Thesis: Ethics and Business Decision-Making

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Ethics and Decision Making

With many organizations, the way to ensure ethical decision making has been to introduce a new code of conduct that reflects the present world and its business challenges. Other companies and scholars, however, are taking a different route and have decided it is better to return to the basics, basics that have been part of ethical considerations for thousands of years since the beginning of Western philosophy and thought. These business "philosophers" stipulate that "moral insight has more to do with the types of questioning and soul searching that Socrates conducted in Ancient Greece." In other words, there is not a need to reinvent the wheel and establish new codes of ethics, but rather to guide behavior "not by issuing directions, but by engaging their listeners in a collaborative process of discussion and deliberation" (Paine, 2003, p. 201) This is the Socratic method. Socrates believed that moral insight and decision making came more from stimulating communication among active and informed minds than a list of "to dos" and "not to dos."

This new interpretation of this philosopher of so long ago may appear outdated, but in light of the ethical concerns in today's business world it may mean as much now as it did thousands of years go. Philosophy school director Malpas, states "But ethics is the foundation of good decision making, so why isn't every company trying to train its staff and leaders in ethical practice?"

Adds Handy (2006, p. 133), "Anyone who has read a code of conduct or statement of business principles knows how hard such documents are to read, let alone understand and retain." They need to be connected with real life concerns in order to have meaning. What Aristotle called the concept of eudaimonia, broadly translated as "happiness," suggests that each person or organization needs to develop its own special talents and resources as much as possible to attain the optimum from life. Further, it is necessary for each person to discover one's own purpose in society and something that he or she is uniquely qualified to perform. This is the main challenge in life (Handy, 2006, p. 133).

This Socratic method is not any different for leaders in organizations or for the total organization than it is for individuals outside of the working world. Each organization needs to have is own special purpose, "which goes beyond making shareholders richer." Leaders must understand they are obligated, if accepting reason for human existence, to make sure everyone who works for and with them to find special purpose and develop their potential to achieve it (Handy, 2006, p. 133). One cannot have a law for oneself and another for the rest.

Handy (2006, p. 134) also agrees that "what is needed is not a guidebook to good ethics, but more exposure to a way of thinking about the underlying quandaries of life. That's doing philosophy." Future leaders or what he calls "guardians," will each need a Socrates to challenge their thinking and help them work out what is the basis of a good life, society and organization, and then apply this philosophy to their own life and organizations. This is the challenge of the leaders of today's leaders and those to come in the future.

Leider (2006, p.294) states that the most meaningful roles in life are ones in which people serve others or create solutions that make life better for others. Leadership has meaning if it serves others. Calling joins self and service. As Aristotle said, "Where our talent and the needs of the world cross, there lies our vocation" (as quoted in Leider).

When looking at business ethics, one is concerned with such issues, or principles, that govern conduct in certain situations that may arise. For example: when a manager considers an candidate's race or age when making a hiring decision; whether employees need to take AIDS tests; of if "playing with numbers," which many companies did in the 1990s, is justifiable because the board of directors looks the other way with such maneuvers (Shaw & Barry, 2006, p. 109). The decisions a person makes in a career and in a working life are not governed just by business rules, but also by how a professional is defined: An ideal or model relationship with clients. There is more to living a morally good life, of course, then being a good businessperson or being good at one's job, add Shaw and Barry. As Aristotle argued: It is a person's necessity to try to achieve virtue or excellence not just in some particular field of endeavor, but solely as a human being. It is not just being considered excellent in this profession, or occupation, or sport, but excellent period. Only then can happiness be achieved.

Yet aspects of organizational structure and function build barriers and make it hard to achieve this moral responsibility as noted by Aristotle. These barriers include organizational norms, group commitment, pressure to conform and differentiation of responsibility, which all make reaching integrity difficult (Shaw & Barry, 2006).

Business philosophers agree that little has been written about ethical theory as it relates to the business world. They see the goal of ethical theory is to identify and support the basic principles to serve all of morality. The apply overarching ethical practices to t specific circumstances occurring in the business world and from this determine the correct behavior. Certain strategies have been suggested to meet this goal. Milton Friedman and Becker (2008) suggests that organizations should adopt the principle of profit maximization to guide them. This principle, conducted via an establishment of a free and competitive marketplace, will lead the company to meet its social responsibility. Others have recommended that the principle be broader than profit maximization, because corporations need to be led by a more general knowledge of social goods and by recognizing the importance of bringing about such goods. In addition, there are those such as Tom Donaldson and Werhane (2007), for instance, who support a form of the social contract theory of corporate social responsibility. According to this perspective, a company institutionalizes its moral responsibility by abiding by the implicit agreement existing between itself and the greater society. Such suggestions agree that the way of achieving ethical responsibility rests with the internalization of an independently justified principle.

DesJardins (2008) sees these similar approaches as failing in the long-term for a number of reasons: 1) the ambiguity of the meaning of the principle among different people; 2) competing principles that are debated; 3) no principle applied to business is binding to all individuals; and 4) the emphasis is on action not a person's character who is to perform this action. The alternative approach, once again based on Aristotle, defines good acts as those performed by the good man. Rather than being circular in argument, this indicates that a person needs to follow someone well versed in the ways of life instead of following a pre-existing principle for everyone. The "good business" is one that is perpetuated by good people; an organization where good people are making good decisions; people who are not swayed by short-term immediate pleasures. What is important in life are things not easily or quickly attainable: having a sense of humor, fostering intellectual abilities, and, above all, possessing phronesis or practical wisdom.

As per Aristotle, because ethics is not a demonstrative science and there is no such thing as unambiguous answers in ethics, a form of reasoning that differs from scientific reasoning is a necessity for the good person. Being able to make reasonable decisions in circumstances where there is no one right answer is the point of phronesis: to possess practical wisdom. With phronesis, it is the ability to make necessary changes so overall lessons fit the specific situation and not trying to fit a pre-existing principle to the circumstance. In many respects, it is the opposite of bureaucratic reasoning. Rather, it is being capable of altering situations without losing sight of one's final goal. An organization looking to further the development of good people should encourage this development of phronesis (DesJardins, 2008).

The importance is developing a professional view of a company where work is not a means to an end, but the end itself. The professional concept stipulates that the underlying value of business is on the supplier of goods and services that contribute to the good of society: 1) Good life for humans lies in the pursuit of excellence; 2) for business, excellence is the pursuit of goods and services to advance the social good; 3)Social good is a decision to be made in the political arena; and 4) Business can institutionalize ethics by furthering the development of good people into its ranks by closely identifying positions with pursuit of business excellence, avoiding an instrumental view of employee roles and encouraging phronesis and discouraging bureaucratic formulism DesJardins, 2008).

One of the major decisions that companies must make is how to distribute scarce and valuable products in the society. From an ethical standpoint,… [END OF PREVIEW]

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