Criteria for Ethical Decision Making

Most ethical dilemmas  involve a conflict between the needs of the part and of the whole—the individual versus the organization or the organization versus society  as a whole.  For example, should  a company implement mandatory alcohol and drug testing for employees, which might benefit the organization as a whole but reduce the individual freedom of employees? Or should products that fail to meet tough FDA standards be exported to other countries where govern-ment standards are lower, benefiting the company but potentially harming world citizens?

Sometimes ethical decisions entail a conflict  between two groups. For example, should the potential for local health problems resulting from a company’s effluents take prece- dence over the jobs it creates  as the town’s leading employer? What about baseball, in which some players evidently  benefit from steroid  use? Even though the substance is banned, there has yet to be an all-out effort to stop the practice, indicating  some moral ambivalence about the practice.

Managers faced with these kinds of tough ethical choices often benefit  from  a normative strategy—one based on norms and values—to guide their decision making. Normative eth- ics uses several approaches to describe values for guiding ethical decision making. Four of these approaches that are relevant to managers are the utilitarian approach, the individual- ism approach, the moral-rights  approach, and the justice approach.15


The utilitarian  approach, espoused by nineteenth-century  philosophers  Jeremy Ben- tham and John Stuart Mill, holds that moral behavior produces the greatest good for the greatest number. Under this approach, a decision maker is expected to consider the effect of each decision alternative on all parties and select the one that optimizes the satisfaction for the greatest number  of people. Because actual computations can be complex, simplifying them is considered appropriate. For example, a simple economic frame of reference could be used by calculating  dollar costs and dollar benefits.

Also, a decision could be made that considers only the people who are affected directly by the decision, not those who are affected indirectly.  The utilitarian ethic is cited  as the basis for the trend among companies to monitor employees’ use of the Internet and to po- lice personal habits such as alcohol and tobacco consumption, because such behavior affects the entire workplace.16 The utilitarian ethic also can be used to explain managers’ decision at Northfield Laboratories to continue clinical trials of a product  that has showed some troubling results and raises red flags.17

By emphasizing the potential benefits to many over the risks to a few, Northfield man- agers reflect  a decision-making  approach based in the utilitarian ethic. The FDA reflects a utilitarian approach  as well by allowing experimental treatments on trauma patients who frequently are incapable of giving informed consent. A spokesperson said that without the FDA rule allowing  such trials, experiments would be impossible  and the larger society wouldn’t benefit from advances in trauma care.


The individualism approach contends that acts are moral when they promote the indi- vidual’s best long-term  interests. Individual  self-direction is paramount, and external forces that restrict self-direction should be severely limited.18 Individuals  calculate the best long- term advantage to themselves  as a measure  of how good a decision  is. The action that is intended to produce a higher ratio of good to bad for the individual compared with other alternatives is the right one. In theory, with everyone pursuing self-direction,  the greater good ultimately is served because people learn to accommodate each other in their own long-term interest.

Individualism is believed to lead to honesty and integrity because that  works best in the long run. Lying and cheating for immediate self-interest just causes business associates to lie and cheat in return. Thus, individualism ultimately leads to behavior toward others that fits standards of behavior people want toward themselves.19 One value of understanding this approach is to recognize short-term variations if they are proposed.  People might argue for short-term self-interest based on individualism, but that misses the point. Be- cause individualism is easily misinterpreted  to support immediate self-gain, it is not popu- lar in the highly organized and group-oriented  society of today. Dozens of disgraced top executives from WorldCom, Enron, Tyco, and other companies demonstrate the flaws of the individualism  approach. This approach is closest to the domain of free choice described in Exhibit 4.1.


The moral-rights approach asserts that human beings have fundamental  rights and lib- erties that cannot be taken away by an individual’s  decision. Thus, an ethically correct deci- sion is one that best maintains the rights of those affected by it.

Six moral rights should be considered during decision making:

  1. The right of free consent. Individuals are to be treated only as they knowingly and freely consent to be treated.
  2. The right to privacy. Individuals can choose to do as they  please away from work and have control of information about their private life.
  3. The right of freedom of conscience. Individuals may refrain from carrying out any order that violates their moral or religious norms.
  4. The right of free speech. Individuals may criticize truthfully the ethics or legality of actions of others.
  1. The right to due process.  Individuals have a  right to an impartial hearing and fair treatment.
  1. The right to life and safety. Individuals have a right to live without  endangerment or viola- tion of their health and safety.

To make ethical decisions, managers have to avoid interfering with the fundamental rights of others. Some people might construe Northfield’s  clinical trials on trauma pa- tients described earlier, for example,  as a violation of the right to free consent. A decision to eavesdrop on employees violates the right to privacy. Sexual harassment is unethical because it violates the right to freedom of conscience. The right of free speech would  sup- port whistle-blowers  who call attention to illegal or inappropriate  actions within a company.


The justice approach holds that moral decisions must be based on standards of equity, fairness, and impartiality. Three types of justice are of concern to managers.

  • Distributive justice requires that different treatment of people not be based on arbi- trary characteristics. Individuals who are similar in ways that are relevant to a decision should be treated similarly. Thus, men and women should not receive different salaries if they are performing  the same job. People who differ in a substantive way, however, such as job skills  or job responsibility, can be treated differently  in proportion to the dif- ferences in skills or responsibility among them. This difference should have a clear rela- tionship to organizational  goals and tasks.
  • Procedural justice requires that rules be administered fairly. Rules should be stated clearly and be enforced consistently and impartially.
  • Compensatory justice means that individuals should be compensated for the cost of their injuries by the party responsible. Moreover, individuals should not be held respon- sible for matters over which they have no control.

The justice approach  is closest  to the thinking underlying the domain of law in Exhibit 4.1, because it assumes that justice is applied through  rules and regulations. This theory does not require  complex  calculations  such as those demanded  by a utilitarian approach, nor does it justify self-interest as the individualism approach does. Managers are expected to define attributes on which different treatment of employees is acceptable. Questions  such as how minority workers should be compensated for past discrimination are extremely difficult. The justice approach, however, does justify the ethical behavior of efforts to correct past wrongs, playing fair under the rules, and insisting on job-relevant differences  as the basis for different levels of pay or promotion opportunities. Most of the laws guiding human resource management  (Chapter 9) are  based  on the justice approach.

Understanding these various approaches is only a first step. Managers still have to con- sider how to apply them. The approaches offer general principles that managers can recog- nize as useful in making ethical decisions.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.

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