How to Handle Ethical Issues in the Workplace

Character and Conscience underlie Ethical Decision Making

Ethical dilemmas in the workplace can be more effectively dealt with if managers follow a few simple steps:

Egoism: Egoism looks at each decision by considering the effects of a decision only as it relates to the individual decision-maker. Most ethicists dismiss this method because it fails to consider the consequences on the stakeholders. For example, if a CEO or CFO is dealing with financial statement reporting and wants the statements to look as good as possible regardless of the rules and effects on others, then egoism rules the day.

Enlightened Egoism: This method considers the consequences of alternatives on the stakeholders but ultimately a decision is made based on whats in the best interest of the decision maker. So, a manager would consider the effects on the stakeholders and may decide that since a particular decision is harmful to the stakeholders because manipulatation of the financial statements compromises the validity of those statements, it is in the best interests of the manager to conform the statements to accounting rules.

Utilitarianism: Here the decision-maker evaluates harms and benefits of alternative decisions using a calculus/weighting approach. Under act utilitarianism, the decision would be to select the act where the benefits to the stakeholders exceed the harms (i.e., net benefits are greater than any other act I might take). The problem here is a decision-maker might weigh the alternative to manipulate the statements as having greater value than conforming to the rules. An alternative is to apply rule-utilitarianism where regardless of utilitarian benefits certain rules should never be violated, such as always follow proper accounting rules regardless of the consequences on others.

Rights and Obligations: In this method the decision-maker uses ethical judgment to evaluate the rights of others (i.e., the investors and creditors). These stakeholders have a right to expect accurate and reliable financial statements. Correspondingly, I, as a decision-maker, have an obligation to respect those rights when I select an alternative course of action. Rights Theory follows a universality approach in that I would ask, before deciding, whether I would want others in my position to make the same decision for the same reason if they were faced with a similar dilemma. If so, my action has universal appeal and should be taken.

Values-based decision making can be a complimentary thought process because the ethical values to be emphasized in the workplace mirror the rights and obligations approach. Decision makers should act in accordance with certain virtues of behavior, or character traits, such as truthfulness, trustworthiness, respect, fairness, responsibility, objectivity, and integrity. If I am a principled person, then my actions reflect these virtues and those who rely on my decisions expect to be treated in accordance with these ethical values.

Ethical decision-making in the workplace is fraught with danger because stakeholders of an organization may have competing demands. Investors and creditors expect to receive truthful information while top management may believe their own personal wealth and image is tied into putting the best face on the financial statements. It takes courage and perseverance for decision-makers to avoid the obstacles that may be in play and follow their conscience. Let your conscience be your guide is as true today as years ago. Of course, we are talking about people who have the propensity to be ethical; otherwise, their conscience may not bother them if unethical actions are taken.

Finally, managers should avoid the proverbial ethical slippery slope where once a decision is made that violates ethical tenets the decision maker starts to descend the slippery slope and it is difficult to reverse course and reclaim the high road. Unethical decisions can lead to cover-up and more unethical decisions down the road. Remember, ethics is about what you do when no one is looking. In other words, you are what you do and ethical people are motivated to do the right thing, not make a decision based on selfishness egoism.

Blog posted by Steven Mintz, aka Ethics Sage, on May 28, 2014 Professor Mintz teaches at Cal Poly, San Luis Obispo and also blogs at: http://www.ethicssage.com.

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How to Handle Ethical Issues in the Workplace