Ethical Leadership and
Decision Making
March 26, 2015
American Society of Military Comptrollers
Barbara Barresi, PhD, RN
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The Ethical Decision Making Process
In business, people make decisions differently than at
home
 Organizational pressures have a strong influence
 The ethical decision making process includes
 Ethical issue intensity
 Individual factors
 Organizational factors
 The framework for ethical decision making
does not describe how to make ethical
decisions

Outlines the factors and processes related to
ethical decision making
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Framework for Understanding Ethical Decision
Making in Business
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Ethical Issue Intensity
The perceived relevance or importance of an ethical issue
to the individual, work group, and/or organization
 Reflects the ethical sensitivity of the individual
and/or work group
 Triggers the ethical decision making process
 Individuals are subject to six spheres of influence
Workplace
Family
Religion
Legal system
Community
Profession
Moral intensity: Relates to a person’s
perception of social pressure and the harm
his/her decision will have on others
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Individual Factors
People base their ethical decisions on their own values and
principles of right or wrong
 Values are learned through socialization
 Good personal values decrease unethical behavior
and increase positive work behavior
 Values are subjective; vary across cultures
 An organization may intend to do right, but
organizational or social forces can alter this
intent
 Research shows that various factors influence
ethical behavior


Gender–women are more ethical than males
Education, work experience, nationality and age
affect ethical decision making
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Locus of Control
Relates to individual differences in relation to a
general belief about how one is affected by internal
versus external events or reinforcements
 Managers with
 External locus of control go with the flow
because that’s all they can do
 Internal locus of control believe they can
control events; are masters of their destinies
and trust in their capacity to influence their
environment
Unclear relationship between locus of control
and ethical decision making
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Organizational Factors
Organizational culture has a stronger influence on
employees than individual values
 Corporate culture: A set of values, norms,
and artifacts that members of an
organization share

Ethical culture: Reflects whether the firm has
an ethical conscience; is a function of many
factors
 Significant others: Those who have
influence in a work group
 Obedience to authority: Helps to explain
why many employees unquestioningly
follow superior’s orders
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Opportunity
The conditions in an organization that limit/permit
ethical/unethical behavior
 Immediate job context: Where employees
work, with whom they work, and the nature
of the work
 Opportunities for misconduct can be
reduced by establishing formal codes,
policies, and rules

Aggressive enforcement is required
Knowledge can sometimes lead to
unethical behavior
•
A person who has an information base,
expertise, or information about competition
has an opportunity to exploit knowledge
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Business Ethics Evaluations
and Intentions
Ethical dilemmas involve situations where rules
are vague or in conflict
 Critical thinking skills and ability to take
responsibility are important
 The final step is deciding what action
to take based on a person’s intentions
 Guilt or uneasiness is the first sign that
an unethical decision has occurred
Most businesspeople will make
ethical mistakes
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Using the Framework to
Improve Ethical Decisions
Impossible to objectively determine if a business
decision is right or wrong
 Understanding how ethical decisions are
made will not solve ethical problems

Business ethics involves value judgments and
collective agreement about acceptable
patterns of behavior
 Ethical decision making in business does
not rely on personal values and morals
Organizations take on cultures of their own
 Informal relationships enforce an ethical
culture

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The Managerial Role in Developing Ethics
Program Leadership
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Ethical Decision Making
O Moral Problems arise in the context of particular
cases (clinical and/or business).
O Faced with morally problematic situations need to
know how to assess the morally relevant details of
the case and apply general moral considerations,
rules, principles, standards and virtues to arrive at
a satisfactory resolution.
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Decision Making Formats
 Frameworks within specific problems in business
ethics can be analyzed.
 These are not formulas but rather a series of
questions which may help to clarify the nature of
a particular issue and how they might be
discussed and resolved.
 Some are a more involved processes
 4 Question Model
 Pragmatic Ethical Decision Making – Kidder's
Model
 Nash’s 12 Questions
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4 Ethical Questions Model
O 1. What is the question?
O What is really at stake?
O Who is affected?
O How?
O 2. How does it affect this business?
O Is it relevant to our business – locally, globally
O Small versus Large Corporations
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4 Ethical Questions Model
 3. What are the external constraints?
 Legal
 Regulatory
 Market
 Partnerships
 4. Apply the Ethical Principles (the difficult question).
 Justice
 Utilitarianism
 Cost Benefit Analysis
 Social Accountability – Community Outreach
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Kidder’s Model Checkpoints
 Kidder, R.M. (1995) How good people make tough choices:
Resolving the dilemmas of ethical living. New York: Fireside
 Recognize that there is a problem
 Determine the actor
 Gather the relevant facts
 Test for right versus wrong issue
 Test for right versus wrong value
 Apply ethical standards and perspectives
 Look for a third way
 Make the decision
 Revisit and reflect on the decision
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Pragmatic Decision Making
O Inspired by the thought of American Philosopher
John Dewey.
O Generic method of intelligent problem solving
adaptable to problematic situations in daily living,
professional practice and the sciences.
O Dewey argued that this method proceeds by logical
steps.
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Pragmatic Decision Making
O Logical Steps
O Recognition of a problematic situation
O Observations of the situation
O A Plan of action
O Evaluation of the plan of action
O To complete the logical steps must work within a
collaborative process of problem solving.
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General Guide to Decision Making
1. Recognize the event, decision or issue
O Are you being asked to do something that you think
might be wrong?
O Are you aware of potentially illegal or unethical
conduct on the part of others or a client?
O Are you trying to make a decision and are unsure
about the ethical course of action?
2, Think before you act
O Summarize and clarify your issue
O Ask yourself, why the dilemma?
O Consider the options and consequences
O Consider who may be affected
O Consult others
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General Guide to Decision Making
3. Decide
on a course of action
O Determine your responsibility
O Review all the relevant facts and information
O Refer to applicable policies or professional
standards
O Assess the risks and how you could reduce them
O Contemplate the best course of action
O Consult others
4, Test your decision
O Review the "Ethics questions to consider"
O Apply company’s values to your decision
O Make sure you have considered policies, laws and
professional standards
O Consult others – enlist their opinion of your planned
action
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General Guide to Decision Making
5. Proceed with confidence
O Communicate decision and rationale to stakeholders
O Reflect upon what was learned
O Share your success stories with others
6. Evaluate the outcome
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Questions to Consider
Before the Final Decision Consider:
O Is it against professional standards?
O Does it feel right?
O Is it legal?
O Will it reflect negatively on you or the company?
O Who else could be affected by this?
O Would you be embarrassed if others knew you took
O
O
O
O
this course of action?
Is there an alternative action that does not pose an
ethical conflict?
How would it look in the newspapers?
What would a reasonable person think?
Can you sleep at night?
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 Normative approaches: How
organizational decision makers
should approach an issue

Different from a descriptive approach that
examines how organizational decision
makers approach ethical decision making
 Concepts like fairness and justice
are highly important in a normative
structure
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 Companies take basic principles and translate
them into core values
 Core values provide the abstract ideals that are
distinct from individual values and daily
operational procedures
 Value practices evolve and are translated into
normative definitions of ethical or unethical
 Individual and organizational values can differ
significantly because of ethical diversity among
individuals
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 Leaders, stakeholders, and the
organizational culture impact the
development of core values
 A firm’s core values provide a blueprint into
the firm’s purpose as well as how it views
ethical decision making and prioritizes
stakeholders
 Organizations that have ethics programs
based on a values orientation are found to
make a greater contribution than those
based simply on compliance
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Principles and Values
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Understanding Ethical Decision Making
Ethical issue intensity, individual factors,
and opportunity result in business ethics
evaluations and decisions
 An organizational ethical culture is shaped by
effective leadership

Top level support is required for ethical behavior
 An ethical corporate culture needs shared
values and proper oversight
 The more you know about ethical decision
making, the more likely you will be to make
good decisions
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