Project 2: Making Decisions That are Legal and Ethical

Learning Topic

Ethical Business Decision Making

It is reasonable that everyone who asks justice should do justice. —Thomas Jefferson

What Is Ethics?

Ethics has been a topic of discussion and debate starting with the Greek philosophers

about 2,500 years ago. We can define ethics simply, but resolving ethical issues is rarely

simple. Ethics is the study of good and of how people apply good principles in their

behavior. Behavior includes how we treat people we know and, perhaps more importantly,

how we treat people we do not know. Our biases and fears can complicate ethical

decision making. Our own interests in achieving specific ends can also interfere with our

choice of an ethical course of action; the ethical choice may not be the most profitable or

socially acceptable.

It might be helpful to discuss what ethics is not. Ethics is not religion, although religion

can guide ethical thinking. Ethics is not defined by what is possible (e.g., through scientific

discovery or technology), although, as new machines are created, what is possible

changes, giving rise to new ethical quandaries. Nor is ethics simply what is commonly

practiced. Any one of us could cite a historically common practice that is unethical. In

addition, what is common practice today in one place will conflict with what is common

practice today in other places.

Ethics is not just how we feel: our instincts may tell us to act one way or another, but this

feeling may not lead us to the best behavior. If making a public speech against a new piece

of legislature were the only way to behave ethically following the passage of that

legislature, would we take this action? Many people, for example, have a gut reaction

against public speaking. The law is not an adequate guide either. Looking back at history,

we can certainly name unethical laws.

An important outcome of ethical decision making is a standard for behavior. Standards can

be informal, as in our behavior on the street, in a store, or with our neighbors. If you see

someone drop a $20 bill, what should you do? Standards can also be formal, usually at the

institutional level (e.g., at a university, trade organization, or business) or the societal level

(city, county, state, national, international). At the societal level, for example, methods and

forms of taxation must be determined. What means of taxation are ethical? Are there

some that are unethical?

What Is Business Ethics?

Business ethics is ethics concerning behaviors occurring within a business context. The

breadth of ethical considerations should be considered when one is formulating a

standard of behavior in a business setting. We cannot look only to the law, only to

common or prior practice, to religion, or to instinct. We must carefully consider multiple

competing factors and, using logic and rational thought, create business standards of

behavior that are ethical.

How Does a Business Provide Ethical Standards?

Businesses attempt to provide ethical standards in several ways:

relying on each individual to make ethical decisions

stopping at compliance with the law

simply telling employees and officers to act ethically

And some businesses achieve results by taking a managing values approach—a systematic

approach to maintaining the organization's values that doesn't depend on individual

interpretation of those values or how to safeguard them.

The first three options are not helpful even when an employee wishes to act ethically; the

employee may not understand how to judge what is ethical behavior. Thus, determining if

your company is using a managing values approach is the first step. Places to look to make

this determination include your organization's mission statement, core values, and ethics

code.

Operational Ethics in a Business Setting

But what if these don't help, or worse, they raise ethical issues themselves? Fortunately,

there is a set of standard ethics tests that you can apply yourself.

Ethics Tests You Can Apply

The first ethics test you can apply is called the front page test, or viral news test. This is a

fairly new test, and it is simple: How would your business feel if the issue were on the

front page of a newspaper? Or went viral on the internet?

More traditionally, there are five theoretical tests with which you can judge a business

action (Markkula Center for Applied Ethics, n.d.):

rights—What duty do the actors have to respect the human rights of those affected?

justice or fairness—Are all parties treated equally or proportionally? If differently, is

the basis for treating them differently rational?

virtues—The good human being is fair, is honest, shows integrity, and shows

compassion. Does the action uphold these virtues?

common good—This test has become more common recently. How does the action

benefit everyone in society? Whom does it not benefit? Whom might it harm?

utilitarianism—Utilitarianism is also called the greatest good principle. Does the

overall good outweigh any bad? Sometimes, this conflicts with other tests.

In order to answer the questions above, we must have a clear sense of what is a good?

What is a harm? What are legitimate rights? What is the standard of fairness? What is the

canon of virtues? What is the common good? These questions have been much debated.

A Method of Determining Ethical Responsibility

There are five questions you can ask to determine whether or not you should act on a

given decision:

What is the severity of the harm?

What is the certainty of the harm?

What is the degree of involvement?

What is the cost of acting?

What is the certainty of the solution?

Process of Ethical Analysis

Think of ethical analysis as a process that builds on itself. Follow the steps below, knowing

that you might circle back and reevaluate your interpretation of the situation as you

complete each step.

1. Identify the stakeholders and determine whether some are more important than

others.

2. Determine whether all stakeholders have been consulted on the business decision at

hand.

3. Describe the possible actions of the stakeholders following the business decision

4. Evaluate each of the possible business decisions in light of the ethical tests.

5. Identify the best possible decision and justify your choice, with reference to the

ethical approach on which you have based it.

References

Markkula Center for Applied Ethics. (n.d.). Ethical decision making. Santa Clara University.

Retrieved from https://www.scu.edu/ethics/ethics-resources/ethical-decision-making/

Resources

Business Ethics in a Nutshell: What is Ethics?

(https://leocontent.umgc.edu/content/scor/uncurated/mba/2218-

mba630/learning-resourcelist1/business-ethics-inanutshellwhatisethics.html?

ou=770958)

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