Business Ethics Chapter 4 PDF

How Do You Decide What’s Right? When you make a tough decision, what are you actually thinking and feeling? It’s not always easy to understand. In order to decide what’s right you need to better understand your own thoughts. In Chapter 3 we covered the blind spots and cognitive gaps we fall into....

How Do You Decide What’s Right? When you make a tough decision, what are you actually thinking and feeling? It’s not always easy to understand. In order to decide what’s right you need to better understand your own thoughts. In Chapter 3 we covered the blind spots and cognitive gaps we fall into. In this chapter, we’ll discuss the psychology leading into deciding what’s right: what are the cues that leads to heightened ethical awareness, make sound ethical judgments, and leads to us taking ethical action. What Affects Our Ethical Awareness? ( 1 / 4 ) In order to take Ethical Action, we must first be ethically aware. The following factors prime us to consider the ethics involved in decision-making more: Ethical Facing the Language is Scrutiny of Used to Moral Intensity Peers Present the Situation What Affects Our Ethical Judgment? ( 2 / 4 ) Facing the Scrutiny of Peers When we know a decision we make will be judged by our peers, we tend to consider the ethical implications more thoroughly. Ethically focused training modules, impromptu discussions, or even bringing up the notion of ethics casually around the watercooler all prime our social minds to be more ethically aware. When an issue does arise, and this issue will come into light for multiple people, having the notion that the decision made will come under scrutiny ensures that the decision will be more morally minded.  What Affects Our Ethical Judgment? ( 3 / 4 ) Language as a Words matter. The language used to describe a situation sets Framing the tone for how it should be handled. Device Ethically charged words amplify the ethical context, whereas euphemistic, or more neutral-sounding words downplay, or muffle it: Amplifying Downplaying Positive words: Integrity, honesty, fairness, propriety, Euphemisms like: ’we’re letting you go,” downsizings, collateral damage, Negative words: lying, cheating, acceptable loss, outsourcing, flexible stealing, forgery, plagiarism… position, value-added revenue, etc. What Affects Our Ethical Judgment? ( 4 / 4 ) Moral Intensity When the implications of our decision pose a real threat to the well-being of other people, physically or mentally, carry moral intensity, heightening our sensitivity to their outcome. Managers can prime their employees by providing training for ethical issues they’re likely to encounter, their implications, and why they are potentially problematic.  Individual Differences So far we’ve covered the markers that affect everyone, and we’ve stressed that environment and group dynamics play the larger role in affecting ethical decisions, especially in a business context. Individuals do bring their own quirks to the table from a management perspective. Recognizing the major aspects of differences between associates matters when tailoring your approach to each individual employee. Individual Differences Cognitive moral development; Locus of control; Machiavellianism; Moral disengagement; Ethical Awareness -> Ethical Judgment -> Ethical Action  Levels of Cognitive Moral Development We level up our cognitive moral development throughout our lifetimes. Depending how advanced an individual’s moral development is will affect how they act when faced with an ethical dilemma. The more advanced their moral Postconvention development, the more closely they will act al accordingly to the “ideal” ethical principles we covered in Chapter 2. Conventional As a manager, you’ll interview and work with associates across a range of different levels of moral development. Preconventional This moral development can be improved somewhat at the workplace through training, but it really comes through a lifetime of experiences. There are three levels, divided into two stages each.  Levels of Cognitive Moral Development The Preconventional level stems from children first Level I: socializing with each other and begin to discern Preconventional between the notions of “right” and “wrong.” At this level, the individual’s only ethical sense is escaping punishment, and self-betterment. They will view any ethical dilemma through the lens of “what’s in it for me? Or “can I get away with this?” Some adults never progress beyond Associates this stage. at this stage… Stage 1: Obedience Fulfill their responsibilities and follow their and Punishment superiors for fear of reprisal or discipline Orientation otherwise. Stage 2: Instrumental Purpose and Are concerned with reciprocity. “If I do a Exchange good job now, I’ll be rewarded in the future.”  Levels of Cognitive Moral Development Level II: This level entails shared moral norms of society, family, or Conventional work colleagues. Level 2 individuals strive to do which pleases others or garners approval. More advanced Conventional level associates begin to view their own actions through the lens of how they play into society at large. Most adults never progress beyond the conventional ethical level. Associates at this stage… Stage 3: Interpersonal Accord, Conformity, Mutual Placing importance on interpersonal Expectations trust and social approval. Beginning to consider the common Stage 4: Social Accord and good. How their actions will affect System Maintenance others they’ve never met. Levels of Cognitive Moral Development Level III: Individuals with a strong moral center have developed a sense Principled of reasoning that goes beyond their self as well as the expectations of others in their immediate social group. They weigh each ethical issue they are posed with in terms of abstract concepts such as justice and rights. A person at this level is rare. Think of whistleblowers who have sacrificed their own livelihood and even personal safety in the name of the greater good. Associates at this stage… Stage 5: Social Upholds rules that are consistent with Contract and fairness and rights for the greater Individual Rights good. Stage 6: Universal Take into account the moral Ethical Principles implications going beyond society’s laws, and make decisions based on what would be the greatest overall good to society.  Locus of Control When it comes to life or business decisions, do you feel like you’re in the driver’s seat, or are you more along for the ride? This perspective is known as the Locus of Control. If you possess a high external focus, it seems like life happens to you, whereas a high internal focus means you feel more in control. Understanding where your associates lie on this spectrum, either through surveys or informal conversations, help you as a manger get a sense of how they feel accountable for their own actions. Managers need to hold team members responsible for their individual responsibilities to help them feel like they are in control and not just another “cog in the machine.” External Locus of Control Internal Locus of Control  Honesty and Humility We all respect and want to work with people who speak with nothing to hide, yet listen to other’s opinions and even criticisms. Psychologists define honesty as “the tendency to be fair an genuine in dealing with others, in the sense of cooperating with others even when one might exploit them without suffering retaliation.” Four different facets of personality comprise Honesty & Humility: Fairness Greed Modesty Sincerity Avoidance  Machiavellianism On the other end of the spectrum from honesty & humility, we have Machiavellianism. Not to be confused with an individual who simply has an undeveloped moral center, someone with Machiavellian traits is someone who values pragmatism over ethical principles, despite the harm it may cause. Niccolo Machiavelli was quoted as saying “A ruler should do good if he can, but … commit evil if he must.” Every manager’s greatest challenge personnel-wise will come in the form of a highly intelligent employee who is principled in the opposite fashion of serving the greater good. Employees as well should look out for Machiavellian traits in management who imply sacrifices to personal health, Niccolo integrity, or time with family are what’s expected from their Machiavelli subordinates. Caveats of Implementing Ethical Principles In Chapter 3, we covered a series of steps for implementing the principles of ethical decision-making to prevent ethical blindness. Now, we’ll explore some of the challenges that arise when applying these principles in real-word situations. While the steps assume a rational approach, human decision-making often falls short of this ideal due to the cognitive biases and the desire to simplify complex situations. In the following section, we’ll examine how to recognize and mitigate these influences to enhance ethical judgment. Checking Overconfidence when Fact Gathering “How Quick, which city is further north, New York or Rome? could I be wrong? Did you get it right? If you didn’t, don’t feel bad. Out of a sizeable sample of business students, 90 percent didn’t either. Not only did they get it wrong, but when questioned they were confident they knew. Another reason to take “What your time when gathering the facts. facts are still While it’s important to be confident and not second guess missing?” ourselves at every turn, we can fall into what’s known as a confirmation trap: trying to make the pieces fit where they don’t belong. Leading up to the great 2008 financial crash, many mortgage brokers also fell into this trap, by assuming many of the people they were creating loans for had enough income to make their payments.  Consequences In Chapter 3 we outlined Identifying the Consequences as one of the key steps in implementing one of the ethical systems in your decision making. Here are a few additional considerations when weighing the consequences of your decisions: Simplify Your Decisions … by reducing down the number of consequences you’ll consider preparing for. Recognize that we are biased towards giving precedence Self vs. Others to consequences that affect ourselves over others. From a risk perspective The illusions of optimism and control, tend to make us underestimate potential risks when taking on a new venture. Be wary of the sunk cost fallacy, continuing to Consequences over Time invest or persevere in an endeavor that isn’t panning out. The Illusion of Superiority Integrity is a fickle thing. It’s easy to see ourselves in a morally superior light. In Chapter 3, we asked you to consider your actions if they were to be viewed in a public light. Surveys have found that individuals tend to falsely believe themselves to be more fair, honest, and ethical than most other people. Ironically, a person of true integrity is someone who takes time to question their own. Those who stop and think to consider their own self-serving motives (which we all have) end up making the most ethical decisions.  Strike a Balance Between Your Brain and Gut Throughout Daniel Kahneman’s 2011 book Thinking Fast, and Slow he uses the labels “System 1” and “System 2”. System 1 is our instinctual, immediate, and effortless thinking —our “gut” reactions— that do not require intense thought. However, this fast thinking is more susceptible to cognitive traps. System 2 is slower, more analytical thought process that requires us to slow down and think. System 1 often takes precedence, guiding us through daily and important decisions alike, but also with risk. Psychologists argue that ethical judgment happens “quickly, effortlessly, and automatically,” The challenge lies in knowing when to trust your gut and when to pause, engage System 2, and think critically.  Key Takeaways Autonomous decision making is rare in most employees. Most people look outside themselves – to management or peers – for moral guidance. Cognitive moral development theory and research tells us that most of the people you manage are going to be strongly influenced by what you do, say, and reward. Be on the lookout for individuals exhibiting Machiavellian tendencies, who tend to be intelligent, yet self-serving. Individuals with an mostly internal locus of control are close to the “ideal” sort of person we’d imagine who makes decisions according to ethical principles rather than self-service. Daniel Kahneman outlined two cognitive frameworks: System 1 & 2. The first is dominant, impulsive, immediate, and prone to cognitive fallacies. The second is slower, more energy-intensive, and methodical in nature.  References D. M. Messick, “Ethical Leadership and the Psychology of Decision-Making,” Sloan Management Review , (Winter 1996), 9 – 22. L. Kohlberg “Moral stages of Moralization: The Cognitive Development Approach.” in Moral Development and Behavior: Theory, Research, and Social Issues, ed. T. Lickona (New York: Holt, Rinehart and Winstone) 34-55 Kahneman, “Thinking, Fast and Slow”, MacMillan, 2011