealed that the company was not following accounting standards and forged its revenue statements. WorldCom chief Bernie Ebbers was found accountable on all charges and was sentenced to 25 years in prison along with former CFO Scott Sullivan (Theguardian.com, 2018). Another very recent case of the German automotive company Volkswagen further sheds light into the bad corporate decisions. In September 2015, the company came under scrutiny from the U.S. environment protection agency for violating emissions standard. The CEO Martin Winterkorn had to resign ultimately thus producing another chapter of failed ethical decision-making (Bbc.com, 2018). These three cases presented glaring examples of breach of ethics of the highest kind. The leaders in these two cases displayed the narcissist personality of leadership and made decisions that were completely against ethics.

The above discussion shows that ethical decision-making within business organizations are influenced by several factors. When an individual fails to reach a decision that concerns the wellbeing of the self and others, it leads to ethical dilemma. Personalities of individuals largely influence decision-making and the ethics associated with it.

In terms of possessing strong ethical values, I feel I lag behind many others. My personality is somewhere around between the narcissist and the conscientiousness. I am a person who thinks about his own interests first in any situation and then think about others. Nonetheless, I must assert that I do not believe in thinking only about me but prioritize my interests. I am in the boundary line between Adam Smith and Emanuel Kant’s philosophy (Appendix B).  In the above sections, I have mentioned about the skills and competencies that make a leader or a manager ethically sound. I have also mentioned different approaches to ethical decision-making. I have found that the approach I mostly follow in my life is the virtues approach, which demands the individual to make decision based on his virtues. Virtues are good qualities that people possess. I believe a decision that does not disturb any of my virtues, is ethical.

Examples of Ethical and Unethical Decision-Making in Business

After analyzing the results of the questionnaire, I have found that the results are in favor of what my personality is (Appendix A). However, the results also indicate that I am lagging behind the qualities that make an effective manager. In the questionnaire, the question about whether I have raised my voice against any unethical activities demonstrates my lack of judgment. I say this because I have witnessed, on several occasions that a person is unfairly treated but I felt that he deserved the treatment because he was from a different ethnic background. At that moment, I thought I was right in not raising my voice against it but later I realized that I was wrong. The results in contrast also indicate that I possess the capability to make my own decisions, which is a requirement to be an effective manager.

As has been mentioned already in the previous sections, managers must have the ability to apply varied frameworks of ethical assessment prior to take an action or making a decision. I believe that I have this skill because I have been in situations where I needed to take the call for the entire team during a class project. During the course of the project, I was faced with the dilemma of whether to proceed with the task without the presence of one of the members or not. I made the decision to go ahead because we had to finish before deadline. When the time of the presentation came, I made sure that the absent member was also given some credit because she had valid reasons for missing the project. In this case, I thought first about my own interest because I wanted to be praised for finishing the project on time but I also made sure that others were not left behind. The other skill to foresee the consequences of the decisions taken from other’s perspective is a skill that I believe I need to work upon in future.

The results of the questionnaire also implied that I do not uphold my protected values strongly. It has been found in the literature concerning ethical decision-making that certain individuals tend to be blinded by their protected values and fail to make ethical decisions. These protected values are inherent in an individual and have been passed on them by their families. However, in certain situations, making the right decision challenges these protected values.  In my case, I had to make a decision for the team that did not align with my protected values.  My protected values ask me to give equal opportunity to everyone irrespective of ethnicity, class or religion. However, when I made the decision to start the project without a team member, it turned out to be against my values. The member incidentally belonged to different ethnicity and my decision was projected as racially biased. Although I was able to clear, the situation but it did challenge my protected values.

After evaluation, I have identified three goals that I need to achieve. I have prepared the following SMART Goals Plan in order to achieve effective managerial skills for ethical decision-making:

Goal 2:

Conclusion

In the end, I must assert that the analysis undertaken by me in ethical decision-making helped largely to clarify certain assumptions I had previously held. In the essay, I delved upon the issues of ethical decision-making in general life and within the context of business. The primary focus of this essay was however to understand the decision-making processes that managers take within business organizations. I used relevant resources from the web including different journal articles to establish my analysis.

The literature review that I did helped a lot in comprehending the views and ideas put forth by other experts and scholars in this regard. Although I knew about the importance of ethics in business, this analysis helped me have a clearer understanding of the various approaches to it. Many authors have researched on the different approaches to ethical decision-making and found out that managers differ in the way they approach an ethical decision. With recent examples of Enron and WorldCom ethical decision-making blunder, I was able to understand clearly the role of leaders in making decisions. Personality of leaders, as I have understood after undertaking this study, matters most in situations where ethics come into question. The analysis also provided a deep insight into the ethical dilemmas faced by individuals in the workplace. I also evaluated my effectiveness as a manager in making decisions and based on that, prepared a SMART objective plan in order to improve

References:

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