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The Importance of Ethical Decision Making

Link Between Ethical Leadership and Ethical Decision Making

The key ingredient of making ethical decisions is having in place ethical leaders who model ethical behavior. I have previously blogged about ethical leadership. In today’s blog, I will point out how ethical leaders create the kind of organization culture and climate that fosters ethical behavior. 

Ethical Leadership

Ethical Leadership has been defined as a “demonstration of normatively appropriate conduct through personal actions and interpersonal relationships and the promotion of such conduct to subordinates through two-way communication, reinforcement and decision making”. The characteristic traits of behavior of ethical leaders and how they create a culture of ethical decision- making follows:

  • Maintain honest relations with employees.
  • Subordinates will strive to perform more innovatively for the success of the organization.
  • Ethical leadership encourages job performance of employees and decreases turnover while increasing job satisfaction and employee work engagement.
  • Ethical leaders must be good communicators and promote transparency in decision-making.
  • Ethical leaders create an ethical climate that enforces core values.
  • Ethical leaders should dedicate themselves to act in accordance with ethical values that underlie the organization’s code of conduct.

Rest’s Model of Ethical Decision Making

I have blogged before about James Rests' model of ethical behavior. He identified four steps in the ethical decision-making process that serves as a useful approach to ethical decision making. The four steps are as follows:

  1. Ethical Sensitivity/Awareness
  2. Moral Judgment/Reasoning
  3. Moral Focus/Motivation
  4. Moral Character

The first step in moral behavior requires that the individual interpret the situation as moral. Absent the ability to recognize that one’s actions affect the welfare of others, it would be virtually impossible to make the most ethical decision when faced with a moral dilemma.

Once a person is aware of possible lines of action and how people would be affected by the alternatives, a process aided by the philosophical reasoning methods, a judgment must be made about which course of action is more morally justifiable (which alternative is just or right).

Moral motivation reflects an individual’s willingness to place ethical values (e.g., honesty, integrity, trustworthiness, caring, and empathy) ahead of nonethical values (e.g., wealth, power, and fame) that relate to self-interest. An individual’s ethical motivation influences their intention to comply or not comply with their ethical judgment in the resolution of an ethical dilemma.

An individual’s intention to act ethically and their ethical actions may not be aligned because of pressures or biases that influence decision making. Individuals with strong ethical character will be more likely to carry out their ethical intentions with ethical action than individuals with a weak ethical character because they are better able to withstand any pressures (i.e., have courage and maintain integrity to carry through ethical intent with ethical action).


Beneficence is the concept that actions should be taken to enhance welfare in society. The following provides some of the considerations to make it happen:

  • Who benefits?
  • Who are the stakeholders?
  • Who are the decision makers?
  • Who is impacted?
  • What are the risks? Right v wrong

Ethical Culture

An ethical culture begins with an explicit statement of values, beliefs, and customs from top management. It should provide the framework for top management on how to manage themselves and other employees, and how they should conduct their business. A code of ethics builds on those values and serves as a guide to support ethical decision making. It outlines how to make decisions that are right, not wrong.

The key to ethical culture is the tone at the top that creates the basis for standards of behavior that become part of the code of ethics. The tone set by managers influence how employees respond to ethical challenges and is enhanced by ethical leadership. Ethical leaders should model good behavior that enhances ethical decision-making, which can be accomplished as follows:

  • When leaders are perceived as trustworthy, employee trust increases.
  • Leaders are seen as ethical and as honoring a higher level of duties.
  • Employees identify with the organization’s values.
  • If the tone set by management upholds ethics and integrity, employees will be more inclined to uphold those values.

Ethical Climate

The ethical climate of an organization plays an important role in organizational culture because it specifically addresses issues of right and wrong. Organizational ethical climate refers to the moral atmosphere of the work environment and the level of ethics practiced within a company.

Leader decisions and actions should inspire employees to think and act in a way that enhances the well-being of the organization, its people, and society in general. An ethical climate is enhanced through a values-driven organization that encourages openness and transparency.

An ethical climate provides a supportive environment to voice matters of concern without fear of retribution or retaliation. An ethical climate should also support policies related to equity, diversity, and inclusion.

Equity, Diversity & Inclusion

Diversity and inclusion are often viewed the same way. However, there are important differences. Diversity is hiring and retaining employees that reflect a society’s diversity, while inclusion makes them feel motivated, and a true part of the organization.


The concept of diversity encompasses acceptance and respect. It means to treat each person as unique and to recognize our individual differences. Diversity means understanding each other and moving beyond simple tolerance to embracing and to celebrating the rich dimensions of individuality. A diverse workforce is one where similarities and differences among employees in terms of different dimensions are molded together to produce the best outcome.


Inclusion has often been defined in the context of a society that leaves no one behind. An inclusive society or workplace is one in which the cultural, economic, political, and social life of all individuals and groups can take part.

Equity vs. Equality

People tend to think about equality of opportunity and fairness in treatment as one and the same. Equality means having the same rights, social status, etc. Equality aims to ensure that everyone gets the same things in order to enjoy full, healthy lives.

Like equity, equality aims to promote fairness and justice, but it can only work if everyone starts from the same place and needs the same things. But when we place it next to equity, that’s when the lines get blurred.

Equity can be thought of in terms of equal opportunity that fits a person’s circumstances and abilities.  Equity may mean giving a group of people different access to resources, as with disabled individuals who deserve special access and provide accommodations as needed.

A good analogy is to think of runners sprinting around an oval track during a competition. The starting point is staggered to ensure each runner runs for the same distance. The staggered start makes up for the benefit of starting in the inside part of the track. Exhibit 3

Challenges to Ethical Decision Making

There are many challenges to ethical decision-making in organizations. Two of these challenges discussed below can be attributed to different environments in organizations that create pressures that might lead some leaders and employees to deviate from ethical norms.

  • Cognitive Dissonance
  • Ethical Dissonance

Cognitive Dissonance

How we think we should behave is often different from how we decide to behave. This creates a problem of cognitive dissonance, a term first coined by Leon Festinger in 1956. The inconsistency between our thoughts, beliefs, or attitudes and our behavior creates the need to resolve contradictory or conflicting beliefs, values, and perceptions.

Cognitive dissonance suggests that we have an inner drive to hold all our attitudes and beliefs in harmony and avoid disharmony. When there is inconsistency between attitudes and behaviors (dissonance), something must change to eliminate the dissonance. Festinger posits that dissonance can be reduced in one of three ways: (1) change one or more of the attitudes, behavior, or beliefs to make the relationship between the two elements a consonant one; (2) acquire new information that outweighs the dissonant beliefs; or (3) reduce the importance of the cognitions (beliefs, attitudes).

Ethical Dissonance

Jones and Hiltebeitel conducted a study of organizational influence on moral decisions and proposed a model that demonstrates organizational influence on the moral decision-making process. Essentially, the ethics of an individual influences the values that one brings to the workplace and decision making, while the ethics (through its culture) of an organization influences that behavior. The model projects four types of ethical fit: (1) high organizational ethics, high individual ethics (High-High), and (2) low organizational ethics, low individual ethics (Low-Low); (3) high organizational ethics, low individual ethics (High-Low) and (4) low organizational ethics, high individual ethics (Low-High).

Let’s pause for a moment and consider the practical implications of this model. Imagine that you are interviewing for a position with a mid-sized company in your town. You can easily find out information about the company on the Internet to prepare for the interview, such as the scope of its operations, products and services, customer base, and geographical locations. However, it is less easy to find out about its reputation for ethics, although reports in the media about specific events might be of some use. Now, let’s assume that you knew (and understood) what is meant by organizational fit and in this case the fit is Low-High. Would that affect whether you interview with the company? Might you ask questions to better understand why that fit exists? Would it affect your final decision whether to work for the company? The information you might gather during the process could be invaluable when you face ethical dilemmas in the workplace.

The bottom line is that ethical decision-making is easier said than done. Most organizations are quite diverse and need to find a way to mesh alternative views and make them consistent with the ethical norms of the organization. Ethical leaders are those who engage employees in ethical decision-making that incorporates diversity, promotes the welfare of the stakeholders, and conducts business with the highest sense of ethics—right, not wrong behavior; good, not harmful behavior.

Blog posted by Dr. Steven Mintz, The Ethics Sage, on September 20, 2022. You can sign up for Steve’s newsletter and learn more about his activities on his website  (https://www.stevenmintzethics.com/) and by following him on Facebook at: https://www.facebook.com/StevenMintzEthics and on Twitter at: https://twitter.com/ethicssage.