BUSINESS ETHICS 3 ETHICAL DECISION MAKING PROCESS S1 PRASETIYA MULYA BUSINESS SCHOOL 19, 22 September 2011
AGENDA 1. 2. 3. 4. 5.
A framework for ethical decision making in business Individual factors Organizational factors How to create high ethical culture Eight steps to sound ethical decision making
A framework for ethical decision making in business Ethical Issues intensity Individual factors Organizational factors Opportunity
Business ethics evaluation & intentions
Ethical or unethical behavior
Individual Factors
Individual differences Locus of control: internal and external Moral development: preconventional, conventional and post conventional Personality factors: age, nationality, education
MORAL DEVELOPMENT KOHLBERG
Kohlberg’s Stages of Moral Development STAGE
1
2
Universal Ethical Principles
3
4
Post - Conventional Recognition of possibility of change in social contract
Social Contract
Law & Order
Punishment & Obedience
Loyalty to nation
Conventional Conformity to social expectation
Interpersonal Concordance
Instrument & Relativity
5
Satisfaction of own needs by deferring to others Physical consequences
Preconventional
6 Commitment to principles such as justice and human dignity
Four styles in ethical decision making
Individualisme: diri sendiri menjadi sumber dan dasar pertimbangan dari segala tindakan dan keputusan. Altruisme: dasar tindakan adalah untuk kebaikan dan keselamatan orang lain. Pragmatisme: dasar keputusan dan tindakan bukan diri sendiri maupun orang lain tetapi tergantung pada kebutuhan pada saat itu dan akibat potensial dari keputusan tersebut. Idealis: dasar keputusan dana tindakan didorong oleh prinsip-prinsip, aturan dan nilai-nilai.
Organizational Factors
Organizational factors influencing ethical decision making Leadership
Organization culture Organizational context
Ethical behavior
Employees Organizational Structure
System
Organization Context
Industry type: sales, education, entertainment, medical, etc Competition Pattern: monopoly, oligopoly, free competition Competitiveness Intensity: low, moderate, high Resources availability : redundant or scarcity Customers Society Technology Government regulation
How to create high ethical organizations
How to create high ethical organization • CEO and management has high moral awareness • Ethical behaviors are codified into vision, mission and organization goals. • Socialize ethical behavior and learning process through reward and punishment system • Create a hero who has ethical behavior • Ethical behavior should be reflected in management practices and organization life. • Conduct open discussion to solve ethical issues. • Ethical dilemma should be solved by considering every stakeholders
The role of Leadership in developing ethic program
Conduct rigorous self assessment of the firm’s values and its’ existing ethics and compliance program Maintain commitment from top managers Publish, post, and make codes of ethics available and understandable Communicate ethical standards through multiple channels Provide timely training to reinforce knowledge Provide confidential resources to whom employees can go for advice or to report their concern Ensure consistent implementation Respond and enforce consistently, promptly, and fairly Monitor and assess using appropriate methods Revise and reform to ensure continuous improvement
Ferrell , 2008, table5,1, p132.
Seven Habits of Strong Ethical Leadership Ethical Leaders
Have strong personal character Have a passion to do right Are proactive Consider stakeholders’ interests Are role models for organizational values Are transparent and actively involved in organizational decision making Are competent managers who take a holistic view of the firm’s ethical culture
Ferrell , 2008, table 5,2, p135
Organizational Culture Basic assumption, values, norms, which influence decision making and behavior in an organization, and generated to new employees Cultural symbols
Shared Behavior Cultural values Cultural values
Shared Assumption
Tingkat dari suatu Budaya
STRATEGIES FOR STRENGTHENING ORGANIZATIONAL CULTURE Actions of founders and leaders Selecting and socializing employees
Managing the cultural network
McShane, 2007
Strengthening Organizational Culture
Introducing culturally consistent rewards
Maintaining a stable workforce
Struktur Organisasi Determinan dari suatu organisasi: 1. Pengambilan keputusan: sentralisasi, desentralisasi 2. Span of control menentukan struktur datar atau tinggi 3. Span of command 4. Formalisasi: peraturan, prosedur
DESAIN ORGANISASI; • Mekanistik • Organistik
Mengembangkan dan merubah etika organisasi Sistem Informal
Sistem Formal
•Kepemimpinan •Struktur •Peraturan/Kebijakan •Sistem imbalan •Sistem seleksi •Orientasi/training •Proses pengambilan keputusan
Perlaku ethis/ tidak ethis
•Norma •Pahlawan •Ritual •Mitos/cerita •Bahasa
IMPROVING ETHICAL BEHAVIOR SELECTION CODES OF ETHICS AND DECISION RULES
TOP MANAGEMENT’S LEADERSHIP JOB GOALS ETHICS TRAINING COMPREHENSIVE PERFORMANCE APPRAISAL INDEPENDENT SOCIAL AUDITS FORMAL PROTECTIVE MECHANISM
HOW TO THINK AND ACT ETHICALLY To think other’s welfare including the welfare of other groups. To think as member of society, not as isolated individual. To obey the law, but not merely following the law. Place yourself and your company as a number of society. Obey moral regulation. To think objectively. To appreciate other’s habits
Eight Steps To Sound Ethical Decision Making Gather the fact Define the ethical issues Identify the affected parties Identify the consequences Identify the obligations Consider your character and integrity Think creatively about potential actions
Check your gut
QUICK ETHICAL TEST
The Golden Rule: “Do unto others as you would have them do unto you”. The intuition Ethic: We know apart from reason what is right. We have a moral sense about what is right and wrong. We should follow our got feeling about what is right. The Means-Ends Ethics: Be sure the ends are not the means. The Test of Common Sense: Think before acting The Test of One’s Best Self: “ Is this decision I’m getting ready to take compatible with my concept of myself at my best?” The Test of Ventilation: Do not isolate yourself with your dilemma. Get other’s feedback before acting or deciding. The Test of Purified Idea: “Am I thinking this decision is right because someone with appropriate authority or knowledge says it is right?”
