1. Ethical Decision Making
Lesson 04
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2. Lessons’ Objectives
◦ Identify ethical behavior and myths of
ethics
◦ Define ethical dilemma
◦ Familiar with resolving dilemma
◦ Identify process of Ethical decision
making
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3. Ethical Behavior
◦ Ethical behavior goes beyond the legal
requirements placed on a business, as it
concerns discretionary decisions and
behavior; in other words, what a business
chooses to do, rather than what is forced to
do.
◦ Business ethics are relevant both to the
conduct of an individual within an
organization and to the conduct of the
organization as a whole.
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4. Myths of Business Ethics
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It is a more religion than management
Our employees are ethical so no need BE
It is a discipline best led by philosophers
It is a matter of good person preaching to
bad persons
It is a new police-person in organization
Ethics can't be managed
Business ethics & CSR are same thing
We obey to law so no need about ethics.
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5. Ethical Dilemma
◦ There are situation when there is not
simple choice between write or wrong
◦ Ethical dilemma is complex judgments on
the balance between the economic
performance and the social performance
of an organization.
 Have two interests - cannot purse one without
having negative impact on other
 Private Interest Conflicts with Corporate
 Business Interest Conflicts with Public.
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6. Ethical Dilemma
◦ E.g.
 New house purchase by employee to
reach office fast meanwhile he is
considered to retrench.
 When the both products are same
quality to justify your high price touch
drawback of competitor
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7. Cont...
◦ An ethical dilemma exists when one is
faced with having to make a choice
among following alternatives:
 Significant value conflicts among differing
interests,
 Real alternatives that are equally justifiable,
and
 Significant consequences on "stakeholders" in
the situation.
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8. Characteristics of Dilemma
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It have extended consequences
It has multiple alternatives
It have mixed outcomes
It have uncertain consequences
It have personal implications
It is easy to make when a person is not
directly involved
◦ Hence EDM are not simple choice
between right and wrong.
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9. Paradigms of Dilemma
◦ Four such dilemmas are so common to
our experience that they stand as
models, patterns, or paradigms. They are:
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Truth versus loyalty.
Individual versus community.
Short-term versus long-term.
Justice versus mercy.
Ethics and Sri
Lanka
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10. Classical Approach Resolving
Dilemma
◦ Three approaches are facilitated
 End-based thinking (utilitarianism)
 Rule based thinking
 Care-based thinking (value to you or close
relationships)
And Virtue ethics - instead upon
execute as an alternative way
 Here action is considered morally right
if in carrying out the action.

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11. Nine ways to Resolving
Dilemma
◦ Rushworth Kidder
1. Recognize as moral issue and define the
problem accurately
2. Identify the affected by decision
3. Gather the facts how events happened
4. Test for right vs. Wrong issues
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12. Nine ways to Resolving
Dilemma
5. Test for right vs. right paradigm (true vs...
6. Apply for the resolution principle
(end, rule, care)
7. Investigate if is any third way out of the
situation
8. Make decision & take action
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13. Whistle blowing
◦ It is methods can be contributed to identify
and act of disclosing wrong in an
organization
◦ Like blowing a whistle to call attention to a
thief or unethical practitioner
◦ But it is questionable when...
 Dissent / disagree - Must speak out against
others in organization
 Breach of Loyalty - Perceived as one who
violates confidentiality and loyalty
 Accusation - Singles out specific individuals as
threats to organization or the public
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14. Whistle blowing
◦ Care about whistle blowing
◦ Make sure situation involves an imminent
threat to society or to the business
◦ Document all allegations
◦ Examine internal whistle blowing first
◦ Should you remain secret
Ethics and Our
behavior
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15. Framework for Ethical Decision
Making
◦ Step 01:
Describe the problem
◦ Step 02:
Determine whether there is
an ethical issue or an ethical dilemma
◦ Step 03:
Identify and rank the key
values and principles
◦ Step 04:
Gather your information
◦ Step 05:
Review any applicable Code
of Ethics
◦ Step 06:
Determine the options
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16. Framework for Ethical Decision
Making
◦ Step 07:
◦ Step 08:
◦ Step 09:
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Select a course of action
Put your plan into action
Evaluate the result
Don’t forget!
◦ Step 10:
Submit cases to your ethical
review team or board regularly for review
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17. Effects of Ethical/Unethical
Behavior
Ethical Behavior
Unethical Behavior
Increases Efficiency and
Effectiveness of
Production and Trade
Reduces Efficiency and
Effectiveness of
Production and trade
Increases Company
Performance
Reduces company
Performance
Increases National
Standard of Living, Wellbeing, and Prosperity.
Reduces National
Standard of Living, Wellbeing, and Prosperity.
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18. Utilitarian Rule
An ethical decision should produce
the greatest good for the greatest
number of people
Moral Rights Rule
An ethical decision should
maintain and protect the
fundamental rights and
privileges of peoples.
Rules for
Ethical
Decision
Making.
Justice Rule
An ethical decision should
distribute benefits and harm
among people in a fair,
equitable, and impartial
manner
Practical rule
An ethical decision should be one that
a manager has no hesitation about
communicating to people outside the
company because the typical person in
a society would think the decision is
acceptable.
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19. Ethical Decision Making
Approaches
1) Utilitarian Approach – Moral behavior
produces the greatest good for the
greatest number
2) Individualism Approach – Acts are moral
when they promote the individual’s best
long-term interest, which ultimately
leads to the greater good.
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20. Ethical Decision Making
Approaches
3) Moral – Rights Approach decisions are
those that best maintain the rights of
those people affected by them.
4) Justice approach – Moral Decisions
must be based on standards of
equity, fairness, impartiality
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21. Three Types of Justices
◦ Three types of Justice Approaches:
I. Distributive Justice – In case of
substantive differences, people should be
treated differently in proportion to the
differences among them
II. Procedural Justice – Rules should be
clearly stated & consistently and impartially
enforced
III. Compensatory Justice –Individuals
should be compensated for the cost of their
injuries by the party responsible.
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22. Ethical Test
1. Is it Legal
2. Benefit Cost Test
3. Categorical Imperative
4. Light of Day Test
5. Do onto Others Test
6. Ventilation Test
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23. Is It Legal
1. Is It Legal
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Ethical – Legal
Ethical-Illegal
Unethical – Legal
Unethical – Illegal
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II
III
IV
◦ I and IV
◦ II and III Difficult
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24. Ethical
• Quadrant II
• Ethical and
Illegal
• Quadrant I
• Ethical and
Legal
Codification
Manifestation
Legal
Illegal
Corporate
Decisions
• Quadrant IV
• Unethical
and Illegal
• Quadrant III
• Unethical
and Illegal
Unethical
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25. Benefit & Categorical
Imperative
2.Benefit Cost Test
 Do the benefits exceed the costs to
whomsoever they accrue?
3.Categorical Imperative
 Are you willing to allow to everyone to practice
the proposed action or do you want to be a
special case?
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26. Light of Day & Do onto Others
4.Light of Day Test – What would be
your reaction if the action were brought
out into the open for public scrutiny
5.Do onto Others Test – Golden Rule –
If you would like others to do the same
to you - passes the test
6.Ventilation Test – Seek out others
views. Discuss the 5 tests with them. If
others feel it is OK – passes the test
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27. A Venn Diagram Model for
Ethical Decision Making
Area 1
Profitable
legal, ethical, G
o for it
Area 2a
Profitable and
legal, Proceed
cautiously
Area 2b
Profitable and
ethical, Probably
legal, Proceed
cautiously
Ethical
Responsibility
2b
Economic
Responsibility
Area 3
Legal, and ethical but
not profitable find
ways to seek
profitably .
3
1
2a
Legal
Responsibility
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28. Thank
You
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