PRESCRIPTIVE APPROACHES TO

ETHICAL DECISION-MAKING IN BUSINESSreferencing

Chapter 4Trevino & Nelson, Managing Business Ethics. NY: Wiley,

1999.

Objectives

Explain the “Prescriptive Approach” to ethical decision-making

Distinguish between “Teleological” and “Deontological” theories.

Identify a set of decision-making tools (ways of thinking about ethical choices).

Why do they call them Prescriptive Approaches?

• The term “prescribe” implies a recommended course of treatment to correct a condition (presumably, an ethical problem.)

• Just as a physician writes a prescription to cure an illness, processes for ethical decision-making are protocols for arriving at ethical solutions.

Two General Types of Prescriptive Approaches

“Teleological” ‘telos’ (goal)• Consequentialist• Focus on results of

decision or action; one’s target.

• Example: Utilitarianism

“Deontological” ‘deon’ (duty)

• Duty, Obligation, Principles, Rights

• Focus on what’s right in broad, abstract, universal principles.

• Example: Moral Rights, Justice

Four Models for Ethical Decision-Making

1. Utilitarianism

2. Moral Rights

3. Justice

4. Individualism

Utilitarianism

greatest good for the greatest number

optimizes satisfaction of greatest number

calculates harm/benefits to those affected

UTILITARIANISM: Ethical Standards

• ORGANIZATIONAL GOALS:ORGANIZATIONAL GOALS:– satisfy stakeholders

– maximizing profits

• EFFICIENCYEFFICIENCY– minimize inputs and external costs to society

– maximize outputs

• CONFLICTS OF INTERESTCONFLICTS OF INTEREST– corporate or collective interest is

superordinate compared to individual interest

UTILITARIANISM: Application

• MERIT PAY

• COMPETITIVE PRICING

• EFFICIENT MARKETS

• BANKRUPTCY

• DOWNSIZING

Moral Rights

maintains rights of people affected

fundamental rights cannot be taken away

rights include: free consent, privacy, life-health-safety, due process, free speech, conscience

Justiceequity, fairness and impartiality

Distributive Justice: differential allocation of rewards to people is based on objective rules and not arbitrary characteristics

Procedural Justice: rules are administered fairly, even-handedly

Compensatory Justice: compensate cost of injury by responsible party

Individualism (Virtue Ethics)

based on personal character, defined by one’s community

relativism promotes the individual’s long-term

interests self-interest is moderated by

reciprocity uses the “golden rule”; cheating -

provokes same behavior in others

Four Models for Ethical Decision-Making

APPROACH THE BEST or ETHICAL CHOICE . . . . .

Utilitarian greatest good for the greatest number optimizes satisfaction of greatest number calculates harm/benefits to those affected

Moral Rights maintains rights of people affected fundamental rights cannot be taken away free consent, privacy, life-health-safety, due process, free speech, conscience

Justice equity, fairness and impartiality Distributive Justice: differential allocation of rewards based on rules and not arbitrary characteristics Procedural Justice: rules are administered fairly Compensatory Justice: compensate cost of injury by responsible party

Individualism promotes the individual’s long-term interests self-interest is moderated by reciprocity \ (golden rule; cheating - provokes same behavior in others)

8 Steps to Sound Ethical Decision-Making

1) Gather the Facts of the Situation2) Define the Ethical Issues3) Identify the Affected Parties4) Identify the Consequences (Long v. Short,

Symbolic Consequences)5) Identify Your Obligations6) Consider Your Character and Integrity7) Think Creatively About Potential Actions8) Check Your Gut.