discuss Critically the role ethics plays on organisations decision making capabilities This essay shall discuss the role that ethics plays on organisational decision making. Depending on the stance an organisation takes on ethics this can have a positive or negative affect. Firstly I will give a brief definition of the key terms used. Decision making stated by (Rollinson 2002) sees it as a process of making a choice between alternatives. (Mintzberg et al 1990) though goes into more depth commenting that the process of identifying a decision is problematic because it may unfold rather than be made explicit. This basically means that decisions made can change due to changing environments and that they cannot be 100% correct. Cook and Slack also state that decisions can be made from past, present and future knowledge. Ethics defined by (Huzynski and Buchanan 2006) its an individuals moral belief about what is right and wrong or good or bad that provides a guide to his/her behaviour. Business ethics can also be incorporated as its ethics applied, examining the ethical principles and moral problems that can arise in a business environment. However (Albert Carr 1968) does argue the point as to whether business ethics should exist as he states that "businesses cannot be ethically sensitive". The world of business is deemed amoral due to the nature of the business environment being competitive, with only the ruthless and purposeful which would survive. Practical ethics This concerns contextual specific areas i.e. business ethics. This overlaps with other areas of business i.e. environmental issues which is advised to be taken account of when making decisions. However would it be right of shareholders to simply look at the financial aspects of set against a pro-active approach to green issues? Even though it would be deemed unethical to simply look at financial gains over protecting the environment would it be wrong to say that a business needs to look at the economic gains to ensure of survival. For example deciding to manufacture products in less developed countries knowing that the business is able to pay cheaper labour for the products produced. The flip side to this argument though is that the decision made to manufacture abroad has ensure d that families are able to survive there with the wages being paid. Ultimately though many people would argue for or against this issue. Economic Man This can be linked to the theory by Adam Smith which stated that some managers adopt the economic man approach to decision making. This involves the concept of profit maximisation based on the rational approach. The rational approach assumes that managers are in full knowledge of all relevant facts to maximise the optimal economic decisions Von Nueman and Moregenstern 1947 believed that a rational manager would always base their decisions to seek the optimal solution based on the financial gains and not acknowledge the external factors.
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Types of decisions (Simon 1984) distinguished two forms of business decisions, programmed and nonprogrammed which managers make on a daily basis. Programmed decisions are those that are simple, common and which occur on a frequent basis. These are determined by procedures and rules set in place by an organisation that managers can follow. Non-programmed decisions are those which are complex and unique which usually are strategic decisions which would have a significant impact on the organisation. Unitary and Pluralist approach Managers tend to make decisions under varying circumstances, processes and constraints. Unitary and Pluralist approaches provide opposing explanations to decisions made. The unitary approach to decisions put forward the idea that there is general agreement about the goals to achieve and the best means to achieve this. However the pluralist approach is completely the opposite as it emphasizes on conflict and power struggles between individual coalitions within organisations. Linked to the unitary and pluralist approaches to decision making can be Mills concept of Unitarianism which is defined as the action which produces the greatest amount of happiness for the greatest number of person's. Under this concept the unitary approach would be well received as it assumes that in general all people within the organisation accepts the decisions made to meet the same strategic goals. However the pluralist approach wouldn't abide to the theory if managers decide to emphasise on the approach as it creates internal; conflict and power struggles from within. This doesn't benefit the organisation as a whole if managers decide to base decisions that would in general not have interest of the employees at heart. There can also be a comparison between different types of managers that decide to base their decisions on specific theorists work. This part shall talk about the comparisons between a manager following the Kantian approach and the other following the utilitarianism concept. Kantian and Utilitarianism Management There can also be an analysis based on two different approaches managers can make when making decisions. This is of the Deontology or Utilitarianism approach. is Deontology rule based ethics also known as non consequential. This simply revolves around a set of rules applied so basically within an organisation it's the rules and policies. Utilitarianism as said earlier is the concept of measuring the consequences of decisions based on the value that it provides the most happiness for al parties involved. The comparison between the two is that they follow different stances based on their ethical reasons. One would follow the rules and polices set by the organisation even if the outcome is not in the best interest of the organisation whereas the other would look at the alternative options available. Under a utilitarianism management approach its likely that employees would be more willing to speak to their manager about certain issues knowing that they would understand.
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An example to show this point could be that of lateness, whether it would be alright to allow an employee to register as on time if they within a 5 minute grace period. Under the Kantian approach, all employees late after a certain time would be deemed automatically late with no exception. However under utilitarianism management may decide that people late within 5 minutes are deemed as on time as it does no harm to anyone. Stakeholder analysis It can be seen depending on the stance that they hold with ethics that firms are ethically responsible to its stakeholders. This is because any strategic, managerial and operational decisions are likely to have an impact on all stakeholders' not just employees but everyone connected. The most powerful stakeholders in terms of decision making are managers who play a significant role in the culture created in terms of an ethical stance. Following the utilitarian approach by Mills, it would be seen that an ethical manager would try to make key non programmed decisions that brings happiness to all stakeholders. However the argument here is that following utilitarianism it would be difficult for any manager to satisfy all for example from shareholders to suppliers and even the wide community. Different stakeholders would want different outcomes for example shareholders wanting high profit margins, whereas suppliers want an equitable / profitable relationship. Some may perceive a decision as beneficial for them whilst others would see it as having a negative impact. McDonalds Take for example McDonald's having an ethical duty to remove their super size meals in America due to external pressures i.e. that of the media. This was a strategic decision as it involved the image of the company and also the direction that McDonalds want to go towards. Agreeing to media and healthcare experts that the super size meals were extremely unhealthy, McDonalds were able to follow ethical reasoning and remove the meals for the benefit of the consumers. Egoism Managers Egoism under a management approach would depict a manager who has their own interest at heart i.e. making decisions for their own benefit. Depending on the managers mentality many tend to make decisions that in the long term is good for their futures. For example making decisions that creates political alliances that would strengthen their position in an organisation. (Cyert 1963) Under this form of ethics it would not go hand in hand with the ideology of making decisions that benefits all stakeholders under the utilitarianism approach. Virtue Theory Whether it would be ethical for a decision maker who had uncertainty in the information given to make a strategic decision that would affect the organisation as a
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whole. The decision maker can not be clear about the about the alternative choices available to them. Ambiguity, when people are unsure about their objectives and about the relation between cause and effect. The argument here is that would it be ethical to make a decision that would benefit the organisation if successful or not due the effects it would have on the organisation if unsuccessful. The decision maker would need to weigh up the benefits to the risk and check whether the outcome would benefit the happiness of all. Conclusion In conclusion it can be seen that businesses exist to maximise their revenues and in effect profits. On the other hand it has been made aware for example by the media and trading standards that organisations need to be more ethical and become more socially responsible for their stakeholders. This would help to enhance an organisations attractiveness and image in the market. However being ethical sometimes entails making a purposeful choice to favour morals rather than profitability which can lead to various dilemmas for example keeping customers happy at the expense of purchasing goods which are more expensive to cater for third world production. This would lead to less profit from sales. The long term effect though is that it would help to create a positive image for the organisation. Being ethical can help to ensure success in the modern world as people are more aware of ethical issues that are occurring within the world. Therefore decision making has many different ethical theories and approaches to help guide managers when faced with ethical issues.
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