Personal Ethics In Business – Individual Decision Making
Before exploring individual and situational factors that influences individual decision making process, it is important to understand the key aspects that drives an individual to make ethical decision in the business world. These aspects are psychological biases, organizational cultures and human dignity (Crane & Matten, 2016). The consideration of these aspects by an individual is depended on factors faced by that individual when making the decision. Three important factors that influence ethical decision making in an individual are individual factors, situational factors and organizational factors. However, this report focused on individual and situational factors that affects individual decision making process regarding the perception on how a Multi-National Company conducts its business operations.
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Many studies have shown that ethical decision making by the management in any business is very important in influencing the perception of an individual in relations to how that business conducts its operations. Considering that MNCs carry out their operations in several countries and regions across the world, diverse cultural backgrounds comes into foreplay when making decisions. Ethical decision ensures that security breaches, violation of privacy and illegal use of intellectual property are avoided (Velasquez, 2014). For example, MNC that trades across the world must portrays itself as a company that addresses the needs of diverse cultures. This means the decision making process must be rational. Irrational entrepreneurial decision making influence investors interested in investing their money in the company to have negative perceptions about the company. Therefore, the management of the MNC should utilize adequate data and information and take enough time in order to arrive at rational entrepreneurial decision making. Studies have shown that lack of enough data and information as well as time pressure contributes to irrational entrepreneurial decision making.
Individual and situation factors on individual decision making
Typically, individual and situational factors work jointly to influence ethical decision in a business. In order to understand how these two factor influences ethical individual decision making in business and how it affects whistleblowing in case of problem arise in the workplace, it is important to comprehend how rational entrepreneurial decision making are made throughout corporation (Deresky, 2017). Generally, individual factors are described as ethical decisions that workers decide to stick to after deliberating on own concepts that he/she considers to be right or wrong. These individual factors are sometimes very complex and can negative affects the workers in their place work especially in the working environment where employees are drawn from diverse cultural background, since an ethical decision can right to some group of workers and wrong to another group of workers based on their personal and cultural background.
Situational factors include location and time among other factors relates to the situation that influence the perception of an individual regarding certain objects, business operations and culture of an individual in the work place. Perception issues is described as an interpretation of an environment by an individual. Perception play crucial role on how an individual solve a problem and make decision (Dicken, 2015). According to social cognitive theory, bi-directional interaction between behavioral, environmental and individual factors determine whether the decision is ethical or unethical. Typically, environmental factors are similar to situational factors since it is the prevailing conditions that surrounds as individual such as an employee making the decision. Nonetheless, individual and situational factors play crucial role in influencing the perception of employees and subsequently the ethical decision making process.
In addition, the decision made by an individual employee influenced by individual and situational factors determines the whistle-blowing behavior in the organization (Trevino, 1996). Many studies have analyzed whistle-blowing behavior in the public organization through the lens of public service ethics, organizational management, bureaucratic politics and political control. However, this report focused on individual characteristic and organizational characteristics in relations to individual decision making and their influence on whistle-blowing behavior.
There are two characteristics that determine whistle-blowing behavior in any organization: these are mission valence and work motives. Research studies have shown that employees that tend to raise alarm when a problem occurs in an organization are committed to the organizational values and loyal to the organization (Jones, 1991). The concept of mission valence was advanced by Rainey (2009) to mean that “affective orientation towards particular outcome” (Rainey, 2009). Other studies have referred mission valence to mean workers perceptions of the salience or attractiveness of a company’s social or purpose contribution which is derived from individual experiences and satisfaction from advancing that purpose.
It is clear that varying levels of mission valence influence the outcome of human resource in terms of job absenteeism and satisfaction in an organization. Further analysis indicated that employees tend to align their expectation with the mission of the organization. For example, organization that tend to have more attractive mission, employees strive to be associated with the organization (Lavena, 2016). This also reflect the commitment of the employee to the organization as well as the urge to report any wrong doing in the organization. Therefore, individual decision to whistle blow correlates with the attractiveness of the organizational goals and job satisfaction.
The second individual characteristic associated with whistle-blowing behavior is work motives. According to the theory of public service motivation, unique service ethic commonly associated with public-sector make the employees to be prone to engage in whistle-blowing. In addition to this, morality and personality of individual influencing ethical decision making process contribute significantly to whistle-blowing behavior (Haines & Leonard, 2007). There are three important factors that drives an individual’s behavior towards whistle-blowing: affective motives such as human emotions; norm-based motives such as loyalty, duty, patriotism and public interest; rational motives such as utility maximization.
These characteristics encourages employees to report any problem that arises in the work place and is likely to negatively affect the operations and the perception of the organization. Structure, culture and environment are among the first characteristics that determines whether the employees are willing to speak out when they noticed a problem in an organization. For example, studies have indicated that when the employees are provided with the supportive environments such as legitimatization of certain organizational values increase the chances of whistle-blowing (Akbar, et al., 2016). Similarly, organizational culture that is more tolerant to responsible employees increases the chance of whistle-blowing. Research have showed that organizational structure that does not tolerate dissent encourages the employees to externally whistle-blow, hence discouraging whistle-blowing within the organization.
Respect and openness are also organizational characteristics that influence the extend of whistle-blowing in the company. Studies by Miethe and Rothschild (1994) indicated that companies or organizations that encourage openness and “permissive of employee voice in a decision-making process” encourages the employees to whistle-blow internally since they strive to maintain legitimate purpose of the company. Respectful and open organization also have mechanisms such as internal channel for resolving problems (Jones, 1991). Some researchers have argued that more open and respectful organization allows the employees to address issues happening internally without reporting to the oversight bodies thus discouraging whistle-blowing. However, the reality is that a respectful and more open company or organization encourages employees to practice ethical behavior thus reducing mistakes internally hence less reporting and subsequently less whistle-blowing.
Flexibility and cooperativeness are the third characteristics that influence whistle-blowing in the organization. Studies indicated that cooperation in the work place is the main driver of cohesiveness and teamwork when making decision regarding ethical environment and practice. It is also considered to be one of the determinants of whistle-blowing (Rainey, 2009). Flexibility in the workplace allows the employees to minimize the risks of committing mistakes in the organization. For example, the empirical study of police whistle-blowing and ethical climate in the state of George by Rothwell and Baldwin (2007) showed that team interest environment such as caring for an organization enhances the willingness of the people to report on misconduct, felonies and misdemeanors.
However, it is important to understand that organizations with more cooperation and flexibility of communications flows among the workers and between the management experience minimal wrongdoing. This means that whistle-blowing by the employees is less. In addition, cohesiveness and teamwork among the employees creates mechanism that addresses the mistakes internally because they perceive that external exposure threatens solidary among the employees in the organization (Akbar, et al., 2016). Nonetheless, whistle-blowing does not means that when any wrongdoing occurs in the workplace, the employee should resort to external exposure before seeking attention from the internal management. Typically, external whistle-blowing should come as the last resort after the internal intervention has completely failed.
The fourth organizational characteristic is fair treatment in the work environment. Studies have shown that when the employees operate in an environment that is perceived to be of high integrity and fair tend to be at ease to talk to the management regarding wrongdoing without any fear of reprisals (Velasquez, 2014). In addition, employees are very committed in ensuring that organizational goal of ethical practice is observed and an individual employee may choose to remind any employee that stray away from the path.
The individual decision making process is generally activated by the need to solve prevailing problem. This means that moral decision is not different since the process starts with the problem which requires moral components to provide solutions (Trevino, 1996). The moral issues or moral component of the problem have been characterized in terms of its moral intensity. Decision making process under the lens of moral intensity follows four stages: recognize moral issue, make moral judgement, establish moral intent and engage in moral behavior.
Recognition of moral issues
Recognition of moral issues is very crucial since a moral decision making process by an individual start with this first stage. Some scholars have argued that many decisions in business are moral decisions, but the decision maker tend to overlook the need to recognize the moral element in their decision making process (Lavena, 2016). Moral issues prevail when an organization implement an action following a decision made and the outcome of the action harms or helps people that have direct and indirect relationships with the organization. Recognition of moral issue requires a consideration of two elements. The first element is that decision maker must acknowledge that his/her decision has consequence on human beings. The second element is that some decisions requires input from other people since an individual has volition. Therefore. an individual that do not recognize moral issue do use moral decision-making schemata. For example, when an individual is not using moral decision making schemata, he/she is using other schemata such as economic rationality.
The moral judgement comes after the recognition of moral issue. Studies have suggested that moral judgement is achieved through a combination of six analytically distinct steps. The first step involves obedience and punishment which is a condition that a person observe the rules because he/she does not want to be punished. The second stage involves instrumental purpose and exchange, where a person observes the rules for furtherance of his/her interest. The third stage is interpersonal accord, conformity and mutual expectation, where a decision maker adopts moral standards because his/her peers have adopted (Haines & Leonard, 2007). The fourth stage is social accord and system maintenance, where an individual decision maker adopts moral standards of the society such as specific law. The fifth stage is social contract and individual rights, where a decision maker understands the relativity of values and he/she obey the rules because they are consistent to the social contract. The sixth and last stage is universal ethical principles, where the decision maker adopts their own ethical principles event if it contradicts the laws of the land. Many studies have linked the process of moral judgement with cognitive moral development due to strong influence on ethical judgement. The linked between these two decision making process model comes as a result of cognitive process that involves moral judgement in decision making process.
Following moral judgement process that was realized through a process of cognitive moral development, the next is for the decision maker to decide what he/she intent to do. It is important to distinguish between morally correct judgement and the decision to act on morally correct judgement which is to establishment of the moral intent. Moral intent involves a balance between a moral factor and other factors such as self-interest (Trevino, 1996). For example, a supervisor in an organization refuses to fire a senior employee since he/she considers the action to be a right thing based on moral judgement, but he/she may decide to fire him/her anyway due to failure his/her part to establish moral intent following organizational pressure or career advancement. Real life experience of the above example was a situation that occurred in relations to the Aircraft Brake Scandal where Kermit Vandivier decided not to speak out about the company even after being aware that the company was selling unsafe product. He what was right but he decided to take no action about the scandal.
This is the last step of moral intensity which involves acting on individuals’ moral intention i.e. engaging in moral behavior. According to Rest’s model, moral behavior is a process of “Executing and implementing a plan of action. It involves working around impediments and unexpected difficulties, overcoming fatigue and frustration, resisting distractions and allurements and keeping sight of the original goal.” Social cognition established a useful theoretical link between moral behavior and moral intensity (Velasquez, 2014). The argument is that human being are inclined to respond to request for help when the problem is uncontrollable and less likely to respond to a problem that is controllable. For example, human beings puts more efforts to assist individuals who are facing predicament that are not their responsibility.
Students are likely to be faced by three ethical dilemmas that relates to the moral decision making process. The first time is mean stage level for a dilemma which requires the students to decide between human life and the obedience of the law. The second ethical dilemma is the decision between personal career and personal intergrity. The third ethical dilemma is s decision between professional duty and the obedience to a superior.
It is recommended that the training for new graduates should focus on addressing these dilemmas in order to assist the students to make right decision in business. For instance, in the first dilemma where the student finds it challenging to make a decision about human life versus obedience of the law. When faced with this problem student should put human life fast and obedience of the law second. In the aircraft brake scandal, the Kermit Vandivier should have decided to put human life first and whistle blow about it.
Where the student is required to choose between professional career and personal integrity, it is recommended that the training should inform them that personal integrity supersede professional career. It is important for the students to understand that they can develop professional career by pursuing their personal integrity. Therefore, personal integrity supersedes professional career. Similarly, students can balance between professional duty and obedience of their superior. This can be achieved by ensuring that training focus on professional duty while obeying the superior.