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Models of Ethical Decision Making

Discuss about the Ethical Leadership and Reputation Applications.

Ethical decision is any decision that is considered as both moral and legal by the people who will be affected by the decision (Jones, 1991). While it is important to make ethical decisions in the context of business, the need is to have knowledge of the ethical issues and a practiced method to explore the ethical aspects of a decision. Moreover, one needs to assess the considerations that can affect the action that is conducted. In order to recognize an ethical issue the decision maker should be able to weigh the impact of the decision on all people or groups. The choice can be between two good alternatives or two bad alternatives or between good and bad alternatives. Once a choice of action is made, the next step is to view the considerations, i.e. whether all people who will be affected by the decision has been consulted and whether all the facts of the concerned issue is known. Next, it is necessary to consider all the alternative actions. In this step, the decision maker’s personality takes over like he may select his option with the purpose of doing greatest good for the greatest number of people which is the utilitarian approach. Then there is the rights approach where the decision maker chooses the options that will respect the rights of all people. As per virtue ethics, moral action is just not based on social definitions or need of the situation but also the perspective of the decision maker with strong moral character and what he may deem appropriate. Finally, there is the justice approach that treats all the involved people equally or proportionately. This essay will review literature that about the importance of ethical decision making to effective management. Its significance is based on the fact that a company has ethical responsibilities to all its stakeholders like employees, shareholders, suppliers and customers. There are mainly three factors that influence the act of decision making which includes the personal beliefs of the decision maker along with environmental factors and business code.

In the context of decision making for a business, ethical perspective is extremely significant in order to do justice to all the involved parties. Since ethics is based on morality hence the perspective of decision maker has high influence on the process of decision making and its impact. O’Fallon and Butterfield (2005) have observed that variables like age and nationality of the decision maker appear to influence decision making. Although people of different nationalities can have different views on the definition of ethics, the extent of influence of nationality has not been assessed. As for age, it has been seen that people who are older take more ethical steps than their younger counterparts thus indicating that age is. Ethical values of managers have an adverse impact on decision which means people with high ethical values have more ethical intentions than people with low ethical values (Singhapakdi et al., 2000). At the core of decision making, Velasquez and Rostankowski (1985) have stated that any action conducted by the decision maker will have direct impact (good or bad) on people.

Influence of Personal Beliefs, Environmental Factors, and Business Codes

There can be different models of ethical decision making like the one Rest (1986) has proposed which is a four-component model. As per this model, first the moral issue is identified and then a moral judgement is made. The goal is to emphasize more on moral concerns over any other concern and to take measures to resolve those moral concerns. Therefore, under this model it is sufficient that a person involved in decision making is of high moral character, it is also necessary that the person has the resolution to act in a moral way. Jones (1991) have argued that moral issues can vary with their moral intensity. Ferrell and Gresham (1985) have suggested a contingency framework for ethical decision making in marketing. As per this model, social or cultural environment give birth to ethical issues, and the factors that affect decision making can be personal values and intentions, and also opportunities provided by the organization.

Decision making are generally the task of the leaders of a company and it is their personality and perspectives of morality that affects the impact of their decisions. Leadership is essentially “the ability to act purposively and ethically as the situation requires on the basis of the knowledge of universals, experience, perception, and intuition” (Toor & Ofori, 2009, p.534). In order to make his decisions make the right impact on the company, it is critical that a leader remain truly ethical and honest with his commitments towards other people. Since a leader is responsible for chartering an organization, therefore the commitment level of employees is largely dependent upon the roadmap that he draws for the organization based on his ethical principles (Neves & Story, 2013). There is no lack of unethical leaders who take undue advantage of any loopholes in the management system of an organization in order to pursue his personal agenda. On the other hand, it is also true that sustaining an ethical conduct is not always possible given the fact that in today’s world of business, there is intense communication and fast flow of communication that induces the leader maintain high performance level under extreme pressure. Although there are genuine transformational leaders who act out of good faith there are also pseudo transformational leaders who give priority to their selfish purposes and influence people for own benefit. According to Toor and Ofori (2009), although transformational leaders are driven by ideologies, it is inspirational motivation that induces them to apply ethical approach, and so the decisions that they make are ideal enough to motivate and persuade team members. Since the decisions taken by transformational leaders are motivational which means they have ethical and moral values, therefore such decisions become example for future leaders to emulate. It has also been seen that the cultural environment of an organization has a strong influence on the decision making tasks of leaders. This is because even though employees get highly motivated with ethical decisions made by their leaders, at the same time they get inspired to provide their best performance in a positive cultural setting. Moreover, the relationship between cultural environment and ethical decision making is two-way. For instance, a good cultural environment encourages a leader to behave in a conducive manner, at the same time a leader who exhibits ethical conduct towards employees induces the latter to promote ethical responsibilities which can pave the way for a positive cultural environment. In the context of ethical decision making, it is also important for a leader to consider the existing state of the company. Based on the working environment of an organization, leaders should encourage employees to maintain ethical standards in their activities. Ethical leaders can also promote self-observation among employees and this will set a permanent system for maintaining ethical standards among current and future employees. There is also the context of ethical dilemma which can arise out of the need of satisfying different stakeholders of an organization like employees, shareholders, suppliers, creditors and so on. For this reason, a leader should be capable of making ethical decisions keeping in view the interests of all parties by involving them in the decision making process. Broussine and Miller (2005) have argued that ethical dilemmas can be conquered only if the leaders and managers have ethical goals and have no selfish agenda. There is also a contradictory view on this as Woiceshyn (2011) has argued that egoism, i.e. pursuit of self-interest can help to eliminate ethical dilemmas considering decision makers do not violate the ethical rights of others in the process of pursuing their self-interests.

Role of Leaders in Ethical Decision Making and Maintaining an Ethical Working Environment

According to Zhu et al. (2004), ethical decisions need to be made in an impartial manner which means every affected party will be treated with fairness. One way of exhibiting fairness is distributive justice which means rewarding those employees who exhibit exemplary performance, which means regular assessment of performance level of employees. Another way of implementing fairness is procedural justice which means the methods for making decisions should be fair. Zhu et al. (2004) have suggested a combined use of distributive justice and procedural justice which means rewarding and compensating employees in a fair manner. The ultimate goal is to set up an ethical environment that is favourable for employee motivation. Curtis (2012) has explored the element of trust in ethical decision making processes. The author has stated that it is important to create a working environment that will generate trust between management and employees, and this trust needs to be maintained at every level of communication between a manager and his employees. In order to make and implement ethical decisions, Aronson (2001) has stated that a leader needs to confer respect on his team members to encourage them to accomplish a common purpose. The personality traits of ethical decision makers have been studied by Antes et al. (2007) as they observe that personality can be predictor of ethical decisions. Personality elements like narcissism and cynicism can have strong and steady impact on decision making compared to other basic personality traits.

In order to behave in an ethical manner as a responsible manager of a company, I need to learn my personality development and assess the same to use it in conducive manner to help solve ethical dilemmas in the company. First, I will consider the big 5 model of personality traits which encompasses extraversion, agreeable, conscientiousness, openness, and neuroticism which are five basic types of personality traits (Nevid, 2012). Since I consider myself as an extravert, this helps in interacting with my employees so that I can well understand their needs and grudges. Moreover, by displaying interest and energy in my behaviour towards employees, I can convince them that I am genuinely interested in their performances which will motivate them to work harder. Moreover, being agreeable means I am capable of leading a team since I can display trust and compassion towards. In the context of ethical decision making, extraversion and agreeable traits will help me to understand the needs of others in my team, and accordingly act in a compassionate manner when making ethical decisions to provide a favourable working environment. The conscientiousness aspect of my personality can make me honest and dependable. This will help me to communicate with my employees in an open and frank manner so as to obtain their trust and confidence. Openness personality trait indicates that a leader can use his experience to solve ethical dilemmas by making advance planning. This is essentially useful since my past experiences can act as roadmap for any future decision making processes that will have an overall ethical influence on others in the company. Neuroticism can be a negative personality trait as it implies irrational and impulsive behaviour induced by fear and anger (Rothman & Coetzer, 2003). However, I lack this personality trait since I can be composed under stressful conditions so that I do not lose my rationality and this helps me to make ethical decisions in a rational state of mind. I can utilize my positive personality traits that include good communication skills and high confidence level – both of which can help me deal with other in a confident manner so as to garner trust from my employees. On the other hand, I need to take measures to do away with my negative traits like low concentration level. I also need to develop my self-monitoring skills in order to hone my managerial skills as ethical decision maker. Since I also consider myself as conscientious person, I give full focus on my responsibilities as a manager and my commitment level is for long-term accomplishment of goals rather than short-term objectives. As part of ethical management, I will motivate my employees by giving them rewards and compensations based on their performance level and at the same time provide them the ethical environment to induce them to consistently give exemplary performance in order to make themselves worthy of the rewards.

Myer Briggs Type Indicator (MBTI) is another personality theory and is a self-inventory tool that helps to identify people based on four different dichotomies – extraversion-intraversion (EI), sensing-intuition (SN), thinking-feeling (TF), and judgement-perception (JP). There can be 16 personality types based on this theory (Bayne, 1995; Cherry, 2014). I have judged myself in the group of having personality traits of ENTP. Having extraversion (E) trait as part of my personality, I am capable of openly mixing with people and have good communication skills which help me to convey my perspective in a clear and unambiguous manner. Second, I think that I have sufficient intuition (N) power which makes me able to understand theories from symbolisms and make strategies based on such theories. Further, my thinking (T) ability assists me to take logical decisions as I can keep my mind rational and alert in any situation. Finally, my perceiving (P) sense allows me to study every opportunity and idea so that I am able to follow any suggestions or opinions.

At the onset of making ethical decisions, it is necessary that the person has total autonomy. This is because if he is under pressure and feels that he has to take decisions based on opinions of others then it is highly likely that he will end up taking unethical decisions. This is because as decision maker he is the only in best position to gauge the given situation and so the choice of action should be his own. Next, the decision maker needs to consider the impact of his decisions which should be preferably be long term as only individual needs can be met to the greatest extent possible. Ethical decisions need also be taken with fair consideration of interests of all involved parties so that everyone will feel motivated to follow the decisions.

Making a list of SMART objectives can be considered as crucial for paving the ground for ethical decision making. It is a list of specific, measurable, achievable, relevant, and time bound activities that can motivate people to work towards fulfilment of desired goals and objectives. Employees need to be provided with specific objectives, i.e. clear and unambiguous tasks so that they clearly understand they role and responsibilities. It is not ethical to assign people with multiple and complex tasks and expect them to give a perfect performance. The need is to set up a series of milestones so that people can have short term goals which can induce a constant feeling of winning. Next, the tasks assigned should be measurable so that the performance level of employees can be assessed in numerical terms. If a task can be measured numerically, then it is possible for the employees to focus on achieving those numbers. Third, employees should be gives objectives that are achievable. To give them goals that are almost difficult to achieve in the given time period is not ethical since it will exert undue pressure on them which will result in low performance level thus making them lose their opportunity to win rewards. As such, employees will lose motivation and will also lose focus since even hard work will fail eventually since the goal itself was unachievable. The tasks assigned should also be relevant to the objectives to be accomplished since if the tasks do not match the required goals then performing those tasks will go in vain thus inhibiting motivation among employees. Finally, employees should be provided with tasks that are time bound, i.e. the tasks should be completed within a specific time frame like six weeks or six months, and so on. This will not only help to accomplish desired goals in time but also will motivate employees to remain consistent in their commitment towards their responsibilities as they know that they have a limited time period to show their skills and performance. In this way SMART objectives can be very helpful for an ethical decision maker since SMART criteria can be quite resourceful in maintaining a consistent working condition in a company.

SMART goals

Action plan



Provide specific goals

Goals must be communicated to employees in clear and unambiguous manner, and not subjected to individual interpretation

Employee goals need to be aligned with organizational goals, and as manager I will determine work unit and individual goals.


The prescribed goals need to be measurable, i.e. performance level of employees can be assessed

Employees can be encouraged to set appropriate boundaries based on time management

Employees need to be encouraged to live up to management’s expectations and maximize their performance level


The prescribed goals should be attainable

Manager should be responsible for tracking progress of fulfilment of goals, implementing required action plans and keeping the employees motivated to attain the goal

The measurable units need to be evaluated and employees must know their limits and learn to say no if specific aspects of the goal are not attainable. It is better to disappoint management a little by refusing to commit to a task than to fully disappoint management by making a commitment and then failing to accomplish the task.


The prescribed goals should be relevant to the company’s overall objectives

With employee participation, the goals will be productive in the working environment and will contribute to the company’s success

Regular assessment of progress will allow management to know how the goals are contributing to the company’s success and to what extent


Every goal prescribed must have a deadline

Proper strategies must be planned and implemented so that goals can be achieved within deadline

Employees need to focus on their work, and with discipline and time management techniques, each goal should be completed within deadline


Today, for a company to thrive it is very important that the influential people within the company who have major roles in making vital decisions for the company’s development maintain ethics and integrity in their conduct. Companies today are not here to merely make financial profits but also have an overall responsibility to gain the trust and confidence of all its stakeholders. Moreover, to maintain goodwill in the market, the company internal performance should be optimum so that end customers can get maximum benefits from the company’s products and services. To achieve this end, employees should be duly motivated to give their maximum performance and this can be attained by providing them with an ethical working environment so as to garner their trust on the company’s management body.


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