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Ethical Decision-Making in Business

Ethics and moral principles should be at the center of actions taken in business, and an MLS degree can expand knowledge of ethical decision-making in the modern business landscape.
Ethical Decision-Making in Business

By Miami Law Staff Report

In today's competitive business world, it can be easy for business leaders to fall into the trap of letting financial accounting and financial gains drive every decision. However, when economic and financial gains overshadow moral values and ethical principles, businesses can suffer from legal problems, a poor workplace culture, and a loss of trust with customers.

Whether you're already working in a business decision-making role or aspire to advance into a more effective leader position, understanding the power of ethical decision-making in business and knowing how to sustain ethical practices in your workplace could help you take your career to the next level.

Understanding Ethical Decision-Making in Business

Before diving any deeper into the core principles of ethical decision-making in business or common ethical challenges, including navigating the gray areas faced by today's business leaders, it's important to understand what ethics entails and the role it plays in shaping modern workplace cultures.

Defining Ethics in a Business Context

In simple terms, ethics in a business context involves making choices that are guided by moral principles rather than a company's bottom line or financial gains. When business leaders make ethical choices, they are considering not just their own well-being and the financial well-being of the company — but also their moral compass and the needs of others (including customers, employees, and other stakeholders). Ultimately, ethical decision-making in business boils down to doing what's right, even when it may not be the most profitable or popular course of action.

So, why are business ethics and ethical decision-making important? For starters, brands that are known for their integrity, honesty, and fairness tend to attract more loyal customers while contributing to their overall profitability and building stronger reputations within their respective communities. Furthermore, ethical businesses may be less prone to legal risks (such as compliance issues and litigation), which can mean longer-term stability and success.

The Role of Ethics in Shaping Corporate Culture

In addition to mitigating risk and building a stronger reputation among customers, ethical decision-making practices can have a positive influence on corporate culture and sustainability. When decision-makers and leaders are frequently seen doing the right thing, employees notice. This can lead to a greater sense of loyalty and commitment to the company, as well as the potential for greater retention.

Combining ethics and business decision-making also builds a framework that can positively influence team member behavior. Employees often model the behavior of their supervisors and managers; so, if they see leaders acting ethically, they’re more likely to implement these principles in their own work. 

Core Principles Guiding Ethical Business Choices

When it comes to business ethics and ethical decision-making, there are some key principles that leaders tend to use in guiding their choices. These include utilitarianism, deontology, and virtue-based approaches.

Utilitarianism in Business Decisions

One core principle of ethics and business decision-making is the concept of utilitarianism. Under this theory, the best and most ethical decision is the one that will result in the greatest good for the greatest number of people. The Concise Encyclopedia of Business Ethics elaborates that "in business contexts, utilitarianism implies an obligation for businesses to do what they can to act in a way that maximizes happiness and minimizes suffering."

In applying this theory to business decision-making, leaders may start by weighing the potential actions they could take before considering the benefits, compassion for stakeholders and drawbacks of each action. The most ethical decision is ultimately the one with the highest number of benefits and lowest number of negative consequences.

Deontological and Virtue-Based Approaches

Another common principle in ethical decision-making is deontology, which focuses more on duty and virtue-based reasoning rather than whether a decision is inherently "right" or "wrong." Instead of centering decision-making around the consequences of an action, deontological decision-making in business is guided by universal beliefs as they relate to:

  • Honesty
  • Transparency
  • Fairness
  • Commitments/contracts

Under deontological principles, a marketing manager may refuse to approve a campaign that relies on misleading tactics to sway audiences, adhering instead to the universal duties of honesty and transparency.

Common Ethical Challenges Faced by Businesses in the U.S.

Business leaders in the United States regularly face ethical challenges, including unethical behavior and conflicts of interest to issues surrounding harassment, discrimination, and fair treatment. By anticipating these obstacles and knowing how to overcome them, leaders can continue to uphold business ethics and ethical decision-making standards.

Conflicts of Interest and Transparency Issues

It's not uncommon for supervisors, managers, and other business leaders to face conflicts of interest in the workplace. This could include anything from pressure to promote a workplace friend to hesitation about reporting certain conduct to higher levels of management. Even when decision-makers know which choice is the right one to make, carrying it out may be easier said than done.

Addressing Discrimination, Harassment, and Fair Treatment

Business leaders may find themselves needing to address problems like discrimination, harassment, and prejudice in the workplace. For example, one 2019 study found that 25% of Black women reported the prevalence of workplace discrimination, compared to 11% of white men.

Turning a blind eye to these issues can create an unstable and even unsafe workplace culture. Thus, leaders must know how to navigate these issues tactfully and effectively to ensure the ethical response and fair treatment of all team members.

Building and Sustaining Ethical Practices

With so many obstacles to ethical decision-making in business, how can leaders continue to build and sustain a culture of integrity? At the end of the day, there's no "one-size-fits-all" approach — and leaders must carefully tailor their own ethics and business decision-making practices to meet the unique needs and challenges of their teams. Still, many businesses find success by implementing a comprehensive code of conduct and actively monitoring decision-making processes internally.

Developing an Effective Code of Conduct

A strong code of conduct is one of the most valuable tools for ethical decision-making in business. Put simply, a code of conduct is a written document that sets rules and guidelines for how employees of a company are expected to conduct themselves.

A code of conduct should include detailed information on such topics as:

  • Compliance with industry laws and regulations.
  • The core values and beliefs of the organization, which should include empathy and be used to guide all decisions and actions.
  • How to report conflicts of interest, harassment, and other issues.
  • How team members should interact with each other and with clients (where applicable).
  • Specific consequences or disciplinary actions for violating the code of conduct.

A thorough code of conduct can promote ethical behavior by establishing a clear framework and giving leaders valuable guidance.

Implementing and Monitoring Ethical Decision-Making Processes

Finally, business leaders should have a detailed plan for implementing and monitoring decision-making processes across the company. This may include setting up clear decision-making frameworks for those in leadership roles, as well as offering dedicated ethics training for supervisors, managers, and other higher-ups.

Over time, business leaders should also conduct audits and performance reviews to measure how well decision-making models align with company goals and values. From there, they may be able to identify areas of weakness that can be addressed with additional training and feedback. Ultimately, the work of business leaders striving for ethical decision-making processes is never completely done — but it is possible to gradually improve processes over time while cultivating a culture of transparency, integrity, and moral behavior. 

Improve Your Own Decision-Making in an M.L.S. Program

As a business decision-maker, ethics and moral principles should be at the center of every action you take. At the same time, you can't expect to build and sustain an ethical business culture without a thorough understanding of ethical business principles and their core values.

If you're serious about expanding your knowledge of ethical decision-making in the modern business landscape, the University of Miami's online Master of Legal Studies program may be right for you. Our general legal studies and human resources tracks include extensive coursework in the role of ethics and leadership values in corporate governance and decision-making, preparing students to become the best leaders possible.

Learn more by getting in touch today or get started with your application for admission here.

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