Model in Action

Using the ethical decision-making model as described in the link in this week’s study materials, apply the model to a real business situation in the news. Please choose a business situation from the past several years. Write a 1-2 page paper describing the factual background of the situation you chose, and then offer an explanation for each of the six steps from the ethical decision-making model.

Model:

 A Framework for Ethical Decision-Making In Business

The model of the ethical decision-making process in business includes ethical issue intensity, individual factors such as individual moral philosophy, organizational factors such as corporate culture, and opportunity; these factors are interrelated and influence business ethics evaluations and intentions that result in ethical or unethical behavior.

1. Ethical Issue Intensity
   1. The first step in ethical decision-making is to recognize that an ethical issue exists. It requires an individual or work group to make a choice that will be evaluated as right or wrong by various stakeholders.
   2. Ethical issue intensity is the perceived relevance or importance of an ethical issue to the individual, work group, and/or organization.
      1. It is personal and temporal in character in order to accommodate values, beliefs, needs, perceptions, situational characteristics, and personal pressures.
   3. Ethical issue intensity reflects the ethical sensitivity of the individual or work group facing the ethical decision-making process.
      1. Research suggests that individuals are subject to six “spheres of influence” when confronted with ethical choices-the workplace, family, religion, legal system, community and profession-and that the level of importance of each of these influences varies depending on how important the decision maker perceives the issue.
      2. Other factors in the ethical decision-making process model, including individual factors, organizational factors, and intentions, determine why ethical issues are perceived differently by different individuals.
   4. The more likely individuals are to perceive an ethical issue as important, the less likely they are to engage in questionable or unethical behavior associated with the issue.
2. Individual Factors
   1. People often base their decisions on their values and principles of right or wrong, which they learned through socialization by family members, social groups, church, and formal education.
   2. In the workplace, personal ethical issues relate to honesty, conflicts of interest, discrimination, nepotism, and theft of resources.
3. Organizational Factors
   1. In the workplace, an organization’s values often have greater influence on decisions than do a person’s own values.
      1. Ethical choices in business are most often made jointly, in work groups and committees, or in conversations and discussions with coworkers.
   2. Corporate Culture
      A corporate culture can be defined as a set of values, beliefs, goals, norms, and problem solving methods that members (employees) of an organization share.
      1. A company or organization comes to be seen as a living organism, with a mind and will of its own.
      2. An important component of corporate, or organizational, culture is the ethical climate, which can be thought of as the character or decision processes used to determine whether responses to issues are right or wrong.
         1. Ethical climate is a function of many factors, including corporate policies on ethics, top-management’s leadership with regard to ethical issues, the influence of coworkers, and the opportunity for unethical behavior.
      3. The more ethical an organization’s culture is perceived to be, the less likely it is that unethical decision-making will occur in that firm.
   3. Significant Others
      Those who have influence in a work group, including peers, managers, coworkers, and subordinates, are referred to as “significant others.”
      1. Significant others help workers on a daily basis with unfamiliar tasks and provide advice and information in both formal and informal ways.
      2. Obedience to authority can help explain why many people resolve business ethics by following the directives of a superior.
4. Opportunity
   Opportunity is a term that describes the conditions that limit or permit ethical or unethical behavior.
   1. Opportunity results from conditions that either provide rewards, whether internal or external, or fail to erect barriers against unethical behavior.
   1. The opportunity for unethical behavior in an organization can be eliminated through formal codes, policies, and rules that are adequately enforced by management.
   2. The opportunity for unethical behavior cannot be eliminated without aggressive enforcement of codes and rules.
5. Business Ethics Evaluations and Intentions
1. Ethical dilemmas involve problem-solving tasks in which decision rules are often vague or in conflict.
2. An individual’s intentions and the final decision as to what action to take are the last steps in decision-making.

The Role of Leadership in a Corporate Culture

Top managers provide a blueprint for what a firm’s corporate culture should be.  If these leaders fail to express desired behaviors and goals, a corporate culture will evolve on its own, but will still reflect the goals and values of the company. Leadership, the ability or authority to guide and direct others toward achievement of a goal, has a significant impact on ethical decision making because leaders have the power to motivate others and enforce the organization’s rules and policies as well as their own viewpoints. Leaders are key to influencing an organization’s corporate culture and ethical posture.

Leadership Styles Influence Ethical Decisions

Leadership styles influence many aspects of organizational behavior, including employees’ acceptance of and adherence to organizational norms and values. Six leadership styles that are based on emotional intelligence-the ability to manage ourselves and our relationships effectively-have been identified by Daniel Goleman: coercive, authoritative, affiliative, democratic, pacesetting, and coaching.

Another way to consider leadership styles is to classify them as transactional or transformational. Transactional leaders attempt to create employee satisfaction through negotiating, or “bartering,” for desired behaviors or levels of performance. Transformational leaders strive to raise employees’ level of commitment and to foster trust and motivation.  Both transformational and transactional leaders can positively influence the corporate culture.