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Minor moral behaviour is usually an outcome of a decision process. A business situation occurs with a variety of threats and opportunities to goals and success. A need to decide is recognised and alternatives must be evaluated and selected. Time is generally short and at a premium. At this point, it is very easy for alternatives to be offered that require marginal moral behaviour. This is when sensitivity can best be exposed and discarded.
Given the above statement how can managers be sensitive to the situation? How can they adhere to personal and ethical values and their moral compass under theses decision pressures?
Table of content
Minor moral behaviour as an outcome of a decision process.
Business situation with threats and opportunities
Alternatives must be evaluated and selected.
Time is generally short and at a premium.
An alternative that require marginal moral behaviour.
The sensitivity analysis
How can they adhere to personal and ethical values and their moral compass under theses decision pressures?
List of references
Ethical versus moral and the decision-making process.
Beachamp and Bowie (2004) gave a very helpful distinction between morality and ethical. Morality is concerned with social practices defining right and wrong. Theses practices-together with other kinds of customs, rules and mores-are transmitted within cultures and institutions from generation to generation. Similar to political constitutions and natural languages, morality exists prior to the acceptance or rejection of its standards by particular individuals. In this respect morality cannot be purely a personal policy or code and is certainly not confined to the rules in professional codes of conduct adapted by corporations and professional associations.
In contrast to morality, the terms ethical theory and moral philosophy point to reflection on nature and justification of right actions, the philosophical reasons for or against aspects of the morality stipulated by society. These words refer to attempts to introduce clarity, substance, and precision of argument into the domain of morality. Although many people go through life with an understanding of morality dictated by their culture, other persons are not satisfied to conform to the morality of society (ibid).
Decision making - To make a decision means to make a judgment regarding what one ought to do in a certain situation after having deliberated on some alternative course of action. Herbert A. Simon treats it as a process synonymous with the whole process of management. He believes that there are three stages of Decision making finding occasions for making a decision; finding possible courses of action; and choosing among courses of action.
Jennings and Wattam (1998) - Added that the range of problems that an organisation faces is diverse. Many decisions are repeated several times during a working day while others occur infrequently and may take place over several years. Cooke and Slack (1991) extended that, we cannot truly judge how good a decision was without the benefit of perfect hindsight. If after the consequences of a decision have become obvious, we can say looking back, the course of action we decided upon was the best available under the circumstances, then the decision can be judged a good one
The process of decision making - Since one criterion of good decision is the way it is made, is crucial to evaluate the process of decision making in details as is showing in the figure below. In the observation stage, where normally starts the decisions making process, an individual manager noticing either that some likely decision opportunity exists in organization or its environment. The second is necessary to consider what it is hoped the decision will achieve. This stage normally involves interpreting and making operational, a company's overall goals and objectives and also setting the boundaries to the decision area, while the third stage there is a need for the manager to diagnose the true nature of the problem. This stage is so import, because faulty diagnosis - formulating the wrong problem- will seriously affect the rest of the process.
Determine the options and evaluate them is the fourth phase of the decision making process, this stage involves the evaluation of the consequences of each decisions options are spelt out in some detail. The choice is the five phase of the process, in this stage one of the decision alternatives is chosen as being the most likely, if implemented, to prove satisfactory. The follow stage is the Implementation which involves making whatever changes the selected option requires, whilst the control is regarding to observe how effective it is at solving or reducing the original problem.
Organization goals and objectives
Source: Adapted from
In practice, the stages in decision making are rarely so clearly defined or recognized as distinct stages by managers. But more importantly, decision making is not so orderly as the model implies. The process does not necessarily progress from one phase to the next without any backtracking or recycling. Real decision behavior can exhibit frequent backtracks and jumps-forward before an option is finally selected.
Minor moral behaviour as an outcome of a decision process - Harrison (1987) reports that there is not guarantee that the man who understands by means of ethical study the difference between right and wrong will necessarily follow the right. Even a person experienced in making moral judgments will often find it difficult to determine which action is right. On his research he also concluded that managers are greatly concerned with ethical behaviour in general but felt little need to modify their personal behaviour. On the other hand managers have propensity to capitalize on opportunities to be unethical if those situations arise. Another finding reveals that managers experience pressure, real or perceived, to compromise their personal moral standards to satisfy organizational expectations.
A business situation with threats and opportunities
(Harrison 1996) argued that like the organization itself, the external environment is composed of several principal aggregates:
Opportunities. Opportunities represent situations with a potential to enhance the long-term competitive advantage of the organization. Opportunities presume that the organization has the capability for capitalizing on them. The litmus test of management is to recognize an opportunity and to exploit it for the benefit and gain of the total organization.
Threats. Threats include all external forces with a potential for intruding on the organization in ways that work to its disadvantage. The most common threats are competition and technological obsolescence.
Requirements. Requirements include statutory requirements, legal codes and other governance mechanisms that act to limit the strategic choices of management.
Responsibilities. Responsibilities constitute expectations on the part of some stakeholder group or external entities that the strategic decisions of management will not work to its disadvantage. Included here is the pervasive concept of social responsibilities.
The concept of strategic gap - is conceptualized in figure 2, stated most simply; the strategic gap reflects the imbalance between the current strategic position of the organization and its desired strategic position. The strategic gap is determined by comparing the organization's inherent capabilities with the opportunities and threats in its external environment. In one sense, the strategic gap is a measure of the perennially imperfect fit between the organization and its external environment. If the capabilities of the organization were fully committed to exploiting all perceived opportunities and warding off all discerned threats, there would be no strategic gap.
There are three conceivable variations of strategic gap: positive strategic gap; negative strategic gap; and zero strategic gap. The first two variations reflect the actual condition of a given organization at different points in time. The third variation exists only in theory. As shown in Figure 1, if O > E, the positive strategic gap is balanced in favor of the organization. The E > O, it is called a negative strategic gap; and it means that the organization is at a significant disadvantage vis-à-vis its external environment. The E = O is an optimal state for an effectively managed organization to make strategic decisions
Source: Harrison (1996)
There are at least three reasons why a capability profile of strengths and weaknesses is important in measuring the strategic gap of a given organization, First the external opportunities usually signifies effective use of internal strengths, secondly the organization from environmental threats requires a knowledge of internal weaknesses, and lastly an organizations excel in all areas.
What is more, two further aspects of an organization's decision environment which affect the context of a decision are: whether the environment is simple or complex and whether the environment is static or dynamic. Simple environment are those which have relatively few elements, and where those which do exist are probably similar to each other well understood. Conversely, a complex environment has large number of factors all of which may be quite different from one another, and their interrelationship difficult to comprehend. A static environment is one that is stable and unchanging over time, whereas dynamic environment is subject to a certain amount of change which possibly may be difficult to forecast. Cooke, S. and Slack (1991)
According to Harrison (1987) the organization must be constantly aware of the diverse external forces affecting it to stay in balance with its environment. The environment is an integral part of the open decision model. Its effects start on the setting of objectives, continue on through the moment of choice, and have particular impact at the time of implementation.
Comparing and Evaluating Alternatives
Harrison (1987) reports that in order managers comparing and evaluating alternatives is usually accomplished in one or some combination of three modes (1) judgment, (2) bargaining, and (3) analysis. In the judgment mode, the decision maker arrives at choice based on experience values, perceptions and intuition. Because judgment is fastest, most convenient, and least stressful, it appears to be the favored mode for the managers. The bargaining mode is the prevalent in decision-making situations where external forces dominate or the choice promises to be controversial. In such situations decision makers seek alternatives that permit the attainment of the managerial objectives as part of compromise among concerned parties.
The analytic mode of comparing and evaluating alternatives, postulates that alternatives are carefully and objectively evaluated, their factual consequences explicitly determined and combined according to some predetermined utility function- a choice is finally made to maximize utility. However, research also shows that, managerial decision makers use the analytical very little (ibid).
Harrison (1987) also summarizes the five components in the decision-making function of comparing and evaluating alternatives.
make an evaluation of the anticipated benefits and costs for each alternative (benefits and cost are estimated for all alternatives before closure on any single on)
Develop an estimate of the risk and uncertainties related to the like hood that given alternative will result in an outcome that will fully or partially attain the managerial objectives.
Make closure on some one alternative or, possibly, some combination of available alternatives
Justify the choice of given alternative by concentrating further on its attributes for attaining the objectives
Ascertain and evaluate the outcomes likely to result from implementing the chosen alternative
Time available and The Time value of money
The time available - to collect information will itself be determined by the context of decision. Here the time available is determine by the gat between when it actually becomes clear that decision must be made, and the time at which the decision it self needs to be made. Sometimes the deadline for the decision is clear. For example, if a sealed tender to contract is required by a particular date, then, if management do not make a decision by that date, their opportunity to choose effectively disappears, and the decision is made by default. At other times, the due date of the decision is less clear. For example, suppose a retail chain store is buying a new outlet. There might be several possible sites currently available. As time passes without a decision being made, some of theses sites could be sold to other buyers and become unavailable. At the same time, other sites could become which were not options ate the beginning of the decision process. The time available for this decision therefore, is not a fixed quantity. But the time taken to make it could, affect the options available, and therefore, the decision itself. Cooke, S. and Slack (1991)
In some decisions the timing of the decision, and therefore the time available can be a decision in itself. For example, a manager purchasing raw materials on the commodity market is concerned to keep his company supplied with the raw materials, and also to buy as cheaply as possible. The fluctuation in the commodity market means that, if the buys consistently when prices are low, he will be supplying the company for less cash outlay than is if he were less skilled at the timing decision. In this case the purchasing manager is fortune in receiving a direct, clear financial feedback (ibid).
The way in which uncertain manifest itself in a decision is usually as a lack of information, in some decisions there is an abundance of information. On the other hand some decisions may take place in circumstances where very little is known about options. Thus the extent of information available can be regarded as an important aspect of a decision's context (ibid).
The extent of information may depend on the time available to collect it. Time, effort and money can sometimes change a situation of little information into one where the information is regarded as adequate. This then can be regarded as a cost related directly to the circumstances or context of the decision. One of the skills of decision making is deciding which areas of the decision need further information and when further information is not worth collecting (ibid).
The Time value of money: A special kind of trade-off - Clemen, R. (1991), One of the most common outcomes in personal and business decisions is a stream of cash flows. For example an investor may spend money on a project to obtain revenue in the future over period of years. In such a case there is a special kind of trade off: spending pounds today to obtain more money tomorrow. A pound today were worth the same as a pound next year, there would be no problem, but that is not the case, because one pound invested now would be worth one pound plus the interest paid. Trade-offs between current and future pounds, refer to the fact that the value of pound depends on when it is available to the decision maker. Because of this, we often refer to the time value of money
Choose an alternative offered that require marginal moral behaviour.
Ethics have been called the standards of decision making. It has been stated that a decision is a process that has been affected with the ethical interest. The role of ethics in the decision-making process is fairly straightforward:
In the development of set of managerial objectives, it is necessary to consider the ethical interest in selecting among various opportunities and areas of potential improvement.
In the development of range of relevant alternatives, it is impossible to avoid making value judgment among the possibilities emerging from the search activity.
In the act of choice, the ethical interest is clearly interwoven into the selection of the best alternative.
Finally, in the implementation of satisfying choice, the decision maker must consider the ethical interest in terms of potential consequences to those areas and individuals that will be affected by decision. (Crane and Matten (2007
Philosophers have concerned themselves mainly with the question of what constitutes a good decision, a major concern of ethics. The system of values and code of ethics employed by the decision maker are no less important in evaluating the rationality of the process of than they are in philosophy. One can, for example, imagine some unethical behaviour in the rational process of arriving at rational decision it is more difficult, however, to conceive of a rational approach to decision making without some system of values. Similarly while ethical conduct may validate a claim of rational behaviour in the decision-making process, the application of some values to a given choices is not in itself sufficient for this purpose. (Crane and Matten 2007)
Sensitivity analysis and post-optimality analysis allow the decision maker to determine how the final solution to the problem will change when the input data or the model change. This type of analysis is very important when the input data or model has not been specified properly. A sensitive solution is one in which the results of the solution to the problem will change drastically or by a large amount with small changes in the data or in the model. When the model is not sensitive, the results or solutions to the model will not change significantly with changes in the input data or in the model. Models that are very sensitive require that the input data and the model itself be thoroughly tested to make sure that both are very accurate and consistent with the problem statement.
There are a large number of quantitative terms that may not be understood by managers. Examples include PERT, CPM, simulation, the Monte Carlo method, mathematical programming, EOQ, and so on. The student should explain each of the four terms selected in his or her own words (refer to Decision Management Tools and Techniques document by Dr McManus).
Many decision modellers enjoy building mathematical models and solving them to find the optimal solution to a problem. Others enjoy dealing with other technical aspects, for example, data analysis and collection, computer programming, or computations.
The implementation process can involve political aspects, convincing people to trust the new approach or solutions, or the frustrations of getting a simple answer to work in a complex environment. Some people with strong analytical skills have weak interpersonal skills; since implementation challenges these "people" skills, it will not appeal to everyone. If analysts become involved with users and with the implementation environment and can understand "where managers are coming from," they can better appreciate the difficulties of implementing what they have solved using decision modelling.
Users need not become involved in technical aspects of the decision modelling technique, but they should have an understanding of what the limitations of the model are, how it works (in a general sense), the jargon involved, and the ability to question the validity and sensitivity of an answer handed to them by an analyst.
Part 2 - How can managers be sensitive to the situation? How can they adhere to personal and ethical values and their moral compass under theses decision pressures?
Decision making is the mainly important action engaged by managers in every type of organizations and at all stage. It is the one activity that most nearly epitomizes the performance of managers, and the one that visibly distinguishes managers from other occupations in the society. Drucker comments for example, that to make the significant decision is the precise executive duty. The present and lasting impact of managerial execution is centered in the efficiency of executive choices. These decisions generate dozens or even hundreds of other decisions of smaller magnitude at descending levels of administration. Strategic decisions,......................... consequently, set the tone and tempo of managerial decision making for every individual and unit throughout the entire organization. If the decision making at the top of the organization is ineffective, then the choices made at lower levels of management will be the same. Similarly, if top management's strategic choices tend to be successful, it reflects favorably on choices made in other parts of the organization.
Hill P et al (1986) explained that in any situation any person could ask you: What is the morally right thing for me to do in this situation? If there are no rules to cover the situation, you can conclude that you may do as you please. For the society all the ethical considerations are bound up in compliance with rigid general rules of universal application and equal weight that work in all-or-nothing fashion, the universality of application and generality of scope is a feature on moral rules.
The decision is considered ethical if and only if he decides what to do by essential reliance upon some ethical rule, principle, standard or norm. By essential reliance is meant that had he not relied on the rule, he would not have decided to do what he did; or, if he had decided to do what he did then his reason for deciding would not have been the same; his reason would not have been an ethical principle, but some other sort of principle, perhaps one of business efficiency, class or national self-interest, or even personal advantage (ibid).
According to Harrison (1987) Values means different things to different people, and it was stated that values are normative standards by which human beings are influenced in their choices among alternative course of action. Values originate primarily at the level of the individual. It is also true, however, that groups have values, usually referred to as norms and organizations have values implicit in their goals and objectives. Many sets of organizational values constitute the total economic system, which in turn is a subset of the larger society. In this regard, it is useful to conceive of hierarchy of values, although the principal focus is on values applied to decision making at the level of the organization.
As a manager makes decision to further the purposes of the organization, human values fuse with organizational values, thus the managers' values necessarily reflect the organization's values, even though, as is often the case, the latter values may conflict with some of the decision maker's personal values. In such cases, the manager will usually adjust personal values to the purposes of the organization so as to further his or her own aspiration, at least as much as possible (ibid).
The American Accounting Association model, mentioned by Campell (2008) suggest seven step process for decision making, which takes ethical issues into account. At step 1 by establishing the facts of the case, while perhaps obvious, this step means that when the decision-making process starts, there is no ambiguity about what is under consideration. Step2 is to identify the ethical issues in the case, this involves examining the facts of the case and asking what ethical issues are at stake. The step3 is an identification of norms, principles, and values related to the case. This involves placing the decision in its social, ethical, and in some cases, professional behaviour context, in this case professional codes of ethics or the social expectations of the profession are taken to be the norms, principles, and values.
In the fourth step, each alternative course of action is identified. This involves stating each one, without considerations of norms, principles, and values identified in Step 3, in order to ensure that each outcome is considered, however appropriate or inappropriate that outcome might be. The Step 5, the norms, principles, and values identified in step 3 are overlaid on to the options identified in step 4. When this is done, it should be possible to see which options accord with the norms and which do not.
In the step 6, the consequences of the outcomes are considered. Again, the purpose of the model is to make the implications of each outcome unambiguous so that the final decision is made in full knowledge and recognition of each one. Finally, in step 7, the decision is taken
Another model also mentioned by Campell (2008) was the Tucker-5 question, which requires a little more thought than when using the AAA model in some situations. This is because three of the five questions (profitable, fair, and right) can only be answered by referring to other things. This might involve a consideration of the stakeholders in the decision and the effects on them. Whether an option is right depends on the ethical position adopted. In order to see how Tucker's 5-question model might work in practice, a scenario must be evaluated.
A big company is planning to build a new factory in a developing country. Analysis shows that the new factory investment will be more profitable than alternatives because of the cheaper labour and land costs. The government of the developing country has helped the company with its legal compliance, which is now fully complete, and the local population is anxiously waiting for the jobs which will, in turn bring much needed economic growth to the developing country. The factory is to be built on reclaimed Brownfield land and will produce a lower unit rate of environmental emissions that a previous technology.
Is it profitable? - Yes. The investment will enable the company to make a superior return than alternatives. The case explains that these are because of the cheaper labour and land costs. Is it legal? - Yes. The government of the developing country, presumably very keen to attract the investment, has helped the company with its legal issues. Is it fair? - As far as we can tell, yes. The only stakeholder mentioned in the scenario is the workforces of developing country who, we are told, is anxiously waiting for jobs. The scenario does not mention any stakeholders adversely affected by the investment.
To conclude after all mentioned above we can conclude that is not easy the managers to apply for the ethics in every decisions that they making, even to follow the decision-making process is a not a common thing within their performance. Sometimes the best choice for the company is not an ethical decision, in relation to the society or in relation to the employees, and conflict of values can arise. The models suggested mentioned by Campbell are very useful but, in real life there much unexpected situations, and in some of them the managers do not have enough time to analysis or search for a good solution in the literature.
It suggested that in some situations when the managers have to decide under pressure and very turbulent environment, they should do based on his experience, personal values, and knowledgement, after the decision had been made, the managers should analysis carefully, and in this time they can apply for the literatures, ethics models and so on. This evaluation has a significant importance in order they will be prepared for the next situation. Harrison (1987) says that an organization at least can adopt the theory incrementally the ideas and approaches, it can affect a complete change to the pursuit of satisfying choices in the decision making model by the boundaries of rationality. Therefore, the final choice lies with management, but the benefits of a more open approach to decision making seem difficult to deny. Perhaps the only real constraint is traditional resistance to change.