Steps for Making Ethical Decisions and Case Studies in Business Ethics

Identify the ethical issue or problem.

Identify the ethical issue or problem.

Gather all relevant information. List the facts that have the most bearing on the decision.

Identify anyone who might be affected by your decision (stakeholders), and how.

List two alternative actions and identify the best and worst case scenario for each alternative, anyone who would be harmed by this choice and how, any values that would be compromised by selecting this alternative, and any automatic reasons why this alternative should not be selected, e.g., legal issues, rules, etc.

Explain what each affected person would want you to do about the issue. Identify harms/benefits to the stakeholders.

Determine practical constraints (factors that might limit your ability to implement an alternative).

Determine a course of action using one of the ethical theories you learned. Make sure you explain and apply your chosen theory.

Jane has just been hired as the head of the Payroll Department at R&S Electronics Service Company, a firm of 75 employees. She was hired by Eddie, the General Manager of the company, who informed her of the need for maintaining strict confidentiality regarding employee salaries and pay scales. He also informed her that he fired the previous Payroll Department head for breaking that confidentiality by discussing employees’ salaries. She was also formally introduced to Brad, the owner, who told her to see him if she has any questions or problems. Both Brad and Eddie made her feel welcome.

After three months of employment, Jane begins to wonder why Greg makes so much more in commissions than the other service technicians. She assumes that he must be highly qualified and must work rapidly because she has overheard Brad commending Greg on his performance on several occasions. She has also noticed Brad, Eddie, and Greg having lunch together frequently. One day, Eddie gives Jane the stack of work tickets for the service technicians for the upcoming week. The technicians are to take whatever ticket is on top when they finish the job they were working on. After putting the tickets where they belong, Jane remembers she has a doctor’s appointment the next morning and returns to Eddie’s office to tell him she will be reporting late for work.

When she enters Eddie’s office, she sees Eddie give Greg a separate stack of work tickets. As she stands there, Eddie tells her if she mentions this to anyone, he will fire her. Jane is upset because she understates that Eddie is giving the easier, high-commission work to his brother. Jane also realizes that Eddie does have the authority to hire and fire her. Since she has only been at the company a short time, she is also still on probation. This is her first job since college. She wonders what she should do. Author: Dr. Marilyn M. Helms, Associate Professor of Management, University of Tennessee at Chattanooga.

Kirk was a bright individual who was being groomed for the Controller’s position in a medium-sized manufacturing firm. After his first year as Assistant Controller, the officers of the firm were starting to include him in major company functions. For instance, today he was attending the monthly financial statement summary given at a prestigious consulting firm. During the meeting, Kirk was intrigued at how all the financial data he had been accumulating was transformed by the consultant into revealing charts and graphs.

Kirk was generally optimistic about the session and the company’s future until the consultant started talking about the new manufacturing plant the company was adding to the current location and the costs per unit of the chemically plated products it produced. At that time, Bob (the President) and John (the chemical engineer) started talking about waste treatment and disposal problems. John mentioned that the current waste facilities were not adequate to handle the waste products that would be created by the “ultramodern” new plant in a manner that would meet the industry's fairly high standards, although they could still comply with federal standards. Kirk’s boss, Henry, noted that the estimated cost per unit wouldbe increased if the waste treatment facilities were upgraded according to recent industry standards.

Whileindustry standards were presently more stringent than federal regulations, environmentalists were pressuring strongly for improving regulations at the federal level. Bob mentioned that since their closest competitor did not have the waste treatment facilities that already existed at their firm, he was not in favor of any more expenditures in this area. Most managers at this meeting resoundingly agreed with Bob, and business continued on to another topic.

Kirk did not hear a word during the rest of the meeting. He kept wondering how the company could possibly have such a casual attitude toward the environment. Yet he did not know if, how, or when he could share his opinion. Soon he started reflecting on whether this was the right firm for him. Author: G. Stevenson Smith, Ph.D., CPA, CMA, Professor of Accounting, West Virginia University Co-author: Curtis Jay Bonk, Ph.D., CPA, Assistant Professor of Educational Psychology, West Virginia University.