Effective decision-making is the cornerstone of any thriving business. According to a survey of 760 companies cited in the Harvard Business Review, decision effectiveness and financial results correlated at a 95 percent confidence level across countries, industries, and organization sizes.
Yet, making ethical decisions can be difficult in the workplace and often requires dealing with ambiguous situations.
If you want to become a more effective leader, here’s an overview of why ethical decision-making is important in business and how to be better at it.
Making ethical decisions at work is critical, especially when you are faced with a difficult situation that tests your moral compass ethics and values should always guide business decisions, rather than just profits
But how do you ensure that you take the ethical route when faced with a tough call?
In this comprehensive guide, I will walk you through a six-step process on how to make ethical decisions at work.
Why Ethical Decision Making is Crucial
Unethical behavior such as fraud, discriminatory practices or environmental damage can ruin an organization’s reputation and hinder long-term success. Studies show that companies with a strong ethical foundation perform better financially as well.
As an employee, you want to protect the company’s interests. But you also need to stay true to your own moral standards. Ethical dilemmas will arise in many situations:
- A colleague asks you to cover up his mistakes.
- You find out your company is dumping toxic waste illegally.
- A vendor offers you an expensive gift to choose their proposal.
In such cases, blindly following authority or giving in to temptation can have disastrous impacts. You need a clear methodology to resolve ethical predicaments rationally.
6 Steps to Make Ethical Decisions
Here is a six-step approach you can follow when faced with a difficult moral dilemma:
1. Stop and reflect
Do not rush into a decision when faced with an ethical predicament. Take a pause and take the time to reflect on the situation.
Ask yourself:
- What seems morally wrong here?
- Is there a conflict of interest?
- Does this align with my personal or company values?
Reflection prepares you to make a thoughtful call.
2. Gather all relevant information
Try to gather as much factual information about the situation as possible. For example:
- Study the company policy manual to see if there are guidelines on the issue.
- Consult the code of ethics or compliance regulations.
- Ask colleagues for their perspectives.
- Do outside research on similar scenarios.
Information will provide clarity on all aspects of the situation. Do not jump to conclusions based on limited data.
3. Identify the stakeholders
Determine all groups and individuals who have a stake in the outcome, such as:
- Customers
- Employees
- Shareholders
- Vendors
- Local community
- Environment
Consider how each party will be impacted by your decision.
4. Develop potential options
Based on the information gathered, come up with several potential courses of action.
Weigh the pros and cons of each option by looking at consequences. Consult your company values and code of conduct as you develop options.
5. Evaluate and choose option
Now that you have reflected on the ethical dilemma and developed possible options, decide on the most appropriate solution.
Ask yourself questions such as:
- Which option best serves the interests of different stakeholders?
- Which seems fairest given the situation?
- What are the downstream impacts?
- How does this align with my conscience and company code of conduct?
Choose the option that passes the ethical reasoning test.
6. Implement decision
Once you have made your decision, follow through on it. Commit to the option and be prepared to explain your rationale if required.
If it involves reporting unethical conduct, follow proper protocols and/or inform your HR. This may have consequences, so be prepared for it.
Developing an Ethical Decision-Making Framework
Using a clear, defined framework for ethical decision making at work can help organize the thought process and resolve dilemmas methodically.
Here are some examples of frameworks you can use:
Potter’s Framework
This involves defining the problem, analyzing choices, making a decision and reflecting on the outcome. This is ideal for everyday ethical dilemmas.
Kidder’s Checkpoints
Identify right versus wrong based on checks of truthfulness, fairness, human dignity, reputation, responsibility and impact on relationships.
Velasquez’s Approach
Evaluate options based on criteria of fairness, rights, justice, common good, and protection of the vulnerable.
Choose a framework that aligns with your values and provides clear guidelines.
Fostering an Ethical Culture
While individual decision-making is important, organizations also need to build a culture of ethics through:
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Values-driven leadership – When leaders consistently demonstrate ethical conduct others follow suit.
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Training programs – Conduct ethics and compliance training for employees.
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Rewards – Offer incentives for demonstrating integrity.
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Reporting mechanisms – Provide anonymous whistleblower hotlines for reporting unethical behavior.
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Accountability – Those who violate policies should face proportionate consequences.
By cultivating shared ethical values across the organization, individual employees will find it easier to make morality-centered decisions.
Key Takeaways on Ethical Decision Making
Making ethical choices is a complex process, but absolutely critical for an organization’s success. As an employee you will face dilemmas that test your moral compass.
Follow these key takeaways when faced with tough calls:
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Take time to reflect on the situation and gather information.
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Weigh different options and use an ethical decision-making framework.
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Evaluate the impact on all stakeholders.
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Stay true to your conscience as well as company values.
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Consider long-term implications over short term gains.
Ethics may seem like a grey area sometimes, but if you follow a systematic approach you can make the right choice.
7 Ways to Improve Your Ethical Decision-Making
You may be familiar with the saying, “Know thyself.” The first step to including ethics in your decision-making process is defining your personal commitments.
To gain clarity around those, Hsieh recommends asking:
- What’s core to my identity? How do I perceive myself?
- What lines or boundaries will I not cross?
- What kind of life do I want to live?
- What type of leader do I want to be?
Once you better understand your core beliefs, values, and ideals, it’s easier to commit to ethical guidelines in the workplace. If you get stuck when making challenging decisions, revisit those questions for guidance.
A bias is a systematic, often unconscious inclination toward a belief, opinion, perspective, or decision. It influences how you perceive and interpret information, make judgments, and behave.
Bias is often based on:
- Personal experience
- Cultural background
- Social conditioning
- Individual preference
It exists in the workplace as well.
“Most of the time, people try to act fairly, but personal beliefs or attitudes—both conscious and subconscious—affect our ability to do so,” Hsieh says in Leadership, Ethics, and Corporate Accountability.
There are two types of bias:
- Explicit: A bias you’re aware of, such as ageism.
- Implicit: A bias that operates outside your awareness, such as cultural conditioning.
Whether explicit or implicit, you must overcome bias to make ethical, fair decisions.
Focus on Fairness
Being “fair” in the workplace is often ambiguous, but it’s vital to ethical decision-making.
“Fairness is not only an ethical response to power asymmetries in the work environment,” Hsieh says in Leadership, Ethics, and Corporate Accountability. “Fairness–and having a successful organizational culture–can benefit the organization economically and legally as well.”
It’s particularly important to consider fairness in the context of your employees. According to Leadership, Ethics, and Corporate Accountability, operationalizing fairness in employment relationships requires:
- Legitimate expectations: Expectations stemming from a promise or regular practice that employees can anticipate and rely on.
- Procedural fairness: Concern with whether decisions are made and carried out impartially, consistently, and transparently.
- Distributive fairness: The fair allocation of opportunities, benefits, and burdens based on employees’ efforts or contributions.
Keeping these aspects of fairness in mind can be the difference between a harmonious team and an employment lawsuit. When in doubt, ask yourself: “If I or someone I loved was at the receiving end of this decision, what would I consider ‘fair’?”
Ethical Decision Making
What is ethical decision making?
This involves considering moral obligations, individual rights and responsibilities, fairness, and the common good and balancing these considerations to determine the best course of action. The goal of ethical decision making is to make morally right and just decisions rather than simply focusing on personal gain or self-interest.
What are the steps of ethical decision-making?
The steps are: 1. Identifying the problem: This involves clearly defining the ethical issue or dilemma and gathering relevant information. It is vital to gather as much information as possible about the situation and the people involved to make an informed decision. 2.
Do you know how to make ethical decisions?
In these instances, it’s critical you and your team knows how to make ethical decisions for the company. Practicing ethical decision making can help you maintain an honest, supportive, and fair workplace culture, but it’s also necessary to ensure your company doesn’t get into legal trouble or face major losses down the road.
How do you make ethical decisions in the workplace?
Such decisions require a compassionate approach. Try imagining yourself in the other person’s shoes, and think about what you would want to hear. Doing so allows you to approach decision-making with more empathy. 5. Focus on Fairness Being “fair” in the workplace is often ambiguous, but it’s vital to ethical decision-making.
