Five Sources of Ethical Standards

Decision Analytics
Owen Seamons
Module Four and Five – Week 9

Your Learning Facilitator
Owen Seamons
[email protected]
4/11/2022 4/11/2022
Ethical Decision-making
Five Sources of Ethical Standards
1. The Utilitarian Approach
Some ethicists emphasize that the ethical action is the one that
provides the
most good or does the least harm, or, to put it another
way, produces the greatest balance of good over harm.
The ethical
corporate action, then, is the one that produces the greatest good and
does the least harm for all who are affected-customers, employees,

shareholders, the community, and the environment.
2. The Rights Approach

Other philosophers and ethicists suggest that the ethical action is the
one that
best protects and respects the moral rights of those affected.
This approach starts from the belief that humans have a
dignity based
on their human nature per se or on their ability to choose freely what
they do with their lives.

Five Sources of Ethical Standards
3. The Fairness or Justice Approach
Aristotle and other Greek philosophers have
contributed the idea
that all equals should be
treated equally
. Today we use this idea to say that
ethical actions treat
all human beings equallyor if
unequally, then fairly based on some standard
that is defensible
. We pay people more based on

their harder work or the greater amount that they
contribute to an organization, and say that is fair.

But there is a debate over CEO salaries that are
hundreds of times larger than the pay of others;
many ask whether the huge disparity is based on a
defensible standard or whether it is the result of
an imbalance of power and hence is unfair.

Five Sources of Ethical Standards
4. The Common Good Approach
The Greek philosophers have also contributed the notion that
life in community is a good in itself and our actions should
contribute to that life. This approach suggests that the
interlocking relationships of society are the basis of ethical
reasoning and that respect and compassion for all others
especially the vulnerable are requirements of such
. This approach also calls attention to the common
conditions that are important to the
welfare of everyone.
This may be a system of laws, effective police and fire
departments, health care, a public educational system, or
even public recreational areas.

Five Sources of Ethical Standards
5. The Virtue Approach
A very ancient approach to ethics is that ethical actions ought
to be
consistent with certain ideal virtues that provide for
the full development of our humanity
. These virtues are
dispositions and habits that enable us to act according to the
highest potential of our character and on behalf of values like
truth and beauty.
Honesty, courage, compassion, generosity,
tolerance, love, fidelity, integrity, fairness, self-control, and
prudence are all examples of virtues.
Virtue ethics asks of
any action, “What kind of person will I become if I do this?” or
“Is this action consistent with my acting at my best?”

Putting the Approaches Together
Each of the approaches helps us determine what
standards of behaviour can be considered ethical.
There are still problems to be solved, however.
The first problem is that we may not agree on the
content of some of these specific approaches
. We
may not all agree to the same set of human and civil
We may not agree on what constitutes the common
We may not even agree on what is a good and what
is harm.

Top issues the public is most concerned about
Ethics Case Study
Minimum wages for agriculture workers.
Wage Earner view
Farmer view
As at April 2022
Standards are not being applied consistently
EY 2017 Asia Pacific Fraud Survey
Identifying ethical courses of action
1. Pressure to meet numbers
Set goals with parameters.
Create incentives that include ethical constraints.
Place parameters around all goals and incentives.
Reward those who make correct choices.
2. Fear and silence
Create internal anonymous reporting systems with effective follow-ups.
Don’t terminate or discipline employees who raise issues.
Protect those who raise concerns.
3. Sycophantic executives and an iconic CEO
Monitor CEO conducts.
Watch for iconic deference.
4. A weak board
Hire experienced board members.
Recruit board members with expertise.
Avoid board members with direct and indirect conflicts.
Eliminate lax attendance.
5. Conflicts of interest
Create and enforce strong policies on hiring employees and awarding
6. Over-confidence
Place parameters around accounting, financial reporting and conduct.
Emphasise the basic hard work of business success.
7. Social responsibility is the only measure of goodness
Encourage basic virtues in company operations and conduct.
Caution that ends do not justify means.
4/11/2022 4/11/2022
Use of Collaboration, Influence and
Strategy in Decision Making

1. Integrity.
2. Cash, Borrowing, and Resource Management.
3. Increased selection and competition
4. Marketing and Customer Loyalty.
5. Uncertainty.
6. Regulation.
7. Problem Solving and Risk Management..
8. Finding the right staff..
– Explain your problem in up to 40 words. Then cut it down to 20
words; then to 10, then finally to only 5 words. These 5 words are
the root of your problem (and likely the root of your solution as
15 Examples of Bad Business Decisions
Camorro-Premuzic (20/8/2019, HBR)
Adapted from 1)
and 2)
Framing & discovery
focus with minimal
Simple analysis
Risk focus on few
Discovery, framing &
full evaluation

Kahneman’s 12 Questions
Differences in Strategic Decision

Adapted from Rozenwig, P. (2013). What Makes Strategic Decisions Different. Harvard Business Review. November Issue.
Strategic Decision Making Issues
Consequential, not unimportant
Long-term, not short-sighted
System-wide, not stove-piped
Contextual, not structural
Rarely final
Fernandes, T (2008). Strategic Leadership and Decision Making 1, Global

What is VUCA?
Volitivity Uncertainty Complexity Ambiguous
How to deal with VUCA **
VUCA and Strategic Decisions
Strategic decisions share the following VUCA like characteristics:
Drawn from analysis of highly variable environments
Are largely intuitive and therefore can be difficult to define
Rarely have one best solution, but often a series of possible
Benefits are difficult to assess as they lack a clear end against which
effectiveness can be judged
Solution states contain high levels of ambiguity and uncertainty
Are formed by competing interests between key players who can
use political pressure to ensure choices align with their preferences.

Meeting Truths **
Building Diversity Questions
Look at your resources in Module 5 on BB and answer the
following questions:
Identify and describe possible advantages to group decision
making of building diversity into team membership
Describe some of the potential social costs to team
relationships likely associated with building diversity into
teams; What are the Likely benefits?
Differences in views and beliefs associated with diversity in
teams can be resisted strongly by established sub cultures in
organisations. How might resistance to introducing team
diversity be overcome by managers-decision makers in

Building Diversity Questions
What are creative tensions? How might the advantages of
creative tension in decision making be explained to middle
managers resisting changes from their established
homogeneous team members?
More recent research into diversity in work practices point to
the benefits of diverse team over homogenous team
membership. What order of advantage is typically involved

Central vs Peripheral Influences
Persuasion can take one of two paths, and the durability of the end result depends
on the path.
(Petty & Cacioppo, 1986)
Central Route Persuasion
The central route is logic driven and uses data and facts to
convince people of an argument’s worthiness. For example, a car
company seeking to persuade you to purchase their model will
emphasize the car’s safety features and fuel economy.
This is a direct route to persuasion that focuses on the quality of
the information.
In order for the central route of persuasion to be effective in
changing attitudes, thoughts, and behaviours, the argument
must be strong and, if successful, will result in lasting attitude
The central route to persuasion works best when the target of
persuasion, or the audience, is analytical and willing to engage in
processing of the information

Peripheral Route Persuasion
The peripheral route is an indirect route that uses peripheral
cues to associate positivity with the message (Petty &
Cacioppo, 1986). Instead of focusing on the facts and a
product’s quality, the peripheral route relies on association
with positive characteristics such as positive emotions and
celebrity endorsement.
This route to attitude change does not require much effort or
information processing. This method of persuasion may
promote positivity toward the message or product, but it
typically results in less permanent attitude or behaviour
change. The audience does not need to be analytical or
motivated to process the message.

Cognitive Dissonance
Attitudes are our evaluations or feelings toward a person,
idea, or object and typically are positive or negative.
Our attitudes and beliefs are influenced not only by external
forces, but also by internal influences that we control.
An internal form of attitude change is cognitive dissonance or
the tension we experience when our thoughts, feelings, and
behaviours are in conflict.
In order to reduce dissonance, individuals can change their
behaviour, attitudes, or cognitions, or add a new cognition.

Source Characteristics that
Foster Peripheral Influence
Personal attractiveness
Helping the other party
Perceived similarity
People with authority have more influence than
those without authority *
Science of Persuasion **
Dr. Robert Cialdini
Persuasion Enhancing Concepts
KTG Influencing Case Study
Decision Making Models
substantive rationality, stemming from the concept of
rationality within
economics, as behavior that “is
appropriate to the achievement of given goals within the
limits imposed by given conditions and constraints”.
Procedural rationality, based in
psychology, refers to
behavior that “is the outcome of appropriate deliberation”
may not be readily known by administrators but need to
be acquired through extensive research and analysis

Values are internal perceptions on the desirability and
priority of one’s actions and choices.
Means are the instruments to satisfy a higher end (Simon,
1997). Although they are used to achieve a higher end,
they are not neutral in
value. When policy makers devise
their strategies, they choose their means according to
their internal values and consequences…
Ends are the intermediate goals to a more final objective
Decision Making Models contd
Economic rationality model
This model comes from the classical economist models, in
which the decision-maker is perfectly and completely
rational in every way. In this, the following conditions are
The decision will be completely rational in means ends sense.
There is a complete and consistent system of preferences that allows a
choice among alternatives.
There is a complete awareness of all the possible alternatives
Probability calculations are neither frightening nor mysterious
There are no limits to the complexity of computations that can be
performed to determine the best alternatives

Social model
At the opposite extreme from the economic rationality
model is the social model drawn from psychology.
Sigmund Freud viewed humans as bundles of feelings,
emotions and instincts, with their behavior guided by their
unconscious desires. These processes have even an impact
in the international arena as they provide some basic rules
of protocol.

Simon’s bounded rationality model
To present a more realistic alternative to the economic rationality
Herbert Simon proposed an alternative model. He felt that
management decision-making behaviour could be described as follows:
In choosing between alternatives, manager attempt to satisfy or looks for
the one which is satisfactory or “good enough”. Examples of satisfying
criteria would be adequate profit or share or the market and fair price.
They recognize that the world they perceive is drastically simplified model
of the real world. They are content with the simplification because they
believe the real world is mostly empty anyway.
Because they satisfy rather than maximise, they can make their choices
without first determining all possible behaviour alternatives and without
ascertaining that these are all the alternatives.
The managers treat the world as empty, they are able to make decision
with simple rule of thumb. These techniques do not make impossible
demands upon their capacity for thought.

Neurocognitive Model
Neuroscientific (neurocognitive) model
In cognitive neuroscience decision-making refers to the
cognitive process of evaluating a number of possibilities,
and selecting the most appropriate thereof in order to
further a specific goal, or task. This faculty is a
fundamental component of executive functions, although
recent studies show that a complex brain network is
involved including motor areas.