Essentials of Business Ethics – Chapter 5: Ethical Decision-Making Framework
Employees need to know how to independently derive a moral answer to business issues
Rotary International’s Four-Way Test
Of the things we think, say, or do:
1. Is it the Truth?
2. Is it Fair to all concerned
3. Will it build Goodwill and Better Friendships?
4. Will it be Beneficial to all concerned?
Raytheon’s Ethics Quick Test
When faced with an ethical dilemma:
- Is the action legal?
- Is it right?
- Who will be affected?
- Does it fit Raytheon’s values?
- How will I feel afterwards?
- How would it look in the newspaper?
- Will it reflect poorly on the company?
The Ethics Decision-Making Framework
The two mentioned above are not philosophically systematic. The moral philosophy literature
provides a more systematic approach for deriving moral conclusions. Some ethical reasons are more
morally acceptable than others.
An ethics decision making framework, parallels Lawrence Kohlberg’s stage of moral reasoning:
1. Who are the people affected by the action? (stakeholder analysis, this helps to inform the
2. Is the action beneficial to me?
3. Is the action supported by my social group?
4. Is the action supported by national laws?
5. Is the action for the greatest good of the greatest number of people affected by it?
6. Are the motives behind the action based on truthfulness and respect/integrity toward each
If the answers to 5&6 is yes, this action is the most ethical
If the answers to 5&6 are mixed, this action is moderately ethical
This framework can help managers reach a moral conclusion regarding the rightness or
wrongness of any decision
The answers to question 5&6 point managers in the direction of the most moral decision
Five Ethical Theories
Egoism – how does the action relate to me? Furthers my interests right, conflicts with my interests
wrong. Social Group Relativism – how does the action relate to my social groups? Conforms with group’s
norms right etc.
Cultural relativism – How does the action relate to the national culture, particularly its laws?
Utilitarianism – How does the action relate to everyone who is affected by it? Beneficial to the
greatest number right.
Deontology – how does the action relate to my duty to become an ideal human being who treats
others in the way that I would want to be treated? Does it treat every stakeholder truthfully and with
respect and integrity?
It is a morally acceptable ethical theory, as long as the pursuit of self-interest does not collapse into
selfishness or generate harm. According to Rand the best thing for the common good is to become
an individual of high integrity willing to pursue one’s self-interest at all costs.
If egoism is the predominant ethical theory, then the more politically powerful or astute employee
gets the scarce resource, to the detriment of organizational performance.
Social Group Relativism
Associating oneself with the ethical standards of a group is often considered to be a higher stage of
moral reasoning than egoism. Social Group Relativism is a common ethical theory. If social group
relativism is the predominant ethical theory, then the more politically powerful or astute department
or social group gets the scarce resource, to the detriment of organizational performance.
If the action conforms with the law, it is right. Laws are established through two distinct processes: