CHAPTER 4

ETHICAL DECISION MAKING

 ETHICAL ISSUE

• An ethical issue is a situation in which it requires individuals or organizations to

choose actions that are evaluated as right or wrong, ethical or unethical.
• An ethical issue is a problem that encompasses ethical aspects and is approached from
ethical perspective.
• The differences between ethical issues and other types of issues: there are criteria for
evaluating ethical issues which is based on ethical standards, while there are none for
other types of issues.
 ORIGIN OF ETHICAL ISSUE

• Ethical issue origins from conflict.

• Conflicts may arise within an individual (internal conflict) or within relationships
(people with people).
• Example:
- The effort to achieve business objectives may conflict with employees' efforts to
attain their personal goals.
- Consumers' desire for safe and high-quality products may conflict with
manufacturers' goal of maximizing profit.
 ORIGIN OF ETHICAL ISSUE

From relationship perspective:

• Conflicts among employees
• Conflicts between employees and managers; subordinates and superiors
• Conflicts between managers and shareholders
• Conflicts among functional departments within organisation
• Conflicts between businesses and external stakeholders
 ORIGIN OF ETHICAL ISSUE

From nature-based perspective:

• Conflicts over philosophy, values, and norms (cultural conflicts)
• Conflicts over power and rights to use power
• Conflicts over functions and operations (coordination conflicts)
• Conflicts over interests and objectives
• Conflicts between ownership rights and the right to use resources
• Conflicts arising from living conditions, personal preferences, etc.
 IDENTIFY ETHICAL ISSUE

How to know if an issue is ethical issue:

• A situation that frequently causes discomfort or harm to individuals or
stakeholders.
• A situation that is not openly and transparently discussed among the relevant
parties.
• A situation that generates diverse opinions or significant debate when discussed.
• A situation that encounters widespread disagreement.
• A situation presented with unclear or ambiguous information.
• …
 IDENTIFY ETHICAL ISSUE

Identify ethical issue through (internal/external) stakeholders:

• Identify internal and external stakeholders.
• Survey stakeholders’ perspectives, thoughts, feelings, and level of agreement
regarding the situation.
• Identify ethical issues through conflicts arising from different stakeholder.
 ETHICAL ISSUE INTENSITY

• Ethical issue intensity: can be defined as the relevance or importance of an event

or decision in the eyes of the individual, work group, and/or organization.
• Ethical issue intensity reflects the ethical sensitivity of the individual and/or
work group facing the ethical decision-making process.
• Individuals’ moral or value intensity increases their perceptiveness of potential
ethical problems, which in turn reduces their intention to act unethically.
• Different individuals perceive the intensity of an ethical issue differently, which
can lead to conflicts between individuals.
 HANDLING ETHICAL ISSUE

1. Gathering information and clarify situation

2. Identifying stakeholders
3. Identifying ethical issues
4. Identifying internal and external reasons
5. Proposing solutions for stakeholders
6. Following results and learn from experiences
 ETHICAL DECISION MAKING PROCESS

• Step 1: Gathering information and processing into data

• Step 2: Clarifying relevant ethical issues
• Step 3: Identifying internal, external stakeholders and their concerns
• Step 4: Identifying solutions
• Step 5: Evaluating influences of each solution to stakeholders
• Step 6: Making decision
• Step 7: Following results and learn from experiences
 ETHICAL DECISION MAKING PROCESS

Step 1: Gathering information and processing into data

• Objectively investigate related facts; raise relevant questions (Who, What,
Where, When, How, and Why?).
• Distinguish facts from opinions.
• Each individual may have different perceptions of the situation.
• Avoid rushing to conclusions without sufficient facts.
• The challenge lies under the uncertainty of the facts and insufficient information,
assumptions may be made but should be clarified later.
• Utilize multiple diverse perspectives to analyze the situation.
 ETHICAL DECISION MAKING PROCESS

Step 2: Clarifying relevant ethical issues

• Consider the ethical issues involved in the situation or the decision to be made.
• Identify the ethical foundation for addressing the issues.
• Avoid focusing solely on immediate concerns while neglecting the broader,
long-term ethical implications.
• Not rush to find solutions before fully understanding the ethical issues in the
situation.
• Evaluate decisions from multiple perspectives.
• If multiple ethical issues exist, consider them sequentially based on priority.
 ETHICAL DECISION MAKING PROCESS

Step 3: Identifying internal, external stakeholders and their concerns

• Who are the stakeholders in the situation? Why are they related to the situation?
• How are they affected?
• What are their concerns and interests?
• What is their relationship with company?
• How do they influence the company’s decision-making?
• Do they have any priority rights?
• What are the relationships and interconnections among stakeholders?
 ETHICAL DECISION MAKING PROCESS

Step 4: Identifying solutions

• Do not only focus on popular solutions but also consider alternative approaches,
including less commonly solutions.
• Ensure that decisions are not influenced by pressure or coercion; maintain
objectivity.
• Strive to develop multiple possible solutions.
• Visualize how the situation will be solved with each proposed solution from
different perspectives.
 ETHICAL DECISION MAKING PROCESS
Step 5: Evaluating influences of each solution to stakeholders
• Who benefits? Who suffers? What are the specific gains and losses?
• Magnitude of consequences: Are the effects short-term or long-term? What is the
likelihood of occurrence?
• Responsibilities, rights and relevant principles: What legal or regulatory
frameworks apply? Is the decision fair or biased?
• Ways to mitigate or compensate for harm: How can negative impacts be
minimized or addressed?
• How to enhance good outcomes?
• How to protect the rights of stakeholders?
 ETHICAL DECISION MAKING PROCESS

Step 5: Evaluating influences of each solution to stakeholders

• Every decision (or action) reflects the decision maker.
• Who will I become after making this decision? What potential consequences
might this decision have for myself?Would I feel comfortable if my decision
were made public?
• What were the outcomes of handling similar situations in the past?
• Put yourself in others' positions; discuss with others to gather additional
perspectives and insights.
 ETHICAL DECISION MAKING PROCESS

Step 6: Making decision

• The decision need to be clearly explained and transparently announced to
relevant stakeholders.
• Consider the time, location, and involvement of other parties when announcing
decision.
• Determine the method and content of the decision announcement.
• Consider about the plan which is used to carry out the decision.
• Address the use and allocation of resources needed for execution.
• Develop strategies to handle opposition or conflicting viewpoints.
 ETHICAL DECISION MAKING PROCESS

Step 7: Following results and learn from experiences

• Measure and compare outcomes with expectations.
• Adjust the decision if necessary.
• Address mistakes in the implementation process.
• Draw lessons learned for future situations or similar cases.